In a recent story originally reported by greenindustrypros.com, we learned that Husqvarna was struggling to meet dealer demand for product orders in the U.S. market. In an Interim Report posted to their website on July 19, Husqvarna revealed that production issues were experiences at the Orangeburg, SC, factory after moving production there from the Beatrice, NE. It also resulted in higher production costs and lower sale numbers for the second quarter.
"For the second quarter, reported sales for the Group decreased 11%, but adjusted for exchange rates the decrease was 1%. For the first half-year, sales adjusted for exchange rates increased by 2%. Industry demand decreased in North America and together with the supply chain challenges in the Orangeburg factory sales were affected negatively,” reports Hans Linnarson, acting CEO and president. “The production disturbances continued to hamper the output from Orangeburg as well as resulting in higher costs. As a result of measures taken, the going cost rate directly related to the disturbances gradually decreased.
In an audio presentation of the report, Linnarson concedes: “It’s impossible to stand up here without (acknowledging) the problems we have had in north America and U.S., the plant actually in Orangeburg here. It was announced that we have some issues there and of course they continued through the quarter.”
In the report, it was explained that: “The production disturbances are due to the increased complexity of materials, associated with the combination of the move of the production from Beatrice, NE, into the production facility in Orangeburg, SC, as well as a significantly higher number of new products being launched.”
The company has stated they will make secure and timely deliveries in 2012 their highest priority. Working toward this goal will also add to production costs for the second half of 2011.
“Further measures will be taken within the Orangeburg factory which is expected to result in SEK 100 - 150m higher costs during the remainder of 2011,” says Linnarson. “We are also planning to increase our pre-season production. As production capacity and flexibility to guarantee the highest delivery performance will be prioritized, we will also review the pace of our ongoing restructuring projects. Savings from manufacturing footprint restructuring will therefore be delayed. The Group's operating income declined in the second quarter. Higher selling prices and a favorable mix were not able to offset negative currency effects, costs related to the production disturbances, higher input costs and marketing expenses."
