The world’s biggest producer of home appliances, Electrolux, said on Wednesday it would close its French cooker factory as it cuts costs amid rising steel prices and fierce global competition.
Electrolux, which warned last month that its 2004 profits would be substantially lower than last year because of surging raw material prices and pressure from rivals, has already announced closures of factories in the United States and Sweden.
At the same time, it is opening facilities or boosting capacity in eastern European countries and Asia, where labour costs are substantially lower.
Electrolux, with brands such as AEG, Zanussi and Frigidaire, fights for customers with U.S. manufacturers like Maytag and Whirlpool as well as Asian producers like Haier.
Production from the French plant in Reims would be moved to existing Electrolux facilities in Germany and Italy, Electrolux said.
The closure of the Reims factory with 240 people will cost Electrolux 300 million Swedish crowns ($43.6 million) and the expense will be booked in the fourth quarter, the company said.
The plant will be closed at the end of the first quarter of 2005 and this will help Electrolux save 70 million crowns annually from 2006.
“We will see the full effect from 2006, but smaller savings will already come next year,” said Electrolux’s spokesman Jacob Broberg.
Electrolux shares, which have lost 7.9 percent since the start of the year, traded 0.7 percent higher at 145.5 crowns on a slightly firmer Stockholm bourse at 1403 GMT.
From CNN