COMPREHENSIVE COVERAGE BELOW: ELECTROLUX has delivered a blow to the Orange economy after announcing the city's whitegoods plant will shut down.
More than 540 staff will lose their jobs when the plant winds down in late 2015. The jobs of hundreds of other staff indirectly employed through the plant are also at risk.
The decision was made during a board meeting in Stockholm, Sweden, earlier this week and announced on Friday afternoon.
Electrolux Home Products Australia and New Zealand managing director Dr John Brown said the company understood the sensitivity of its decision, but the company’s investment study concluded it could manufacture refrigerators more cheaply in other factories in Asia and Eastern Europe. He said the company had spoken to all levels of government before reaching its decision.
Sacked workers will receive their full entitlements under existing workplace agreements.
Dr Brown said the plant would be shut down in a "gradual and orderly manner" starting late 2015. The doors will close for good in 2016.
The Glenroi plant has been under the microscope since February, when Electrolux announced a six month investment study to see if Orange is globally competitive enough to make a new range of refrigerators and freezers.
Reconfiguring the factory to build the new range would have cost more than $45 million.
An Electrolux refrigeration factory in Rayong, Thailand, was the other contender for the investment.
The Orange factory, which makes 300,000 Electrolux, Westinghouse and Kelvinator refrigerators each year, needed less capital investment than the Thai plant. However Thai labour costs are a quarter of Australia’s.
The Orange facility is Australia's last refrigerator manufacturing plant.
The plant contributes nearly $75 million to the city's economy each year, according to the Western Research Institute. The operation employs about 4.4 per cent of the city's full-time workforce.
It is responsible for the direct and indirect employment of about 872 full-time staff.
Orange City Council had offered to waive its annual rates for ten years, which would save the plant more than $1 million. The state government had also offered to provide payroll tax relief for five years if the Orange plant stayed open.
The former federal government also gave the plant a $4.7 million clean technology investment grant which is conditional on it continuing to operate beyond this year.
New federal Industry Minister Ian Macfarlane visited the plant two weeks ago to hear the case for a $41 million bailout package.
Mr Macfarlane has urged the company’s board to delay its decision on the plant's future until December to give the government more time to consider whether it would provide the money.
Comment is being sought from Electrolux, Orange City Council, the Australian Manufacturing Workers Union and federal government.
'One of the saddest and darkest days in Orange's history'
Orange Andrew Gee says he's bitterly disappointed Electrolux had decided to produce its fridges in Thailand.
“This is one of the saddest and darkest days in Orange’s history. If the decision stands, it’s also the tragic end of an era for Australia. This was the last fridge manufacturing facility in the country,” he said in a statement.
"The community will find it hard to come to terms with the fact that the Orange plant, which makes a healthy profit of millions of dollars each year, could be closed.”
Just completed the saddest press conference I've ever done as a local member.— Andrew Gee (@AndrewGeeMP) October 25, 2013
Mr Gee revealed the NSW Government had offered Electrolux $4 million in payroll tax relief to help keep the plant open. This is about $1 million more than what Electrolux had requested, he said.
"It comes down to the fact that our market here is small and Electrolux can make greater profits in Thailand where labour is $2.50 per hour compared to $25 to $30 in Australia. Electrolux is a foreign company and it has no particular allegiance to Australia. It’s all about money."
Deputy Premier Andrew Stoner said the planned closure "is a devastating blow to regional NSW and the Orange community".
He said the decision "is indicative of the ongoing challenges faced by our manufacturing industry, including increased competition from cheaper imports, the lower cost of production overseas and the high Australian dollar".
He said the NSW Government would work hard to identify and assist in the development of new employment generating opportunities.
Union slams government response
Federal Industry Minister Ian Macfarlane should get on the first plane to Stockholm to secure the future of 500 Orange residents and avoid a 'jobs catastrophe' in Central West, the Australian Manufacturing Workers Union says.
AMWU state secretary Tim Ayres said the decision to close the plant was a "king hit to jobs and Australia’s manufacturing capacity".
“Saving these jobs and saving this manufacturing capacity should be the number one priority for the Industry Minister right now,” Mr Ayres said in a statement.
The union said the Federal Government has failed to deliver a commitment that would make a difference to Electrolux’s investment decision.
“The time to act is right now – Mr Macfarlane should be in Sweden next week making the case for the world class workforce and production capacity Orange has to offer.”
“For the sake of the five hundred workers and their families whose livelihoods depend on Electrolux, I hope Mr Macfarlane steps up to the plate.”
Comment is being sought from Mr Macfarlane.
Cobb defends government response
An angry Member for Calare John Cobb says the government was prepared to look at assistance options to keep Electrolux in Orange but was not given the opportunity.
“At our meeting with Electrolux management in Orange on the 11th of October, Industry Minister Ian Macfarlane and I pressed for two things – for Electrolux to provide their business case to the new government and once this occurred to allow at least six-to-eight weeks for us to assess it, or in other words until at least December. This time was absolutely necessary to allow for the Cabinet and departmental processes.
“Unfortunately for Orange, Electrolux global management had made the decision to have one production centre in South East Asia, and nothing the federal or state governments might have done was going to change that decision.”
Mr Cobb praised local management for pushing to keep the factory open.
Social media reaction to the closure