Archive for March, 2005

Maytag’s Herrin, Ill., facility receives state grant

March 25, 2005
Maytag’s Herrin, Ill., facility receives state grant
 
Date March 25, 2005
Section(s) Business
Brief  
 
Special to the Daily News

HERRIN, Ill. — Following through on Gov. Rod Blagojevich’s Opportunity Returns pledge to support businesses in the Southern region, Maytag Herrin Laundry Products will launch its facility upgrades after receiving state support.

The company is getting a $385,000 grant to upgrade the shipping dock at the Herrin facility, making key improvements to its overall finished goods shipping process, allowing it to better serve its dealer customers and realize cost savings. Today, business and community leaders from Herrin and throughout the region met to celebrate the pending dock improvements.

Maytag

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Maytag shares rise

March 22, 2005
Maytag shares rise
 
Date March 22, 2005
Section(s) Business
Brief  
 
Shares of Maytag Corp. gained more than 5 percent after an upgrade to “neutral” from “sell” by Longbow Research.

Maytag shares rose 68 cents closing at $14.15 on Monday with more than 4.2 million shares traded. It was up another 25 cents in early trading today.

“While we continue to believe Maytag is suffering from a number of competitive disadvantages, the additional price increases [announced in April] are likely to result in a net favorable contribution to Maytag‘s bottom line in 2005,” analyst David MacGregor wrote in a note to clients.

Maytag stock sinks lower; shareholders to decide issues

March 21, 2005
Maytag stock sinks lower; shareholders to decide issues
 
Date March 21, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

Associated Press Writer

DES MOINES — Maytag Corp. stockholders were growing edgy after watching share prices drop to their lowest level in at least a decade.

“Of course we’re not happy with the price of the stock,” said Nick Rossi, who owns a hardware store in Northern California and owns 800 shares of Maytag stock. “I’m unhappy with management. I think they’ve made a lot of bad mistakes over the past 10 years.”

Maytag shares closed Friday at $13.47, considerably less than the $70 per share trading price in 1999. The stock has traded in a 52-week range of $13.47 to $32.21, but as recently as 2002, shares were trading above $45. Shares were above $14 in early trading today.

Rossi, of Boonville, Calif., said he has owned the stock for more than 20 years. He’s an advocate of more shareholder control. Maytag‘s board currently maintains the ability to reject any purchase offers by other companies through a so-called “poison pill” policy.

“That is a violation of fundamental ownership,” Rossi said. “If an offer comes from another company, the shareholders have the right to consider it and management has an obligation to present their case for or against it, but the shareholders should decide.”

About 60 percent of shareholders have voted to eliminate the poison pill policy every year since 2001, but the board has declined to accept it.

Last year, the company’s board has said they would reverse the policy this year, but they’ve retained the right to reinstate it at any time.

Rossi has successfully placed the issue before shareholders at the company’s May 12 annual meeting in Newton.

The company has advised shareholders to vote no.

“The board is in the best position to negotiate on behalf of all stockholders, evaluate the adequacy of any potential offer, and seek a higher price if there is to be a sale of Maytag,” the company said in a proxy statement to be released to shareholders. “The board’s ability to seek a higher price in takeover contests on behalf of all stockholders is significantly greater than the ability of the individual stockholder to achieve such a result.”

Another initiative, which would allow shareholders to vote on all of the company’s board directors each year, also is on the ballot. A majority of shareholders have voted for the change for the past three years but the company refused to make the change. It is endorsed for the first time by the company this year.

Annual elections would make board members more accountable to shareholders, said John Chevedden, of Redondo Beach, Calif.

His father, Ray Chevedden has 207 shares of Maytag stock. He’s held stock in the company for at least a decade.

“I guess you could say they are a serial ignorer of the majority of shareholder votes,” John Chevedden said. “We feel if they had adopted these good governance practices they’d be better positioned today.”

Rossi said he too hopes the board adopts an annual election this year because he said it makes the board members more accountable to shareholders.

The company has maintained that it could leave Maytag vulnerable to a takeover.

Rossi said with the stock trading at current levels, increased interest in buying the company is a possibility.

“If somebody sees value in that company and has a good idea how to turn that company around, the shareholders should have the option of considering it,” he said.

An investment fund owned by the International Union of Bricklayers and Allied Craftworkers wants shareholders to approve a study on the affect outsourcing has had on the company’s reputation.

Trowel Trades Standard & Poor’s 500 Index Fund had the issue included in the company’s annual proxy statement. The issue will be placed before shareholders at the annual meeting.

The fund owns 2,779 shares of Maytag stock.

Maytag has shifted some refrigerator production to a plant in Mexico after closing a factory in Galesburg, Ill., and has agreements with Daewoo and Samsung, both Korean manufacturers to make Maytag appliances.

If passed by shareholders at the meeting in May, the company board would be asked to set up an independent committee to determine if outsourcing has hurt Maytag‘s brand name or reputation.

The company opposes the move and contends that its global strategy has helped it stay competitive and in some cases has preserved jobs in the United States.

Maytag stock hits 52-week low

March 17, 2005
Maytag stock hits new 52-week low
 
Date March 17, 2005
Section(s) Business
Brief  
 
Maytag stock hit a new 52-week low of $13.88 this week. The stock rebounded slightly this morning to about $13.94 around 10 a.m.

It’s not if, but when Maytag is leaving

March 16, 2005
It’s not if, but when Maytag is leaving
 
Date March 16, 2005
Section(s) Opinion
Brief  
 
To the Editor:

I found Mr. Hussmann’s City Beat column very interesting. In regard to Jean Morgan’s comments about Maytag, I’m surprised that anyone was surprised. Maybe I’m wrong, but I feel the general consensus in Newton is Maytag is leaving Newton, it’s just a question of when.

If Maytag receives any news coverage, it is usually negative. All we hear from Ralph Hake is we have to cut costs. The Newton plant is too expensive with overhead, wages and benefits. …

Correct me if I’m wrong but Maytag signed a four-year contract agreement with the UAW where both parties agreed to the current plan of wages and benefits. Now (Maytag) wants to hammer on retirees’ benefits. It would be nice to see executives spend 30 years (or more) of their life in a factory; 30 years of breathing dust, dirt, chemicals and other debris. Thirty years later your back is probably bad, your knees are probably shot from concrete floors (and now we wear comfortable, mandatory, metatarsal steel-toed work boots). You probably have carpal tunnel and many other health problems. We’ve gotten the good out of you for 30 years, but now you are too expensive to take care of in retirement.

No one ever releases a statement that is complimentary to the workforce at Maytag. Every cost that we have ever helped cut is never revealed to the public. Once a year the employees get a barbecue pork sandwich, chips and pop for their safety record and that makes all of them feel a whole lot better (Not!).

It has always been rumored that the city of Newton discouraged any other industry from coming to Newton. That rumor was based on the (perception) that Newton catered strictly to Maytag and Maytag wanted no competition for city control, wages or employment selection. If that has been true in the past, it has really come back to haunt us. Reap what you sow.

So many people seem surprised about the track actually coming to Newton. Look around the area and think back over the last five years. How many road improvements have already been made in the area surrounding the track location? Roads have been widened, paved and new wide, heavy duty bridges have been installed. Coincidence? I don’t think so. When will the city officially announce the exit that will be put in on East 12th Street South?

I personally am not against the track. Actually I’m excited. If it is managed properly and used year round as projected, I am one who believes that this could do great things for Newton.

I do have great sympathy for the property owners near the site of the track. My wife and I live in the country for the same reasons I’m sure these homeowners do — privacy, peace and quiet and no close neighbors. To me, that is the biggest drawback of the entire project.

Mr. Hussmann mentioned Kansas City and Cabella’s. When will the truth ever come out about all of the rumors a year or two ago about Cabella’s looking into building at Colfax? If it was true and Jasper County lost them, shame on us.

When Fred Maytag decided to build a factory in Newton, was he met with so much controversy and skepticism?

Bob Richardson

Newton

Maytag places annual election of board members before shareholders

March 15, 2005
Maytag places annual election of board members before shareholders
 
Date March 15, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

Associated Press Writer

PETER HUSSMANN

Newton Daily News Editor

Maytag Corp. says it plans to place the issue of an annual election of all board members on the agenda for its May 12 shareholders meeting.

The vote was announced in a document filed Monday with the Securities and Exchange Commission and represents a reversal in the board’s long-held position.

For three years, the board has resisted a demand from the California Public Employees’ Retirement System, which owns 300,000 shares of Maytag stock, for annual elections of the entire board. CalPERS said annual elections hold board members more accountable to shareholders.

Each time, Maytag board members have said annual elections are not in the best interest of the company or its shareholders because they promote instability.

This year, CalPERS said it would seek disqualification of board members who opposed the plan. It then withdrew the request, according to a document filed with the SEC on March 4.

Last year, 66 percent of Maytag‘s shareholders voted for an annual election of the entire board. In 2003, 59 percent supported the change. In 2002, 55 percent of shareholders supported it.

“The board has listened and responded to its shareholders who believe this change is in the best interest of the company,” said CEO Ralph Hake in a statement. “While the board believes that classifications of directors promoted continuity and stability on the board, careful consideration was given to all relevant factors including our shareholders’ wishes. Given this, the board supports the change and will urge our shareholders to approve these amendments.”

Currently, three or four company board members are elected each year for a three-year term, staggering the terms. This year, directors Barbara Allen, Howard L. Clark Jr., Lester Crown and William T. Kerr are nominees up for election.

If shareholders representing at least two-thirds of the outstanding shares approve of the proposal, the four directors who are nominated for election in 2005 will be elected for one-year terms. If the declassification measure fails, the nominees will be elected for three-year terms expiring at the 2008 annual meeting. Directors not up for re-election this year will serve the remainder of their three-year terms.

Several other stockholder initiatives are included in the preliminary proxy statement, including a measure to study the impact of Maytag‘s outsourcing and offshoring manufacturing on its brand name and reputation.

Trowel Trades S &P Index Fund intends to initiate a shareholder proposal which calls on the board of directors to establish an independent committee to “prepare a report evaluating the risk of damage to Maytag‘s brand name and reputation in the United States as a result of the outsourcing and offshoring of manufacturing work to other countries …”

Trowel contends that offshoring poses a significant risk to Maytag.

“In our opinion, Maytag‘s brand name is one of its most important assets,” the preliminary proxy statement says. “In the 2003 Annual Report, Maytag‘s Chairman and CEO listed ‘highly regarded brands’ as one of Maytag‘s ‘significant strengths.’ We are concerned that shifting production offshore can harm Maytag‘s name and reputation. We believe Maytag is vulnerable to consumer dissatisfaction in the U.S. where a signifant portion of Maytag‘s sales take place.”

The corporation is asking shareholders to reject the proposal.

“While Maytag has and will continue to maintain a strong manufacturing base in the U.S., Maytag‘s U.S. workforce mirrors a U.S. economy that is changing from a manufacturing to a techology and services economy,” the proxy statement says. “Our outsourcing has largely consisted of obtaining component parts and certain finished goods from low-cost countries in order to remain competitive. These actions are taken as needed to continue to provide high-value products for our customers and consumers around the world and to create a strong company that benefits all of our stakeholders over the near, medium and long term. Given Maytag‘s strong employment record in the U.S., its long history of responsible globalization and the enduring strength of its reputation and brand, the board does not believe a study of this kind is necessary.”

Another shareholder proposal calls for Maytag to implement the International Labor Organization’s standards on human rights. The board is asking shareholders to reject the proposal saying it has already implemented practices addressing the issue and such a measure would be “duplicative of our existing efforts.”

The preliminary proxy statement shows that CEO Hake’s base salary rose about $38,000 in 2004 to $879,167. For the second year in a row, the chairman did not receive an annual incentive tied to financial metrics for company performance. He did receive $282,880 in long-term incentive pay in 2004 and with other payouts brought his salary to approximately $1.2 million last year.

Maytag stock closed down Monday 13 cents at $14.63 on the New York Stock Exchange. In early trading today, it was down another nickel.

The stock has been trading at a 52-week range of $14.47 to $32.21.

Rumors of demise might be overstated

March 11, 2005
Rumors of demise might be overstated
 
Date March 11, 2005
Section(s) Columnists
By Peter Hussmann

Editor

 
 
So, what does Jean Morgan know that we don’t?” The call came in Thursday morning.

I knew immediately where this was going.

No, it wasn’t about some kind of insider information about the racetrack development the Newton City Council had just waved green that precipitated the call. It was, however, her statement during the meeting that all but had the Maytag production plant in Newton closed that made the caller wonder just exactly what she knew.

During discussion on Wednesday evening, Morgan said the track development was crucial to the community, particularly now because of the near certainty of the demise of the Maytag plant in Newton.

Say what?

Morgan’s remarks were obviously based on comments made earlier in the week by Maytag CEO Ralph Hake. During a visit with market analysts, designed to reassure investors that Maytag has, is and will continue to undertake the necessary steps to ensure a profitable company, Hake said that Maytag plans to focus all vertical axis (top load) washer operations in one dedicated plant and all dryer operations in another. Products made at its other facilities, he said, would “migrate” toward these prime facilities (Herrin, Ill., for washers and Searcy, Ark., for dryers — the logical assumption of the statement seems to tell us.)

HAKE WENT ON TO note that while Maytag has the nicest “suite” of high-efficiency laundry products in its stable of appliances, efforts will be undertaken to improve factory utilization at these manufacturing sites.

The local translation seemed dire. Newton — the thinking went immediately after Hake’s comments — is about to go the way of Galesburg.

There are a couple of things that make me take the optimistic view, for now at least, to caution the community against Morgan’s panic mode.

First is the fact that the union and company officials have been working hard since the strike ended and a new contract was approved to increase its operating efficiencies. During a conversation with corporate head of factory operations a couple months ago, he noted the improvements Newton has made in its dryer platform to make the plant more profitable. In addition, talks are continuing on ways for the company to better utilize its production employees to meet market demands, much like Amana workers did, which resulted in expansion of refrigeration manufacturing.

And should Maytag decide sometime in the future to even further expand its “suite” of high efficiency products through the release of a machine with another highly visible and respected label, Newton might seem a logical place to start such an operation.

Finally, the shear magnitude of the laundry workload Newton bears for Maytag would seem to make it difficult to totally replace, as it stands now.

Hopefully I’m not just looking through rose-colored glasses and rumors of Newton’s imminent demise are being greatly exaggerated.

SO, SHOULD MY ANALYSIS of Maytag‘s current and future local state of affairs prove inaccurate, will the racetrack project be the community’s saving grace?

That remains to be seen. But it can’t hurt at all.

Parallels for Newton might be able to be drawn from the Kansas Motor Speedway. Prior to its development several years ago, the site was a sleepy burg west of Kansas City. Today the track hosts major racing events and has drawn a plethora of well-known, high-end retailers which vie for the race fan’s dollars. (Can you say Cabella’s and Bass Pro Shop? If you ain’t racin’ you ought to be fishin’.) What was once viewed as a poor country cousin now boasts some pretty fancy threads and is the envy of many surrounding communities unwilling to take the initial risk.

In the coming weeks, the Daily News plans to take a close look at what’s transpired since the Kansas track was first proposed and subsequently opened. Hopefully, we’ll be able to glean some insight into the challenges the community faced, likely outcomes from the track’s opening and what we might expect as the project moves forward over the coming years. We’ll keep readers posted on when to expect the series.

Maytag mum on local production

March 8, 2005
Maytag mum on local production
 
Date March 08, 2005
Section(s) Local News
By DAVID PITT

Associated Press Writer

PETER HUSSMANN

Newton Daily News Editor

Maytag Corp.’s chief executive said Monday the company will pursue more efficient manufacturing plants and continue to outsource more of its production to foreign companies, in addition to streamlining its washer and dryer production facilities.

CEO Ralph Hake, in a presentation at the 26th annual Raymond James Institutional Investors Conference in Orlando, Fla., also said factories making washers and dryers will see changes in the coming year.

Hake said the company will dedicate one factory to making top-load washing machines and have one dedicated dryer plant.

“Additional volumes will begin to migrate from our other plants to these two dedicated facilities,” he said.

Hake did not state where the facilities would be located or whether the location decisions had already been made or were still under evaluation.

Maytag spokewoman Karen Lynn declined to elaborate on whether that meant factories would be closing this year or what impact that might have locally, where the Newton factory has been cited as the corporation’s most expensive operation.

“We didn’t go down into specific details of that,” she said.

The move will improve quality and cost and simplify parts and components distribution, Hake said. In addition, the move will allow Maytag greater flexibility in the plants to meet marketplace needs.

Maytag operates laundry manufacturing plants in Newton; Herrin, Ill.; Searcy, Ark.; and Florence, S.C. All four facilities make washers although the Florence facility does not make dryers.

In Newton, Maytag produces two lines of vertical axis washing machines, the Atlantis and Dependable Care. Companion dryers for the models are also made.

Hake also talked about Maytag‘s high efficiency line of washers.

Maytag has the broadest and most complete suite of high-efficiency laundry products in the market place,” he said.

Hake said Maytag will be reviewing its high-efficiency production this year, as well.

“From a plant utilization standpoint, we still have work to doand will be evaluating those this year,” he said.

Maytag began production of its horizontal-axis Neptune washing machine in Newton eight years ago, where the front-load model is still produced. Since that time Maytag has introduced a Neptune top-load, which is made at a U.S. Maytag plant, and two products produced overseas by Samsung, a compact 24-inch undercounter model and a new 27-inch model introduced this month.

Hake said more outsourcing will occur this year. About 12 percent of Maytag‘s products are currently made overseas.

“We have sourced very little historically as a company and we will continue to source more,” Hake said. “The percentage will go up.”

Maytag, which completed the closure of a Galesburg, Ill., refrigerator plant in 2004 and opened a new refrigerator factory in Reynosa, Mexico, will continue to pursue less costly manufacturing options, Hake said.

He said the company will likely find other areas where “cost structure will not support us manufacturing here in the U.S.”

“Longer term, I want to emphasize that we will continue to review our overall strategy and take measures to identify greater manufacturing and sourcing opportunities in low-cost regions,” Hake said.

Cost cutting measures last year resulted in $30 million in savings and the company is on track to save $150 million in 2005, Hake said.

About $120 million comes from a company restructuring, which cut 1,100 salaried jobs from the work force of about 19,500.

The company saved another $23 million by closing the Galesburg refrigerator plant, said George Moore, Maytag‘s executive vice president and chief financial officer.

Hake said the company is leaner and more capable of getting new appliances to market faster.

Maytag will likely look at finding ways to reduce the escalating cost of health care for retirees, which Hake said has doubled since 1999.

Moore said pension and retiree medical expenses will increase to $140 million this year, $26 million higher than 2004.

“We are evaluating our options regarding retiree medical costs,” Moore said.

Increasing costs of steel and fuel could threaten profitability this year, but Moore said cost-saving initiatives and appliance price increases will help offset raw material prices.

The company expects earnings of $1.10 to $1.30 per share for the year, Hake said.

Maytag shares closed up $1.23 at $15.93 on Monday. In early trading today, the stock had dropped 42 cents to $15.51.

The stock has been trading at a 52-week range of $14.57 to $32.31.

Maytag touts its ‘faster, leaner’ organization

March 7, 2005
Maytag touts its ‘faster, leaner’ organization
 
Date March 07, 2005
Section(s) Local News
Brief  
 
ORLANDO, Fla.– Maytag Corporation today reaffirmed its business strategies and guidance during the 26th annual Raymond James Institutional Investors Conference in Orlando, Fla., saying that Maytag is a much different company than it was a year ago.

Chairman and CEO Ralph F. Hake commented, “We are realizing the cost savings from our restructuring. We remain focused on developing preferred brands, creating innovative products and achieving best-in-class cost and quality.”

Hake said that the One Company initiative executed in 2004 has transformed the organization into a faster, leaner and more unified Maytag.

“We’re customer-focused and more responsive,” he explained. “We are a flatter organization with fewer layers. We’re shortening the decision-making process and are reducing our time to market.”

The company demonstrated its commitment to product innovation by citing the numerous launches in the first quarter of 2005, including:

* New Maytag Neptune front-loading washers and dryers

* Jenn-Air floating glass appliance suite

* Hoover FloorMate hard surface floor cleaner

* Hoover SteamVac Duo cleaner

Maytag continues to look beyond North America as the company expands global sourcing opportunities.

“Our design center in China will supplement existing R &D resources, while we further develop our product supply partnerships with Asian companies,” Hake said.

At the conference, Maytag executives reaffirmed plans to achieve improved earnings in 2005, expected by the company to be in the range of $1.10 to $1.30 per share, including about 5 cents of restructuring charges.

Hake told analysts that Maytag has already realized $30 million in cost savings and is on track to achieve $150 million in annual savings from restructuring.

“In addition to reducing the size of our salaried workforce, we have successfully completed the conversion of our computer systems and integrated our sales and marketing teams,” he added.

Two Maytag businesses continue to grow at double-digit rates. Maytag International grew 13 percent in 2004 and is expanding its product line up, entering new markets and adding Maytag Stores in Canada and Mexico. Another bright spot is Maytag Services with 27 percent growth in 2004.

George Moore, Maytag‘s executive vice president and chief financial officer, said aggressive cost-saving initiatives and appliance pricing increases are expected to offset steel and fuel cost increases, which continue to pressure profitability. He expects material costs to be an on-going challenge in 2005.

In addition to the Raymond James conference, Maytag will take part in Smith Barney’s 18th annual Global Industrial Manufacturing Conference in New York City on Wednesday. On Thursday, Maytag will participate in the JP Morgan Small Cap Conference in Chicago.

Maytag shareholder attempts to disqualify board members

March 3, 2005
Maytag shareholder attempts to disqualify board members
 
Date March 03, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

Associated Press Writer

DES MOINES — Maytag Corp. shareholders pushing for annual election of all board members have been rebuffed again in a letter filed with the Securities and Exchange Commission.

In the letter filed Jan. 14, Maytag attorney Elliott Stein informed the SEC that the company would exclude the proposal from its agenda at this year’s upcoming shareholders’ meeting.

The California Public Employees’ Retirement System, which owns 300,000 shares, or 3.7 percent, of Maytag stock, has been pushing for the election change for the past three years.

It’s a matter of corporate accountability, according to CalPERS, and support for annual elections is growing.

Last year, 66 percent of Maytag‘s shareholders voted for an annual election of the entire board. In 2003, 59 percent supported the change. In 2002, 55 percent of shareholders supported it.

Each time, Maytag board members have said annual elections are not in the best interest of the company or its shareholders.

Maytag‘s current system of electing a third of the board each year to staggered three-year terms safeguards the company against an unsolicited third-party takeover and ensures a continuity of experience and institutional knowledge, CEO Ralph Hake said last year.

In its request this year, CalPERS planned to ask shareholders to disqualify board members who oppose the annual elections.

“We believe any direction that ignores such overwhelming votes of the company’s shareholders is not fit for re-election and is not qualified to serve as director of the company,” said the letter from CalPERS attorney Peter Mixon.

Stein said the request left the board little choice.

“It is clear … that the intent of the proponent is to use this outcome to coerce directors into … disqualifying themselves from renomination,” Maytag attorney Elliott Stein wrote.

Maytag also filed a request to exclude a proposal by shareholder Nick Rossi, of Boonville, Calif., who wants a shareholder vote required before the board can take a so-called poison pill action. Such actions are taken as preventive measures against unwanted takeovers.

About 60 percent of shareholders have voted in favor of the proposal every year since 2001, but the board has declined to accept it.

Rossi said in a letter to the company that the poison pill entrenches current management and could damage stock value.

Maytag stock, selling for $32.21 a share in April, has been trading at less than half that in recent weeks. Shares closed Wednesday at $14.85, down 25 cents, on the New York Stock Exchange.