Ikea is closing its only factory in the United States and moving production to Europe, where it says production costs are lower. The Danville, Virginia, production site, which makes wooden shelves, will be shuttered, resulting in the loss of about 300 jobs. The Swedish retail giant says the move isn't related to tariffs but rather that costs for raw materials are higher in the U.S.
IKEA Group justified its decision because of raw material prices - the company said prices are higher in the US compared to Europe. Ikea has plants in Poland, Russia and Sweden. Ikea said the decision to close the plant was not related to tariffs. It said the particle board used at the Virginia plant is purchased from US suppliers. The Danville plant opened in 2008 and employs 300 people.
The plant in Danville, Va., produces wood-based furniture, primarily shelves and storage units, for stores in the United States and Canada. Ikea plans to move the production to Europe to be able to keep costs low in its North America stores. That implies that it’s more expensive to make furniture in the U.S. than it is to make it in Europe and then pay to ship it across the Atlantic.
Empathetic leader & data-driven strategist. Smash goals with high-performing teams, empowered by coaching & collaboration.
Cost reduction move impacting workers in Virginia. Very curious about how trade relationships (moving forward) will impact costs of goods, even from a beloved brand like IKEA. Thoughts? #globaltrade #sustainability #packaging #woodproducts #mdf #supplychain
The Danville factory’s primary role was producing wood-based furniture, primarily shelves and storage units, for stores in the United States and Canada. That implies that it’s more expensive to make furniture in the United States than it is to make it in Europe and then pay to ship it across the Atlantic. Ikea says that the cost of raw materials in the United States is too high to justify the plant, when the same products can be made in Europe for a fraction of the price. “This was an extremely difficult decision to receive. We made every effort to improve and maintain the competitiveness of this plant, but unfortunately, the right cost conditions are not in place to continue production in Danville, Virginia, for the long-term,” said Bert Eades, the site manager at IKEA Industry Danville, in a statement. “We will do everything we can in the coming months to support our co-workers through this change as they look for new jobs and training opportunities.” #labor #economicdevelopment https://lnkd.in/e8XpsKc
Wondering if this is a sad trend that will continue to grow throughout the US despite the news that some big companies are coming back to the US to produce product. #manufacturing #trendingtopic
I always hate to see plant closures, especially when it's in or near the community where I was born and so many of my family continue to live. But, to make lemonade out of lemons...a number of these individuals should be absorbed by existing businesses who are desperate for skilled workers. And a vacant 1 million s.f. building is very hard to come by in Virginia...hopefully this will catch a lot of prospect's attention and it will be snatched up soon. The road to economic growth and revitalization is often bumpy with lots of ups and downs...Danville/Pittsylvania County has made impressive strides in the past decade. I'm confident this will be just another bump in the road, and that great things are in that region's future!