IKEA closing US furniture factory, leaving 300 people unemployed.
This week, Ikea announced that it will be cutting 300 jobs by closing its only U.S. manufacturing hub. The facility is located in Danville, Virginia, and has been operating since 2008.
The Danville factory’s primary role was producing wood-based furniture, primarily shelves and storage units, for stores in the United States and Canada. Ikea plans to move the production to Europe to—somewhat paradoxically—be able to keep costs low in its North America stores.
That implies that it’s more expensive to make furniture in the United States than it is to make it in Europe and then pay to ship it across the Atlantic. Ikea says that the cost of raw materials in the United States is too high to justify the plant, when the same products can be made in Europe for a fraction of the price.
“This was an extremely difficult decision to receive. We made every effort to improve and maintain the competitiveness of this plant, but unfortunately the right cost conditions are not in place to continue production in Danville, Virginia, for the long-term,” said Bert Eades, the site manager at IKEA Industry Danville, in a statement. “We will do everything we can in the coming months to support our co-workers through this change as they look for new jobs and training opportunities.”
The news comes about six months after Ikea laid off about 20% of the factory’s workers. At the time, Eades told local newspaper the Danville Register & Bee that the factory’s production for 2018 was down 25% compared with what the company expected in the budget.