Home / Business / In the US and Ikea's Danville decision to blame high materials costs, leaving 300 people looking for new jobs | Business

In the US and Ikea's Danville decision to blame high materials costs, leaving 300 people looking for new jobs | Business



Ikea will close its operations in the Cane Creek Center Industrial Park in December, forcing its approximately 300 employees to find work elsewhere.

The company announced the decision Wednesday afternoon, citing the high costs of raw material in the United States.

The production will be transferred to the Ikea Industry production sites in Europe to meet the demand for affordable furniture in North America, company officials said in a press release.

"The conditions are not there to ensure competitive production in Danville," said Bert Eades, site manager. "Despite many efforts to improve, the cost structure for production in Danville is still too high, especially for raw materials, which results in significantly higher prices than other existing Ikea plants. making the same products. "

He said current tariff wars between the United States and other countries do not contribute to high costs.

The factory opened in Danville with great fanfare in May 2008, so with Gov. Tim Kaine sawing a log in half as part of the ribbon cutting ceremony.

"Three hundred people are unemployed and this will obviously be a huge challenge for them," said Ken Larking, director of the City of Danville. "Fortunately, they have five months to find other employment opportunities."

Mr. Larking pointed out that the high costs of the raw material would have affected Ikea if the company were located elsewhere in the United States. It's not unique to Danville, nor to Virginia, nor to North Carolina, he said.

The company came to the Dan River area to manufacture "functional and affordable wood products," according to the press release. The Cane Creek Center, jointly owned by Danville and Pittsylvania through the Danville-Pittsylvania Regional Industrial Facilities Authority, produces Besta's Kallax shelves and lounge storage units for Ikea US and Canada.

"This is a disappointing news," said Telly Tucker, director of economic development for Danville, adding that his office would work with Ikea and local and national authorities to ensure that affected employees have the opportunity to find a another job and to retrain if necessary.

The announcement comes just six months after the Danville plant layoff of about 90 employees. High inventories and underperforming sales led to this decision.

Ikea Danville's production for 2018 was about 25% lower than its budget, Eades said in an interview in December 2018, following the announcement of the January layoffs. The installation produces about 3 million pieces of furniture per year.

Ikea Industry is part of Inter Ikea Group, headquartered in Luxembourg, is the world's largest producer of wooden furniture. Ikea Industry has 24 sites in 9 countries and employs around 20,000 people. The Danville unit is the only Ikea production site in North America.

Pittsylvania County Economic Development Director Matt Rowe also expressed his disappointment.

"All our thoughts and prayers are with the families and employees involved," Rowe said. "Our number one concern is to do our best to limit the fallout, [and] Make sure employees can work with Ikea and other employers to land. Fortunately, we are in an economy with many job opportunities. "

Tucker and Rowe plan to work together to replace these lost jobs.

"We will do everything in our power to ensure these jobs are filled with new job opportunities," said Tucker.

Eades said the company would strive to help its workers find a new job, provide career advice and work with federal, regional and local authorities to provide support and assistance to the community. job search.

He added that Ikea will offer "a program of support and benefits extended to his colleagues [employees]. "

"We will detail this support package with the union leadership," Eades added, referring to the union of employees, the International Association of Machinists and Aerospace Workers.

Officials said in the press release that production will continue until December, giving employees time to find new jobs and retraining. According to the press release, Ikea will remain in Danville until the spring of 2020, including the time needed to dismantle the plant.

The departure of the company will leave a vacant building of nearly one million square feet and city and county officials are hoping to find another industry for the site.

"We are already looking for potential customers looking for buildings of this size," said Rowe.

Danville Mayor Alonzo Jones agreed that the sites offer amenities to interested companies.

"We believe that this one million square meters of space and proximity to rail will make it an attractive site for prospects," said Mr. Jones.

According to Larking, Tucker and Rowe will visit the Cane Creek site on Thursday to prepare it for commercialization.

Rowe was at Cane Creek Center on Wednesday afternoon when cars were leaving the Ikea site.

"It's heartbreaking to see all the cars coming out of the parking lot," Rowe said.

He was at Cane Creek Center to talk about two new 100,000 square foot shell buildings to attract business.

John Crane shows up for the Danville Register & Bee. Contact him at jcrane@registerbee.com or (434) 791-7987.


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