Preemptive warning

Preemptive warning
 
Date May 13, 2005
Section(s) Columnists
By Peter Hussmann Editor  
 
Two weeks ago, Maytag fought back from the negative press coverage it was receiving over its first quarter results by sending a note to employees that the situation was not as dire as being said by some in the media. The quarter saw a profit, market share gains had been made and efforts were under way to address additional cost and structure problems within the company, the letter to employees said.

The company took the issue a step further last week by writing a cautionary note to employees about potential inaccuracies in a not-then-released news report on the company — a sort of preemptive warning of potential fallacious reporting.

I mention this only because the company urged employees to “please feel free to make copies of this document and share them with your family, friends and neighbors who may have an interest in understanding the real truth about Maytag.”

Well, I do, someone did and here you go.

“As you are well aware,” the memo to employees went, “since Maytag reported its first quarter sales and earnings, the corporation has been inundated with negative media coverage, much of which has been inaccurate. As employees, this has been understandably distracting and possibly even confusing — that’s why we have been attempting to set the record straight with the right information that you deserve to have.

“In the spirit of that effort, we are letting you know in advance that we anticipate that The Des Moines (Register) will carry a large story on Maytag in its Sunday, May 8, edition. Given what we know about the reporter’s focus, we expect that this article might also contain inaccuracies … of the facts concerning our business and our future.”

The accompanying note signed by CEO Ralph Hake goes on to say many of the same things mentioned in last week’s column — Maytag is profitable, has many new products in the pipeline, it intends to “move swiftly and aggressively to bring our costs more in line with our competitors in terms of production, benefits and wages,” plans to meet with unions in hopes of negotiating “substantial changes that will reduce manufacturing costs at certain plants” (i.e. Newton and North Canton) and it expects to prove its critics wrong.

Again, more interesting spin coming out of the Newton headquarters in response to the recent negative press.

——

DURING THE SHAREHOLDER’S meeting on Thursday, one person asked why Maytag did not attempt to follow the lead of Harley Davidson and attempt to position itself in the same American icon mold.

Good idea, Hake agreed, but for a couple of problems.

First, he noted to reporters at a press conference following the meeting, is that Harley Davidson is sold to buyers through dedicated retail outlets. Maytag products, however, are sold at the wholesale level to numerous big box retailers which have leverage in negotiating prices at the same time demanding a full spectrum of product price points for consumers. While Maytag is able to get premium prices for several of its product lines, just like Harley Davidson, the differences between the “utilitarian” products Maytag produces and the recreational products Harley makes separate the products to such a degree that Maytag is not able to solely play the American icon game available to the Milwaukee-based motorcycle company.

MR. HAKE ALSO MADE a comment during this discussion that gave me pause and likely will be the subject of some additional newsprint in the coming months.

Whereas Harley Davidson has been able to generate a cooperative understanding with its unions in bringing product to market and facing its competitive pressures from foreign-made road bikes, Maytag has “chosen to have conflict when necessary” with its unions to address its production cost concerns, he said.

The CEO did not expand on the comment during Thursday’s brief meeting with reporters — and to be fully forthright, no follow up questions were asked about the comment — but I assume (and you know what that means) the collision course between the realities of manufacturing in America today and the union’s long-held place as the protector of the dignity of the American worker may not be able to be diverted.

Hopefully, that will not be the case.

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