Electrolux, F&P Adding U.S. Production

By Alan Wolf On Oct 10 2005 - 6:00am

While domestic majap makers seek offshore production and sourcing to keep manufacturing costs in line, at least two foreign white-goods vendors are planning to add to existing capacity or open major new production facilities right here in the United States.

The companies, Sweden's Electrolux and New Zealand's Fisher & Paykel, have determined that the higher cost of U.S. labor is offset by the reduced cost of shipping finished goods across the country rather than overseas.

Spurred by consumer demand for stainless steel interiors in their premium dishwashers — plus assistance from North Carolina — Electrolux is expanding its range of dishwasher products for the North American market with a new premium line that will be produced at the company's production facility in Kinston, N.C.

To accommodate the new production, Electrolux will invest $18 million in added capacity at the plant and create more than 100 new jobs. The factory was chosen for its status as a “world class” facility in terms of cost, quality, safety and productivity, the company said. To help support the project, Gov. Mike Easley has provided a “significant” grant to Electrolux from the One North Carolina Fund, which assists the state in recruiting and expanding quality jobs. The grant will be applied for equipment and tooling for the project, Electrolux said.

“We have great confidence in the ability of the people at our Kinston dishwasher factory to produce the industry's best premium dishwasher for the most discerning consumers,” said Keith McLoughlin, Electrolux's major appliances CEO for North and Latin America. “The new products are aimed at the fastest growing segment of the market. Along with the other dishwashers we make at Kinston, Electrolux will have its most comprehensive dishwasher offering ever.”

Based on the demands of premium dishwasher buyers as determined by extensive consumer research, the new line will include advanced performance features and the latest technology developed by Electrolux's Global Dishwasher team, in addition to the stainless steel interior.

Electrolux has already begun acquiring equipment and retooling the factory to prepare for the new line. Production is expected to begin in early 2007.

Meanwhile, Fisher & Paykel has chosen Clyde, Ohio, as the site of a new washer and motor component factory, its first laundry facility in the United States. The plant, to be located in an existing warehouse, will replace two facilities in Australia and New Zealand in order to reduce the costs of production, freight and working capital associated with supplying the U.S. market, the company said.

“With the expected increase in washer sales in the U.S.A., placing a plant closer to that market shortens lead times and means that we are better placed to capitalize on growing sales opportunities,” said Fisher & Paykel's managing director/CEO John Bongard.

The company will also benefit from the weakness of the U.S. dollar compared to the currencies of New Zealand and Australia, he noted.

The plant, expected to go online in March, will produce Fisher & Paykel's direct drive Smart Drive washer line, plus motors for both that platform and Whirlpool's high-efficiency washers. Whirlpool also maintains a washer facility in the area, which is central to both Fisher & Paykel's major customers and the company's warehouses in Chicago; Dallas; Charlotte, N.C.; Orlando, Fla.; and Vancouver, Canada.

Fisher & Paykel will reportedly receive tax incentives worth $355,000 from Ohio for the relocation.

Fisher & Paykel established a major beachhead in the U.S. last year with its $33 million purchase of Dynamic Cooking Systems (DCS), which manufactures premium indoor and outdoor cooking products.

The U.S. represents Fisher & Paykel's fastest-growing market, with sales up 22 percent here last year compared to 17 percent growth in 2003. Fueling those gains was the brand's placement at No. 2 majap retailer Lowe's, following its entry into select Home Depot locations. The company also enjoys continued support from the independent channel, and two years ago forged its strategic alliance with Whirlpool, which began with a Whirlpool-branded version of the vendor's double DishDrawer dishwasher.