Electrolux will stop producing room air conditioners in the United States as part of a global restructuring of its major appliance and compressor businesses that is designed to boost productivity and profits.
The plan, which becomes effective in 2003, calls for a 6 percent workforce reduction worldwide and the consolidation of manufacturing facilities and other functions in China, India and Europe. About 86 percent of the layoffs would come from majap operations.
In the U.S., Electrolux has targeted its Edison, N.J.-based AC facility for closure following the 2003 room-air season, which generally extends through June or July. Thereafter, the company’s U.S.-based Frigidaire unit will import ACs from Electrolux’s Brazilian operation and from outside suppliers. About 1,350 jobs would be lost as a result of the plant shutdown.
Electrolux will take a fourth-quarter charge of $154 million to cover global restructuring costs.
“We must make every effort to improve operations that are under-performing or not creating sufficient value,” said president/CEO Hans Straberg. “This is fundamental for enabling increased activities in product development and marketing to achieve growth, and for strengthening our leading positions within our highly competitive industries.”
Straberg added that despite the planned shutdown of the New Jersey facility, the company remains committed to the room air business within the U.S.
“We must… examine changes in our cost structure within air conditioning in North America, and leverage our strong market position in this product category,” he said.
The restructuring is expected to save the company an average of $36.7 million annually through the end of 2005.