The raw materials prices needed for Ikea production in U.S. are more expensive than Europe (Image via: Eluniversal.com)

Ikea Will Shut Down Its U.S. Factory

Kirana Chandra Mumpuni Budiana
Business & Industry
Retail & Food Services
Jul 17, 2019
2172
Ikea has been making its wooden products in the production factory of Danville, Virginia, since 2008. Those products are including shelves and storage units. Recently, the site manager Bert Eades made a statement that Ikea will not be able to continue the production in Danville factory. He stated the reason as there are no right cost conditions needed to continue producing Ikea’s products. Ikea has been trying to improve and maintain the factory, but it is not working anymore. Therefore, they will close the factory on December 2019. It’s a really bad situation for the 300 workers working at the Ikea’s factory in Danville.

The high price of raw materials becomes an obstacle for Ikea. A comparison is made between its production factory in U.S. and other Ikea’s factories in European countries, such as Poland, Russia, and Sweden. The prices in Europe are more friendly than those in U.S. So the company affirmed that they will move the production to Europe. They also revealed this is a strategy to make the furniture in North America more affordable.

Ikea has been going through a restructuration. As a part of it, they have cut 7.500 jobs or equals to 5 percent of their global workforce in November 2018. The move is expected to create 11,500 jobs in the next two years. Ikea determines to build 30 smaller stores in big cities to attract younger market. So it’s not surprising for Ikea to make many bold moves to enhance the market reach.

Source: https://www.nydailynews.com/news/national/ny-ikea-closes-only-us-factory-20190716-4uxvbcwnhnfyzbjnx47szjgvwa-story.html

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