Kongsberg Automative, a History of Closing Plants

So, I've been reading and talking to Joe about the news of the lock out in Van Wert county, Ohio (my home state).

I decided to do a little digging into Kongsberg. Norway is a trade unionist country with very strong ties to the international trade unions among European countries. So, I decided to look at their 4th quarter annual report to see what they had to say.

Apparently, they had a loss of revenue (they lost money) when they closed their Amotfors seat heating system plant.

Norwegian vehicle components maker Kongsberg Automotive Holding ASA announced on Friday (28 September) that it has initiated employee negotiations regarding a possible closure of its seat heating systems plant in Amotfors, Sweden.

Kongsberg Automotive said that it plans to transfer the operations to its existing production facilities in Poland in order to reduce costs.

The reorganisation reflects persistent margin pressure in the European automotive industry, Kongsberg Automotive said.

"We are one of the world's leading suppliers of seat heating systems for cars. To maintain this position we must adapt our production costs to a level which yield acceptable earnings also in future," said Olav Volldal, CEO of Kongsberg Automotive.

"The potential closure is not because our employees have not performed. It is due to the significant cost gap between high cost and low cost countries," Volldal added.

The restructuring of the operations will affect 90 employees in Amotfors.

So, that had me thinking. They were willing to close a profitable plant on the hopes that they'll be even more profitable when they pay lower wages and move out of high environmental standard Sweden and into low environmental standard Polland. But best of all is probably the line form their Fourth Quarter 2005 annual report where they noted:

The Group is reporting a tax cost percentage of 26 % in 2005. The tax cost is around 28 % for all the countries where Kongsberg Automotive operates, except for Poland where the tax rate is 19 % and the USA where the tax rate is around 33 %. There are no taxes payable for the Norwegian operations due to significant tax loss carryforward related to the Raufoss acquisition.

Do you see the tax base numbers? 33% for the US and 19% when they do business in Poland. So, how long will it be before they move the Van Wert Teleflex operations to Poland?

Sure seems as if this is their kind of business model...acquire patent technologies and then burn the communities where these items are made as they move to less taxing, less environmental standard countries. I really doubt this lock out has anything to do with the workers and everything to do with the way Kongsberg sees the US, as 33% tax. Looks as if they just want to lower the tax rate, costs for doing business and of course labor costs to that of Poland. Come on Poland, what happened to Solidarity?