The Electrolux dispute has eased, but the spectre of a Chinese takeover (with a possible acquisition) remains

The Electrolux dispute has eased. It is fair to say that, compared with the drastic targets set by the Swedish group (1,700 outright redundancies), the combined action of the Ministry of Economic Development (MIMIT), the trade unions and the regions concerned has yielded some results. It is obvious that the structural crisis facing the European household appliance sector in the face of the onslaught from Asian manufacturers cannot be resolved with a stroke of the minister’s pen, but there appears to be scope to manage its effects and, in the meantime, to explore what a joint response might look like at the Brussels level.

Redundancies have been taken off the table, and the key tool for managing the Electrolux crisis will be voluntary redundancy schemes backed by a company investment (90 million). The package the Swedes will offer to persuade workers in Porcia and Susegana to hang up their Electrolux overalls remains to be determined, but there appears to be a fair number of workers at the two factories willing to negotiate their departure. The local labour market looks set to absorb the redundancies, particularly if they are spread over three years. In any case, Minister Adolfo Urso has also guaranteed that the state is ready to play ‘its part’. But how many employees will have to leave? According to the figures provided yesterday at the ministerial meeting, the figure is expected to be 1,250 (600 office staff and 650 production workers – a significant number) – but the minister and the trade unions hope to reduce this number as the dispute progresses.

As for the Cerreto plant in the Marche region, which the Swedes had previously called for to be closed, it has been decided for the time being not to pull the plug. The workers will remain at the factory and a process of re-industrialisation will begin with the arrival of new investors from the sector or from related industries. The trade unions, albeit with some slight differences of opinion, have welcomed the new direction taken in the dispute, not least because they know it should not be difficult to find volunteers for voluntary redundancy, particularly if there are ‘robust social safety nets’. A further meeting has already been scheduled for 29 October, at which the resolution of the dispute is expected to be formalised. Brussels’ involvement, in the form of Commissioner Stéphane Sejourné – who was put under pressure by a joint position from the industrialised countries (Italy, France, Germany, Spain, Poland and Slovakia) calling for new policies to manage the transition of the white goods industry, starting with a review of the CBAM and measures to tackle high energy costs – has played a significant role in easing tensions.

Whilst the costs of Electrolux’s restructuring may be mitigated, serious questions remain. The first and most immediate: have the Swedes begun reducing their workforce in order to make the group’s profit and loss account more attractive and sell it to the Chinese firm Midea (as was rumoured at the time)? There is no answer as yet; there have certainly been signs of Swedish disaffection with the business in the recent past, and it is clear that with Midea’s arrival, many things could change in a company that has, in any case, always enjoyed close industrial relations. In short, labour disputes may well be skilfully managed, but the competitiveness gap between Asian and European white goods manufacturers remains a key issue. This issue is likely to be at the center of a similar debate on the future of the Italian plants owned by the Turkish group Beko, which took over from the American company Whirlpool. At the time, an agreement was reached that anticipated today’s Electrolux model, but the trade unions have been reporting for several months that production has been cut at some plants and that the promised industrial revival has been delayed. Nothing new, unfortunately.