Electrolux to Lay Off 1,700 Employees and Close Plant in Italy as Demand Drops
Electrolux Announces Major Layoffs and Plant Closure in Italy
Background and Reasons for Layoffs
MILAN, May 11 (Reuters) - Electrolux plans to lay off 1,700 people in Italy, more than 40% of its workforce in the country, and close one of its plants there, Italian trade unions said on Monday.
The Swedish appliance maker has struggled with weak consumer demand and competition from lower-priced rivals, which has sent the stock down as much as 75% from its 2021 highs.
As a result, Electrolux has signalled more layoffs and has been restructuring, cutting costs and focusing more on premium categories to try to lift profitability.
Details of the Plant Closure
Electrolux plans to close its kitchen hood-making facility in Cerreto d'Esi, near Ancona, in central Italy, and reduce staff levels in all its plants, Italy's UILM, FIM and FIOM metalworkers' unions said in a joint statement after earlier meeting company officials.
Electrolux, which was not immediately available for comment, runs five plants in Italy, with a total of 4,500 employees.
Union Response and Government Involvement
Gianluca Ficco, of UILM union, who attended the meeting in Venice, said in a separate statement that Electrolux had highlighted the critical situation in the European market, a surge in production costs and increasingly fierce competition from manufacturers in Asia.
The unions called for an eight-hour strike at Electrolux's plants in Italy and urged the government to intervene. Italy's industry ministry said it was closely monitoring the situation.
"The Ministry intends to carry out all necessary monitoring activities and maintain constant, structured dialogue with the company and the trade unions," it said in a statement.
Electrolux’s Strategic Moves and Global Impact
Electrolux has also ruled out any possible partnership with Chinese rival Midea, similar to the one it plans to establish in the United States, the unions said.
The Swedish company said last month it would partner with Midea in North America, where Electrolux has long struggled.
It also announced a 9 billion Swedish crowns ($977 million) rights issue to fund the partnership, as well as cost-cutting measures and deleveraging its balance sheet.
Recent Plant Closures and Financial Context
This follows a series of plant closures by Electrolux, after it announced earlier that it would close a factory in Hungary and one in Chile.
($1 = 9.2129 Swedish crowns)
(Reporting by Giulio Piovaccari in Milan; additional reporting by Marie Mannes in Stockhom; editing by Gavin Jones and Alexander Smith)
