IKEA plans to close its only U.S. factory site and shift operations to Europe.
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IKEA produces wood-based products like the KALLAX shelves and BESTA storage units at the 930,000-square-foot facility, which opened in 2008. The company said its production costs in Europe will be lower and that importing the goods will make its products more affordable in North America, according to the report.
“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, Va., for the long-term,” plant site manager Bert Eades told the Journal.
IKEA says its retail business generated the equivalent of $43.5 billion last year. It operates 422 stores, including 19 that opened in 2018.
The company has more than 40 production facilities in Europe, Russia and China, the Journal reported.
The future of the Danville site remains to be seen. IKEA bought the property earlier this year, but will help the city find a new occupant for the facility, according to the report.
City Manager Ken Larking told the Journal that the loss of about $500,000 in tax revenue from IKEA will hit the city’s budget. However, officials said Danville still benefited from IKEA’s presence. Councilman Sherman Saunders told the Journal the facility helped the city grow beyond textiles and tobacco.
“Even though we’re sad that they’re closing, the bottom line is we’ve made more money from IKEA than we spent to get IKEA here,” he said.
IKEA will work with the city to support laid-off employees in their job searches, according to the report.