Electrolux to Cut More Than 5,000 Jobs
STOCKHOLM, Sweden (AP) _ Appliance maker AB Electrolux said Tuesday it will cut more than 5,000 jobs in the next two years and close an air conditioner plant in New Jersey as it seeks to lower costs and improve productivity.
The world’s largest producer of household appliances, whose brand names include Frigidaire, Electrolux, Weed Eater and Eureka, said it would also consolidate its operations in China and India.
``We must make every effort to improve operations that are underperforming or not creating sufficient value,″ said Electrolux president and chief executive Hans Straaberg. ``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.″
The company plans to eliminate 5,091 jobs through the restructuring and close its air conditioner manufacturing facility in Edison, N.J. It also plans job cuts in India and China and will sell a component plant in Australia. The company’s board of directors approved the restructuring.
The company will take a charge of nearly 1.37 billion kronor ($153 million) in the fourth quarter to cover the restructuring costs.
The company’s shares fell 9.4 percent to close Tuesday at 135 kronor ($15.20) on the Stockholm stock exchange. In the United States, Electrolux shares fell $2.80, or 8.3 percent, to close at $31 on the Nasdaq Stock Market.
Electrolux said it would shift some production from Sweden, Italy and Germany to Romania, as well as some refrigerator production from Spain to Hungary. It also expects to restructure its compressor operations in Spain and India. Straaberg said the company’s air conditioning unit would see work shifted to Brazil.
Before the announced cuts, Electrolux employed more than 87,000 workers worldwide.
The company also said it made provisions for nearly $9 million for asbestos litigation claims made against it in the United States.
By the end of November, there were 194 suits filed against Electrolux. The company said nearly all of them were related to externally supplied parts used in industrial products that were made in the early 1970s but had since been discontinued.
The number of individual plaintiffs in these pending cases is approximately 14,300, Electrolux said.
In October, the company posted a 36 percent drop in third quarter profit and predicted market demand in Europe and North America would be flat or slightly lower for the rest of the year.
Third-quarter net profit was 1.24 billion kronor ($133 million), compared with 1.93 billion kronor in 2001.
Sales in the three-month period ended Sept. 30 fell 3.2 percent to 31.8 billion kronor ($3.4 billion) from 32.8 billion kronor in 2001.
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