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ELECTROLUX

Electrolux threatens Nuremburg closure

Swedish electrical appliances giant Electrolux said on Monday it was considering shutting down the Nuremberg factory of its German arm AEG before the end of next year in reaction to an indefinite strike being staged at the plant.

A premature closure of the site was “an alternative,” an Electrolux spokesman said.

“We have to start looking for alternatives in order to supply customers,” he said.

Sources suggested the factory could be shut down as early as this year.

AEG’s Nuremberg plant, which makes dishwashers, washing machines and dryers, is scheduled to be shut down by the end of 2007.

But the factory’s 1,750 employees went on indefinite strike on January 20th to try and secure better compensation for workers and the industrial action is beginning to squeeze supplies.

The powerful IG Metall union slammed the threat of premature closure as a way of putting pressure on the workforce.

And the union’s regional chief in Bavaria, Wolfgang Neugebauer, complained that “half-truths and lies being spread by the Swedish parent” would harm negotiations scheduled to re-start on Thursday.

In an interview with the Sunday newspaper, Welt am Sonntag, Electrolux chief Hans Stråberg insisted that the decision to close the Nuremberg factory was “irrevocable”. And he accused IG Metall of instrumentalising the strike, saying its sole interest was preventing the decline in union membership.

“IG Metall is destroying jobs in Germany,” Stråberg raged.

AFP

ELECTROLUX

Sweden’s Electrolux sees big US deal stopped

UPDATED: Shares in Swedish white goods giant Electrolux plummeted on Monday morning after US firm General Electric, which was poised to sell its appliance division to the Nordic firm, cancelled the agreement.

Sweden's Electrolux sees big US deal stopped
Electrolux's office in Kungsholmen, Stockholm. Photo: Fredrik Persson/TT
Electrolux, which sells brands including Frigidaire, AEG and Zanussi as well as its own name, is already the world's second-largest home appliance maker after Whirlpool.
 
It announced a year ago that it wanted to buy part of General Electric (GE).
 
But the US firm said on Monday that it has decided to cancel the agreement to sell its appliance division to the Swedish group which had offered last year to buy it for $3.3 billion.
 
The US Department of Justice had threatened to sue Electrolux and GE over concerns the deal would create a duopoly and hand Electrolux a US market share of some 40 percent.
 
Electrolux said it had made extensive efforts to obtain regulatory approval, and said it “regrets” that GE had terminated the agreement while the court procedure was still pending.
 
“Although we are disappointed that the acquisition will not be completed, Electrolux is confident that the Group has strong capabilities to continue to grow and develop its position as a global appliances manufacturer”, said Keith McLoughlin, President and CEO of Electrolux in a statement.
 
Shares in Electrolux — one of Sweden's most famous brands — initially dropped by 14 percent after the decision was announced, and remained 12 percent lower by mid-morning.
 
The failed deal has already cost the company millions of kronor in preparatory work and General Electric has requested a termination fee of $175 million.
 
GE revealed in a statement that it was still interested in selling the appliance division.
 
Monday's announcement took some analysts by surprise.
 
“I was surprised this deal was contested by the Justice Department, but then when we saw what their concern, which was the creation of duopoly in a part of the appliance market, it began not to look so good,” said Karri Rinta, an analyst with Handelsbanken Capital Markets.
 
“It's back to square one for Electrolux in North America. This is a deal that would have made them much stronger in the US especially against Samsung and LG,” he said.