Archive for July, 2004

Maytag sues Electrolux over washing machine basket patent

July 27, 2004
Maytag sues Electrolux over washing machine basket patent
Date July 27, 2004
Section(s) Business

Associated Press Writer

DES MOINES, Iowa (AP) — Maytag Corp. has filed a patent infringement lawsuit against competitor Electrolux Home Products Inc. over the design of plastic washing machine baskets.

The two-count civil lawsuit, filed Friday in U.S. District Court in Sioux City, alleges that the Frigidaire division of Electrolux is manufacturing, using and/or selling products which infringe on two patents assigned to Maytag in 1999.

A patent issued in March 1999 details the design of the basket and one issued in November 1999 explains a one-step cost-effective method for molding the basket.

Patent documents indicate the plastic basket was designed to replace traditional metal baskets which cost more to manufacture.

Maytag seeks a permanent injunction to prevent Electrolux from using the designs and monetary damages with interest.

Company spokeswoman Lynne Dragomeier said she couldn’t place an amount on the alleged damage.

“We would not comment on that because it is an active litigation,” she said.

Dragomeier said the company discovered what it believes is the infringement “as a part of our normal practice of being very diligent regarding patent enforcement.”

The company seeks a jury trial, according to court documents.

“We have not yet reviewed details of the charges and cannot comment on matters in litigation,” said Elextrolux spokesman Tony Evans. “However, we are confident that it will be shown that there is no merit to the charge.”

Maytag, based in Newton, manufactures and sells laundry equipment under the Maytag and Amana brands.

Electrolux Home Products is the North American division of Sweden-based AB Electrolux. It was formed in 1997 when Electrolux combined with American Yard Products, Frigidaire, and Poulan/WeedEater.

Frigidaire, based in Atlanta, manufactures and sells washers and dryers in addition to other home appliances.

Maytag and Frigidaire have laundry machine manufacturing plants in Iowa.


Credit analysts lower their outlook for Maytag

July 27, 2004
Credit analysts lower their outlook for Maytag
Date July 27, 2004
Section(s) Local News
DES MOINES (AP) — Two credit analysts lowered their outlook for Maytag Corp. Monday citing weaker-than-expected second quarter financial results.

Standard & Poor’s Ratings Services revised its outlook for the Newton-based appliance manufacturer from stable to negative.

A report by analyst Jean C. Stout expressed a concern that Maytag “will be challenged to improve its operating performance and market share in the near term despite actions taken to reduce its cost structure, improve its operating efficiency, and launch new products.”

Maytag‘s short-term corporate credit and commercial debt ratings were lowered to A-3 from A-2. Ratings for long-term corporate credit, senior unsecured debt and medium-term note programs were maintained at the previous BBB level.

Maytag had about $1.1 billion of debt outstanding at July 3, 2004.

Fitch Ratings downgraded Maytag‘s senior unsecured rating to BBB- from BBB and its short-term debt rating to F3 from F2.

Its rating outlook for Maytag remained negative.

“Fitch expects operating earnings to remain under pressure in the near term as steel costs remain high and actions to reduce high inventory levels negatively impact sales and operating profits,” analyst Thomas P. Razukas said in his report.

Maytag‘s chief executive told analysts Friday that efforts to cut costs through closing an Illinois refrigerator plant, seeking concessions in labor contracts and a corporate restructuring that eliminated 1,100 jobs will improve the company’s outlook.

The introduction of newly designed refrigerators and vacuum cleaners also should help improve sales in coming months, said CEO Ralph Hake.

Maytag posted a second quarter loss of $41.1 million, or 52 cents a share on Friday. Sales for the quarter were $1.15 billion, down 1 percent from $1.16 billion from a year ago.

Maytag‘s stock was up to $19.76 after falling to $18.54 on Friday.

Maytag earnings tumble

July 23, 2004
Maytag earnings tumble
Date July 23, 2004
Section(s) Local News
DES MOINES (AP) — Maytag Corp. posted a loss Friday of $41.1 million, or 52 cents a share, due to falling sales in housewares and commercial products and major costs from a strike, legal costs and a corporate restructuring plan.

That compares to a profit of $25.2 million, or 32 cents a share, a year earlier.

Sales for the quarter were $1.15 billion, down 1 percent from $1.16 billion from a year ago.

Investors reacted negatively to the news, dropping the company’s stock price to a low of $18.54 in heavy trading this morning. The stock has hit 52-week lows three times this week.

The nation’s third largest appliance manufacturer wrote off 13 cents a share in restructuring charges for a refrigerator plant closing in Illinois and 11 cents for a company reorganization that shed 1,100 salaried jobs.

It also took 16 cents a share as a contingent for pending litigation involving front-loading washers where the company faces a class-action lawsuit for alleged design flaws and 9 cents a share for an adverse judgment in a case involving commercial distributorships for Amana products.

A three-week strike at the flagship laundry production plant in Newton cost the company about $5.5 million, said Ralph Hake, Maytag‘s chairman and chief executive.

A contract with union employees at Maytag‘s Amana refrigeration plant expires in September. Maytag‘s Galesburg refrigeration plant is scheduled to close in September and company’s new Reynosa, Mexico, refrigeration plant is operational.

The Hoover floor care division continued to drag down earnings with disappointing sales, Hake said.

“Our operational performance was disappointing,” he said. “The housewares segment loss had the largest impact because we anticipated a recovery at Hoover floor care.”

Hake said increased costs of steel hurt the appliance segment. A new labor contract with the United Auto Workers at Newton and the restructuring should help lower future costs, he said.

“Within our Major Appliances segment, Maytag Appliances underperformed because of material costs, under-absorbed burden and the strike at our Newton facility,” Hake said. “However, several major risks have been addressed, including the Newton work stoppage and costs related to early generation front-load washer litigation. Our ‘One Company’ cost savings plans, which will lower our cost structure dramatically, are on track.”

Discussing the Newton facility during the company’s earnings conference call, Hake noted that, including the renegotiation of the Newton production workers’ contract, the company will save $13 million in pension benefits. But even with the new contract, the Newton plant remains the company’s highest cost facility.

“”We did make progress in this Newton contract,” Hake said. “We did not get sufficient progress that Newton would be competitive today compared to our other laundry plants.”

Hake continued saying the company would need additional cost-saving for Newton “to be competitive and eligible for new products.”

In June, Maytag announced a corporate restructuring plan designed to eliminate $150 million in annual costs. The move eliminated 20 percent of the corporation’s salaried workforce with the closure of its Hoover headquarters facility in North Canton, Ohio, and the merger of Hoover, Maytag Appliances and Maytag Corporate business operations into one group. Locally, several hundred salaried positions are to be eliminated as part of the move.

The vending machine segment also saw lower than expected sales, Hake said.

Maytag appliance sales increased by 2.4 percent, far below the industry unit growth of 9.7 percent.

“In the second quarter, we gave back our first quarter branded market share gains,” Hake said.

Housewares sales, which includes Hoover, fell 13.5 percent, while commercial products dropped 8.2 percent.

Maytag lost $2.4 million, or 3 cents a share, for the first six months of the year on sales of $2.37 billion. That compares to a profit of $59.7 million, or 76 cents a share, on sales of $2.3 billion a year earlier.

Hake said new products to be launched in the last half of the year, including newly designed refrigerators, should help improve sales.

Hake said he expects 15 new products launched by Hoover should help turn around flagging sales in the floor care division.

Hake had announced in early June that the company would miss earnings expectations by a substantial amount.

Analysts had expected earnings of 40 cents a share for the quarter, according to a survey by Thomson First Call.

Hake said the company expects earnings for the year in the range of 20 to 30 cents a share which includes restructuring charges of about 80 cents a share.

That’s far below the expected $2 a share analysts had expected.

“While this quarter has been a huge setback and disappointment to all, we will recover,” Hake said, “Maytag is a better company than the second quarter indicates.”

Newton Daily News Reporter Andy Karr and Editor Peter Hussmann contributed to this story.

Maytag needs to regain its niche

July 19, 2004
Maytag needs to regain its niche
Date July 19, 2004
Section(s) Opinion
To the Editor:

When is the board or someone in management going to stop and realize that Maytag does not have to be the number one in sales to excell in the appliance industry?

For years, Maytag‘s stock was very strong because the management realized that Maytag had a niche in the industry; that niche being quality, U.S.-made products. Millions of people purchased Maytag products at much higher than average prices because they wanted an appliance made in the U.S.A. that would last.

The new management here needs to stop listening to “analysts” who think Maytag needs to be just like everyone else in the industry, except sell more. When major manufacturers start selling similar products they always end up competing with selling prices and sooner or later they all take a bite financially. This philosophy always ends with layoffs, discontinuing products and cancelling sales to certain countries all needed cut costs because no one makes money.

Stop trying to make cheaper and cheaper products in order to keep in line with the sales of Whirlpool, etc. Whirlpool has been know as a manufacturer of lower-cost products for people who can’t afford higher priced, higher quality appliances and that is great for them. That is their niche. Just remember, Maytag has always been a strong company because of their niche in the industry.

Kim Davis


Work to make Newton strong

July 19, 2004
Work to make Newton strong
Date July 19, 2004
Section(s) Opinion
To the Editor:

So the strike is over and all is well. Right? Wrong!

And if you are sitting around hoping… things will get back to normal, forget it… The writing is on the wall. Maytag is not a safe haveen for the people in Newton any more.

You need to get out of the washer and start looking around the wash room and see other options. The first thing you need to do is to see that the race track does not slip away. That thing can be more than a race track. It is not the only solution, but I think it is a start.

Newton has a good position beside I-80. And a lot more can happen here besides a Jesus park and a porn shop and there are a lot of smart people who, if they put their minds to it, can save this town.

Olen W. Lambert


Federal government sues Maytag

July 16, 2004
Federal government sues Maytag
Date July 16, 2004
Section(s) Local News


A federal lawsuit filed in Chicago on Thursday alleges Maytag Corp. discriminated against older workers when it shed its nationwide sales team of senior managers over the age of 50.

The suit, filed by the U.S. Equal Employment Opportunity Commission, alleges that Maytag violated federal age discrimination laws when it eliminated 13 of its 22 regional sales manager positions in 1999. Of 11 regional sales managers demoted to the newly created position of zone manager, eight were over the age of 50. Only one employee over 50 was able to retain his regional manager job, the EEOC complaint alleges.

EEOC attorney Ethan Cohen will lead the federal government’s litigation against Maytag. He said he hoped the class action lawsuit will result in Maytag being “enjoined from age discrimination practices in the future.”

“Demoting people because they have gray hair is just as illegal as doing so because they have brown skin,” he said. “In attempting to force out older workers, Maytag was not only depriving itself of some of its most productive workers, it was breaking the law. There’s nothing wrong with pushing change in the workplace, but it is wrong to assume that older workers will not be able to keep up with those changes.”

Cohen told the Associated Press that Maytag allegedly feared the workers would not be able to implement new computer-based sales procedures.

“They were stereotyping these workers believing they wouldn’t be able to manage these new methodologies,” Cohen told the AP.

Maytag Corp. spokesperson Lynne Dragomier said the lawsuit took the company “by surprise.”

“While Maytag has been involved in an individual case, this is the first we have learned of the broader allegations described in the EEOC’s news release,” she said. “We deny the allegations described. We will vigorously defend Maytag‘s position and decisions in this matter.”

An age discrimination charge by Matthew Max, a Chicago area sales representative, gave rise to the EEOC investigation and lawsuit. Max told the EEOC that the zone manager’s position was eliminated in a further restructuring in 2000, resulting in several older managers receiving further demotions and loss of pay. The EEOC’s investigation of Max’s charge revealed that in 2001, Maytag reversed course and increased the number of regional sales manager positions to 17. The older managers were denied reinstatement to their former positions. The new supervisor, age 33, subjected them to negative age-based comments and suggested they were too old to productively perform their jobs, the EEOC report states.

Max filed an individual lawsuit against Maytag for alleged age discrimination practices on Wednesday.

Jack Rowe, the director of EEOC’s Chicago district office who managed the agency’s investigation, said that two of the demoted managers eventually lost more than 25 percent of their incomes.

“Older workers are at a critical point in their careers,” he said. “Their ability to save for retirement and plan for future needs is more limited, and disruptions in their ability to earn have more serious consequences than if they faced such challenges earlier. It is now EEOC’s job to seek compensation for the victims of Maytag‘s alleged discrimination and to help ensure that such conduct does not recur.”

According to John Hendrickson, regional attorney in the EEOC’s Chicago office, the litigation comes after repeated efforts to conciliate the case and is intended to secure permanent change.

“We already know Maytag has reached private, confidential settlements with at least two of these managers,” he said, “but there is nothing to ensure that the discrimination is not repeated. We expect to correct that through this case.”

Stressful time for newsmen

July 16, 2004
Stressful time for newsmen
Date July 16, 2004
Section(s) Columnists
By Peter Hussmann


It’s kind of like watching your neighbors argue. You’ve lived next door for years, know their parents, been invited to the graduations, had them over for dinner, even watched their kids a time or two. All of a sudden you’re put in the middle of a situation where sides are expected to be picked, her or him, us or them. You don’t want to be there but your proximity forces the necessity.

The problem is you like them both. You would love to see them work out their disagreements because you truly care for each. But it appears the sides aren’t talking much. The common ground which has kept them together so long appears threatened.

Though you intend not to pick sides, well aware that you don’t fully understand the problems which have brought them to this point, your actions are scrutinized. Holding the ladder while he cleans the gutters is taken one way. Helping her cart groceries to the house is taken another.

Such is the case I faced as I dealt with the most stressful situation I’ve ever been involved with in my 20 years as a newsman. Both sides involved in the Maytag strike took their opportunities to criticize the local news coverage, each saying a bias existed toward one side or the other, according to their interpretations of the reports written.

But those critical of the coverage failed to understand that newspapers don’t write for the audience being covered. The reports are written for the general reading public, the neighbors — so to speak — who don’t know what’s happening and why what is going on is important to them.

But that’s not to say that those asked to cover the strike do not have their personal opinions on the situation. The problem of journalism is that reporters bring their own convictions to the table every time they are asked to cover a story. It cannot be eliminated, only mitigated. We are not blank slates. A professional, however, leaves those thoughts at the news story door and relegates those opinions solely to the Opinion Page, a disconnect probably lost on most readers. The hard news columns are for Jack Webbs only. “Just the facts, ma’am.”

Trust is a hard thing to garner and even more difficult to reinstate once it’s lost. For any real or perceived transgressions, I — and the Daily News — apologizes. But what I can say to readers — and those who were so closely involved in the strike situation — is that I — and the Daily News — demanded both sides be fully heard; as much as each trusted to tell or from what we were able to glean on our own. That’s our job.

So let’s move on.

Will somebody please tell me why corporate America doesn’t demand that the current health care system be modified? Why is health care employment based? I don’t understand why the only group which could probably gain the ear of the Hill doesn’t demand something be done.

Maytag gives Galesburg workers official notice jobs eliminated

July 15, 2004
Maytag gives Galesburg workers official notice jobs eliminated
Date July 15, 2004
Section(s) Local News
GALESBURG, Ill. (AP) — Hundreds of workers at Maytag Corp.’s Galesburg plant have officially received notice that their jobs will soon be eliminated.

Maytag delivered a required 60-day termination notice to 875 full-time production workers Wednesday and told them that they will be out of a job in mid-September.

About 200 employees will continue working until their jobs are phased out by February 2005, officials said.

Workers have known the layoffs were coming for two years, said Dave Bevard, president of the International Association of Machinists Local 2063. Maytag announced in October 2002 that all 1,600 employees at Galesburg Refrigeration Products would lose their jobs by the end of 2004. About 380 workers have already been laid off.

Company officials said production will move to Amana and a plant will open this fall in Reynosa, Mexico.

In the meantime, Maytag has been working with employees to try to help them find new jobs and opportunities, said Bob Ramage, senior director of Galesburg operations.

“In our case, here’s a group of people that have been together,” Bevard said. “Sometimes they’re like your second family.”

Analysts express concern over Maytag’s ability to compete

July 15, 2004
Analysts express concern over Maytag’s ability to compete
Date July 15, 2004
Section(s) Local News

Associated Press Writer

Maytag Corp. stock reached a new 52-week low Wednesday as analysts expressed concern that the nation’s third largest appliance manufacturer may have trouble competing.

Rising interest rates could cut demand for major appliances and increasing pressure from low-cost competitors could hurt Maytag sales, Prudential Equity Group’s Nicholas Heymann wrote in a recent analysis.

“Given the fact that virtually all of its competitors today continue to shift more production to Mexico, staying competitive for Maytag may prove increasingly difficult going forward, in our view,” said the analysis.

Maytag shares closed 53 cents lower at $21.71 on the New York Stock Exchange Wednesday.

The stock had traded as high as $32.21 and as low as $22.10 in the past year.

Most of Maytag‘s appliances are still made in the United States while the nation’s top appliance manufacturer, Whirlpool, makes more than 20 percent of its appliances in low-cost regions, the analysis said. The second largest, General Electric, imports more than half of its appliances sold in the U.S.

Maytag expects to have 17 percent of its products outsourced by next year, chief executive Ralph Hake said in a June conference call with analysts.

The company has entered an agreement with Korean manufacturer Samsung to make some front-load laundry products and outsources some top-freezer refrigerators to Daewoo, another Korean manufacturer.

Maytag also opened a refrigerator manufacturing plant in Reynosa, Mexico, this year.

“While all these developments appear to be moves into the right direction, we do not believe they are even nearly enough for the company to stay in the game,” the Prudential analysis said.

Manufacturing was halted at Newton Laundry Products on June 10 when the workers represented by the UAW went on strike. The company and union failed to reach a contract agreement after nearly a week of contract extensions.

The company’s 1,525 production workers returned to their jobs July 6 after a 27-day strike.

The Newton workers agreed to a new contract that requires them to pay more for health care and reduces the company’s costs for retirement benefits for future workers.

Similar concessions may be sought as workers at the company’s Amana refrigerator factory open contract negotiations in September.

Heymann’s analysis also said Maytag maintains heavy debt and it expressed doubt that a restructuring plan announced last month would significantly reduce costs.

The plan eliminated about 20 percent of the company’s salaried work force.

In a June 4 conference call with analysts, Maytag chief executive Ralph Hake said the company has maintained healthy laundry and cooking appliance sales. Dishwasher sales were flat and demand for refrigerators was weaker than expected.

He said the company was not expected to meet analysts expectations for the quarter.

Maytag officials are scheduled to release second quarter earnings on July 23.

Hake said although earnings margins and sales growth were issues of concern, the company’s cash flow was more than adequate to pay down debt, fund pension programs and maintain investor dividends.

“Cash is not an issue for the Maytag Corporation,” he said.

Demand for some of the company’s premium washers and dryers increased sufficiently for Maytag to recall about 100 laid off production workers in Newton, where Atlantis, Neptune and Dependable Care models are made, said company spokeswoman Lynne Dragomier.

The workers will return to their jobs Monday, she said.

About 700 workers have been laid off from the Newton plant since 2002.

Some need our help

July 14, 2004
Some need our help
Date July 14, 2004
Section(s) Opinion
To the Editor:

We are so thankful that the stressful weeks of strike are over for some. Unfortunately, as we’ve read in this paper, the stress and worry continue for many in our community. It has been humbling and frightening to have the control over our lives be taken from us.

However, there is a group of individuals in our community who never have control. They are the physically and mentally challenged who have always been and will always be dependent on us, the community, to help them live as normally and independently as possible.

Progress Industries has recently closed three group homes, and the workshops are no longer taking new workers. Our daughter is happy and fulfilled because every day when she gets up she gets to go to work. She is so proud of what she does.

Our daughter has been on a referral list for a group home placement for four years. A young man at Newton Senior High School had worked in the sheltered workshop for a semester and really enjoyed it, yet he was told he could not continue this summer. Neither of them can live or work wherever they want. They, along with many others, need the support of everyone to be able to achieve a minimum of what the rest of us take for granted. They are dependent for everything — transportation, accessibility to shops, jobs, acceptance, etc.

We hope the tremendous support shown to the striking Maytag workers will be there for those who will always need our help.

Gloria and Junior Simpson