Collins: No immediate changes at Maytag

Collins: No immediate changes at Maytag
 
Date May 23, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

Associated Press Writer

The man behind the proposed purchase of Maytag Corp. says there are no plans to make immediate changes to the company behind some of the nation’s most popular household brand names.

Timothy Collins, CEO of New York-based Ripplewood Holdings LLC, flew to Newton on Friday to meet the people behind the company that makes Maytag washers and dryers, Amana refrigerators and microwaves and Hoover vacuum cleaners.

Collins, 48, is leading the private investor purchase of Maytag, which also includes RHJ International, GS Capital Partners and the J. Rothschild Group of Companies. As part of a $1.13 billion cash deal. The investors also will assume $975 million of company debt.

Despite criticism of Maytag CEO Ralph Hake and his management team, Collins said there are no plans to make immediate changes.

“At this point we have every plan to keep them in place. They’ve been dealt a very tough hand and I think they’re developing plans to deal with it and we’re certainly going to be as helpful as we can to them, but I’m not planning to run Maytag, I’ll tell you that,” he said.

Criticism came from industry analysts including Sam Darkatsh, of Raymond James and Associates Inc. who wrote Friday in a newsletter that he was saddened by the announcement.

“Frankly, it is an indictment of the last several generations of Maytag leadership, of which the current regime is only the last chapter,” Darkatsh wrote.

Maytag shareholder Nick Rossi, a 43-year-old California businessman, said he was disappointed with the sale because he would rather keep his share of ownership in the company that he believes has a lot of potential to improve.

Rossi, who has owned Maytag stock for more than 20 years, said the solution for the company’s woes is not a new owner.

“I think it’s just putting in better management,” he said. “I think they just focused on the wrong things. I think they should have focused on upscale and been more of a niche player for the upscale customer. They lost their focus on quality and the image was one of quality.”

In the past year Maytag‘s profits have slumped steeply, it cut 1,100 salaried workers, closed a western Illinois refrigerator plant and faces the prospect of shuttering two more of its costliest domestic factories. Earlier this year, Best Buy Stores Inc. dropped Maytag as a major appliance supplier, giving its retail floor space over to brands that have shown more consumer appeal, from rivals such as LG Electronics Inc. and Samsung Electronics Co. of South Korea, Siemens AG and Whirlpool Corp.

The Maytag sale is subject to the approval of regulators and shareholders. Rossi said he plans to vote against it.

The fate of some of Maytag‘s United States factories including the flagship laundry plant in Newton and a Hoover plant in North Canton, Ohio, is still uncertain.

“I think the reality is we can’t change the laws of nature,” Collins said. “These plants are going to have to be competitive and there are lots of ways to get there. If they can find a way to make these plants competitive and profitable, that’s obviously their first choice.”

Collins said he met Friday with officials of the UAW, which represents the 1,275 production workers in Newton.

“I think they’re very constructive and realistic and know that in order to prosper the company has to prosper and they have to be competitive,” he said.

The way to do that is up to the management and labor officials to determine, he said.

The International Association of Machinists and Aerospace Workers Unions, which represents 1,400 workers at a refrigerator plant in Amana, viewed the purchase positively.

“It is our hope the new leadership recognizes the talent and dedication of the U.S. workers who have made Maytag appliances an American classic,” said James E. Brown, IAM Midwest Territory General Vice President.

The investors plan to take the publicly traded Maytag private and invest resources to make it a world player, Collins said.

“They’ve got to be a much bigger company which means they’ve got to be with their own brand and other brands serving the global market,” he said. “They can’t be a purely domestic company and compete.”

Analysts speculated that other companies could show interest in Maytag.

“Such a buyer would probably be a foreign appliance manufacturer with an established global distribution network and a good backlog of new product innovations,” wrote David MacGregor, an analyst with Cleveland-based Longbow Research.

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