Founded in 1910, Swedish manufacturer Electrolux has evolved into a $13.8 billion global powerhouse in home appliances. It sells more than 40 million products in 150 countries, and has earned a 28% global market share (2005).
President and CEO Hans StrÂberg identified four goals in his 2006 first-half recap that he said were helping the company achieve better financial results: strengthening brands, successful marketing, product innovation and cost reductions.
Electrolux was able to mitigate raw material price increases (estimated at $693 million since 2004 or 5% of sales) and reduce group common costs, he stated.
In addition to some adjustments to product lines, Electrolux had begun moving production from high cost countries to countries with a lower cost base. By 2010, the company estimates that these moves will save $346 million to $485 million per year.
Already included in the plant moves was the closure of its Greenville, Mich., plant and the transfer of its operations to a factory in Juarez, Mexico (which will reach full capacity in the third quarter of 2007). A strike in Nuremberg, Germany caused Electrolux to move ahead plans to close that plant. In a similar move, the company shut its small appliance plant in Torsvik, Sweden, and moved production to Poland.
Logistics for Electrolux is a corporate function that's managed globally. The head of global logistics is based in Singapore.
China serves not only as a sourcing location for Electrolux, it is also an end-use market. Major appliance shipments in China increased over the first five months of 2006, but sales of major appliances declined in the second quarter because the company exited a number of unprofitable retail outlets. It also de-emphasized some low-margin products, increased the mix of sales of higher-end products, and focused on fewer regions. Improved logistics efficiency and lower marketing and administrative costs were reportedly offset by low manufacturing capacity utilization. As StrÂberg noted, operating income for Asia in the second quarter was in line with the prior-year period, but remained negative.
