FOCUS no. 4

Trends and developments

in the white goods sector in Europe

A working paper of the EMF

Documentation

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Table of contents

Foreword 5

By Peter Scherrer, EMF General Secretary 1. White goods in Europe - Is relocation a fatality or a threat? 6

Presentation by Syndex

2. The white goods sector in Italy 12

Report by FIM-CISL

3. The white goods sector in Germany 20

Report by IG Metall

4. The white goods sector in Spain 25

Report by MCA-UGT

5. The white goods sector in France 37

Report by FTM-CGT

6. The white good sector in Sweden 40

Report by Svenska Metall

7. The white goods sector in Denmark 41

Report by IDA

8. The white goods sector in Austria 42

Report by GMT

9. The white goods sector in Hungary 44

Report by VASAS

10. The white goods sector in the Czech Republic 47

Report by OS KOVO

11. The white goods sector in the UK 59

Report by Amicus

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FOREWORD The EMF focus no. 3 “Trends and developments in the white goods sector in Europe” is providing an overview of the white goods production, which is an important sector of the European metal industry. Currently aproximately 200.000 workers are directly employed in Europe in the production of household appliances. Under the conditions of an uncontrolled und unregulated globalisation this industry is facing a permanent increase of worldwide competition. The management of the leading producers of washing machine, dryers, dishwashers etc. is reacting with massive restructuring programmes. The consequences are often the shift of production to the new member states of the European Union and in some cases immediately to the Far East respectively China. Thousands of jobs have been lost in this industry during the last few years. Currently European politicians and the European Commission only observe this phenomenon. Dramatic and spectacular cases like the closure of the Electrolux plants in Fuenmajor (Spain) or AEG Nürnberg (Germany) made the headlines. Then politicians express their solidarity, governments representatives appear and try to prevent the worst, the plant closure and consequently the loss of jobs from happening. The problem of the loss of one of Europe’s most traditional metal industry sectors is certainly not appropriately addressed. If not a joint effort of all stakeholders involved in this industry takes place very soon we have to face the danger that again an industry, which provides products of high quality for the consumers and hundreds of thousands of jobs and a living for workers and their families disappears. The future competition will be in the highly sophisticated products. A rapid initiative on a European scale is needed to secure the basis for production of white goods in Europe. Modern work organisation, adequate support for research and development, increased training and education of the workforce to secure an advantaged position in the market is urgently needed. The EMF Focus no. 4 shows developments and trends in the white goods sector. It is not the result of a scientific research project. A European overview is given in the first chapter by Syndex, a French consultant agency. The member organisations of the EMF have contributed reports about the situation of the industry in their countries. The aim is to highlight the most important figures and facts to give the reader basic information at a glance. The figures are subject to constant change and the figures mentioned give a good orientation. The very recent developments in the white goods sector encourages the EMF to continue and even to reinforce the efforts to try to find European solutions for the problems caused by the restructuring programme of the white goods producers. The EMF founded an ad-hoc working group on white goods. This working group will provide further information and will co-ordinate activities like confronting European institutions with the negative effects that uncontrolled and unaccompanied rapid industrial change has for workers, regions and the industry itself. The working paper is subject to further development and cannot provide a complete detailed overview but it is a good basis to work with on the future of this important European industry.

Peter Scherrer EMF, General Secretary

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1. WHITE GOODS IN EUROPE – IS REALOCATION A FATALITY OR A THREAT? PRESENTATION MADE BY SYNDEX ON 7th NOVEMBER 2005

The Electrolux announcement In 2004, Electrolux, leader of the white goods sector, announced that by 2008 more than 50% of its 27 factories will have moved to low-cost countries. What’s the situation of the European white goods sector? How to qualify the strategies of the firms in this sector? Is there an alternative to the relocation of the West European factories? The white goods sector is dominated by 4 groups worldwide At a world level, the sector is concentrated around four main manufacturers:

Electrolux (Sweden): 13,1 billion € of sales Whirlpool (USA): 10,1 billion € BSH (Germany): 6,8 billion € Indesit (Italy) : 3,2 billion €

Then Arcelik in Turkey, Fagor et Brandt in Spain and Gorenje in Slovenia). Concentration is going on in

Fagor, n°1 in Spain, buys Brandt, n°1 in France, in May 2005 Whirlpool may finalize the purchase of Maytag in 2006

Relocations are often minimized but we observe … Statistical studies will often downplay the importance of relocations as well their effects on employment. The reason why is that it is difficult to know the intra-firm exchanges, the immaterial exchanges, the outsourcing and other organizational changes that are linked to relocations. In the white goods sector, before the announcement of Electrolux’ CEO, we could observe: … shutdowns in the West … Decrease of the number of workers in Germany

1995: 80 000 workers 2005: 55 000 workers

Sweden 1995:12 000 workers 2005: 6400 workers

France 1996: 28 429 workers 2002: 19 500 workers

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Electrolux is not the only company to announce shutdowns: BSH: washing machine plant in Berlin Bauknecht/Whirlpool: dishwasher plant in Neunkirchen Fagor/Brandt: microwave oven plant in Aizenay

… new plants in Central and Eastern Europe Acquisitions:

1999: Fagor buys Wrozamet, Poland’s number one manufacturer 2000: Merloni (Indesit) buys Stinol and becomes the first producer in

Russia New plants:

In 2005 Bosch announces the construction in St Petersburg of a plant that should manufacture 500 000 refrigerators over a year

Brandt announces the construction in Romania of a plant that should reach a capacity of 350 000 washing machines by 2007

In Poland, the number of plants of white and brown goods has increased from 13 in 2003 to 23 in 2006 (source: CECED - European Committee of Domestic Equipment Manufacturers - Polska). Costs, prices and competition don’t seem to justify relocation Raw materials can make up to 65% of the total cost of a white good and in 2004, the price of steel underwent a 22% increase and the prices of plastic rose up to 15%. This trend has persisted during the year 2005. But raw material does not get any cheaper once you’ve moved east. It’s been difficult to raise the prices of white goods in Western Europe

In large series, there is a harsh competition with products from southern countries like China, Korea and Turkey and, to a lesser extent, those from Central and Eastern Europe.

The retailers favour « no name » products as well as their own brand, all of which now represent one third of the refrigerator and freezers sold in France.

Still, white goods remain regional products In most markets, you’ll more often than not see a local brand being on

top of the sales. Apart microwave ovens, there are not many universal product in the

white goods sector. Neither do the relative dynamism of Central and Eastern European markets The European Eastern countries have an economic growth superior in comparison with the rest of Europe. In Western Europe, white goods are a replacement market, in Central and Eastern Europe, it’s an equipment market

The highest growth rates in Europe for the year 2002/2003: • Romania: + 70,1% (0,7 million in volume) • Bulgaria: + 40,8% (0,2 million)

Still, the main markets are amongst Western Countries [sales of CECED companies]

2003 : Europe before enlargement : 58,5 millions of product sold

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New Member States, Candidates to the EU (without Turkey) and Russia: 8,8 millions of products sold. Main white goods markets in Europe (millions of products sold)

• United Kingdom : 13 • Germany : 12,7 • France : 10,1 • Italy : 7,0 • Spain : 6,2 • Russia and Sweden : 6,1

Is the strategy of the manufacturers to take advantage of lower wages? The Electrolux leadership made it very clear. They intend to take advantage of the wage differential between Western Europe and Central and Eastern Europe. In the company’s Half-yearly Report 2005, Electrolux’ CEO writes that “Relocation of production from the US to Mexico and changes in production in Europe are part of our efforts to turn unprofitable units around”. More than dynamism of the markets, cost of raw materials and components, the issue appears to be those differences in the level of wages between European countries that remain important (gap of 1 and 13 between the minimum wage in en Latvia and Luxembourg). But then, global labour cost makes only between 15 to 20% of the cost of a white good. Therefore, we can assert that relocation has a strong political dimension. And we can assume that relocations in Central and Eastern Europe are nothing but a stage in a continuous process of industrial mutations that should lead to other changes as the wages increase in Central and Eastern of Europe. What are the answers?

Before relocation: anticipate the companies’ plans and propose alternative strategies

In case of relocation: put forward an alternative assessment of the relocation project

Discuss the projects from the citizen’s point of view: the white goods sector is obviously concerned with the issue of sustainable development

Bring new tools to the trade unions at an European level

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1. Anticipate the projects of the companies Manning intensity in the products

+ the weight of the manning in the total cost is high, + the risk of relocation in low-cost countries is high

Level of complexity of the products and process of manufacturing

+ the products are standards and manufactured in large series, + the production is easy to transfer

Degree of particularity of purchasing

+ the purchases are standard, + easy it is to substitute them

Weight of the logistic cost in the final product

If the logistic costs (transport + related services) associated to the purchase circle in low-cost countries have a limited weight in the total cost , the risk of relocation in low-cost countries is high + the size of the product is low, + the logistic costs are low

Power of negotiation with the customer

The great dependence on one customer or the existence of numerous competitors on its market will reduce the power of negotiation of the provider

Company strategy The aggressive strategies in term of prices will tend to favour the relocation of activities in low-cost countries, a move opposite to the strategy or differentiation

2. Give an alternative assessment of the costs and savings The main topics are:

level of wages differences in productivity potential effects of a high turn-over of employees scarcity of skilled employees costs of supervision and settlement coordination costs consequences of exchange rates sensibility towards unpredicted changes in demand with very diverse

markets 3. Discuss the social rationality of the relocation projects Consider negative externalities

Upside externalities (supplying, pollution) Downside externalities (water and electricity, toxic products, recycling) Logistic externalities linked to transportation (white goods are

ponderous goods: impact CO2) Opportunity costs related to not taking advantage of positive externalities in a certain territory as far as infrastructures and services are concerned Sustainable growth, a manufacturers’ proclaimed priority

Whirlpool: “Customers continue to rank corporate social responsibility as an important driver of their brand loyalty.”

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Indesit: “Ethical responsibility towards both the environment and people is a big priority for Indesit Company.”

CECED: “Achieving higher levels of energy efficiency and a wide diffusion of new technologies in Europe are essential to cut energy demand, reduce dependence on energy imports, and promote smart economic growth for the benefit of the environment and society at large.”

This approach is supported by the European Commission: The EU Eco-Management and Audit Scheme (EMAS) is a management tool for companies and other organizations to evaluate, report and improve their environmental performance.

Evaluate advantages and costs of a relocation project: For the firm Investments Settlement costs

Restructuring costs Differences in amortization of investments Value of resale or rejects of equipment or facilities

Intermediary consumption

Differences in costs linked to supplying (supplying + stocks) Differences in hidden costs linked to quality (rejects …) Differences between costs linked to outside services (electricity, maintenance of the machines, subcontracting) Differences between costs in logistics

Personnel Differences in labour costs Differences in productivity Differences in hidden costs related to work organization (absenteeism, accidents, turnover) Supplementary coordination costs (management, technical support, administrative support …)

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Evaluate advantages and costs of a relocation project: For public authorities Public investment Opportunity costs/investments based on public funds

Externalities related to the environment

Cost differences linked to pollution or degrading of natural patrimony

Impact on employment Mid-term effect on employment, growth in the local employment market, standard of living

Market impact Changes in prices, position of the competitors

4. Reinforce social dialogue at the European level There should be improvements as far as the information and consultation of workers at the firm and sector levels are concerned. There is a need for workers/management bargaining at the European branch level. European Works Councils could analyze strategies and evolution of industrial groups and make alternative proposals on industrial policies.

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2. THE WHITE GOODS SECTOR IN ITALY REPORT BY FIM-CISL

The electrical household appliance industry involves 620 factories and employs 57,567 people. This figure covers the manufacturers of larger electrical household appliances: refrigerators, washing machines, dishwashers and cookers. If we consider also those employed in firms serving the major manufacturers and those involved in the manufacture of smaller electrical household appliances, the figure rises to 200,000 employed. Thus it is a very important sector in Italy both on the industrial level and in employment and social terms.

EMPLOYMENT TREND IN THE INDUSTRY 1981/2001 (excluding service industry)

1981 1991 2001 80,697 EMPLOYED 50,110 EMPLOYED 57,567 EMPLOYED After the major downturn in the eighties, the number of jobs rose between 1991 and 2001, though the increase began to level off in subsequent years. Employment problems have begun to surface in the more recent period, on the other hand, due to either current or planned relocation towards other countries with lower labour costs. Numerous mergers have taken place in the industry since the eighties, to the point where all the brands and factories are now concentrated in the hands of a very small number of companies.

FACTORIES 1981 1991 2001 924 758 620 Mergers have accounted for a gradual decrease in the overall number of factories. Multinational companies Electrolux, Whirlpool, Indesit and Candy top the bill in terms of size, importance and number of staff. Yet the component industry is very important too, with its 500 companies most of which were first set up as suppliers to a single customer but which have experiences considerable growth in the export market over time. The merger trend in this industry is confirmed by the figure for the average number of employees per company, which rose in the nineties, unlike what occurred in virtually every other area of manufacturing in the metalworking industry. Figures for production through 2003 tell of an expanding industry enjoying constant growth both in terms of overall output and turnover. That trend turned negative in the latter part of 2004 and remained so throughout 2005, when output took a downturn and, above all, many businesses' profit margins began to shrink.

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TURNOVER TREND IN THE INDUSTRY FROM 1997 TO 2003 YEAR TURNOVER 1997 7,992 1998 8,183 1999 8,695 2000 9,026 2001 9,298 2002 9,490 2003 9,775 Right through the end of 2003 turnover in the industry rose constantly. Emerging countries, in particular within the 25-strong EU, are bringing a great deal of competitive pressure to bear; and companies in the industry are making huge investments in the establishment of new factories in these countries, where the technological level is good but labour costs are lower.

Electrical household appliance industrial output index

Output experienced a major downturn in the last quarter of 2004. To date Italy is still one of the main manufacturers of electrical household appliances on the international scene and it is still an important exporter, but in the early years of the 21st century electrical household appliance manufacturers from East Asian countries won increasing market shares in Italy too, as well as competing on the export market. The trade balance with respect to countries from that region was heavily negative in this period, although Italian manufacturers continued to enjoy a positive trade balance with all the other regions of the world. We can state that industrial output, turnover and export in the industry showed a positive growth trend from 1990 through 2003. But all the indicators have been pointing down since the third quarter of 2004. Businesses complain that their main difficulties include also the high cost of raw materials, in particular the cost of plastic and of steel. All of this makes global competition in the electrical household appliance market increasingly difficult and jeopardises this important sector in a big way.

Trend (in %)

-18 -15 -12 -9 -6 -3 0 3 6 9

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The leading companies have asked the trade union organisations to redefine working hours in an attempt to build new and greater flexibility into production, in such a way as to take best advantage of all the opportunities that the market offers. In this context that points up the difficulties inherent in competing on the cost aspect of the product with countries with such different regulatory and cost environments from those in Western Europe, there is also an attempt on businesses' part to renegotiate existing agreements and to remodel the whole system of relations with the trade unions by trying to destroy the negotiating role that they have built up over the years. The trade union organisations, on the contrary, are aware that competition must be based above all on top-of-the-range products with a high quality standard and capable of fully meeting the new standards that are beginning to come into force in the EU in the field of energy saving and of the recycling of materials. That is why it is necessary to work on employees' skills, also in conjunction with universities, on research and on the development of innovative products, so that competition with other countries is not restricted simply to a matter of labour costs but, above all, to the nature of the product itself. Yet above and beyond any understanding of the problems and identifying potential strong points, right now cost comparison and falling profit margins have prompted two of the four major multinationals to make the decision to cut back on staff. Whirlpool is planning to cut staff in its factories in the province of Varese, while Electrolux intends to cease manufacturing a refrigeration item made in the province of Florence, cutting back on staff in a big way. If these measures are adopted, there would be an immediate impact also on other industries serving these companies. In this high-risk environment for the industry's prospects, we have begun an institutional debate with the Industry Ministry and the Regional Authorities most concerned; and this, not only in a defensive function where many jobs are at risk but also in an effort to address the issue of the future of the electrical household appliance industry that has provided jobs and profits from the sixties to the present day.

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Italian electrical household appliance industry: manufacturing areas

TERRITORIAL DISTRIBUTION OF THE INDUSTRY IN ITALY The factories are mostly located in the north of the country, in particular in the Veneto and in Lombardy. The factories located in the Friuli Venezia Giulia and Marche regions are very important in terms of numbers of job, and thus of their social impact.

WHIRLPOOL CANDY

ELECTROLUX HOME PRODUCTS ITALY

INDESIT COMPANY IMMERGAS SMEG

FABER ELICA

RIELLO

IAR SILTAL

DE LONGHI

BAXI

ANGELO PO SAECO MERLONI TERMOSANITARI

ANTONIO MERLONI

HAIER

ALI GROUP ELECTROLUX PROFESSIONAL BRANDT

Region % Piedmont 5 Lombardy 38 Veneto 12 Trentino Alto Adige 2 Friuli Venezia Giulia 3 Emilia Romagna 13 Tuscany 3 Marche 7 Abruzzi 3 Others 14 Total 100

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Impact of each sector on the overall turnover of the electrical household appliance industry

"White goods" represent almost 70% of Italy's total turnover in the electrical household appliance industry.

Geographical spread of component part suppliers

Most of the factories are concentrated in northern Italy: mainly in Lombardy, in the Piedmont and in the Veneto.

76.4% North

16.7% Centre

6.9% South �

� �

White goods 68.4% Small appliances 13.5%

Extractor hoods 5.7%

Air conditioning 1.1%

Heating 11.3%

Other 20.3%

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Leading multinational companies in the industry in Italy Electrolux The group in Italy manufacturers white goods (cookers, dishwashers and washing machines) and gardening equipment in 10 factories with a staff of about 10,000. Three factories are engaged in the gardening sector (in the provinces of Lecco, Brescia and Legnano) with a staff of about 400 people. Seven factories manufacture electrical household appliances:

In Solaro (province of Milan) dishwashers are manufactured and about 1,250 people are employed.

In Forlì cookers, ovens and hobs are manufactured and about 1,400 people are employed.

In Porcia (province of Pordenone) washing machines are manufactured and 2,500 people are employed.

In Susegana (province of Treviso) refrigerators are manufactured and about 1,800 people are employed.

In Scandicci (province of Florence) refrigerators are manufactured and 750 people are employed.

In Villotta di Chions and Valloncello (province of Pordenone) professional catering appliances are manufactured and about 1,000 people are employed. Output remained stable in 2004 but operating margins dropped on account of falling prices, competition and the rising cost of raw materials. Reorganisation is currently under way involving investment in product and manufacturing processes. In particular, the refrigeration sector looks set to be problematic.

INDESIT MERLONI The group manufactures white goods in all four sectors (washing machines, cookers, dishwashers and refrigerators). It employs about 5,000 people in eight different factories.

In Albacina, Ancona, it manufactures hobs and employs 596 people. In Refrontolo, Treviso, it manufactures cookers with a staff of 269. In Brembate, Bergamo, washing machines with a staff of 561. In Comunanza, Ascoli, washing machines with a staff of 704. In Teverola, Caserta, washing machines with a staff of 577. In Carinaro, Caserta, refrigerators with a staff of 764. In Melano, Ancona, refrigerators, then hobs, with a staff of 645. In None, Turin, dishwashers with a staff of 649.

Increase in permanent employment. Investments both in the product and in the manufacturing process were made in 2004, and further investments are planned for 2005. Output dropping in the washing machine, dishwasher and refrigerator sectors; rising output forecast in the cooker sector.

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CANDY GROUP Employment in the Italian group stands at 1,957, with a downward trend, albeit with differences in the various factories.

In Brugherio (Milan) washing machines and washer-dryers are manufactured and 900 people are employed.

In Santa Maria Hoè (Lecco), in the Bessel factory, dishwashers and washing machines are manufactured and 300 people are employed.

In Erba (Como), built-in ovens, built-in hobs and free-standing cookers are manufactured and 190 people are employed.

In Cortenuova (Bergamo) refrigerators, fridge-freezers and freezers are manufactured and 450 people are employed.

Reorganisation and restructuring with recourse to social shock absorbers have been under way for several years.

Turnover and output 2004 ended more or less on an even keel, with turnover 3% up. Output rose considerably, by 7%. Profit margins dropped as a result of the rising cost of raw materials (steel and plastic) and of a drop in retail prices due to competition among the various (particularly non-European) manufacturers. The Candy Group saw an improvement in its market position. Several different dynamics can be seen in this context: an impressive increase in the washing machine sector, the cooker sector is stable, and the refrigerator sector dropped by a whole 10% more than forecast. Investment in Italy is planned to run at around 20m to 25m euro, directed mostly towards maintenance, rekeying manufacturing processes, and updating also a number of products to meet higher quality and energy saving standards. Where global strategy is concerned, Candy has confirmed its approach based on aiming to seize opportunities for expanding into eastern markets, also as a way of keeping costs down. WHIRLPOOL Present in Italy in the refrigerator, washing machine and cooker sectors with four factories and a staff of 5,900.

3,700 people are employed in Cassinetta - Varese - where refrigerators and cookers are manufactured.

850 people are employed in Naples where washing machines are manufactured. 900 people are employed in Trento where refrigerators are manufactured. 450 are employed in Siena where freezers are manufactured.

In 2005 Whirlpool set in motion a staff downsizing program for 783 employees in its factory in Varese following a decision to cease manufacturing bottom-of-the-range cookers and refrigerators. Negotiations with the trade union organisations led to an agreement on the non-traumatic handling of the serious manufacturing and employment problems, with the use of social shock absorbers (special wage supplement fund and mobility) and training as an attempt to devise a future for the manufacturing site. Cookers: The cooker market has been impacted by bottom-of-the-range development involving growing commercial aggressiveness on the part of the so-called "no brand" firms, in other words companies that manufacture without using

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any particular recognisable brand name. This has prompted Whirlpool to focus on the middle and top-of-the-range markets, but without loosening its grip on the range of more economical models. On the basis of these considerations, the company has illustrated its product innovation strategy which involves the launch of new projects over the period from 2005 through 2008, with the addition of a new purpose-designed platform for the manufacture of products aimed at the "top of the range." Refrigeration: The best prospects for growth appear to be in the built-in products sector and top-of-the-range goods; thus Whirlpool, in an effort to boost its chances of success, is putting its money on recovering competitiveness in its refrigerator factory, on top-of-the-range products (both free-standing and built-in) and on every single cost component factor. Radical change is planned in the factory's layout and organisational structure. The company has illustrated its strategic plan which provides for the addition of new articles to the top of the range. These articles will gradually replace its traditional free-standing products. In particular, it plans to introduce 20 new projects over the period from 2005 to 2008. These new projects include also the addition of a new product platform and of new sales policies designed to further enhance the company's presence in the "top-of-the-range" end of the market.

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3. THE WHITE GOODS SECTOR IN GERMANY REPORT BY IG METALL

1. History of white goods production

The Federal Republic of Germany used to enjoy an international reputation for producing a high volume of household appliances. In fact, as recently as the late 1980s Germany was still responsible for churning out around one third of all household products manufactured in the European Community. Compared with the overall output of the USA, Japan and Western Europe, German suppliers accounted for just under 15% of production. At the time, Germany was in third place behind the USA and Japan. In the late 1980s some 75,000 people were still employed in the white goods sector there (as opposed to the current total of 55,000).

In Germany's new federal states (the former GDR), when the Berlin Wall came down there were still remains of a household goods industry, with approximately 2,000 staff employed by regional kitchen cupboard manufacturer Foron, which manufactured the first HCFC-free refrigerators. All that remained of this manufacturer was a development centre, which has since been taken over by a Japanese group. Bosch Siemens’ household goods division in Nauen, Brandenburg, which turns out washing machines, (though originally it also manufactured driers), made the only investments in the household goods industry in eastern Germany.

A final remark on the history of the white goods industry in Germany is as follows: Since the 1960s there has been marked concentration, accompanied by extensive rationalisation, and numerous bankruptcies and sales of companies. As a result, only a handful of groups are now active in the domain, compared with the large number of manufacturers there used to be. 2. The industrial groups involved

a. Bosch and Siemens Hausgeräte GmbH (BSH)

This is the leading group in Germany and Europe, with sales in excess of 6 billion € and roughly 14,000 employees in Germany (roughly 35,000 worldwide) and seven production sites.

The company was founded in 1967 as a joint venture between Bosch and Siemens. Today, BSH manufactures its products in 40 factories around the world. As a result of the drop in turnover in its main market, Germany, the output and capacity utilisation of the German production sites have steadily declined in recent years. By contrast, there have been clear rises elsewhere in Europe.

The production sites in Germany are Nauen and (still) Berlin for washing machines and driers, Dillingen for dishwashers, Bretten and Traunreut for ovens and Giengen for refrigerators and freezers. Vacuum cleaners are produced in Bad Neustadt and Traunreut also produces water heaters.

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The locations and numbers of employees of these factories are as follows: Bad Neustadt, roughly 400 employees; there is a risk that vacuum-machine

production may be relocated to China. Berlin, roughly 1,100 employees; The closing down of the Berlin plant, which

was originally planned for 31st December 2006, will not occur thanks to tough resistance by BSH employees in Berlin and strong solidarity on the part of the BSH workforce in the whole of Germany. As the workers’ demands for a social plan in case of redundancy would have cost management about 130 million €, the company gave up its original plan to close down the plant and decided to negotiate a programme of cost reduction with the works council and IG Metall.

Bretten, roughly 1,100 employees; the factory is sue to be refitted by a producer of bulk articles to manufacture goods of special sizes.

Dillingen, roughly 2,500 employees; here an agreement has been concluded to safeguard the production site until 2010. Dillingen's rival production sites - Lodz (Poland) and Cherkesköy (Turkey) are going to be expanded.

Giengen, roughly 2,000 employees; here an addendum to the collective agreement was adopted, guaranteeing the production site's survival until 2010 within the context of a reinvestment in a series of fitted appliances, subject to an extra hour of working time per week. Once this agreement expires the plant will return to a 35-hour week.

Nauen, roughly 380 employees; drier production has been shifted to Lodz, and the manufacture of so-called top-loaders has also been relocated. The plant gained a contract for the production of a new range of washing machines and has thus benefited from an investment of 90 million €.

Traunreut, roughly 2,300 employees; the plant's capacity is well utilised with ovens and hotplates; however, its production of water heaters is under severe threat from Chinese exports, affecting some 60 jobs.

b. AEG Hausgeräte GmbH/Electrolux

AEG Hausgeräte GmbH has its registered office in Nuremberg and two production plants, in Nuremberg and in Rothenburg, mostly turning out large-scale freestanding electrical appliances and fitted appliances. AEG Hausgeräte GmbH is a wholly owned subsidiary of Electrolux, based in Stockholm, Sweden. It employs around 4,300 staff. In terms of its output, Electrolux ranks second in Europe and third in the world. The Electrolux group's turnover worldwide is in excess of 13 billion €, and it employs roughly 75,000 people.

AEG Rothenburg, roughly 1,100 employees; good capacity utilisation re fitted ovens and hotplates, but construction of an oven factory in Eastern Europe and the loss of free-standing appliances. A new management policy entails setting up two legally hived off production lines manned by agency workers paid at below the collectively agreed rates.

AEG Nuremberg, roughly 1,700 employees; production of driers and washing machines. The plant will be closed down as a result of internal benchmark comparisons. Production should be relocated to two new firms in Poland. Employees in the plant went on strike on 20th January 2006. They want to obtain a reasonable settlement, an early retirement arrangement for older workers and retraining for all those not yet eligible for pensions.

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c. Bauknecht Hausgeräte GmbH/Whirlpool

Bauknecht was founded in 1919, but errors committed by its management led to its filing for bankruptcy in 1982. Since 1991 Bauknecht has been a wholly owned subsidiary of Whirlpool Cooperation, USA. Bauknecht Hausgeräte GmbH currently has two production sites: Schorndorf for washing machines and Neunkirchen for dishwashers. The production site in Calw (refrigerators and freezers) was closed down in 1999, affecting 380 jobs. All production was shifted to Italy. Schorndorf, roughly 1,400 employees; producing a washing machine with a capacity of 9 kg exclusively for the American market. The existence of the production site depends entirely on whether next model of this washing machine is also manufactured in Schorndorf. That decision will be taken in 2006. Neunkirchen, roughly 550 employees. Steady decrease in the number of units going to the production site in Poland. An agreement on short-time work is currently in force. When the Wroclaw plant starts turning out some 950,000 units - as will probably be the case in 2008 or 2009 - the Neunkirchen production site will be under serious threat. Under a site selection agreement guarantees have been given that the plant will continue until at least 2008 as a new generation of built-in apparatus will be produced in Neunkirchen. d. Miele & Cie

Miele was founded in 1899 and has been in the possession of two families ever since. The company is currently being managed by the third and fourth generations of these two families. Miele manufactures top-quality electrical household appliances, both for professional use and fitted kitchens. The Miele group also owns Imperial, which manufactures and distributes its own fitted appliances. Of all the companies producing electrical household goods in Germany, Miele boasts the greatest vertical range of manufacture. It still develops and produces its own electronic controls, drive units and so forth. Miele has nine production plants in Germany, the biggest being in Gütersloh (washing machines, driers, distribution centre, central spare parts store) and in Bielefeld (dishwashers, vacuum cleaners).

The German plants had to announce short-time work in 2005. An agreement has been concluded to safeguard the production sites until the end of 2007. After that, the group plans to shed some 1,000 jobs (in a socially acceptable manner). From 1 March 2005 onwards, a 34-hour working week was introduced which will apply for the full duration of the agreement.

Bielefeld, roughly 1,800 employees; 18 million € is being invested here in the

manufacture of a new dishwasher. Gütersloh, 4,800 employees; 13 million € is being invested here in a new press. Oelde, roughly 600 employees; roughly 7 million € is being invested in oven

production here. Miele, which primarily manufactures appliances in the top price range, is

investing heavily in new ranges of goods, which will hit the market this, and next year and hopefully help to secure the jobs in Germany in the long term. The group plans to invest a total of 155 € million during the 2005 financial year.

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3. Delocalisation of white goods production and its impact on the industrial structure of the regions affected

The constant strides made by the policy of delocalisation practised by individual groups are having a serious impact on the regions affected. For instance, the threatened closure of Bosch Siemens Hausgeräte GmbH's washing machine factory in Berlin must be seen against the backdrop of 30% unemployment in the metalworking and electrical goods sector in the city. The compensation for these job losses in industry, which leading politicians had hoped would take the form of fresh employment in the services sector in Berlin, has failed to materialise. So the city remains dependent on the continued existence of its traditional industrial sectors. Moreover, the further migration of industrial jobs away from the capital is heightening its current financial crisis.

The closure of the Nuremberg plant was decided by Electrolux despite the profits it generates. This plant closure will considerably weaken a region that is already structurally weak. The region of Franconia has the lowest rate of industrial jobs in Bavaria. The entertainment industry that used to be settled there (e.g. Grundig) has almost completely disappeared. The loss of tax revenue associated with the further loss of around 1,700 jobs will pose a major problem for the city of Nuremberg.

The Neunkirchen dishwasher plant run by Bauknecht/Whirlpool, which is also threatened with closure, is also in a structurally weak region. Industrial activity in the federal state of Saarland used to be dominated by the coal and steel sectors. The region's structural change to new industries (the automotive and automotive supplies sectors) has only been partly successful. Saarland suffers from very high unemployment. In this context, the closure of the Neunkirchener plant would be another catastrophe.

The region of Eastern Westphalia, where Miele has based its production, is characterised by an industrial mono-structure, i.e. dominated by the kitchen furniture and household goods industry. Miele's management is continuing to back the production sites located there. Any change in this policy would deal the region a fatal blow. 4. Development of the market in the past and expected future developments

In 2002 the turnover achieved by companies manufacturing household goods in Germany peaked at 13 billion € and has been steadily declining ever since. Sales in 2005 are expected to total less than 12 billion €. Since 1985 the foreign share in these sales has risen steadily from 3,4 to 6.2 billion €. During the same period, domestic sales sank from 8,2 to 5,8 billion €. Prices in the German market have been seriously eroded, though this trend will probably start levelling out. The corresponding figures for individual segments are as follows: washing machines - over 22%, dishwashers - 9%, refrigerators and freezers - 8%, ovens - 6%. The primary causes of this erosion are weak domestic demand, the sway over demand held by major chains, and the advent of cheap production at plants located in China, Korea and Turkey. The demand for high-quality appliances in Germany has dipped sharply. One noticeable trend in the household goods sector is towards the forced acceptance of broad wage cuts by the respective workers.

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The German white goods market is highly saturated the figures for individual segments being as follows: washing machines - 95%, electric cookers - 84%, refrigerators and freezers - 99%. The dominant factor is the need for use, whereas driers and dishwashers still boast growth potential. The decline of the private housing market in Germany is having a major knock-on effect in the household goods sector, with demand for new appliances and kitchens decreasing noticeably. If state subsidies for private home building are abolished as planned, demand will sink even further. Further delocalisation of household goods production can be expected in the future. The manufacture of small household appliances (like irons, mixers, toasters, kettles, and so on) has already come to an end in Germany. The same will happen to large household appliances unless something is done to turn the current trend around. 5. Employment in the white goods sector in Germany

Over the past decade, the employment figures have been as follows:

1995: 80,000 employees 2000: 63,000 employees 2003: 59,000 employees 2005: 55,000 employees

This trend will continue, with the fall becoming even steeper and even more jobs being lost each year unless suitable countermeasures are taken and prove successful.

Summary

Bearing in mind this trend, IG Metall's policy in the sector entails:

Counting on a resurgence of domestic demand Pressing head as fast as possible with product innovation

German companies cannot compete with cheap foreign producers in terms of prices, since the hourly wages of 1€ paid in, say, China are unbeatable. The only way to achieve a competitive edge is through innovation. Examples of innovations that will soon be viable are computer-controlled appliances for the elderly that are designed to be recycled and the exploration of possible applications involving micro- and nanotechnologies. More research and development is required, being crucial for securing the future of production sites. R&D synergies should also be sought with the established academic infrastructure. This too would promote the survival of jobs in industry. In view of the current problems faced by the white goods industry, an appropriate industrial and structural policy in Germany and at European level must be applied to alleviate the situation and provide the necessary backing.

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4. THE WHITE GOODS SECTOR IN SPAIN REPORT BY MCA-UGT

CONTENTS 1. INTRODUCTION

2. STRUCTURE OF THE SECTOR

2.1. DEFINITION

2.2. DEVELOPMENT AND STRUCTURE

3. MARKET

3.1. DEVELOPMENT

3.2. PRODUCT LINES

3.2.1. Refrigeration

3.2.2. Cooking

3.2.3. Washing

4. DEVELOPMENT OF EMPLOYMENT

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1. INTRODUCTION

The white goods sector is composed of all companies that manufacture domestic equipment and appliances from the following product lines: washing and drying of clothes and dishes, cooking food and refrigeration and freezing.

Although, strictly speaking, these are consumer goods, the manufacture of white goods can be analysed along with the electrical machinery sector given the similarity of the production process, the primary materials and components used, the final product and the applicable industrial policies.

In Spain, this sector emerged in the early 1960s and was represented by a group of small companies producing a diverse range of products. That decade was marked by a continuous increase in demand driven by the switchover to domestic services powered by electricity, the attention given to this equipment in the media and the fact that hire-purchase schemes were becoming more widespread.

The economic crisis of the 1970s along with the higher level of market saturation resulted in a major slump in demand. This weakened the sector's position and its inadequate structure, which was characterised by high financial costs, an insufficient commercial policy and a lack of competitiveness, was unable to cope.

The situation meant that virtually all the companies were forced to implement various reindustrialisation and reconversion plans, which began in 1980, were the most productive under the Law on Reconversion of 1984 and expired on 31 December 1988.

A few dates should suffice to demonstrate the scale of the restructuring undertaken during this period. The 18 companies that underwent reconversion ended up as three large groups and a few small companies.

Following the completion of the plan, the companies experienced positive development, broadened their product range and included new designs, thereby adapting to demand.

In the 1990s, the large European companies in the sector stepped up the pace of the processes for the integration of assets and/or for cooperation at both national and international level.

At European level, internationalisation policies and the opening of new markets in Asia, Africa, South America, and Eastern Europe and so on became more widespread.

At this level, during the 2003 financial year, the outlook changed somewhat due to the fact that consumption prospects started to falter. It was forecast that demand for many electrical appliances would only be a demand for replacements. Nevertheless, it is important to point out that if the European economic cycle enters a new phase of expansion and the international economy regains its levels of activity, innovative products with a low level of saturation will see opportunities for growth.

2004 was a good year for Spain that was helped along by a growth market for all its products, probably the result of excellent development in the construction sector.

Generally speaking, manufacturers took the opportunity to reorganise their structures again with the aim of creating increasingly productive organisations.

Forecasts for 2005 made by Market Vision are very optimistic for our national market. Predicted growth is based on a development of around 4% for tumble dryers, dishwashers and washing machines.

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2. STRUCTURE OF THE SECTOR

2.1. DEFINITION

The white goods sector, as mentioned in the introduction, is comprised of companies that manufacture domestic equipment and appliances run on electricity or gas, which fall within one of the following business lines: washing and drying of clothes and dishes, cooking food and refrigeration and freezing.

According to the National Classification of Economic Activities of 1993 (CNAE-93), this sector corresponds to heading 29.7, which refers to the manufacture of domestic appliances and includes:

29.71: Manufacture of electric domestic appliances. Manufacture of electric machines, appliances and devices for domestic use. Manufacture of electro-thermic appliances for domestic use.

29.72: Manufacture of non-electric domestic appliances for heating and cooking.

2.2. DEVELOPMENT AND STRUCTURE In 2003 and 2004, the macroeconomic context was conducive to the development of the sector, mainly since it fostered domestic consumption.

However, various economic sources, including the Bank of Spain, indicate that the strength of domestic consumption is based on the increase household disposable income, which is likely to be rather more moderate in the future due to the high level of indebtedness of the population. This means that savings used to pay off the debt could have an impact on consumption.

Another factor that could affect the future of the consumption of electrical appliances is the price, which could be affected by the increase in prices of hydrocarbons, the cost of some primary materials and the European directive on waste electrical and electronic equipment.

It is also necessary to mention the phenomenon of industrial relocation in this overview. Arguments advanced in favour of this strategy by the multinationals are based on a loss of competitiveness and lower production costs in third countries.

The key to this phenomenon, in which decision-making centres are situated outside the national territory, lies in the influence which foreign presence has on the national structure of the sector.

Companies in which the degree of foreign ownership is equal to or greater than 50% created approximately 73% of the turnover generated by the sector in the last three years. Spanish companies contributed 27%.

The Spanish market for white goods is currently dominated by three groups which, financially speaking, control approximately 60% of the domestic market.

For this sector, the Spanish group Fagor is the market leader with a share of almost 25%, the German holding company Bosh-Siemens has a 21% market share and the Swedish group Electrolux has a share of approximately 14%.

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FAGOR ELECTRICAL APPLIANCES

Out of the three largest groups, this is the only one which is really Spanish, with all of its sites located in the País Vasco region. It is part of the Mondragón Corporación Cooperativa, which absorbed the companies Fagor Clima and Fabrelec. In 1990, it set up an Economic Interest Group called Temfa together with France's Thomson Electromanager, the UK's General Domestic Appliances and Italy's Ocean Electrodomestici.

The company's products are sold under the following brand names: Aspes, Edesa, Fagor and White-Westinghouse.

The Cooperativa's activity has been very dynamic. At the beginning of 2004, the company floated on the stock market in order to find resources that would enable it to fund some of its projects. This method of issuing debt yielded €60 million.

Another extremely important decision taken by the company was to sell its 50% stake in the Argentinean subsidiary Mclean, confirming the company's existence as a manufacturer from Argentina.

In mid-2004, the company expressed a keen interest in Eastern Europe and strengthened its position in Poland via the company Wrozamet.

Also in 2004, Fagor embarked on a new adventure by becoming a shareholder of the French company, Brandt, the leader in the white goods sector.

The new feature in the company's strategic plan for 2005-2008 is the purchase of the French company that doubled the company's turnover. Fagor currently has 16 production plants and 12 brand names.

Fagor has also set up its business further afield in Russia by means of a local group called Gasmash that makes boilers.

In business terms, the most important strategic decision was the withdrawal of its 'White Westinghouse' catalogue, a decision that enabled the company to focus on its other brand names.

Finally, Fagor set up an individual structure for its home automation business, transforming it into a business area that could yield great benefits on its income statement.

BOSCH-SIEMENS

This German multinational set up shop in Spain in 1989 through the acquisition of Balay and BS Electrodomésticos (formerly Safel), to which it contributed technology, management, financing and an external distribution network. At present, the group has plants in Cantabria, Navarra and Aragón. It belongs to the BS Interservice group, through which it provides standardised technical support.

The main brand names the group uses to market its products are: Balay, Bosch, Gaggenau, Lynx, Crolls, Siemens and Superser.

Over the last two years, the German group has reorganised it business activities in Spain and restructured the company and its brands.

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In 2003, three subsidiaries (BSH Fabricación, BSH Balay and BSH Interservice) merged under the name of BSH Electrodomésticos España. They retained their own legal structure.

In 2004, the group decided to take control of the production of air conditioning in its Estelle site (Navarra) by transforming BSH and Fedders International Air Conditioning into BSH Home and Air Conditioning at the same time as approving its merger within BSHE-E.

As regards products, the group has introduced its new range of cooking equipment (ovens, glass ceramics and extractor hoods), although the most prominent launch was the 'dressman' ironing robot under the Siemens brand.

ELECTROLUX

The Swedish group has four production facilities in Spain, two of which are used for the production of white goods and the other two for compressors.

The Electrolux group in Spain is structured as follows.

Electrolux España, SA (holding company): is responsible for the manufacture of compressors under the name of Unidad Hermética. Five other companies are currently dependent on it:

Electrolux Home Products España, SA

Electrolux Home Products Operations España, SL

Electrolux Proffesional, SA

Electrolux Industrial, SA

Electrolux Financiera, SA

The brands of the Electrolux group are: Zanussi, AEG, Corberó and Electrolux.

Following two years during which sales fell, the Swedish company managed to increase its turnover in 2003, thereby reversing this trend.

The company implemented a new three-year management plan (2004-2007) with which it is hoping to earn itself one of the privileged positions in the sector. One of the approaches on the drawing board is aimed at combining the commercial and production units.

In 2005, the first AEG teams including the Electrolux logo are extremely prominent. The decision to associate the local brand with the company logo is similar to the approaches already pursued in France and Italy.

The company intends to promote the brands where added value is greatest, such as the Zanussi brand.

The company recently announced its intention to look into the viability of various European plants including the site in la Rioja. It seems that the decision could lead to transferring production from the site in la Rioja to an Eastern European country.

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GEOGRAPHICAL DISTRIBUTION

The companies producing domestic appliances are located throughout the country (with the exception of Extremadura, Ceuta and Melilla) although we can pick out four autonomous communities with a higher than average concentration: Cataluña (33.5%) well above the rest, País Vasco (15.8%), Comunidad Valenciana (10.4%) and Madrid (9.0%).

Autonomous communities No employees 1-19 20-49 50-99 100+ Total

Andalusia 6 15 4 0 1 26 Aragon 14 8 0 1 5 28 Asturias (Principado de) 1 0 1 0 0 2 Balears (Illes) 0 3 0 0 0 3 Canaries 0 1 0 0 0 1 Cantabria 3 3 1 1 2 10 Castilla y León 2 10 2 0 0 14 Castilla-La Mancha 1 13 1 0 1 16 Cataluña (Catalonia) 31 76 19 6 10 142 Comunidad Valenciana 12 25 4 2 1 44 Extremadura 0 0 0 0 0 0 Galicia 3 3 1 0 0 7 Madrid (Comunidad de) 11 22 2 1 2 38 Murcia (Region of) 1 9 1 0 0 11 Navarra (Comunidad Foral de) 2 3 1 0 3 9

País Vasco (Basque country) 11 34 9 4 9 67 La Rioja 1 3 2 0 0 6 Ceuta y Melilla 0 0 0 0 0 0

National total 99 228 48 15 34 424

Source: INE Central Companies Directory, 2004.

As we can see from the table, there were 424 companies producing white goods in Spain in 2004. This marked a 7.6% reduction on 2003, which corresponds to a reduction of 35 companies.

As regards the size of the companies in 2004, 23% had no employees, 54% had between 1 and 19 workers and 23% had over 20 workers.

3. MARKET Data expressed in product units were obtained from the National Association of White Goods Manufacturers (Asociación Nacional de Fabricantes de Electrodomésticos de Línea Blanca - ANFEL) and data expressed in euro was obtained from Market Vision magazine.

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For ANFEL data, it should be noted that data for 2001, 2002 and 2003 do not include the market in Canarias. Data for these years can therefore not be compared with data from 2004 in which Canaries is included.

3.1. MARKET DEVELOPMENT

As mentioned previously, the market for white goods has seen a positive development in recent years.

The table below (ANFEL data) presents this development for the period 2000-2004 for product units sold.

White goods market Year Units Change (%) 2000 6,552.9 5.0 2001 6,653.5 1.54 2002 6,778.3 1.88 2003 7,226.1 6.61 2004* 7,957.8 - . -

Source: ANFEL (own representation). Data in thousands.

In the period 2000-2003, the number of units sold increased by 10.27%, reaching 7,957,800 in 2004. This increase in sales, as has emerged from the data set out above, is essentially due to the development recorded in 2003 (6.61%) which is much higher than that recorded for previous years.

As for 2004, the upward trend seems to be continuing although we are unable to compare data, as explained above, since Canaries is included. If we analyse the domestic electrical appliance market in terms of its economic value, we can see that the annual percentage increase is greater than the annual percentage increase for product units, which peaked in 2003 with a 9.07% increase.

White goods market Year €000s Change (%) 2001 1,789,889 2002 1,888,788 5.53 2003 2,060,036 9.07 2004 2,213,678 7.46

Forecast 2005 2,302,225 4.00

Source: Market Vision (supplement No. 138 – March 2005)

As regards the forecast for 2005, a 4% increase on 2004 is predicted which is lower than that recorded for previous years.

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3.2. PRODUCT LINES

3.2.1. REFRIGERATION

In 2004, this product group posted sales of 2,188,700 units, which corresponds to €717,758,000 (although sources differ).

Development since 2000 has been far from consistent. There were no sharp increases or decreases except in 2003. An increase of 11.17% in product units sold was recorded in 2003.

This group includes refrigerators and freezers, which represent 82% and 18% of the sales in this product group respectively.

82%

18%

Refrigerators Freezers

The table below presents the data for the market for refrigerators and freezers in product units.

Market for refrigerators and freezers (units)

2000 2001 2002 2003 2004 PRODUCT

UNITS Change

(%) UNITSChange

(%) UNITSChange

(%) UNITS Change

(%) UNITSRefrigerators 1,544.9 2.18 1,524.7 -1.31 1,50.,1 -1.02 1,680.5 11.36 1,804.9Freezers 287.2 -1.47 299.6 4.32 308.8 3.07 340.4 10.23 383.8TOTAL 1,832.1 1.59 1,824.3 -0.43 1,817.9 -0.35 2,020.9 11.17 2,188.7

Source: ANFEL (own representation). Data in thousands.

By analysing the development of the two products that compose this group, we can see that given the importance that refrigerators represent in demand (82% of sales in this business line), these are the products that shape the overall trend.

Since 2001, freezer purchases have been on the up, achieving their maximum increase in 2003 (10.23%) and sales of 2,188,700 units in 2004.

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The study of this market from a financial perspective (in € thousands) shows a different trend to that previously analysed, indicating growth throughout the period. This study highlights in particular the increase in 2003 for refrigerators (13.17%) and in 2004 for freezers (13.08%).

Market for refrigerators and freezers (€ thousand)

2001 2002 2003 2004 PRODUCT €000s €000s Change

(%) €000s Change (%) €000s Change

(%) Refrigerators 516,372 534,061 3.43 604,380 13.17 652,070 7.89Freezers 50,876 54,745 7.60 58,091 6.11 65,688 13.08TOTAL 567,248 588,806 3.80 662,471 12.51 717,758 8.35 Source: Market Vision (supplement No. 138 – March 2005)

3.2.2. COOKING

This section groups together traditional cookers, ovens and hobs.

The percentage represented by each of these products for the sales of this product group is shown in the graph below. Hobs represent the largest proportion of the sales of this group (53%).

7%

53%

40%

Cookers Hobs Ovens

Sales of cooking appliances remained virtually constant for the period between 2001 and 2003 displaying no significant changes (approximately 1%).

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Sales of cookers, hobs and ovens

2000 2001 2002 2003 2004 PRODUCT

UNITS Change

(%) UNITSChange

(%) UNITSChange

(%) UNITS Change

(%) UNITS Cookers 233.2 2.73 211.6 -9.26 185.9 -12.15 173.5 -6.67 175.5Hobs 1,210.0 5.86 1,215.3 0.44 1,242.9 2.27 1,253.2 0.83 1,416.0Ovens 895.4 4.36 913.0 1.97 933.8 2.28 964.6 3.30 1,082.6TOTAL 2,338.6 4.96 2,339.9 0.06 2,362.6 0.97 2,391.3 1.21 2,674.1

Source: ANFEL (own representation). Data in thousands. The thing that stands out in the overall development of these three products is cooker sales, which have decreased per product unit every year since 2001. More specifically, during the period 2000-2003, cooker sales fell by 25.60%.

Hobs and ovens however have experienced moderate growth over the last four years.

This trend seemed to remain the unchanged for the 2004 financial year since the inclusion of the Canaries market is barely noticeable.

Market for cooking equipment (€ thousand)

2001 2002 2003 2004 PRODUCT €000s €000s Change

(%) €000s Change (%) €000s Change

(%) COOKING 488,585 508,397 4.05 537,427 5.71 570,597 6.17 Source: Market Vision (supplement No. 138 – March 2005)

To analyse the overall market trend for cooking appliances, the only data we have available is general data (in € thousand). Increases in sales values have grown every year. Specifically, 2004 saw a 16.79% increase in sales values compared to 2001.

3.2.3. WASHING

This section includes washing machines, tumble dryers and other washing appliances such as dishwashers. Washing machines account for 59% of the entire market; dishwashers represent 27% and tumble dryers 14%.

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59%27%

14%

Washing machines Dish washers Tumble dryers

Sales for this product line have been marked by growth with an increase of 18.12% between 2000 and 2003. 3,095,000 product units were sold in 2004.

Sales of washing machines, tumble dryers and dishwashers

2000 2001 2002 2003 2004 PRODUCT

UNITS Change

(%) UNITS Change

(%) UNITS Change

(%) UNITS Change

(%) UNITS Washing machines 1,538.6 4.29 1,549.8 0.73 1,578.1 1.83 1,654.3 4.83 1,829.4

Dishwashers 214.5 25.81 641.7 199.16 688.9 7.36 749.0 8.72 834.6Tumble dryers 629.1 12.2 297.8 -52.66 330.8 11.08 410.6 24.12 431.0

TOTAL 2,382.2 7.96 2,489.3 4.50 2,597.8 4.36 2,813.9 8.32 3,095.0 Source: ANFEL (own representation). Data in thousands.

In the analysis for each product, you can see few similarities in market behaviour.

Washing machines had a tendency for growth over this period increasing by 7.52% between 2000 and 2003. The moderate growth recorded in previous years seemed to continue in 2004 with 3,095,000 units being sold.

As regards dishwashers, sales shot up – in 2003 a 249% increase in sales was recorded compared to 2000 – which was the result of a major boost during 2001. In 2001, sales increased by almost 200% compared to 2000.

The most recent data we have available for the sale of dishwashers (2004) shows unit sales of 834,600.

Tumble dryers are the only product unit in this product group that have seen their sales figures decline over the entire period (down 34.73%). Whilst it is true that 2001 was the only year in which a drop in sales was recorded (down 52.66%), sales were still not

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able to get back up to levels registered in 2000 despite large increases in 2002 and 2003.

Market for washing machines, tumble dryers and dishwashers (€ thousand)

2001 2002 2003 2004 PRODUCT €000s €000s Change

(%) €000s Change (%) €000s Change

(%) Washing machines 461,728 489,531 6.02 531,381 8.55 567,750 6.84Dishwashers 209,639 224,542 7.11 238,712 631 255,579 7.07Tumble dryers 62,689 77,512 23.65 90,045 16.17 101,994 13.27TOTAL 734,056 791,585 7.84 860,138 8.66 925,323 7.58 Source: Market Vision (supplement No. 138 – March 2005)

In the table above, you can see the development of this market in terms of its value in euro. We can see that, in this case, there is not as much disparity between the different products with all three products maintaining an upward trend, with tumble dryers curiously enough standing out. 4. DEVELOPMENT OF EMPLOYMENT Available data for employment in the white goods sector has been obtained from the Industrial Companies Survey compiled by the INE (National Statistics Institute), which collects data on people employed in section 29.7. Manufacture of domestic appliances.

Employment in this sector during the period between 1999 and 2003 can be split into two different stages (see table below).

The first stage covers the first two years of the period, a time when there was strong employment growth. But from 2001 onwards, employment rates began to fall and then continued to decrease more and more each year.

YEAR No. OF WORKERS Change (%) 1999 20,645 3.47 2000 23,002 11.42 2001 22,953 -0.21 2002 22,292 -2.88 2003 21,481 -3.64

Source: Industrial Companies Survey (INE) (own representation).

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5. THE WHITE GOODS SECTOR IN FRANCE REPORT BY FTM-CGT

Over the past 10 years in France the volume of white goods has increased:

Cooking appliances have driven the main growth in the sector, up 1.3 million units in 9 years.

Washing appliances have also performed well, up 900,000 units. Growth in the refrigeration and freezing appliances segment has been less

vigorous, up 400,000 units. As a rule, demand is shifting towards products that are more ergonomic, economical and easier to use. However, the household appliances sector is becoming an increasingly hostile environment in which to develop. This sector is facing a drop in prices resulting from:

Tougher competition and the arrival of new entrants on the market from low labour-cost countries;

Pressure exerted by distributors, e.g. competition between 'discount' dealers; Buyer behaviour.

The economic situation has also aggravated the phenomenon, due to:

An explosion in the cost of materials (petroleum derivatives and steel) and components which represent 70% of production costs;

Exchange rates: the rise of the euro compared to the dollar and other currencies. The main manufacturers are no longer represented in France. Four groups share the market for large household appliances in Europe:

World leaders - Electrolux, Whirlpool. BSH (top of the range) and Indesit.

This already concentrated sector could expand in the coming years:

To restore the balance with distributors and certain suppliers; As a result of opportunities for buyouts that may arise in both Eastern and

Western Europe. (Fagor's recent takeover of Elco-Brandt confirms this trend). This industry has become a huge, constantly changing market characterised by repeated restructuring and relocations:

Whirlpool: delocalisation of the Amiens washing-machine factory to Slovakia - 225 jobs lost.

Electrolux: closure of the Reims factory (cooking appliances) - 224 jobs lost. Merloni (Indesit): Restructuring at the Thouville site and transfer of the

production of cooking appliances to Italy and countries in the East - 200 jobs lost.

Elco-Brandt: closure of the Lesquin site (refrigerators) - 150 jobs lost. In 1996, the sector employed 28,429 people in France. By 2002, the number of staff employed had dropped by almost 9,000 to around 19,500. This sector still has 10 or so

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production sites in France (representing more than 5,000 jobs), which are threatened by strategies geared towards boosting group competitiveness by constantly trying to cut costs, e.g.:

By using subcontractors; By imposing pay freezes; By demanding greater flexibility.

Total number of employees in the sector:

Whirlpool Amiens: 580 workers Elco-Brandt: Vendôme: 321 workers

Aizenay: 257 workers La Roche/Yon: 691 workers Lyons: 737 workers Orléans: 758 workers

Rosières: Lunery: 350 workers BSH (Gaggenau) Lipshein: 400 workers Indesit: Thionville: 200 workers Electrolux: Revin: 738 workers.

The current monthly salary paid in this sector after 15 years of service is €1,400 per month. Volume of white goods on the French market from 1996 to 2004:

Refrigeration and freezing: 1.7% growth per year Washing: 3.1% growth per year Cooking: 3.4% growth per year

The total market for white goods increased by 2.9% per year. Turnover (billion £):

Electrolux down 2.8% Whirlpool up 8.6% BSH up 9% Indesit up 5.6%

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Main production sites and distribution of workers for the entire white goods sector by Region

Manufacturers Workers Production

Whirlpool 583 cooking, refrigeration

Electrolux 738 washing

Indesit 200

BSH 400

Rosières 350

Elco-Brandt:

Vendome 321 cooking

257 cooking

691 washing

758 cooking

737 washing

The Elco-Brandt group has recently been taken over again by a new buyer, Fagor (Spain).

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6. THE WHITE GOODS SECTOR IN SWEDEN REPORT BY SVENSKA METALL

The white goods sector in Sweden has for the past ten years gone through a dramatic change and downsizing. The big change for this sector started when the new "market" in former East - Europe was opening. Then the white goods companies started to open factories in these countries and of course also move production/factories and jobs from Sweden. For ten years ago approximately 12.000 people were working in the white goods sector in Sweden (that means white and blue collar workers in total). If you go back longer there were many more people working in this sector. Today, in 2005, it is about 6400 people working in the domestic white goods sector. In Sweden today its only two domestic white goods companies in this sector, it is Cylinda and Electrolux (about 6000 people in Electrolux and about 400 people in Cylinda). Cylinda manufactures washing machines and refrigerators for the domestic market. Electrolux in Sweden manufactures, cookers, refrigerators, freezers, washing machines, tumble driers, compact products like washing machines and outdoor products like chains saws and lawn mowers (Electrolux own company called Husqvarna) On the commercial side Dometic has 800 employees – who make refrigerators for hotels and mobile homes. The jobs have dispersed; and either been sold to other white goods companies or moved to low-cost countries, in former East - Europe or Asia, for example China, today there is more "new" white goods companies in the market. The competition for the "old" white goods companies is much harder. There are many new brands for example washing machines, cookers and vacuum cleaners. These "new" companies are manufacturing in China, Poland and Hungary, for example are selling their products for very low prices everywhere in the whole world. The change or downsizing for white goods sector in Sweden and Europe is ongoing and the end has not yet been reached.

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7. THE WHITE GOODS SECTOR IN DENMARK REPORT BY IDA

As mentioned at the EMF meeting on June 10th 2005, Danish white goods production is no longer anything worth boasting of, although we in the late 1980’s and early 1990’s had a fairly large national production of white goods with well established brands like Volund (washing machines and dish washers), Voss (Stows, cookers, ovens and ventilators), Gram and Vestfrost (refrigerators and freezers). Further back several other brands were around. Today as Electrolux is closing its production of large washing machines (for industrial and laundromat purposes) in Nyborg, laying off 250 employees, only Vestfrost remains. Until recently even Gram had a production plant (in Vojens), but Gram has been sold to foreigners and production has been moved abroad, although Gram maintains some research and development and some marketing activities in Denmark. Vestfrost are really the only company with a Danish production worth mentioning. At their production facilities (outside Esbjerg) 1,100 employees produce refrigerators and freezers (for both household and industrial purposes) worth 160 million Euro (around 90% of the production is exported). By the way, Vestfrost is now a Danish owned company since Electrolux sold their 50% shares in 2003. Far below 2000 Danes are involved in white goods production in Denmark. It is unclear how many are involved in service activities etc. Of course it would be noticed if Vestfrost moved from Esbjerg, being one of the largest employers in the area. Gram in Vojens does not nearly play the same role. Denmark is experiencing a good economical evolvement right now and a lot of white goods are being sold to the Danish consumers, but as you can understand not many Danish products are among them. Neither is it a much notified production area as it was 15 years ago when the first lay offs hit the sector. However, it should also be stressed that Danish industry is heavily involved in supplying the white goods sector with compressors and thermostats (Danfoss), but it has not been hit so far. Although white goods production has been moved, customers apparently still rely on their Danish subcontractors.

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8. THE WHITE GOODS SECTOR IN AUSTRIA REPORT BY GMT

1) Statistics- Development NACE-Code 2971: Electrical and electrothermic consumer goods

Employees

October 2005 2.Quarter 2005 1.-2.Quarter 2005 2004 3.499 3.512 3.599 3.668

Total Turnover (in 1000 €) June 2005 2.Quarter 2005 1.-2.Quarter 2005 2004 52.870 148.201 290.349 539.232 Source: Statistic Austria

2) Companies in the white goods sector in Austria After the closure of the “Elektra Bregenz” production site per 31 July 2003 with some 400 employees, belonging to the insolvent French company group Brandt-Moulinex, in the Tyrol (western federal province of Austria) only two companies have remained. During the process of insolvency of the company the Turkish Acalik Group bought Elektra Bregenz at the end of 2002. Acalik produces now former Elektra Bregenz household appliances in Turkey, advertising them as Austrian branded goods. The redundant “Elektra Bregenz” employees could benefit from a generous redundancy plan, including the establishment of a so-called labour foundation for re-qualification and emplacement. Firma Liebherr Haushaltsgeräte Lienz GesmbH. A member of the international Liebherr Group at the production site in Lienz (Eastern Tyrol) produces about 630.000 refrigerators and freezers annually for domestic and commercial purposes. Currently the total staff is 1.315, including 178 salaried employees. Firma Liebherr operates a production site for freezers in Bulgaria (workforce 550) and constantly threatens to relocate production to Bulgaria. The Liebherr Group’s holding company is Liebherr-International AG in Bulle, Switzerland, which is entirely owned by members of the Liebherr family. Besides domestic appliances Liebherr produces cranes, wheel loaders, cargo handling, and mining equipment. Group turnover 2004: 4.5 Million €, workforce 2004: 22.245

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Company E.G.O. g GesmbH. Heinfels is owned by the international E.G.O group, a worldwide supplier to manufacturer of household appliances (heating and regulating components), with its headquarters in Germany. At the production site in Austria it produces hotplates for cookers and employs a workforce of 313, including 35 salaried employees. The company group has locations all over the world, in Australia, China, Germany, England, Finland, France, Greece, Italy, Japan, Croatia, New Zealand, Norway, Slovenia, Spain, South Africa, Switzerland, Turkey and USA. Hence, relocation is a constant threat to intimidate works council and union. Both companies in the Tyrol have not yet implemented the collectively agreed common pay system for white and blue-collar workers due to the fact that the majority are blue-collar workers who would benefit from the new system. The additional labour costs arising due to the new equal pay and grading system will therefore fall due not earlier than at the beginning of May 2006. At that very moment it is expected that intensified threats to relocate or shift production lines will be announced. Company AHT Cooling Systems in Rottenmann (Styria) AHT predominately operates within the industrial chilling and freezing area. Major business segments are supermarket equipment, ice cream cabinets, bottle coolers, service. Currently the Austrian production site employs a workforce of 350. The history of AHT Cooling Systems goes back to the 15 century, when in Rottenmann (an iron ore rich region) ironworks was established. In the 1950’s Bauknecht produced household appliances, in 1983 the owner changed and AHT re-established production. In 2002 foundation of AHT Asia, a Joint Venture (JV) with SFA Company in Turkey was established. According to the information by our local union officer, a massive financial investment into Turkish production site is ongoing, adding to the fear that the ice cream cabinets division might be relocated to Turkey.

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9. THE WHITE GOODS SECTOR IN HUNGARY REPORT BY VASAS

Historical overview of the white goods industry In Hungary, a white goods industry simply does not exist. Those very few factories producing items from a statistical point of view belong to the processing industry and they are even not regarded as a sub-branch of industry of any kind. Moreover, white goods belong to the electric engineering and instrument manufacturing industry; the manufacturing of electric engines; transformers and power station instruments are also part of this sector. In the union’s opinion, the development of this industrial area is rather contradictory. Before the metamorphosis of the politico-economic system, the main assignment of this branch was to supply both the domestic and international markets with refrigerators, washing machines, centrifuges, electric-stoves, water-heaters, etc. The extra capacity of the industry was used for enlarging dollar-related export possibilities. According to this sort of expectations the Hungarian companies have been securing the domestic supply, making efforts beyond that to appear with modern, up-to-date and qualitative goods on the western markets. This have been mainly achieved by buying licences like Bosch licence for manufacturing washing machines or providing delivery services for big store-chains, i.e. Quelle. After the changes of the system, these firms (with one exception) have transferred to foreign ownership, going through deep changes as well. This kind of transformation also occurred at the only single company that became the property of a bunch of Hungarian private investors. Hajdúsági Ipar Művek-HIM-: manufacturer of washing machines, centrifuges, water-heaters, etc. Having followed the politico-economic changes, the market has been enlarged and customers started to buy western brands of goods, while the market has been saturated with imported items, resulting in a gradual streamlining process, concerning both companies and their products. The main example in this process was Electrolux, which by buying up the Lehel refrigerator works also transformed its scale of products, initiating at the very beginning a lay off of its employees, while from the mid 90s, a continuous increase of personnel was witnessed, concurrently, transplanting the manufacture of some of the goods from eight West-European economies. Coincidently most of the western companies are conducting only business activities in Hungary, putting it otherwise, not producing consumer goods at all, i.e. Whirlpool, Bosch-Siemens, Hausgerat, etc. Due to the fallback in the domestic manufacturing

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capacities, the production value-importance of white goods branch decreased, today, a growing trend is seen in selling imported goods. White Goods manufacturing companies in Hungary Electrolux Type of product: refrigerator- and deep freezers, vacuum cleaners both manufacturing and selling as well as forest and gardening tools. No. of employees as of 01.07.2005: 3830 pax. Investments: 44 bn HUF during 14 years. The biggest investment of the pas few years is the founding of the Nyiregyháza plant, sided with continuous product- and technology development. Hajdúsági Ipar Művek HIM, Nationality: Hungarian. Type of products: hot water systems, storing instruments, household electric-gas boilers, agitator-disk washing machines, centrifuges, gas-boilers, flat radiators, and solar-energy produced hot water systems. No of employees: 946 pax. Activity: Continuous item-technology development. /Environmental care/ in the past few years, remarkable developments took place in technologies like: surface treatment, heat isolation and painting. SVT Wamsler Household Goods Mfg. Ltd. Co Type of goods: Non-electric household appliances, gas- oil- and solid material burners, fireplaces, and moulding goods. No. of employees: 1022 pax. Investments, activities: Procurement of CNC machines, laser-cutters, acid teraters, plasma-cutters, providing facilities for enamelling. Elekthermax Ltd. Co. /Dutch/ Type of products: Large-kitchen and household gas devices, gas-convectors, manufacturing household dishwashers, pipe heating-bodies, electric cooking ovens, smoothing irons, etc. No. of employees: 402 pax. No important size investing took place, the company struggles for survival, markets diminishing, topped with employment concerns. Geographical sub-division of plants

Electrolux Town of Jászberény Plant 3200 pax. Location: Mid-Hungary. Economic-social effect: In that given area-mainly at the town it is the largest employer, having essential role in the social, employment and economic performance of the county.

Electrolux-Nyiregyháza 630 pax. Location: East-Hungary. Rate of unemployment is about 20% in that area, therefore, the socio-economic repercussion of the plant carries extraordinary importance.

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Hajdúsági Ipar Művek Location: East-Hungary. Rate of unemployment in that region is approx. 20%; consequently, the socio-economic effect of the plant is extraordinarily remarkable.

SWT Wamsler Location: North-Hungary. This is the biggest employer in County Nógrád, positioning itself among the number one companies there.

Elekthermax Location: West-Hungary. Its role in that region is rather unimportant. Business perspective

Electrolux Past: Successful privatisation, up-to-date goods and manufacturing standards. Future: To maintain it’s market leading position.

Hajdúsági Ipar Művek Past: Market leader in electric boilers, water-heaters, agitator-disk washing machines and centrifuges in the domestic markets. Future targets: To increase production efficiency, discover market bottlenecks in order to secure business profitability.

SWT Wamsler Ltd. Past: Having privatised, majority of ownership German. Considerable markets in Hungary. Producing for exports as well. Future: Maintain its market position; introduce the company at the Stock Exchange.

Elekthermax: Past: Used to be a market leader in manufacturing electric-stoves, - fireplaces. Future: The company struggles for survival, markets narrowed down, and problems with employment.

Changes in employment in this branch

1991 2005 Future Electrolux 5100 pax 3830 to hold this standardHajdúsági Ipar Művek

3300 946

SWT Wamsler 2030 102 Elekthermax 1700 402 decrease of

personnel

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10. THE WHITE GOODS SECTOR IN THE CZECH REPUBLIC

REPORT BY OS KOVO Characteristics of the branch The branch – Manufacture of machinery and equipment (NACE 29) belongs to the most important branches of the national economy. The branch includes manufacture of machinery for a very general scope of use. Its products create components of production technologies in all branches of the manufacturing industry, civil engineering, and agriculture and mining activity and in the production of electrical power. They are used in the army, police and transport sectors and also in the households. In the year 1998 till the year 2002 in this branch 159 bankruptcies and liquidations happened of companies with at least 10 employees, which have impact on 24200 employees. If we include all the entrepreneurs subjects (including private persons) 303 companies went through bankruptcy procedure or through liquidation, employing at that time 24527 employees. Due to the stability of proportionate indexes it is evident that the companies that went through the bankruptcy procedure or through liquidation didn’t expire completely, they were restructured, sold and they continue to function including some transfer of majority employees. Based on gathered experiences, knowledge and skills new companies were created. More and more important are the SME´s, which are not only able to absorb employees from companies which through bankruptcy procedure or through liquidation, but which are also able to react on consumer demands. The branch, according to the Classification of Economic Activities NACE, comprises of the following seven groups: 29.1 Manufacture and repairs of machinery for production and use of mechanical power, except aircraft, vehicle and cycle engines (internal combustion engines, ship engines, locomotive engines, turbines, pumps, compressors, valves, gearboxes, crankshafts, gears and bearings). 29.2 Manufacture and repairs of other machinery and general-purpose machinery (furnaces, driers, refuse incinerating plants, burners, lifting, transport and handling equipments, cooling, ventilating and air-conditioning equipments, packing machines). 29.3 Manufacture and repairs of agricultural and forestry machinery (tractors, garden tractors, ploughs, planters, harvesters, milking systems). 29.4 Manufacture and repairs of machine tools and forming machines (metal, wood, stone and concrete-working machine tools, presses, power hammers, pulling stands, welding, solder and braze equipment, power tools).

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29.5 Manufacture and repairs of other special purpose machinery (mining, metallurgical, construction and earth-moving machines, rubbers and plastics processing machines, food, textile and publishing and printing industries machines, leather, glass and tobacco industries machines). 29.6 Manufacture and repairs of weapons and ammunition (weapons and ammunition for army, police, hunting and sport). 29.7 Manufacture of household appliances and equipment (electric and non-electric devices for household).

Shares of the groups in receipts from sales of own products and services in 2003

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Regional structure of the branch

Shares of regions in the main production indicators in 2002

Main economic indicators

Price development

Since 2001 a permanent growth of products´ and services´ prices has been obvious in the CPA 29.1 – Machinery for the production and use of mechanical power, CPA 29.2 – Other machinery and general – purpose machinery, CPA 29.3 – Agricultural and forestry machinery and CPA 29.5 – Other special – purpose machinery. In the groups

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CPA 29.4 – Machine tools and forming machines, and CPA 29.6 – Weapons and ammunition, after the yearly enhancement of prices a moderate decrease of prices has been registered. It was caused by the worldwide recession, which manifested namely in the machine tools, forming machines, weapon and ammunition manufacture; the influence of removal of the international tension on the European continent is surviving as well as the termination of exports into countries, which are risky with respect to safety. In the CPA 29.7 – Household appliances and equipment, after moderate decreasing of prices caused by the competition pressure lasting several years, the prices have been already stabilised. Main production indicators

Receipts from sales of own products and services in current and constant prices in 2000 – 2003

Manufacture of the entire branch expressed in receipts from sales of own products and services, in current and constant prices, had been growing in the period from 2000 – 2003. In 2002, however, the growth of the entire branch was not too pronounced and the groups 29.1 – Manufacture and repairs of machinery for the production and use of mechanical power, 29.4 – Manufacture and repairs of machine tools and forming

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machines, and 29.7 – Manufacture of household appliances and equipment, did not take share in it. In 2003 a turnover was already registered in the majority of groups inn the branch, namely in the group 29.1 – Manufacture and repairs of machinery for the production and use of mechanical power, and 29.5 – Manufacture and repairs of other special-purpose machinery. The development of the value added in the period from 2000 to 2003 has similar outline as the indicator of receipts from sales of own products and services. In the decline of production in 2002 namely the group 29.1 – Manufacture and repairs of machinery for the production and use of mechanical power and the group 29.4 – Manufacture and repairs of machine tools and forming machines, took share. A basic turnover was already registered in 2003. The largest value added in the last several years created the group 29.2 – Manufacture and repairs of other machinery and general-purpose machinery and the group 29.5 – Manufacture and repairs of other special purpose machinery.

Value added in current and constant prices in 2000-2003

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The number of labour forces in the entire branch has been continuously decreasing every year and it was amounted to 93,7% of the 2000 level. In comparison with 2002 the number of workers declined by 2,6%. An increase in the number of workers was registered only in the group 29.1 – Manufacture and repairs of machinery for the production and use of mechanical power.

Number of employees in 2000 – 2003

Development in main production indicators in 2000 – 2003

Total costs in current prices in 2000 – 2003

The total costs in NACE 29 are inter-annually growing by about 3%. They increased by 10.1 % in the last three years.

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The labour costs in the NACE 29 inter-annually increased by 1.6% only, when the largest increase of 8% was recorded in 2001. At the decreased number of workers it means that the wages were higher in 2003.

Labour costs in current prices in 2000 – 2003

Labour productivity and labour costs

Labour productivity from value added in current and constant prices in 2000 – 2003

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Labour productivity from value added in current prices has been inter-annually increasing since 2000, except the year 2002. In the whole branch this value increased by 25.9% as compared with 2000. In 2003 it was amounted to CZK 391.8 thousand/employee. The share of labour costs showed in the individual groups of the NACE 29 branch an irregular development. The entire NACE 29 branch has provided a stable value with a local increase of the share in 2002. The labour costs in 2003 were amounted to two thirds of the total costs (66.7%).

Share of labour costs in value added in current prices in 2000 – 2003

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Foreign trade

Development in foreign trade with NACE 29 products, in current prices in 2000 – 2003

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Development in foreign trade – NACE 29 in current prices, in 2000 – 2003

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Territorial structure of foreign trade Export territories in 2003

Import territories in 2003

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Investments Tangible investments Since 1997 the yearly investments in this branch have maintained the level exceeding 7 billion, except the year 1999, which was extraordinary week in investments. In 2003 almost CZK 10 billion were invested, which was by CZK 2 billion and by 25.6% more than in the foregoing year. It means that investors are awaiting and economic growth and are preparing its utilisation.

Development in tangible investments in 2000 – 2003 (NACE 29)

Foreign direct investments

Foreign direct investments – NACE 29

The effect of abroad investments in the branch is for its development without any doubts positive. Summary and perspective of the branch 29.7 – Manufacture of household appliances and equipment – there is great competition in this group. The market is controlled by the large marketing chains, which are selling goods under the “very” hard conditions for the manufacturers. The Czech manufacturers that are smaller are withstanding this pressure with large difficulties. A perspective development on the CR territory cannot be expected.

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11. THE WHITE GOODS SECTOR IN THE UK REPORT BY AMICUS

Introduction The UK white goods market covers sectors such as home laundry appliances, refrigeration equipment, cooking appliances, microwave ovens and dishwashers. The total market value for household appliances (white goods) reached GBP £2.81bn (3.93bn €) in 2004, only a 1.9% increase from 2003. The UK market for such goods is one of maturity where only the categories of dishwashers and tumble driers have much potential to increase volume sales. The main opportunity to increase the value of the white goods market is through technological innovation. The mature white goods sector employs 20,000 people and has an annual turnover of £799 million (1200 million €), of which £173 million (260 million €) around one fifth of total production is exported. The largest sector by value is home laundry appliances and dishwashers with a 37 per cent (37%) share of the white Goods total market. The state of the economy and of the housing market are particularly important to the demand for white goods, since purchases may often be deferred, consumers can opt for cheaper items than they may have wanted and it is a move to a new house that frequently triggers the purchase of household goods, whether for the first time or as a replacement. Service and repair of White Goods is also a major aspect of the sector, (circa 3500 service engineers employed in sector) however with the price of appliances ever decreasing only the expensive appliances are usually repaired unless an extended guarantee or insurance policy has been purchased. The white goods market is dominated by a small number of multinational manufacturers with well-known brands. Consolidation among them continues, with the most recent re-shaping being the UK operations of General Domestic Appliances Ltd (ex GEC and Marconi Company) and Merloni Domestic Appliances Ltd, which came together as Merloni Elettrodomestici UK Ltd, part of the Italian Merloni Group, now renamed the Indesit Company Globally and in the UK the Indesit Company UK Limited. Major Companies in the UK White Goods sector Indesit Company Set up in 1975 as Merloni Elettrodomestici, Indesit Company is the youngest of the sector’s world leaders and is one of the top 3 European white goods producers. Ariston and Indesit are the Group’s two “historic” brands, which are sold throughout Europe and lead the built-in and freestanding segments respectively.

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Hotpoint (originally manufactured electric Irons in USA by General Electric Appliances that heated right to the point hence Hotpoint) is the brand leader for washing machines in the UK with the manufacturing plant located in Kinmel Park in Wales. There are also 3 other manufacturing sites for tumble driers (undergoing major investment), refrigeration and cookers. Service in the UK is a major aspect of white goods and The Indesit Company UK Service Division has around 1600 employees. The Indesit brand itself is not that well known and as such the name Hotpoint will continue to be used, supplemented by other branding as required. The other distinctive regional brands - Scholtès and Stinol – are amongst the leaders in the France and Russia, respectively. Through its 20 production facilities and 22 commercial establishments throughout the world, Indesit Company applies a model of sustainable development that aims to further social progress wherever it operates. Significant in this context is the Company’s commitment to creating industrial districts in emerging nations such as Poland, Russia and, recently, China. Indesit Company has 20.000 employees worldwide and 20% are UK based. Products Marketed Brands Marketed Cookers Ariston Dishwashers Cannon Fridge/Freezers Creda Hobs - Built-In Hotpoint Microwave ovens Indesit Ovens - Built-In Refrigerators Spin Dryers Storage Heaters Tumble Dryers Upright Freezers Washer Dryers Washing Machines Factory Locations Cookers Washing Machines Grindley Lane Royal Welch Avenue Blythe Bridge Kinmel Park Stoke on Trent Bodelwyddan Staffs Clwyd ST11 9LJ LL18 5TY Employees at site: 807 Employees at site: 610

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Refrigeration Tumble Driers Morley Way Yate Peterborough Bristol PE2 9JB BS37 5HR Employees at site: 578 Employees at site: 637 Head Office lndesit Company Morley Way Peterborough PE2 9JB Turnover in the UK: 300m £ (450m €) Employees in the UK: 5515 MP MEP Dr Helen Clark MP Mr Robert Sturdy MEP House of Commons European Parliament London Rue Wiertz SWIA OAA 1047 Brussels Labour MP – Peterborough Belgium Conservative MEP -Eastern Mr Robert Flello Mr Michael Cashman House of Commons Terry Duffy House London Thomas Street SW1A 0AA West Bromwich Labour MP – Stoke on Trent B70 6NT Labour MEP Chris Ruane Mr Graham Watson House of Commons Bagehot’s Foundry London Beards Yard, Bow Street SW1A 0AA Langpot Labour MP – Vale of Clwyd Somerset TA10 9PS Liberal Democrat MEP Steve Webb Mrs Jill Evans House of Commons Basement Rear London 23 High Street SW1A 0AA Chancery Lane Liberal Democrat MP – Northavon Cardigan SA43 1HD Plaid Cymru MEP

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Electrolux Group The Electrolux Group has two business areas, Indoor Products and Outdoor Products, both of which include products for consumers and professional users. With sales of SEK 121 billion, Electrolux is the world's largest producer of appliances and equipment for kitchen, cleaning and outdoor use (Flymo and Husqvana). Electrolux is also one of the largest producers in the world of similar equipment for professional users. In 2004, Indoor Products accounted for 77% of Group sales and Outdoor Product for the remaining 23%. Products Marketed Brands Marketed Chest Freezers AEG Dishwashers Electrolux Fridge/Freezers Moffat Refrigerators Onyx Tumble Dryers Parkinson Cowan Vacuum Cleaners – Cylinder Tricity Bendix Vacuum Cleaners – Upright Zanussi Vacuum Cleaners 2 in I (Flymo and Husqvarna) Washer Dryers Washing Machines (Outdoor equipment) Electrolux Ltd Head Office: Electrolux Ltd Cornwall House 55-77 High Street Slough Berkshire SL1 1DZ Turnover in the UK: 300m £ (450m €) Employees in the UK: 3567 Factory Location: Electrolux Ltd Merrington Lane Trading Estate Spennymoor Co Durham DL16 7UU Employees at site: 800 MP MEP Mr Kelvin Hopkins MP Ms Eryl McNally MEP House of Commons European Parliament London Rue Wiertz SW1A OAA 1047 Brussels Labour MP - Luton North Belgium Labour MEP - Eastern

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Rt. Hon. Derek Foster MP Mr Stephen Hughes MEP House of Commons European Parliament London Rue Wiertz SW1A OAA 1047 Brussels Labour MP - Bishop Aukland Belgium Labour MEP - North East Mr Syd Rapson MP Mr James Provan MEP House of Commons European Parliament London Rue Belliard 97-113 SWIA OAA B-I 047 Brussels Labour MP - Portsmouth North Belgium Rue Belliard 97-I 13 B-I 047 Brussels Conservative MEP – South East Mr Kevan Jones MP House of Commons London SWIA OAA Labour MP - Durham North Ms Fiona Mactaggart MP House of Commons London SWIA OM Labour MP – Slough Rt. Hon. Tony Blair MP House of Commons London SW1A OM Labour MP - Sedgefield Hoover/Candy Group Hoover is a subsidiary of Candy, the parent company of CDA. Candy acquired it from Maytag Corporation of the USA in 1995. Hoover, founded in 1906, has a plant in Merthyr Tydfil, South Glamorgan, manufacturing white goods and another in Cambuslang, Strathclyde, and manufacturing non-white goods products. These include vacuum cleaners (vacuuming is often referred to as hovering in the UK due to extensive marketing campaigns), which in 1992 were subject to an over-subscribed free flights promotion. This eventually cost the company (then under Maytag ownership) some £48 million.

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Products Marketed Brands Marketed Dishwashers Candy Floor Polishers Hoover Freezers Iberna Refrigerators Kelvinator Steam Cleaners Otsein Tumble Dryers Zerowatt Vacuum Cleaners - Cylinder Vacuum Cleaners - Upright Vacuum Cleaners 3 in 1 Washer Dryers Washing Machines White Goods Factory Location: Same address as Head Office. Factory workers on site: 550 Parent Company: Candy Spa (Italy) Turnover in the UK: £212m (318m €) Employees in the UK: 1761 Hoover Ltd Head Office: Hoover Ltd Pentrebach Merthyr Tydfil Mid Glamorgan CF 48 4TU MP MEP Ms C Russell MP Mrs Glenys Kinnock House of Commons Labour European Office London The Coal Exchange SW1A CM Mount Stuart Square Labour MP - City of Chester Cardiff CF10 6EB Bosch Siemens Home Appliances Ltd BSDA (registered in 1985 and based at Hayes, Middlesex) is a wholly-owned subsidiary of Bosch-Siemens of Munich, Germany, itself jointly owned by Robert Bosch GmbH and Siemens AG. Two other German white goods manufacturers owned by Bosch-Siemens, Neff GmbH of Bretten and Gaggenau Werke GmbH of Gaggenau, have UK subsidiaries, Neff and Gaggenau (UK) Ltd. BSDA supplies reference white goods in the UK under the brand names Bosch, Siemens and Neff. They are all imported from Bosch-Siemens and manufactured by the two parent companies. In some cases the same model is supplied under all three brand names. Another BSDA subsidiary, Appliance Care Ltd, handled all after-sales servicing for the group. All BSDA products are relatively highly priced. Neff deals almost entirely with the built-in market and does not supply tumble driers. Gaggenau, acquired in January 1995, supplies mainly high- specification cooking equipment and its sales of reference goods are very small. At present it is separately managed and sources its products from its own immediate parent company.

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Products Marketed Brands Marketed Air Conditioning Bosch Cookers Gaggenau Dishwashers Neff Food Preparation Siemens Freezers Superser Gas Fires Heating Products Hobs - Built-In Irons Kettles Microwave ovens Ovens - Built-In Refrigerators Toasters Tumble Dryers Vacuum Cleaners - Cylinder Vacuum Cleaners - Upright Washing Machines Turnover in the UK: £145m (217m €) Employees in the UK: 460

Head Office BSH Home Appliances Ltd Grand Union House Old Wolverton Road Wolverton Milton Keynes MK12 5PT MP MEP Dr Phyllis Starkey Mr James Elles House of Commons Disraeli House London 12 Aylesbury End SW1A 0AA Beaconsfield Labour MP – Milton Keynes South West Bucks HP9 1LW Dyson Ltd James Dyson established his business in the UK initially with a bag less vortex vacuum cleaner, which was also manufactured in the UK. However in 2002 all UK production was ceased the factory closed and the product is now manufactured in the Far East with only the design process & marketing carried out in the UK. Products Marketed Brands Marketed Vacuum Cleaners Dyson Washing Machines

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Head Office Dyson Limited Tetbury Hill Malmesbury Wiltshire SN16 ORP Turnover in the UK: £277m Employees in the UK: 1200 MP MEP Mr James Gray Dr Caroline Jackson House of Commons 14 Bath Road London, Swindon SW1A 0AA Wiltshire Conservative MP – North Wilshire SN1 4BA Conservative MEP Crosslee Plc Crosslee of Halifax, West Yorkshire, is a manufacturer of tumble driers, and a supplier to the UK market under its White Knight brand. It was formed in 1986 following a management buy-out of the UK tumble drier facilities of Philips (which later sold its other UK white goods interests to Whirlpool). In addition to direct sales of its White Knight brand, Crosslee supplies tumble driers to Emaco (under the Zanussi and Tricity Bendix brands), MDA (Indesit and Ariston brands although currently under notice as Indesit intends to produce all models at ex GDA Hotpoint factory), Whirlpool, Candy and Servis, and a Thor brand that is sold by an independent distributor of that name in Northern Ireland. It exports 60 to 70% of its output. Crosslee also supplies a very small number of washing machines and dishwashers in the UK under its White Knight brand; these are imported from Spain. Its White Knight products are sold mainly to multiples. Products Marketed Brands Marketed Fridges Hostess Deep Freezers Royal Cozyfire Electric & Gas Fires White Night Hostess Trolleys Spin Dryers Tumble Dryers

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Head Office Crosslee Plc Lightcliffe Factory Hipperholme Halifax West Yorkshire HX3 8DE Turnover in the UK: £50m (75m €) Employees in the UK: 730 MP MEP Mr Gerry Sutcliffe MP Mr Richard Corbett House of Commons 2 Blenhiem Terrace London Leeds SWIA OAA LS2 9JG Labour MP - Bradford South Labour MEP Evolution and Developments of the Sector The white Goods market has to adapt along with technological evolution where ‘built in’ appliances are being demanded to fit in with the modern household. No longer will consumers just accept white box shaped appliances, but demand design features and colour coordination. The ability to place products at the right price with all the required innovations is the challenge for the sector, as then growth could become achievable. The ‘value’ end of the market is very competitive where instead of repairing the product consumers opt to replace especially if the price point is below £140 (200 €) whereas higher value may well be repaired. To remain competitive and also produce goods that offer a return on the investment the UK mature market is moving towards the mid to high end price point where additional features can command a higher price. The idea of a refrigerator having Internet access or a cooker being able to download recipes seemed science fiction. However these are features already available as convergence even in domestic appliances becomes available. Washing Machines with higher load capacities are also being developed for the home market whereas previously these were purely commercial products for guesthouses or hotels. Without evolution, innovation and added value producing low cost high volume products alone would leave the UK and indeed Europe’s producers at risk of low cost Far East Globally and Eastern Europe (non EU and new EU entrants) have producers both new and established names who have relocated and who are intent to continue to dump low cost products into the UK and the EU in general.

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To defend manufacturing within the UK is a priority for Amicus as without a manufacturing base the whole economy is at risk. The sector provides employment for thousands, with the associated infrastructure distribution, servicing. If the sector diminished it would be unlikely that it would ever return, skilled and semi skilled employment would be lost, and the balance of payments deficit (Gross Domestic Products or GDP) would undoubtedly increase to the detriment of all citizens of the UK and indeed Europe in general. Even consumers who may well see price reductions in the short term will also loose out in the long term, as economic instability does not just affect the sectors employees.