MEMPHIS, TN (WMC) - Electrolux says it will consolidate its Memphis facility as the company moves toward consolidation.
Electrolux announced Thursday plans to invest $250 million into its Springfield, Tennessee manufacturing facility and release a new line of Frigidaire cooking products. In the process, the company will consolidate its U.S. cooking production into the Springfield facility.
“We are committed to investing in U.S. manufacturing and launching new Frigidaire kitchen products. By appropriately right sizing our business for a changing market, we can invest in the growth areas and drive profitability,” said Alan Shaw, Head of Electrolux Major Appliances North America. “We are very committed to supporting our Memphis teammates and are announcing these changes two years in advance to provide transition time."
Workers at the Memphis facility have already had to cope with layoffs and pay cuts. The company lost a significant amount of business with the Sears' bankruptcy.
Production at the Memphis facility is expected to continue through 2020. The facility currently employs about 530 workers.
City officials were blindsided by the news, since city and county leaders made unprecedented investments to lure the company to the Mid-South.
Shelby County Assessor Melvin Burgess said Electrolux did not fulfill their part of the deal, leaving a full eight years before the end of their PILOT agreement, which offered the company tax breaks for 15 years.
Memphis Mayor Jim Strickland stopped short of saying he would take legal action, but he did say the city would “vigorously" defend the city's investment.
“This is not a reflection on Memphis, but it is disappointing,” Mayor Strickland said.
Mayor Strickland said he learned one of the city's biggest investments was leaving town through a press release.
Swedish-based Electrolux opened its 750,000 square foot cooking manufacturing facility in Memphis back in in 2013 after receiving about $140 million in cash and grants, free land and a 15-year PILOT, according to the city.
Four years later, they are closing the doors.
“The world economy has hit this company hard with Sears closing they have fewer outlets to sell their wares,” Mayor Strickland said. “There was a steel tariff that affected their business.”
By the end of 2020, Electrolux will be consolidating and moving their operations 230 miles up the road to Springfield, Tennessee and leaving 530 Mid-southerners out of a job.
“In life there are disappointment and we're going to keep moving forward on Memphis,” Mayor Strickland said. “We have thousands of jobs out there right now. We have free workforce development.”
Union leader Paul Schaeffer is concerned about the quality of jobs some of these laid off workers will be able to find.
“The manufacturing job market right now in Memphis is not that great with companies like Amazon moving in there,” Schaeffer said. “There are some prospects for employees, still I don’t know if it will be as good of a job as they had at Electrolux.”
Mayor Strickland said at least workers will have nearly two years to find a new job. He’ll also meet with Electrolux officials on Friday.
Burgess will also hold a press conference Friday morning to explore legal options to recover the money.
WMC5 will be there and bring you the very latest.