Ikea announced it will discontinue production at its Danville, Virginia, plant in December 2019. The Ikea Industry production unit located in Danville is the only Ikea plant located in North America.
The plant, which produces wood-based furniture for Ikea stores in the U.S. and Canada, opened in 2008 and now employs 300 workers, according to a company press release emailed to Retail Dive.
Ikea said production will be transferred to existing production facilities in Europe where production costs are lower "to meet the demand for affordable furniture products in North America."
Ikea's announcement to end production at its Danville, Virginia, Ikea Industry unit comes after the furniture retailer previously said it would cut 7,500 jobs in a restructuring effort. The job cuts announced in November, however, were mainly toward communication, human resource and administrative roles, according to a Wall Street Journal report. In December, the Danville unit began to experience cuts as well, though, with 90 reported layoffs.
"This was an extremely difficult decision to receive," Bert Eades, site manager at the Danville, Virginia, plant said in a statement. "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."
The company cited high costs associated with production in Danville, especially for raw materials, which resulted in "pricing that is significantly higher than other IKEA Industry units making the same products in Europe."
Including dismantling, the facility will remain present in Danville until spring 2020. Ikea said it will work with the union as well as partner with federal, state and local agencies to support the 300 employees it currently employs at its Virginia plant.
"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," Eades added.
Ikea Industry has 43 production units in nine countries, including Poland, Sweden, Russia and China, and employs 20,000 workers, according to a company website. The Danville plant primarily produces KALLAX shelving units and BESTÅ living room storage units that are sold in the U.S. and Canada.