The first warning of the tsunami that had just begun with the sudden closure by the Beko di two factories in Poland (1800 employees) by relocating production to Romania and Türkiye, was the heavy loss on profits – passed over in silence – of the first half of 2024, announced by Anonymous Sirketi Archelik, that is, Beko, on July 30 (with a delay of one month). The shock for the Turkish multinational, accustomed to always very healthy profits, must have been considerable. Also because the very rapid expansion outside Turkey of Beko, desired and conducted by Hakan Bulgurlu on the basis of numerous and very expensive acquisitions, concluded with the challenging joint venture with Whirlpool for the sale of activities in Europe, Africa and the Middle East, has gradually coincided with the progressive and worrying falls in European sales of majaps, weighed down by price competition from Asian competitors.
Golden Power, will it be enough?
The expectations of the government and the unions for the five Italian factories and the approximately 5 employees, are proving difficult to satisfy. The announcement of theGolden Power exercise by the Government, will not be enough: as the CGIL of Ancona has underlined, in a complex scenario like the current one, with a contraction in volumes that is becoming structural, the simple commitment not to carry out relocations may not be enough. And Beko responded negatively to the metalworkers' union that had asked to be involved in the industrial plan.
The reasons for the closure
For some years the madwoman relocation policy in Polandon the part of multinationals, it didn't work anymore. Apart from the fact that the cost of labor has risen considerably, Poland has become rich, has very low unemployment rates, and dismissed employees quickly find work and compensation. Its oversized factories have become unprofitable because the types, all freestanding, had remained unsold for a long time. Technically, the sites have been suffering from huge losses for years and years, in particular Łódź e Wrocław, because they were working at no more than 20 percent of their capacity (in total they reached only 300 thousand majaps) due to the wrong choices made by Whirlpool. Here the US leaders had invested massively for create the largest European platform of free-standing appliances. Precisely the mega segment where low-priced, low-quality Made in China has triumphed for decades. And where margins, thanks also to the crazy price wars in the retail sector, have been destroyed.
All European Free Standing at Risk
What happened in Poland is happening in part and for some types also in other European production sites. Free standing sales in sharp decline have progressively lowered capacity and profitability. The break even of a manufacturing plant comes when it is active at about 75% of its capacity. For years now, the value and profitability come from built-in appliances, especially those for cooking and air treatment, which boast design, customization, quality content, and the professional distribution of cooks who have been careful not to lower their price lists. Unless in the coming months the very recent agreement between the giant Midea and Mondo Convenienza for the distribution of the made in China proceeds (a European-Chinese mix of not excellent formal and executive quality) does not begin to erode this sector too.
Troubled waters for the CEO
What reorganization plan that the company had announced for September will not happen or, at least, it will not happen before October and in any case it will require heavy adjustments to the Italian production sites. Meanwhile, the English ex Indesit factory in Yate is also moving towards the cessation of activities, which had been announced for some time. Another warning: the brilliant and dynamic Bulgurlu, accredited by the press and the Brussels institutions as fervent environmentalist, would have met with criticism not so veiled at home, within the holding companies. With a slowdown in his promotion to the highest levels of Koç, as is traditional practice for Arçelik CEOs, and as had happened to his father Bullent, promoted to CEO of the Group. And in any case, as happened with the closure of the two Polish sites, everything is decided in Istanbul, exclusively by the narrow family summit of the Koç family.
The European slowdown on green
Altra braking, that to the Europe's ambitious environmental programs, caused by the advance of the populist-Lega members, which has dealt a very hard blow to European companies engaged in the very expensive green transaction but hit by the unfair competition of Asian multinationals that do not have any kind of social, environmental, economic and political constraints on all world markets. And the Beko, which under the direction of Bulgurlu has has long chosen a path with a strong green imprint, has to deal with these changes.
For Beko, no sanctions against Russia
The crisis in sales in the European markets is much more serious for the TV and consumer electronics sectors, sectors where the group also operates with the Grundig brand (acquired after the bankruptcy of the German company of the same name). Compared to European competitors, However, Beko can boast three highly strategic and profitable assets starting from the prolonged and elevated devaluation of the Turkish lira which has been greatly supporting the Group's exports for years and years. According to asset large production capacity in the air conditioning sector, a segment that is and will be constantly growing. The third asset, the Russia, is even more favorable and once again penalizes European companies hit by the sanctions imposed by the USA. Neither Bosch nor Electrolux are present in the large Russian market and in those of the numerous Russian-speaking countries, which boast economies in strong growth. Turkey has never accepted to submit to the US diktat and the consequences Turkish companies – including Beko – operate on those markets without any limit. A gigantic advantage. For this reason, Arçelik had paid over 2022 million dollars in 220 for the two Russian factories formerly owned by Indesit and Whirlpool, equipped with a capacity of 2,8 million devices including refrigerators and washing machines, at the top of that market.
13 years of acquisitions
Beko's accelerated growth in Europe, Middle East and Asia for over ten years, and excellent debuts in the Americas, have been backed by a very expensive series of acquisitions, supported by one of the richest holdings in the world. Acquisitions and openings of hubs that the slowdown in global sales is starting to undermine. Here is a brief list of operations most important.
- 2011: Acquisition of Defy, No.1 in home appliances and climate in South Africa, for $230 million, and subsequent expansion in Africa
- 2016: Thailand, new 100 million dollar site
- 2016: Acquisition of Dawlance, No.1 in Pakistan, for $258 million
- 2017: Romania, new washing machine site worth 100 million dollars
- 2017: India, joint with Voltas of the multinational Tata for a new refrigerator factory of 100 million dollars
- 2019: Singer, a leader in Bangladesh, acquired for $75 million
- 2020: Acquisition of 60% of Hitachi Appliances for $350 million and subsequent expansion in Asia
- 2021: Acquisition of Whirlpool Global Holdings' refrigeration and washing units
- 2021: Acquisition of the Manisa (Türkiye) refrigerator plant from Whirlpool for 78,3 million euros
- 2022: Acquisition of the two ex-Indesit and ex-Whirlpool factories in Russia for 220 million euros
- 2022: Egypt, construction of second plant begins for an investment of 100 million dollars
- 2023: Acquisition of Whirlpool's operations in the Middle East and Africa for $20 million
- 2024: Completion of the transaction between Whirlpool Corporation and Arçelik for the sale of 75 percent of Whirlpool EMEA for 750 million euros to the Turkish company
