Electrolux to cut 500 jobs in vacuum cleaner revamp

The world's biggest home appliance maker will also create about 200 new jobs at the Jaszbereny plant, southeast of Budapest. The relocation is expected to be completed in the first quarter of 2005, the company said in a statement.

Electrolux said the move was driven by the need to rein in costs at its vacuum cleaner operation, in the face of increasing competition globally and rising price pressure.

Closure of the Swedish plant in Vastervik will cost 200 million Swedish crowns ($26 million) but will save an estimated 150 million crowns annually.

Electrolux, whose products range from washing machines to dishwashers under brand names including Electrolux, AEG, Zanussi and Frigidaire, is closely watched for signs of global spending on durable consumer goods.

"In order to remain competitive, Electrolux has to lower costs, especially labour costs," the company said.

Electrolux spokesman Jacob Broberg in Stockholm said Hungarian wages on average were one-10th those of Swedish workers.

"In the vacuum cleaner market in the last two to three years there has been a rapid fall in prices and there have increasingly been more products imported from China," Broberg said.

"We have seen this coming and we have moved to meet the challenge."

The relocation will bring the production of an additional one million vacuum cleaners a year to Hungary, Electrolux said.

Attila Vass, director of the Electrolux Floor Care appliance factory in Hungary, told Reuters the facility expected to produce about two million vacuum cleaners in 2004.

Electrolux shares were unchanged at 1133 GMT, underperforming a stronger Swedish market where the bluechip OMX <.OMX> was up more than one percent. (Additional reporting Patrick McLoughlin in Stockholm) ((



Source: Reuters