SWEDE GREED: The long-running agenda to shut down Electrolux

A FORMER Electrolux boss claims forces inside the Swedish company have had a long-running agenda to shut the Orange factory.

Jason Furness, the Glenroi plant's general manager between 2007 and 2010, said "a few clowns" had been quietly pushing to close the factory and move production offshore during his time in the top job - well before a review of its future was announced in February this year.

"The Orange plant making money - and very good money - was an inconvenience to people with an agenda to shut the factory and has been for a number of years," Mr Furness said.

"These people exist and it looks like they have won.

"They had a belief you can't build anything unless it is in a low cost country. It's a philosophical difference. It's not uncommon in many companies."

Mr Furness believed the plant was still turning a profit and said the high Australian dollar and wages of the factory's 544 employees should not be used as the primary reason for its demise.

The company has blamed a tenfold difference in wages between Australia and Thailand as a key factor behind abandoning production in Orange.

"Labour cost is cheaper up there [Thailand], however, let's get some sense in this," Mr Furness said.

"In my time a small fridge took about $20 in direct labour, the most expensive was about $100. As a percentage of the costs of parts, freight, overhead and depreciation, labour was a part of this but certainly far from a dominant player."

He dismissed claims the factory was another victim of the high Australian dollar because the company imported about two-thirds of its refrigerator components.

"So as the dollar went up it actually made it easier for imports to come in because it lowered the purchase cost of the majority of the componentry," he said.

"The dollar is not the villain it's made out to be."

"The Orange plant making money - and very good money - was an inconvenience to people with an agenda to shut the factory and has been for a number of years" - Former factory general manager Jason Furness

Mr Furness made some of his comments in a post on a union-affiliated Facebook page.

He followed them up in an interview with the Central Western Daily from his home in Newcastle on Friday.

"Unions often don't help with their behaviour but in my time at Electrolux they never had any impact on our productivity programs or profitability," he said.

"They can be a pain in the bum but there was nothing in their behaviour, from my time there, that could be seen as part of the decision by Electrolux to leave."

Mr Furness said if the board was determined to expand its Asian market it made sense to have a production facility in the region.

"There will be people in Thailand who are happy about this decision as they will see jobs and investment moving to their town. They will build a modern and well planned factory up there," he said.

"It would not make financial sense to build one million units per year in Orange and export the majority of the volume."

According to Electrolux financial statements, Southeast Asia represented just four per cent of total sales last year, compared to about six per cent in Australia, New Zealand and Japan. Sales are forecast to decline in Australia but surge in Southeast Asia, where Electrolux is targeting the exploding middle-class population.

Mr Furness warned the Thailand expansion strategy would backfire if the company had botched its market forecasts.

"Production close to the point of sale is a solid philosophy in most cases," he said. "The track record of sales in China and Asia is pretty poor, however. They do have to solve that.

"Over promise and under deliver was my experience with any volumes forecast by the sales groups in these countries. I suspect the business case (for the Thai expansion) relies heavily on expanded sales in these areas. This forecast may not come true and then they will have wasted a massive amount of shareholder funds."

The Orange factory contributes nearly $75 million to the Orange economy each year. It was Australia’s last refrigerator manufacturing plant.

Comment was sought from Electrolux but not obtained at the time of publication.

MORE: Electrolux bombshell shocks Orange

MORE: Electrolux history in pictures

MORE: Cold, calculating Electrolux board

MORE: Assistance not enough for plant

Smartphone
Tablet - Narrow
Tablet - Wide
Desktop