Ikea Plant Closure: Why Are 300 Employees Losing Their Jobs?

Swedish furniture company Ikea is shutting the doors to its U.S. factory effective in December. The company said it will move all of its manufacturing operations to Europe in an effort to cut costs.

The Danville, Virginia, furniture factory is the only production plant that Ikea has in the states. The site opened in 2009 and employs about 300 workers. The 300 workers that will lose their jobs because of the plant shutdown will be offered job search assistance, MSN reported.

The European move will allow Ikea to reduce its raw material costs, which is said are higher in the U.S. The company has plants in nine countries and employs about 20,000 people.

"We made every effort to improve and maintain the competitiveness of this plant, but unfortunately the right cost conditions are not in place to continue production in Danville," site manager Bert Eades said in a statement.

Despite the imposed tariffs on imported particle board, which Ikea commonly uses in the production of its furniture, the company said it was not the reason for the move. The particle board Ikea uses in Danville to build its furniture is purchased from U.S. suppliers, CNN reported.

The layoffs in Danville are not the first for Ikea as its holding company, Ingka Group, said last year it would cut about 7,500 employees globally within the next few years. The company has plans to build 30 smaller-format locations in major cities that are located around the world, creating 11,500 jobs, according to the news outlet.