Electrolux says it will close a manufacturing plant in Memphis, as the household appliance business contends with higher steel prices and Sears’ bankruptcy.
The Memphis factory, which builds Frigidaire and Electrolux ovens and employs about 530 people, will shut down by 2020, according to Electrolux.
The company said the closure is part of a USD 110.5 million plan to streamline manufacturing that includes shuttering a second plant in Santiago, Chile and upgrading a facility in Springfield, Tennessee.
Electrolux, which owns Frigidaire, said in a press release that it is rethinking its strategy “in light of changing market dynamics, increased raw material costs and current trade policy.”
President Donald Trump implemented steep tariffs on most steel and aluminum imports last year. Trump said the move was meant to boost domestic production of the materials, but trade groups warned that it would lead to soaring costs for goods that are made with steel and aluminum.
Electrolux spokesperson Eloise Hale declined to detail how the company has been impacted by raw material price increases and US trade policy, but she said steel is a “key material” for the company.
American-made appliances have also struggled because of competition from cheaper products imported from abroad, Parks Associates analyst Brad Russell said.
The appliance market is also hurting from the shutdown of many Sears locations as the company navigates bankruptcy. Sears for decades served as a go-to shopping destination for ovens, washing machines and other large appliances.
Sears filed for bankruptcy last year. At the time, Frigidaire was listed as one of its largest creditors: Sears owed the brand USD 18.6 million, according to court filings. Hale declined to provide additional comment.
Alan Shaw, the North American head of major appliances at Electrolux, said in a statement that the company is “committed to investing in U.S. manufacturing and launching new Frigidaire kitchen products.”
That includes a plan to invest $250 million in an expansion of a 45-year-old plant in Springfield, Tennessee, about four hours northeast of Memphis.
But the expansion will not necessarily mean new jobs.
“The investment will go toward modernizing the plant with automation and expanding production,” Hale said. “This is not about job growth.”
Electrolux, which acquired American brand Frigidaire in 1986, is a massive appliance producer with 56,000 employees and factories all over the globe, according to its latest annual report.
The company’s US portfolio includes plants in South Carolina, North Carolina and Minnesota where the firm produces freezers, refrigerators and dishwashers.―KITV