Swedish appliance company Electrolux, which moved its North American headquarters to Charlotte two years ago, has surpassed the state hiring goals required for its incentives money, with a local workforce of 750, officials said Monday.
And, with an aggressive marketing campaign for its Frigidaire appliances and hiring dozens more people at its Charlotte headquarters Electrolux hopes to position itself for an expected economic turnaround, Jack Truong, head of the companys North America division, told the Observer.
But in releasing its quarterly earnings Monday, Electrolux said the global economy still poses a challenge. The company was weighed down by a slowdown in its key European markets, and officials said they expect the North American appliance market to be weaker than they initially forecast for the rest of the year. They had anticipated growth of up to 2 percent during that period, but said Monday they now expect a 1 percent decline.
While the retail market remains challenging, a potential turnaround in housing offers some flickering hope, Truong said. Our strategy is really about pushing the right marketing campaign, he said.
To that end, Electrolux has started its first major ad campaign for Frigidaire appliances in two decades, Truong said. The company is touting new appliances, such as its Gallery Orbit Clean Dishwasher, and advertising more heavily to lure consumers to choose Electrolux over its larger rival, Whirlpool.
The soft markets, that means its all the more on us to make sure we reach consumers in a big way, Truong said. The companys ad campaign, which emphasizes Frigidaires innovations through the decades, began in the middle of September and runs through the first quarter next year.
Local, state incentives
In 2009, Electrolux announced it would move its North American headquarters from Augusta, Ga., to a leafy campus in University Research Park. The company was lured in part with state and local incentives worth up to $27 million, if it brought 738 jobs by 2015.
The companys Charlotte headcount passed the 750 mark this year.
The headquarters are also now home to a high-tech computer assisted design center, a wall-sized screen with a bank of projectors the size of a small car that can show a three-dimensional virtual model of a potential product.
Its one of four that the company uses worldwide to design products, Truong said. The machine, installed about three months ago, eliminates the 14-week process of designing a non-functioning prototype, which Electrolux employees said could cost between $50,000 and $100,000 for a new refrigerator design.
How we can become competitive here in North America is through technology, and better design, Truong said.
Truong said the company is looking to hire about 80 more employees at Charlotte, in areas such as engineering, IT, sales and marketing. The company is considering constructing another building at its Charlotte campus.
When the market comes back, Truong said, that means well have even more expansion here.
Challenges in Europe
Monday, Electrolux reported its third-quarter sales worldwide rose 5.9 percent, to just over $4 billion. While sales grew in North America, Latin America and Asia, they fell in Europe, with major appliance shipments down 1 percent. Electrolux expects Europes troubles to continue.
The market situation in Europe is likely to get worse before it gets better, and we are minimizing the negative effect by launching new products and eliminating costs, said Electrolux CEO Keith McLoughlin, in a statement.
To cut costs, Electrolux said Monday it will downsize three plants in Europe.
Truong said he doesnt expect further manufacturing cuts in North America, where the company has previously shifted some production to lower-cost countries such as Mexico.
If anything, our factories are quite busy right now, Truong said.
He said the high-end and lower-end products have been doing well, but now the company is also beginning to see a rebound in its mid-range products.
The high, high-end homes are going to be built regardless. We see the high-end appliances are quite steady. Its lower than it was five years ago, but its been steady, Truong said. Recently, we began to see the middle product begin to have some growth.
In North America, sales increased more than 9 percent, to $1.2 billion. The company is still recovering from the economic downturn, which prompted Electrolux last year to close plants and cut staff in a bid to save $761 million annually in Europe. The North American appliance market had slumped 25 percent from their peak in 2005.
Electrolux said Monday its North American profit margin before taxes rose to 6.7 percent, from 1.5 percent in the same quarter a year ago. The company cited higher prices and a more favorable mix of products sold as the reasons.
We see now that the new home construction is going up, and we start to see now some signs that the home value is going up, Truong said. The next thing were waiting for is to see more people going back to work.