Ikea plans to close its only U.S. factory site and shift operations to Europe. The Swedish furniture company’s Danville, Virginia, manufacturing facility will close in December, cutting about 300 jobs, The Wall Street Journal reported. The company said its production costs in Europe will be lower and that importing the goods will make its products more affordable in North America, according to the report.
Total Retail's Take: The cost to operate the U.S.-based factory proved too much for Ikea to justify keeping it open, especially considering the furniture retailer's extensive production capabilities in Europe and Asia. Growing minimum wages is impacting many industries, with retail being one of the hardest hit. This week the House of Representatives passed a bill raising the federal minimum wage to $15 an hour, drawing criticism from the National Retail Federation (among other business groups).
“This unprecedented proposal to increase the minimum wage by 107 percent is a one-size-fits all approach that would lead to unintended consequences for American workers and the businesses that employ them,” said David French, senior vice president of government relations at the NRF.