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Electrolux to Close Sweden Vacuum Cleaner Factory
May 11, 2004
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Sweden-based appliance maker AB Electrolux has decided to discontinue production of vacuum cleaners in Vastervik, Sweden. The company announced that production will gradually be transferred to the Electrolux vacuum cleaner factory in Hungary. Production at the Vastervik plant will continue during 2004, but is expected to end in the first quarter of 2005.

In February 2004, Electrolux announced that it was investigating a possible transfer of the vacuum cleaner production in Vastervik to Hungary.

"We have now finalized our investigation of the factory in Vastervik," Magnus Yngen, head of the Floor Care & Light Appliances business sector said in a statement. "We have also carefully studied the investigation performed by the employee consultant. Both investigations show that it is not possible to overcome the cost disadvantages of manufacturing vacuum cleaners in Sweden. We will now go forward with the discussions with the unions regarding the conditions for the closure."

The Electrolux vacuum cleaner factory in Vastervik has approximately 500 employees. Electrolux said the closure of the factory will incur a total cost of approximately SEK 200 million (approx. U.S. $25.8 million), the majority of which will be taken as a charge against operating income in the second quarter of 2004. The yearly savings are estimated to be approximately SEK 150 million (approx. $19.3 million).

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