Structural changes
Electrolux initiated a restructuring program in 2004 to make the Group’s production competitive in the long term. When it is fully implemented in 2011, more than half of production of appliances will be located in low-cost countries and savings will amount to approximately SEK 3 billion annually. Restructuring provisions and write-downs are reported as items affecting comparability within operating income.
Electrolux introduced throughout 2009 a number of restructuring activities. These activities are described below.
January 2010
Production of cookers in Sweden to be phased out
In 2009, an analysis was performed of a possible phase-out of the cooker production in Motala, Sweden. It was subsequently decided that the Group’s production of cookers in Motala will be discontinued. The greater part will be phased out and it is intended that an external part will take over production of large cookers and compact-kitchens. Approximately 240 people are employed at the plant. The cost of the discontinuation is estimated at approximately SEK 90m, which will be charged against operating income, within items affecting comparability in the first quarter of 2010.
December 2009
North American corporate office operations to be consolidated
To take advantage of synergies, improve coordination and increase efficiencies, it has been decided to consolidate most of the US corporate office operations and support functions into one single location. The new corporate headquarters will be located in Charlotte, North Carolina.
Consolidation will be done gradually and is scheduled to start in the third quarter of 2010. The cost for the consolidation is estimated to SEK 218m, which was charged to operating income in the fourth quarter of 2009, within items affecting comparability.
October 2009
Production of laundry products in North America to be concentrated
Decision has been taken to concentrate production of laundry products in North America to the Group’s factory in Juarez, Mexico, while ceasing production at the plant in Webster City and its satellite plant in Jefferson, Iowa. A total of approximately 950 employees will be affected.
Production is expected to be discontinued at the Jefferson plant in the fourth quarter of 2010 and at the Webster City plant in the first quarter of 2011. The cost for the closures is estimated to SEK 560m, which was charged to operating income in the fourth quarter of 2009, within items affecting comparability.
Production at the washing-machine factory in Spain to be discontinued
It has been decided to discontinue production at the washing-machine factory in Alcalà, Spain. A total of approximately 450 employees will be affected.
Production is expected to be discontinued in the first quarter of 2011. The cost for the closure is estimated to SEK 440m, which was charged to operating income in the fourth quarter of 2009, within items affecting comparability.
April 2009
Washing-machine plant in Russia to be closed
Electrolux will close the plant in St. Petersburg, Russia. Production comprises washing machines mainly for the Russian market, with approximately 250 employees.
The closure is scheduled for completion in the second quarter of 2010. The shutdown involves a total cost of SEK 105m, which was taken as a charge against operating income in the first quarter of 2009, within items affecting comparability.
Refrigerator plant in China has been closed
Electrolux discontinued production at the refrigerator plant in Changsha, China, in the first quarter of 2009. The closure of the factory involved a total cost of SEK 162m, which was taken as a charge against operating income in the first quarter of 2009, within items affecting comparability. About 700 employees were affected by the closure. Distribution of appliances is now concentrated to gain a strong position in the premium segment.
March 2009
Higher efficiency at the washing-machine plant in Italy
Electrolux will re-engineer production at the washing-machine plant in Porcia, Italy, in order to increase efficiency and productivity. This involves a cost of SEK 132m, which was taken as a charge against operating income in the first quarter of 2009, within items affecting comparability.
Cost-reduction measures in December 2008
In light of the sharp market decline at the end of 2008, it was decided to reduce the number of employees by more than 3,000. All operations on a global basis were affected.
The costs for these actions, approximately SEK 1 billion, were charged against operating income before items affecting comparability in the fourth quarter of 2008, see table Cost-saving program in the fourth quarter of 2008.