Sweden's Electrolux to close German plant

12th December 2005, Comments 0 comments

12 December 2005, STOCKHOLM - Swedish home appliance maker Electrolux announced Monday that it would close a plant making washing machines and dishwashers in the German city of Nuremberg with a loss of 1,750 jobs.

12 December 2005

STOCKHOLM - Swedish home appliance maker Electrolux announced Monday that it would close a plant making washing machines and dishwashers in the German city of Nuremberg with a loss of 1,750 jobs.

Production was to be moved gradually from Germany to lower-cost Electrolux plants in Italy and Poland. The German plant, which had been acquired by Electrolux from the extinct German group AEG, was expected to be fully closed by the end of 2007.

Electrolux said it had no choice but to close the site, since market prices for whiteware were falling sharply and it could no longer make the appliances economically at Nuremberg.

"This was one of the most difficult decisions I ever experienced during my time at Electrolux," Johan Bygge, who is in charge of Electrolux's European and Asian home-appliance business, said in a statement.

"We've no choice when we take account of the interests of the company as a whole," Bygge said. "Every washing machine made at Nuremberg and sold in Germany loses us 60 euros (71 dollars). Every dishwasher loses 45 euros."

Electrolux markets its appliances in Germany with the venerable AEG brand on them and the 80-year-old factory still carries the AEG name.

The closure was expected to cost some 2.3 billion kronor (288 million dollars), some 200 million kronor (25 million dollars) higher than previously estimated.

The cost would be taken as a charge against operating income in the fourth quarter of 2005, Electrolux said.

Union representatives in Nuremberg had presented a cost-saving programme that was insufficient, Electrolux spokesman Anders Edholm told the online edition of financial daily Dagens Industri.

Staff at the AEG plant have been demonstrating or intermittently striking for months in protest at the closure plans and had offered to accept steep pay cuts. The main union at the factory, IG Metall, said it would hold more strikes to secure generous lay-off terms.

Workers whistled derisively as Electrolux executive Horst Winkler gave them the bad news at a meeting in Nuremberg Monday.

The site's output this year is expected to be about 1.4 million whiteware machines, including clothes dryers.

Electrolux's share rose marginally on the Stockholm bourse on the news.

Electrolux said it would also investigate the future operations of a plant in Torsvik, Sweden, that has 190 employees.

The company has in recent years struggled with higher costs for materials and components and slow sales in key markets.

DPA

Subject: German news

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