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Why IKEA close its factory in Romania? |
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Friday, 12 September 2008 |
The business model, brought the Swedish furniture producer IKEA annual turnover of over 20 billion euros, which aim at the lowest cost is the reason for the closure of its factory in Romania, writes Ziarul Financiar.
 Chain commercial purposes maximum reduction of the cost of the entire chain of production and sales. The increase in these indicators in the region where IKEA has a factory, was forced exit from the market. In recent years, the mill in Suceava is affected by increases of 70% in the price of raw materials used, as in 2005 the factory started to realize losses, which reached a total value of 10 million. Given the circumstances last month the company decided to suspend the operation of the factory.
In general, when it decides to invest in production, marketing chain seeks to encompass the entire cycle of production - from the extraction of timber to the assembly of the furniture in finished.
In 1999, the company began to realize investment of 12 million in Romania, but fails to provide all activities necessary for the full production process, which would achieve more effective control over costs.
"Research has shown that the factory is unable to ensure long-term supplies at this level of integration of production. So the company decided to withdraw from this business, "said the director of the factory Kelemen Balatsi.
The factory has used wood from Suceava, but due to growing prices have been forced to import used.
After the 2003-2004 production unit of IKEA, which manages the plant in Suceava - Swedwood, is at a loss.
On the other hand, for a period of six years turnover of the factory has noted a growth of only 39%, with the result that in 2007 the factory has generated only 1% of the total production of Swedwood. In Romania Swedwood has realised a turnover of 16.3 million and losses of 2.8 million last year.
After the decision to close the mill, located on an area of 52 ha and with area of 15 thousand square meters, has been declared for sale.
"Looking for an investor, to update production. Only if this is achieved, will consider selling individual assets, "said Balatsi.
Closure of the factory is part of a program to improve the effectiveness of the company, which has led to the reduction of personnel in Slovakia and Sweden. |
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