Ikea will shut down its operations at Cane Creek Centre industrial park in December, forcing its nearly 300 employees to find work elsewhere.
The company announced the decision Wednesday afternoon, citing high costs for raw material in the United States.
Production will move to existing Ikea Industry manufacturing sites in Europe to meet demand in North America, company officials said in a news release.
“Conditions are not in place to run competitive production in Danville,” site manager Bert Eades said. “Despite many efforts to improve, the cost structure for production in Danville is still too high, especially, when it comes to raw materials. This results in pricing significantly higher than for other existing Ikea plants making the same products.”
He said the ongoing tariff wars between the U.S. and other countries do not play into the high costs.
The plant opened in Danville in May 2008, with then-Gov. Tim Kaine sawing a log in half as part of the ribbon-cutting ceremony.
“Three hundred people are out of work and it’s obviously going to be a huge challenge for them,” Danville City Manager Ken Larking said.
Larking pointed out that the high costs for raw material would have affected Ikea if the company were anywhere else in the U.S. It’s not unique to Danville or Virginia or North Carolina, he said.
“It’s disappointing news,” Danville Economic Development Director Telly Tucker said, adding that his office will work with Ikea and state and local officials to make sure employees have options for other jobs and retraining where needed.
The announcement comes just six months after the Danville plant laid off about 90 employees. High inventory and lower-than-expected sales led to that decision.
Ikea Danville’s production for 2018 had been about 25% less than what was anticipated in its budget, Eades said in December 2018, when the January layoffs were announced.