Electrolux 2009 Annual Report Download - page 44

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60% of production will be in LCC
16 plants have been closed
5 plants have cut back production
9 new plants have been opened
RESTRUCTURING
Electrolux is in the final phase of the comprehensive restructuring program that was
initiated in 2004. When the program is completed, the Group will have a competitive
production structure with modern and efficient manufacturing facilities throughout the
world. Approximately 60% of the Group’s appliances will be produced in low-cost
countries that are close to rapidly growing markets for household appliances.
Costs
annual report 2009 | part 1 | strategy | costs
Electroluxcurrentlyhasproduc-
tionfacilitiesin17countries.
Modern,highlyproductiveplants
havebeenbuiltinAsia,Mexico
andEasternEurope.Inadditionto
producinginnovativehigh-quality
productsfortheAustralian,North
AmericanandWesternEuropeanmarkets,
theseplantsalsosupplynearbygrowth
marketswithcompetitiveproducts.
Appliances
Plants in LCC
Floor Care
Professional products
The appliance industry has undergone major changes. A large
share of production has been moved to low-cost countries (LCC).
Consumer demand for better products at lower prices has been a
strong driver for this relocation. Globalization and producers
from low-cost countries have increased the pressure of having
a cost-competitive manufacturing foot-print. Electrolux deci-
sions to relocate production are based on careful analyses of
a number of factors, including present and future labor-cost lev-
els, transportation parameters, access to suppliers and close-
ness to future growth markets.
Such analyses have resulted in decisions to establish new
plants in several countries, including Poland, Hungary, Mexico,
China and Thailand. The restructuring program will soon be com-
pleted, and is expected to generate annual savings of SEK 3 bil-
lion. The program is expected to be completed during 2011.
However, some production must remain in high-cost countries
(HCC). Plants for cookers and ovens for the built-in segment in
Europe must be close to the end-market, in light of advanced
technology and high transportation costs. Production of refrigera-
tors must also be close to the end-market. These products are
bulky and therefore expensive to transport. In addition, labor
costs account for only a small share of total production cost.
Smaller products such as vacuum cleaners can be transported
long-distance inexpensively, so that all Group vacuum cleaners
are produced in low-cost countries.
40