What does Maytag’s future hold?

What does Maytag’s future hold?
Date February 25, 2004

By PETER HUSSMANN
Editor

One hundred seventy people will be laid off from Newton Maytag laundry production operations on Friday.

Maytag will soon launch two additional products to augment its high efficiency laundry offering. Production will occur outside the United States at an existing plant in Seoul, South Korea, in what’s being called a “partnership” with Samsung Electronic Co., Ltd., already a player in Maytag’s relatively new appliances services business.

The president of Maytag Appliances, Bill Beer, is currently touring local civic organizations saying that Newton Laundry Products, known to locals as Maytag Plant 2, will not be the site of any new platforms or products until such factors as quality, cost, safety and delivery are addressed. He is also telling community members the difficulties the appliance manufacturer faces in remaining competitive in a global marketplace.

The community is biting its collective fingernails.

Maytag’s spokesperson, Lynne Dragomier, won’t give the exact number of people receiving layoff notices. The “adjustment to production numbers,” i.e. workers, she said, is “driven by market demand,” a fluctuating situation which occurs from time to time depending on market forces.

UAW Local 997 President Pat Teed puts the number at 170 people. Further, he says, the total number of production workers now on layoff reaches nearly 600. Employees hired as long ago as April 1998, as Maytag ramped up production of its Neptune model, now find themselves without work.

In late January, during a conversation with investors, Maytag CEO Ralph Hake said the corporation planned to launch two new laundry products.

“We also expect to launch two additional products in 2004 to augment our high-efficiency laundry offering,” he said.

Dragomier said the announcement on Tuesday accounts for both of the laundry products first alluded to by Hake in a conversation with investors a month ago. She said the high-efficiency, front-load products, to be produced in Korea under the Maytag and Amana brands and sold through current distribution channels in the United States and internationally, do not amount to new product platforms.

The “strategic alliance” with Samsung, she said, was based on the corporation’s finding that it could find better “value” and “speed to market” through the “partnership” with Samsung than through its four laundry manufacturing facilities in the U.S.

Beer, the long-time local Maytag executive, who left the company briefly while Maytag was was run by former CEO Lloyd Ward only to be asked back under the interim direction of Leonard Hadley upon Ward’s departure, has met with a number of local groups, including a standing-room-only discussion with retirees in mid-February at the DMACC auditorium, to spell out Maytag’s business situation and how it might impact the community.

As it stands, Beer says in an article appearing in today’s Progress Edition, included inside this edition of the Daily News, the Newton Maytag production plant stands no chance of future investment for new product lines or appliance platforms due to its below than acceptable rankings on cost, quality, safety and delivery measures, among the other facilities within its other four U.S.-based laundry production facilities.

“As it stands today, Newton is not eligible for new product platforms,” Beer said. “There will be no new launches here.”

Maytag CEO Hake targets negotiations on the collective bargaining contract, which expires May 31 for UAW Local 997 members, as key to the future of local Maytag operations.

“Especially at Newton, we will be examining, with union leadership, how that plant can become more cost effective and competitive so that they may again become eligible for new product platforms and preserve jobs,” he said.

But both Beer and Teed are optimistic a successful conclusion to negotiations can be reached. Negotiations are expected to begin in early April with the contract expiring May 31.

“The management team at Newton Laundry Products and the UAW understand the work they need to do,” Beer said. “I’m an eternal optimist. I’ve been through lots of contracts and I remain optimistic the two groups will find ways to address the situations. The working relationship between the two groups has never been better.”

Teed agreed.

“I’m looking forward to a positive round of negotiations,” he said. “The new workforce is educated, hard-working and the most productive. We’ve always had a great relationship (with the company) and have always done what was asked. The future here is bright.”

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