By Craig Zammit
STOCKHOLM, Sweden: Electrolux president and CEO, Hans Stråberg, discussed recently with Business Wire, Electrolux’s 2006 third quarter results and the progress of the company’s floorcare business.
“The result for the third quarter increased by 10 per cent, which is largely in line with our expectations. However, this does not mean that I am satisfied,” said Stråberg.
“In Europe, we saw a continuation of the problems stemming from the strike in Nuremberg, Germany. In North America we continued to improve the result despite some temporary suppliers’ problems at the Juarez factory in Mexico that are now under control.
“I am especially pleased with the development of floor care, which shows that it is possible to have good margins in a tough market – if you have the right products and the right marketing at a competitive cost position. Increasing costs for raw materials, a weakening North American market and a continued challenging competitive environment are concerns.
“The result of our floor-care operation is a fine illustration of how our strategy is working. In this sector, production has been moved to low-cost countries. But more importantly, we are developing innovative products that consumers want and we focus our marketing on one brand – Electrolux. The result is that almost 50 per cent of our vacuum cleaners in the market are younger than two years, and our profitability is approaching the same peak level as before the drop in 2002,” he said.
Stråberg ranks product innovation as a fundamental factor in increasing the company’s profitability.
“An example is the appliance market in the UK. The UK market has long been struggling with weak market growth and poor profitability. By introducing innovative products backed up by well conceived communications under the Electrolux brand, we have improved our mix and increased our profitability.
“As I have said many times, I am convinced that by working efficiently with developing new innovative products, continued brand building, profitable growth and cost savings projects, we will reach a margin comparable with the rest of the industry. In the long term, we will also be among the best in the industry,” Stråberg said.
On the local front, the South Australian government, in conjunction with the Federal government, has set up a $30 million investment fund to lure companies to Adelaide following the closure of two Electrolux factories and its resulting restructure which led to the loss of 500 local jobs.
Federal Industry Minister Ian Macfarlane said the Federal government would provide $25 million, with the South Australian Government chipping in the remaining $5 million.
Macfarlane stated the $30 million would ideally help establish long-term sustainable industries and improve long-term employment.