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Deadline to save 500 jobs just weeks away; in association with RBS.

Byline: By Andrew Mernin

BOSSES at a struggling factory which makes household cookers have just two months to save the jobs of its 500 workers.

Staff at the Electrolux plant in Spennymoor, County Durham, were told yesterday that the Swedish electronics giant would launch a two-month investigation into the future viability of the loss-making site.

The firm will then make an announcement in December on whether the site will close, cut staff numbers by 100 or remain open.

Electrolux will compare the cost of running the Spennymoor plant to facilities in lower cost countries and has lined up a site in Poland which would replace its North-East factory should it close.

General manager Dave Watroba said the plant, which has endured losses for several years, is on target to break even by 2009.

However Electrolux has given the factory the December deadline to prove it can actually turn a profit within two years.

Mr Watroba said: "They want us to take time to look at our operations to improve our financial performance. There's a consensus on the shop floor that we just want to know either way whether it will close or not." Bosses at the factory, which makes free-standing and built-in cookers, have blamed its losses on the decreasing amount people are willing to pay for white household goods.

It has also suffered at the hands of increased retailer consolidation and lower manufacturing costs in places such as Turkey and Eastern Europe.

Meanwhile the firm could be lining up an application for a lifeline from regional development agency One NorthEast, which has given it financial backing in the past. In 2003 the agency gave a pounds 1.9m grant to Electrolux for plant development and equipment on the condition that it kept staff levels above the 650 mark.

The company used around pounds 1.5m of that figure but has since reduced its staff numbers to below the agreed limit, leaving pounds 450,000 of funding untouched.

Representatives from Electrolux will meet with One NorthEast and The County Durham Development Company today to discuss ways of saving the future of the plant.

A One NorthEast spokesperson said: "In terms of funding it would be up to Electrolux to come to us. We've given them aid and we've sent in NEPA (North-East Productivity Alliance) with their lean manufacturing expertise and we are going to work hard with them to keep them in Spennymoor."

Alan Hall, director of manufacturers' organisation EEF, said it would be a tragedy if the Spennymoor plant closed but remained positive on the future of the region's manufacturing sector.

He said: "While any adverse decision affecting the Spennymoor plant would be deeply disappointing, the manufacturing sector in our region continues to be buoyant. What is reflected within Spennymoor is a high quality and highly skilled workforce. I would be very surprised if job openings at other companies in the locality did not emerge and meant that redeployment to other companies could become a real possibility."

Analysis

AS GLOBAL manufacturing giants have reaped the rewards of doing business in low-cost environments, the North-East has suffered.

Two years ago over 760 jobs were lost when the LG Philips television tube factory in County Durham closed, with production moving to China.

A year later, tyre firm Goodyear Dunlop axed 585 jobs in Washington.

And now, in Electrolux, we see another manufacturing juggernaut with one eye on the cheaper overheads of a lower cost country. It remains to be seen whether Electrolux will follow Thorn's lead and stay in the North-East, or do as LG Philips did and cash in on its facility and move overseas.

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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Date:Oct 12, 2007
Words:625
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