Stockholm, Sweden-based Atlas Copco last week announced its decision to establish a factory for assembly of pneumatic power tools in Hungary. Designed to strengthen the long-term competitiveness of its Industrial Technique business area, the step includes a proposal to transfer assembly from Hemel Hempstead, Great Britain.

“This is part of our strategy to increase sourcing from Eastern Europe and Asia,” said Fredrik Möller, business area president, Atlas Copco Industrial Technique. “By establishing production in Hungary, we are lowering our cost base and safeguarding our future growth prospects.”

The factory, located close to Budapest, will become fully operational during the first quarter of 2008. A consultation process will be initiated in Hemel Hempstead, where Atlas Copco primarily produces pneumatic tools for the automotive and general industry under the CP Desoutter brands. The measures are expected to affect approximately 85 employees. The factory currently employs almost 200 people. Costs related to the proposed move amount to slightly less than SEK 50 million (about U.S. $7.7 million).

“We regret the unfortunate situation this change will represent for our employees in Hemel Hempstead, and the company will take every reasonable action to assist those affected in achieving alternative employment either within or outside the Atlas Copco Group,” Möller said.

Great Britain is an important market for Atlas Copco and the changes will not have any effect on the marketing, sales and service of CP Desoutter products.
“This reorganization will give us the efficiencies of production and administration to be able to operate in the market with a greater competitive edge and to further develop the range and quality of products to the benefit of our customers,” said Möller.

Atlas Copco is a global provider of industrial productivity solutions. The products and services range from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems, to related aftermarket and rental.

Atlas Copco’s Industrial Technique business area develops, manufactures and markets industrial power tools, assembly systems, aftermarket products, software and service.