Hake: No plans for more plant closings

Hake: No plans for more plant closings
Date May 13, 2004
Section(s) Local News

NDN Staff Writer


Maytag Chairman and CEO Ralph Hake did little to ease the concern of Newton residents over the future of laundry production operations in the city other than to say there are currently no plans to close any more U.S. plants.

Hake met with reporters following the corporation’s annual shareholder meeting, but was reluctant to discuss specifics of the Newton operation due to ongoing contract negotiations between the company and UAW Local 997. The current three-year contract expires at the end of the month.

Since the beginning of the year, Maytag officials have said the Newton operation does not stand to gain any new product platforms until such issues as safety, quality, cost and delivery are addressed.

Employment levels at the plant have fallen by nearly 1,000 people since the high point of production in the late 1990s. Currently, there are approximately 1,600 production employees at Maytag’s Newton facility. And late last month, salaried personnel involved with Maytag operations were terminated as a result of reduced production levels.

“Without major changes, Newton is not eligible for new products,” Hake said. “Newton is one of our highest cost plants.”

Reluctant to identify specifics of the improvements needed, Hake did say that union officials have been working with the company to address some of the problems. He noted that safety rates have been improving but remain above average and that improvements in production methods have occurred.

“The union has been working with us,” he said.

Although reluctant to speak about the future of Newton’s operation, Hake did say that future growth areas will go to those plants that can be most competitive.

“I’d love to see them all grow, but those plants that are most cost effective are the ones most likely to grow,” he said.

At the shareholders meeting, Hake said increasing competition from imports and falling prices for appliances impacted Maytag’s profitability in the past year.

Maytag’s leader promised continuing changes to keep the company profitable in the global market. By building company brands, delighting customers and continuing to innovate, he said, the company can persevere.

Hake recapped 2003, outlined plans for the future and fielded some heated questions on the closing of the company’s Galesburg, Ill., plant during the hour-long meeting.

During his presentation, Hake noted that competition for Maytag products is heavy, including increased competition from foreign companies. This has led to decreasing prices for Maytag products. In 1974, a Maytag washer retailed for about $499, he said, while today a washer with more features retails for $439.

“In the appliance industry, the competition is so fierce that the price we can garner for our products moved down,” he said.

Looking back at 2003, Hake noted a 2.7 percent sales growth, major appliance marketshare gain and the expansion of Maytag Services. He highlighted new products released during the year, including the Skybox personal vendor, a French door refrigerator and the Neptune drying center.

Hake also mentioned a decrease in earnings in 2003, which he attributed primarily to the Hoover brand. In particular, Hoover has been hurt by increased competition from imports and soft sales of upright vacuums. Hake promised to revamp Hoover to improve its profitability and announced that 15 new Hoover products are planned for this year, a “record number.”

Hake also noted that employees at the Hoover plant in Ohio agreed to restructure their contract as a cost control measure.

Repeatedly during his presentation, Hake mentioned the need for Maytag to continue to make changes to remain competitive.

“Change has been and will continue to be a way of life at Maytag,” he said.

Often with change comes resistance and after his presentation, Hake was hit with tough and sometimes heated questions from shareholders. Several machinist union members questioned company decisions surrounding the closing of the plant in Galesburg and the transfer of those jobs to a facility in Mexico.

One man asked how Maytag could justify closing the Galesburg facility if the company truly is concerned with the communities where it operates.

“Your actions in Galesburg indicate you have little concern for the communities in which you function,” he said.

Another man named two soldiers serving in Iraq who worked at the plant and asked what company executives would say to them when they return to find their jobs gone to Mexico.

Hake repeatedly rebutted comments about closing the plant by referring to its lack of profitability.

“I understand your point of view,” he said in response to one Galesburg questioner. “The truth, is the compelling financial argument to shut down at Galesburg was overwhelming and necessary for shareholders.”

Hake further added that the refrigerator manufactured at the plant was not selling well, and that continuing to produce that product in Galesburg would cost the company money.

Of all the commenters, only one voiced support.

“I support you and what you’re doing,” one man said, “You have to do what you can to be competitive in the world market.”

Near the end of the question and answer session a shareholder asked if the company had plans to relocate additional plants to Mexico.

Hake responded by saying Maytag will try to keep jobs in the United States where they remain financially viable.

“My goal is to protect as many American jobs as we can,” he said. “Time will tell if we can.”


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: