Article taken from The Commercial Appeal, Sat, July 19, 2014.
Appliance maker Electrolux has begun to hire the second shift as it boosts production at its new plant in Memphis.
Bringing on up to 300 new workers is considered welcome in Memphis, a jobs-hungry city which assembled a massive series of incentives to lure the $190 million factory and a promised 1,240 jobs.
With the new shift starting, officials at the Swedish company said some suppliers might soon make plans to relocate from Canada. The burst in hiring comes as Electrolux this week shuttered a Quebec plant replaced by the factory in Memphis.
Electrolux Memphis currently employs about 650 workers, and company officials say that figure could reach 800 to 1,000 in the next few months.
The Quebec-Memphis consolidation has reached its final stage, Electrolux chief executive officer Keith McLoughlin told industry analysts during a conference call Friday in which he praised employees for a “particularly good job” with the complex plant transition.
While it’s not clear how many suppliers might relocate to Memphis and the Mid-South, industrial experts say it’s common for factories to open close to the final assembly lines. The Electrolux Memphis site includes hundreds of vacant acres for supplier plants.
“With people trying nowadays to have shorter and shorter supply chains … you see more and more suppliers locating close to their larger partners,” said Shawn Jones, assistant professor of supply chain management at the University of Memphis.
Proximity cuts down on costs, so suppliers like to be as close as possible. But there are a number of factors — including taxes — that could determine whether Electrolux’s suppliers eventually end up in Memphis, or somewhere nearby, Jones said.
“One of the factors would certainly be ‘Who are the other manufacturers that they sell to?’ ” he said.
There are a number of appliance manufacturers in the American South. Whirlpool has a 1.5 million-square-foot factory and distribution center in East Tennessee at Cleveland, and Electrolux has 3,500 workers making freestanding ovens in Middle Tennessee near Nashville. Suppliers already in place to provide parts to those plants might stay in place and truck parts to Memphis.
Memphis’ workers make high-end cooking appliances, which were among the items driving Electrolux’s sales of major appliances in North America during the company’s second quarter. Electrolux said Friday that its global operating income, excluding items affecting comparability, was up 12.5 percent.
In Memphis, the plant opened in January and ramped up at a cautious pace as production processes were fine tuned, Jack Truong, chief executive of Electrolux Major Appliances North America, said in an interview.
Several weeks ago, Electrolux decided to start a second work shift, Truong said, and plans to bring that shift to full capacity, which is about 200 to 300 new employees, by late October.
“The products from Memphis look beautiful,” he said.
The growth in jobs is not unexpected. Electrolux, which received $188 million in state and local incentives to move its operation from Quebec, said at the time it expected to eventually have 1,240 jobs at the new plant.
Local officials are hopeful that Memphis’ plant will eventually look like the facility running in Juarez, Mexico, where Electrolux has consolidated its refrigeration business.
“I think you’re going to see that happen here,” said Mark Herbison, senior vice president of economic development for the Greater Memphis Chamber.