Electrolux: Lay-offs and Investment in Hungary

Following a strategic overview started earlier this year, Swedish home appliances manufacturer Electrolux has decided to initiate a plan to improve efficiency throughout the Group. This Tuesday, the company also announced a plan to outsource parts of its current manufacturing in Hungary and invest in its Nyíregyháza refrigerator plant.

The efficiency measures and redundancies related to the outsourcing will lead to restructuring charges in the third quarter 2019 of approximately SEK 1.6 billion, a press release by the company says. The net impact of non-recurring items in the third quarter is anticipated to be negative with approximately SEK 400 million.

Early this year, Electrolux announced an intention to spin off its Professional Products business area as a separate company. The company also communicated a plan to sharpen the consumer organization and accelerate profitable growth by creating four regionally focused business areas and reorganizing key global functions. As the strategic overview related to these activities has progressed, Electrolux says it has now identified opportunities to improve efficiency in both the consumer and professional organizations. The resulting redundancies are anticipated to impact approximately 875 non-production positions globally. The activities will more than offset increased ongoing costs related to the separation of Professional Products and result in a more streamlined setup for the consumer business.

As previously communicated, Electrolux is also currently carrying out a manufacturing investment program, totaling SEK 8 billion during 4-5 years as from 2018, to strengthen competitiveness and drive profitable growth. As part of this, the company has decided to invest approx. EUR 100 million in automation, digitalization and innovation capabilities in its production of high-end refrigerators in Nyíregyháza, Hungary. Furthermore, in the review of the overall competitiveness of the manufacturing operations in Hungary, Electrolux has decided to outsource production of vacuum cleaners from its Jászberény facility, and a significant part of the freestanding refrigerators currently produced there. This is anticipated to impact approximately 800 production employees.