Maytag looks to form partnership with Newton community

Maytag looks to form partnership with Newton community
 
Date September 22, 2004
Section(s) Local News
   
 
By PETER HUSSMANN

Editor

When Fred Maytag built his washing machine company in Newton more than 100 years ago, he was a father-figure to the community. And he fostered his paternalistic role by building parks, recreation facilities and assisting in local government developments. His success was Newton’s success as he took care of his Maytag and Newton family.

Fast forward 100 years. While the heritage and legacy Fred Maytag developed remain, the business factors the company now faces are as different as the wringer washers that drove the company’s success.

Mark Krivoruchka, senior vice president, human resources, at Maytag Corporation expounded on some of the challenges facing Maytag in a speech sponsored by the Newton Development Corporation on Tuesday.

The former GE and Pillsbury executive, who has been with Newton for more than two years, said there are factual and emotional descriptions ascribed to Maytag‘s place in the community, though the perceptions are only a part of a picture many might not see.

First, he said, is the fact of Maytag‘s 100-year history in Newton, its laundry manufacturing plant, one of the largest in the world, and the corporate headquarters facility near downtown Newton, one of only three Fortune 500 companies in the nation sitting in a town of roughly 15,000 people.

Emotional elements also drive the company’s perception. Depending upon where one sits, Maytag is viewed as either a 1,000-pound gorilla extracting a price from its workers through its greedy grab for more profits or home to the best production work force in the world, Krivoruchka told the 40 community members attending the luncheon discussion.

There’s more to the story, he told the group.

While most think of Maytag at either end of its spectrum — from the production workers producing washers and dryers at Maytag Plant 2 to the corporate headquarters building — there are many other facets to Maytag‘s involvement in Newton.

Newton, Krivoruchka said, is home to one of three Maytag call centers — which handle 5,000 calls a day; headquarters for Maytag Business Services — responsible for directing the work of 2,000 appliance technicians across the country; the location for Maytag‘s laundry engineering center; headquarters for sales and marketing operations; the center for the corporation’s logistics, directing shipments from nine national warehouses, including one located here; and the location for its information technology center.

“There are a lot of people who work in the middle,” Krivoruchka said. “There is a lot located here that is not part of corporate office and the plant. That’s a big plus for the Newton community.”

Krivoruchka also addressed the corporation’s One Company reorganization announced in June aimed at saving the company $150 million annually when fully initiated.

While most focused on the loss of 1,100 salaried work force jobs, the reorganization is designed to improve Maytag‘s ability to participate effectively in the appliance manufacturing market and eventually make for a stronger company.

By combining the operations of Hoover, Maytag Appliances and Maytag Corporate into one business unit, Krivoruchka said the new dynamic will create speed and responsiveness to business conditions.

Under the old alignment, the senior vice president said, Maytag had as many as 10 layers of management oversight from top to bottom. The goal now is to bring that down to five layers, he said.

“That drives the level of responsiveness,” he said.

Krivoruchka also noted the span of control some Maytag managers had in the past. For as many as 65 percent of Maytag managers, the past figures showed them with oversight responsibility for as few as one to three people.

“We want to stretch that,” he said. “By doing so, we empower people and allow people to grow.”

The human resources VP also noted Newton’s hourly to salaried worker statistics that the company hopes to change. Currently, there are 11 hourly employees in Newton for each salaried employee. At Amana, that figure is 23 to 1. The standard to which they want to meet stands at 30 to 1.

HEALTH CARE COSTS are another big issue facing Maytag today. As a self-insured corporation, Krivoruchka said the company stands to spend as much as $150 million on health care costs for its employees and retirees this year, up 10 percent from last year’s costs.

Those costs were a big part of the recently negotiated union contract. After a nearly month-long strike, the local membership ratified a new four-year agreement where workers will pay a portion of their health insurance. Overall, the company said the new Newton union contract will save the company approximately $13 million, although the costs of operation locally continue to make the plant exempt for new product platforms based on the corporation’s safety, quality, delivery and cost matrixes for investment.

“We look at it as a shared responsibility,” Krivoruchka said. “There will be deductibles and copays.”

Maytag salaried workers are all part of the “Maytag Model” health care plan — an 80/20 shared cost.

Krivoruchka also noted the impact of safety issues on Maytag‘s cost of doing business.

“We take seriously our ability to provide a safe place to work,” he said. “Overall, Maytag‘s safety record is very good.”

The human resources director, however, noted that the hourly worker’s compensation costs in Newton are much higher compared to other production facilities. In Cleveland, Tenn., the hourly cost of covering worker’s compensation claims is 8 cents an hour. In Newton it stands at 64 cents, down from $1 two years ago.

“The challenge in Newton is getting those costs under control,” Krivoruchka said. “Newton is still the highest cost facility. They are making progress.”

Maytag also faces numerous business challenges. With the influx of Asian manufacturers into the appliance market, analysts expect continued downward pressures on pricing, Krivoruchka said.

As examples, he noted that a Maytag washing machine produced in 1974 pulled a $499 price tag while a model today, even with more features, draws only $439. The same is true in refrigeration, he noted. A side-by-side cost $1,600 in 1990 but only goes for about $1,000 today.

With these business realities in mind, Krivoruchka asked that a two-way street dialogue be opened in the community.

“Our business challenges are not going to go away,” he said. “We have to reduce our fixed cost base. We want to look back at the community and ask for support of our business challenges and understand what we’re going through.”

On the other side, he said, Maytag needs to understand how it can be a better partner in the community. While it has a long tradition of community involvement — everything from assistance with the new Maytag pool, the development of a day care center to developing a local community college in a former plant building — its days as a paternalistic protector needs to move toward an asset partner with the community.

“We need to find ways to work together,” he said.

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3 Responses to “Maytag looks to form partnership with Newton community”

  1. Chemist Says:

    Who really now is engaged in the control of health? To mine it neglected the large pharmaceutical companies and the medical centers. There should be a centralized management WBR LeoP

  2. Suqita Abdullah Says:

    I need help with my range stove because it doesnot work any more it was purchased in 2002 at Good Housekeeper. The problem is that I cannot afford to pay for repairs due to my income ( I am experiences some over-whelming hardships due to a severpaid cut in wages). Therefore I am requesting some help with my Maytag double oven range repairs. Icannot afford the cost of this stove repairs and I suffer some chronic illness that require me to eat correctly and I cannot due to this stove problem. So if you can help me with this problem and get my stove repair I will be so greaterful.

    Thank You
    Ms.Suqita Abdullah
    313-478-0580
    16537 Chapel
    Detroit, Michigan
    HELP ME PLEASE!

  3. Rosie Says:

    I thank you for your comment.

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