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Electrolux factory under threat

11/10/2007

Swedish appliance maker Electrolux has said that the future of its cooker factory near Durham is in question.

Around 500 people are employed at the Spennymoor plant, which manufactures free-standing and built-in cookers for the UK and Irish markets.

Electrolux, whose brands include AEG, Zanussi and Frigidaire, said it had decided to examine the "future viability" of the factory in the wake of downward pressure on prices and intense competition.

"Imports from countries with lower cost levels have intensified over the last few years, therefore resulting in lower prices," said Electrolux spokesman Magnus Yngen.

"Price erosion and the intensified global competition has significantly undermined the profitability of the factory in Spennymoor which is why we need to review the operations there", he added.

Electrolux says it expects to complete the investigation by the end of the year.

In recent years the world's second biggest home appliances maker has been cutting costs and moving production to low-cost manufacturing sites in Asia, eastern Europe and Mexico. The action comes as the company seeks to tackle growing competition and rising raw material costs.

Electrolux has also said that it is nearing the end of a scheme under which it will spend up to £5 billion pushing through cost cuts and relocating around half of its plants in Europe and North America.

Thousands of jobs are set to be lost as a result.