Swedish Chutzpah II

Translation of main points from the original article in Dagens Industri:  2005-04-12  by Johan Öberg
"Electrolux expects a reduction in cost of 21% from the materials/services you deliver to Electrolux."

• Electrolux's letter to every one of their suppliers dated March 18th was worded very bluntly, and stated Electrolux expects cut in supplier's prices of 21% retroactive to January 1st this year.
• The letter stated in part: "We look forward to receiving your detailed action plan/recommendations within 10 days before we move on to the next phase of this process." It was signed by the three exec's responsible for procurement.
• Jacob Broberg, Electrolux spokesman:
  "We confirm issuing the letter, but we are publishing our quarterly report shortly and it is too soon to answer any questions. We offer no comment to reactions from our suppliers, nor how many suppliers have committed to this severe price-cut."
  "It is part of our strategy for cutting costs."
  "We are also considering using suppliers from low-cost countries, and moving parts of our own production to low-cost countries."
• Electrolux is facing stiff price competition, mostly from Asian manufacturers such as Korea's LG Electronics.
• The letter uses formulations that practically reek of desperation. "As you are aware the industry's manufacturers as well as retailers are being exposed to extraordinary sharp competition in the market place. Electrolux is no exception and we are willing to take extraordinary and immediate measures to remain competitive in this changed environment. If we cannot answer this new market climate together, we stand to both lose substantial market share."