Ikea announced that it will close down operations in its US factory by the end of the year, slashing 300 jobs. The decision stems from the company’s observation that it is cost-effective to manufacture and import products from Europe.
According to media reports, the Swedish furniture retail company noted that the cost of raw materials were high in the US compared to Europe. The prices in the southern Virginia town of Danville were reported to be ‘significantly higher’.
Ikea’s US factory was opened in 2008. It produced wood shelves and storage units for markets in the US and Canada. With the new decision, it will close the factory in December.
The company’s site manager Bert Eades said “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, VA for the long-term.”
Ikea has production units at 24 sites in nine countries with a labour force of 20,000. “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,” Eades said. The company will take an initiative to work with US agencies and labour representatives to assist in job search for retrenched staff.
The Orange County Register reported that the company has purchased 19 acres of land in Meredith International Centre to build a 330,000-square-foot store. The store’s construction site is located along Inland Empire Boulevard and will create hundreds of job opportunities.