Electrolux AB, the world’s largest appliance maker, reached an agreement with striking workers in Germany on closing the company’s AEG plant in Nuremberg.
Employees will be paid 1.8 months of salary for each year of employment and offered further training, the Stockholm-based company said today in a statement. Some 1,750 workers at the factory walked out last month to protest the transfer of dishwasher and washing-machine manufacturing to Poland and Italy.
Electrolux, the maker of Eureka vacuum cleaners, has shut factories in Western Europe and moved production to countries such as Poland as raw-materials prices rise and competition intensifies. The cost of closing the AEG plant, which employs about 40 percent of the company’s German workforce, contributed to a fourth-quarter loss of 440 million kronor ($50 million).
The IG Metall union called the accord “a good result under the current conditions,” according to a faxed statement. It said the company raised its initial offer of 0.77 month of salary.
Electrolux joins businesses including Siemens AG and Samsung Electronics Co. in scaling back its workforce in Germany, where manufacturing wage costs are the world’s second- highest. The country has struggled with an unemployment rate of more than 10 percent that has added to sluggish economic growth.
Delivery Delays
The agreement calls for the plant’s closing to begin in July and completed at the end of next year. Electrolux said it still expects the shutdown to cost 2.3 billion kronor. The union will vote on the agreement this week, the company said.
Chief Executive Hans Straaberg said earlier this month a standoff with the Nuremberg employees had led to delivery delays for some products. The company initially offered about 100 million euros, or an average of 60,000 euros per worker, including a choice between a severance and more training.
Straaberg aims to save about 3.5 billion kronor by moving about half of the company’s manufacturing out of “high-cost” countries in the next three years. Electrolux expects growth to accelerate this year, helped by cost cuts resulting from the plant closures and price increases in the U.S.
The appliance maker has shut 15 plants since 2002. Electrolux also has said it plans to close a refrigerator plant in Spain and an Italian lawn-mower factory. Refrigerator production is to be curtailed in Italy and Sweden.
From Bloomberg
