Electrolux is injecting over half a billion dollars into its U.S. manufacturing arm to update and expand operations and to support new kitchen products for its Frigidaire brand.
Under the plan, more than $250 million has been budgeted for the company’s Springfield, Tenn., facility, which will be modernized and expanded by 400,000 square feet to accommodate increased manufacturing capacity. Construction will begin late this year and continue into 2020.
The Springfield plant will also produce a new line of freestanding cooking products, the company said.
The other $250 million-plus was previously earmarked for the manufacturer’s refrigerator/freezer facility in Anderson, S.C., which will also produce a new line of Frigidaire products. Modernization and expansion efforts began there last year and are expected to be completed in 2019.
As part of the plan, Electrolux will move freezer manufacturing to Anderson from its factory in St. Cloud, Minn., which will cease production in 2019. The company is taking a $75 million restructuring charge this quarter to cover the consolidation.
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“This is a difficult announcement for our Minnesota teammates,” said Alan Shaw, who heads Electrolux Major Appliances North America. “We are committed to supporting them and are announcing this two years in advance to provide transition time.”
Shaw added that the company is “committed to the Frigidaire brand [and] our U.S. manufacturing base,” and that the consolidation will help simplify operations.
The $500 million investment is part of an increase in capital expenditures designed to drive growth in North and South America over the next three to four years, with a focus on product development, automation and innovation, Electrolux said.
The new Frigidaire line, introduced at this month’s Kitchen & Bath Industry Show (KBIS) in Orlando, includes a freestanding Frigidaire Pro glass-door refrigerator in stainless steel (model FPGU19F8TF) that features an oversized glass portal and LED illumination for viewing contents without opening the door. The 19-cubic-foot, counter-depth fridge can be paired with Frigidaire’s standalone All-Freezer, and will ship in June with a suggested $3,199 retail.
In other Electrolux news, the company reported its fourth-quarter and full-year results for 2017, ended Dec. 31. Weighted down by unfavorable currency fluctuations, companywide net sales edged up just 0.7 percent for the quarter, to 32.3 billion SEK, and operating income increased 22 percent, to 1.6 billion SEK.
For the full-year, net sales rose 0.8 percent, to 122 billion SEK, and operating income rose 18 percent, to 7.4 billion SEK.
In North America, Q4 sales slid 4.2 percent, to 9.6 billion SEK, on declines in private-label products and marketplace pricing pressures, while operating income fell 27 percent, to 447 million SEK, due to price promotions, costlier raw materials and the cost of new-product launches.
For the full year, sales declined 6.3 percent, to 40.7 billion SEK, and operating income increased 3.2 percent, to 2.8 billion SEK, thanks to improved cost efficiencies and a greater mix of higher-margin products, the company said.
In prepared remarks, president/CEO Jonas Samuelson said the company reached its target operating margin of 6.1 percent last year, an improvement of nearly 20 percent. Looking ahead, he pegged North American marketplace growth at 2 to 3 percent for 2018; said the company will implement previously announced price increases; and cited the investment in U.S. kitchen appliance production.
No mention was made of the impact of President Trump’s about-to-be-implemented tariffs on foreign-made washers and component parts.