By Chris Nicholls
STOCKHOLM: Electrolux has announced the closure of its Scandicci refrigerator plant in Italy, citing a reduction in competitiveness over recent years.
Electrolux said the decision came after an investigation started in February this year into their Italian refrigerator factory’s efficiencies. The investigation was prompted by rapid production capacity growth in Eastern Europe and Asia, combined with increased global competition, leading to “strong price pressure and subsequently a decline in margins,” the company said.
“The competitiveness of our Italian refrigerator plants has been weakening for several years, which is why we decided to carry out this investigation,” said European major appliances operations senior vice president, Ernesto Ferrario.
“We are confident that the conclusions from the investigation, when implemented, will increase our competitiveness and profitability in the refrigeration business,” he said.
The company will now look to its Susegana plant to continue building fridges in Italy, investing additional money to raise productivity and efficiency.
The Scandicci plant will not close until the second half of 2009, but when it does, 450 employees at the Scandicci plant will be out of work. And, despite the extra investment in it, approximately 300 workers at the Susegana plant will lose their jobs. Electrolux said it will try and help those affected by using outplacement services and in the re-industrialisation of the Scandicci factory.
The restructuring will incur a total cost of approximately 600 million Kronor (AU$105 million), of which 540 million will be taken as a charge against operating income in the second quarter of 2008. A spokesperson for Electrolux Europe told Reuters news service the company expected to save approximately 200 million Kronor (AU$32 million) a year after the closure.
Australian refrigerator supplies will not be affected, a spokesperson said, as Electrolux still manufactures refrigerators for the local market at its Orange factory.