Archive for October, 2005

There goes the neighborhood

October 28, 2005
There goes the neighborhood
 
Date October 28, 2005
Section(s) Opinion
Brief  
 
To the Editor:

Casualties in Iraq reach the 2,000 mark. Hurricanes Katrina and Rita force hundreds of thousands of people out of their homes and out of work. Paul McCartney comes to Des Moines. But what is the banner headline? “Ralph Hake puts house up for sale”

Shoppers for Ralph’s house could get a real deal with former Maytag President Bill Beer’s house that is up for sale at about a third of the price of Ralph’s.

Yes sir, this could really be something big. I even heard that just to catch the wave of enthusiasm, senior director of operations of Newton Laundry Products Mark Parriott is considering a garage sale. He’s trying to catch the crowds, so watch for the little sale signs on the parking.

With all the hype about Ralph wanting to leave town, which comes as no surprise, one can only anticipate the next banner headline. “Ralph Hake: Homeless in Iowa”

By the way, I have a little three bedroom Quonset hut in the vicinity of the fire and rescue squads that I’ll let go for just $100,000. Stop by, I’m in the book.

S.C. “Newt” Rodgers

Newton

Maytag CEO’s Newton home for sale

October 26, 2005
Maytag CEO’s Newton home for sale
 
Date October 26, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Ralph Hake’s home in Newton is up for sale.

The 4,200-square-foot home on nearly two acres in the southwest part of the city is being listed through the Des Moines office of Iowa Realty. The asking price is $759,900. The local assessor’s office values the property at $533,970.

News that the three-year-old home went on the sale block came just days after the Maytag CEO told stock analysts the company plans to “urgently address” issues concerning its North American production facilities. Hake said the company could close factories in an effort to cut operational costs.

At the top of the list is Maytag‘s flagship production facility in Newton. For years Maytag has said it is its highest cost operation and that new product platforms would not be coming to the plant until costs were cut. Last year, following a three-week strike, Maytag production workers agreed to a new four-year contract that included a number of concessions, especially in regard to health care. Maytag said the provisions agreed to were still not enough to bring new products to Newton.

Maytag also has been actively migrating product platforms to specific manufacturing sites. Its Herrin, Ill., site is now being used to produce most vertical-axis washers, with its Searcy, Ark., site producing companion dryers.

Employment at the Newton plant has dwindled over the past few years, from a high of about 2,500 workers in the late 1990s to about 1,000 today.

During the conference call with analysts on Friday after releasing third quarter results, Hake also said the company is close to securing a line of credit that would enable it to undertake some of its manufacturing restructuring initiatives. Other factories Maytag has targeted for possible closure include its Hoover production operation in North Canton, Ohio, and a washer factory in Florence, S.C.

The U.S. Justice Department is continuing to review the Whirlpool buyout offer for Maytag. In late August, the Maytag board of directors approved a plan where Whirlpool would buy Maytag for $21 a share in a stock and cash offer. Nearly $1 billion in Maytag debt would also be assumed by Whirlpool.

Maytag has set a shareholder meeting on the proposal for Dec. 16 in Newton. Stockholders must approve the sale offer for the takeover to move forward, in addition to Justice Department approval.

Analysts covering the appliance industry have speculated the Maytag headquarters in Newton would likely close upon a successful Whirlpool takeover. The combined companies would create the world’s largest appliance manufacturing operation.

Maytag to tackle manufacturing issues

October 21, 2005
Maytag to tackle manufacturing issues
 
Date October 21, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

The future of Maytag production operations in Newton dimmed today as the company said it planned to “urgently address” its excess manufacturing capacity issues.

In announcing a larger-than-expected $18.2 million third quarter loss, Maytag CEO Ralph Hake said the company plans to address its manufacturing operations in the laundry and floor care segments of its operations. The company has said its Newton operation is its highest cost facility. Maytag‘s North Canton, Ohio, Hoover vacuum facility and its Florence, S.C., operations have also been previously named as cost drains on its bottom line.

“Our performance demonstrates the need to urgently address our specific excess manufacturing capacity issues and eliminate these barriers to cost competitiveness and acceptable financial performance,” Hake said. “Our excess costs are concentrated in laundry, for which we have four plants, and in floor care, where we have three plants.”

The 23 cents per share loss for the quarter came despite a net sales increase of 6.5 percent, $1.26 billion this year compared to $1.19 billion for the third quarter 2004. The sales increases were driven largely by major appliances, washing machines and refrigerators. Sales of commercial products were up 2.5 percent, but net sales of floor-care products were down despite an increase in unit sales.

Hake said that despite disappointing third quarter results, he was not discouraged by indicators.

“Our overall financial performance for the third quarter was disappointing, disappointing but not discouraging,” he said. “During the quarter, we grew our top-line sales by 6.5 percent from year-earlier figures. Overall, we held our own in share year-over-year and improved sequentially.

“Clearly, customer and consumer demand for our brands and products continues to be strong. Winning in the market is the first necessary step to recovery; rapidly improving our cost structure is second.”

Despite the growth in sales, Hake said high cost manufacturing operations, higher raw material costs and transportation costs impacted results.

“Despite the top-line sales successes, our excess manufacturing capacity in some product categories continues to worsen as consumer demand shifts to our products that we source from lower cost manufacturers,” he said.

Sourced products in major appliances primarily comes within its laundry and refrigeration categories. Twenty percent of major appliance unit sales came from sourced products for the quarter. In floor-care, 30 percent of the products were sourced.

“Sourcing these newest product designs is a strategy that is enabling our growth and rapid innovation with reduced R &D and capital commitments by Maytag,” he said.

Hake said Maytag continues to work with the Justice Department in regard to the pending merger with Whirlpool. Whirlpool is offering to buy Maytag for $1.7 billion in a cash and stock offering. It also plans to assume nearly $1 billion in Maytag debt. Hake said he expects the deal to close in the first quarter of 2006. A shareholders meeting on the merger has been set for Dec. 16.

However, as an independent company, Hake said Maytag needs to continue with its business plan.

“Whether or not Maytag remains an independent company, we must significantly improve our overall performance to create value for our customers,” he said. “To accomplish this, we are working to address our excess manufacturing capacity issues in our laundry and floor-care categories. This fixed cost structure and under-utilized capacity remain barriers to acceptable financial performance.”

Hake noted that the company has already taken efforts to improve its laundry operations by concentrating its vertical-axis washer production in Herrin, Ill., and its dryer production in Searcy, Ark. He said more needs to be done.

“Our challenge is to replace the products and revenue stream from our underutilized facilities with improved products at dramatically lower costs,” he said. “This involves product redesign, some sourcing and migration of products from our high-cost laundry and floor-care facilities.

“When completed, we envision a manufacturing footprint with lower costs, higher utilization and fewer locations. However, achieving this transition successfully in two product categories without customer disruption is both a planning and execution challenge, so we are continuing to work through the necessary details. When our plans are finalized, we will announce the impacts and financial consequences.”

Maytag also said it will secure a new $600 million credit instrument early in the fourth quarter. It will allow Maytag to have in place the “required financing flexibility to achieve the necessary manufacturing restructuring.” Maytag may take additional restructuring charges, asset impairments and accelerated depreciation as part of its efforts to reduce excess manufacturing and improve profitability.

“As the third-quarter results show, we clearly have a lot of difficult work to do, but I expect that the initiatives we are reviewing will enable us to achieve a step change in our performance level,” Hake said.

Newton Daily News holds community forum: Outcomes

October 20, 2005

Newton Daily News

On Oct. 19, 2005 the Newton Daily News hosted a local forum as part of its on-going effort to inform the community about the latest developments concerning the Maytag buyout and how the 112-year-old company’s possible departure might impact the community. The newspaper invited a broad spectrum of local business, industry and government leaders to participate in the day-long session entitled “Forging Ahead: A Community Dialogue.”
The forum’s goal was to look collectively at the potential risks to  Newton and Jasper County should worst-case scenarios develop, identify the community’s strengths and brainstorm on possible strategies that can foster new arenas of economic vitality and community growth.
Approximately 100 people attended the event, which was moderated by Steve Gray of Canton, Mass., former publisher of a family-owned newspaper in Monroe, Mich., and past publisher of the Christian Science Monitor.

Potential Risks
The day started with the group identifying the risks the community (early on it was made clear that community meant the entire county) may face if Maytag leaves. Here are the possible dangers named by forum members:
• Loss of tax dollars from Maytag closing its operations
• A declining student population
• Loss of Maytag employees and the skill sets both the corporate and
manufacturing employees possess
• Loss of retail
• Larger unemployment levels
• Lower community morale
• A decline in housing
• Loss of identity
• A decrease in charitable giving
• A loss of the safety net for the community’s most vulnerable
• Loss of friends and neighbors
• Increased anger/hostility
• Increase in crime and the associated social impacts
• A decline in community services
• Loss of perceived opportunities
• Loss of services for at-risk children
• Loss of diversity
• A lessened standing in the state
• Increased health problems due to the stress of job loss
• Losing a sense of entitlement
• Increased divorces/family problems
• A thinning business community
• Increased bankruptcies
• A reduction in Maytag business opportunities
• A decline in the local infrastructure
• Loss of a sense of security
• Loss of city bonding capacity
• An increase in situational poverty
• Loss of the intermodal rail facility
• Loss of entrepreneurs
• Loss of young adults
• Loss of community momentum
• Increased business closures
• Loss of Red Pride
• Increased substance abuse
• Increased negative media coverage
• A decrease in the standard of living
• A decrease in the quality of the educational system
• Loss of the arts community
• Increased stress on children
• Difficulties in attracting new businesses/families to the community
• A decline in the commuter retail business sector
• A negative impact on the agricultural sector
• Loss of the employee talent pipeline
• Declining population
• Loss of long-standing non-profit betterment groups (Project Awake,
Renew Newton)
• Increase in crime and the fear of crime
• Declining community aesthetic appeal
• Loss of DMACC, Buena Vista
• A loss of philanthropy from Maytag
• Reduced state revenues due to population declines
• An increase in naysayers
• Loss of hope
• Loss of the volunteer base
• Sense of a loss in the quality of the community
• Loss of political influence on the state and federal levels due to
the loss of Maytag
• Being positioned as Whirlpool’s “mother-in-law”
• Empty Maytag buildings
• Negativity becoming a bigger factor
• A decrease in the capacity to care for the community’s elderly
• Generational disconnection over Maytag experiences
• Loss of choices/control over the future
• Less reasons to come to Newton
• Perceptional cost of labor
• “Change paralysis”
• Fear of failure
• Holding on to the past
• Loss of tourism
• Loss of inbound traffic
• Fear of a decline in economic wealth standing
• Increased rumors
• Loss of recreational opportunities/free family activities
• Believing there is no life after Maytag

Community Assets/Strengths
Gray then asked the forum participants to identify the resources and assets available in Newton and Jasper County. Using an analogy from the movie “Apollo 13,” he asked the participants to consider what Newton has on the table, so to speak, that could be helpful in developing strategies for continued health and growth in Newton and Jasper County.
Here are the current strengths and assets named by the group:
• An aggressive economic development program/success of JEDCO in securing the forthcoming construction of a biodiesel plant.
• 1,500 available production workers
• Strong local companies
• Experienced workforce
• Strong education system/preschool to master’s degree availability
• A growing population base
• A resilient and strong housing market (less than 10 percent of current sales are due to Maytag employment/costs are below state average)
• Strong amenities countywide (parks, preserves)
• Active community improvement organizations (Project Awake, Renew Newton)
• A tradition of working together to improve the community
• Strong medical facilities (Skiff hospital) and medical practitioner base
• Infrastructure capacity (sewer, water)
• United Way seeing an increase in donors
• Des Moines developing on the east side
• Location on Interstate 80
• Renovated, updated airport
• Wealth to spur entrepreneurship
• Excitement that change can bring/momentum
• Large, highly qualified employment pool
• Active, numerous volunteer base
• Revitalization through arts (small business opportunities)
• Low employee turnover
• Organized labor
• Two wineries
• Pool of young leaders
• Quality of life
• Quality retirement centers
• Great place to raise kids
• Diverse group of financial lenders that are pro-growth oriented
• YMCA
• Newton Public Library
• Community Theater
• Maytag Park and Maytag Park Pool
• Progress Industries
• Capstone
• Teen Center
• Drive-in theater
• Maytag Dairy Farm
• Newton Arboretum
• Westwood Golf Course
• Hike and bike trails
• Jasper County Museum
• Wrestling Museum
• Renovated schools
• DMACC/Conference Center/Buena Vista
• Neal Smith Wildlife Refuge
• Salvation Army
• Local churches
• Day care/adult day care
• The vitality in the county’s towns
• Full-time emergency medical care/full-time fire department
• United Way (goal of $418,000 this year)
• Iowa Speedway
• Early childhood development programs
• Workforce development office
• Civic events (Fourth of July/Courthouse Christmas Lighting, etc.)
• Thirty minutes to/from Des Moines
• Leadership transition
• Proximity to state universities
• Local foundations
• Survivor attitude
• Physicians/specialists
• Low crime rate/safety
• Post-Maytag success stories
• Locally-based entrepreneurship opportunities by Maytag employees
• DMACC experience
• Maytag Family Foundation
• Local cable access channel (could be utilized more)
• Chamber of Commerce
• Midwest work ethic/commitment to families
• Keep faith with one another/follow through on commitments
• Underutilized intermodal facility
• Viable railroad
• Ex-Maytag business contacts
• Whirlpool opportunities
• Civility
• Broadband Internet
• Elderly care
• UAW involvement in the community
• Globalization opportunities
• Newton alumni as a resource
• Basics and Beyond alternative high school program
• Spiritual leadership
• Public/private collaboration
• Small busiensses
• Ecumenical heritage
• Location/tourism
• Hunting
• Prison labor
• Change of seasons
• Civic groups (Rotary, Kiwanis, etc.)
• Growth in cohesiveness
• History of community mobilization (Keep Maytag in Newton)
• Red Pride
• Opportunity for community to mature
• OPEN/sister-city relationships
• Sense of community ownership/pride
• Courthouse
• Agricultural opportunities
• Local media
• State resources/lawmakers intune to Newton
• Mayor at the statehouse
• State Rep. Dennis Black intune with Altoona (his district includes it)
• Growing business opportunities outside the area
• Affordable housing
• Commitment by residents to the area
• Small business community
• Sculptures/murals (Sculpture Festival)
• Animal care
• County Extension
• Rock Creek (county parks)
• Neighborhood schools
• Stable teacher staff
• Jasper Community Foundation
• Newton Development Corporation
• Training opportunities/facilities
• Employer/education partnerships
• Ample city of Newton bonding capacity
• Jasper County listed in top 10 among Iowa counties as a creative environment to foster entrepreneurship and new economic development opportunities (University of Iowa Study by John Solow)

At the conclusion of this section of the forum, moderator Gray offered his perception on the assets listed by the group.
“It sounds to me like Newton and Jasper County are more of a community than a lot of other places. In hoping to attain new jobs and residential growth, that is an intangible that is a massive, rich thing,” Gray said, noting that strength could play a large part in the community’s future strategies.

Strategies
The newspaper-sponsored forum attendees then spent considerable time identifying specific strategies the community might adopt to shape its future. After the group’s suggestions had been captured, each participant was invited to cast five “votes” to identify the five ideas they felt had the most promise.
Following is a brief description of the strategies generated. At the end the strategies are ranked according to the consensus attendee perception of importance.
• Since the community has a strong base of current and former Maytag employees with many skills and abilities, efforts could be made to utilize those skill sets to make Newton the focal point of a technology corridor running between the two state universities in Ames and Iowa City.
• Do what we do best. In Iowa, that’s cultivating crops and raising livestock. Efforts could be made to develop processing, packaging, transportation and storage facilities for the sale of Iowa crop and animal products around the world.
• Develop a comprehensive, one-stop Web site where companies and individuals could learn all the advantages of locating in Newton and Jasper County.
• Create an incubator system to assist individuals in nurturing their business plans. Both Maytag and non-Maytag people could be targeted. Business plans with great merit could receive various types of assistance.
• Promote community-based entrepreneurship with support programs to spur job growth in the area.
• Promote the development of the arts and related economic development benefits. A local group is currently working on a plan to develop a foundary for casting art pieces.
• Look at developing value-added agriculture processing businesses that use new technologies.
• Create “away teams” to visit and learn from communities that have successfully recovered from major job losses.
• Explore supplier chains that local companies use and potential recruit supplier companies to the community.
• Expand 101 things best about Newton to a state, regional and national advertising campaign. Tell Newton’s story outside the immediate area.
• Use existing conference facilities to draw state and regional conferences to Newton. Should Maytag properties come open, potentially expand current facilities within the available property. Coordinate these efforts with the Christian Conference Center.
• Should Maytag property come open, attempts to attract Des Moines insurance company expansions to Newton could be made.
• Launch a major “Keep Maytag (or Whirlpool) in Newton” effort. Visits with Whirlpool officials should be made to encourage use of current Maytag facilities for Whirlpool operations. The message has to be given that Newton has much to offer and can become an integral part of future operations for the expanded corporation. Point out that Newton can change from a “cost center” to a profit center. Such a mentality change can be beneficial to Newton.
• Approach other local companies about their needs and recognize their contributions to the community. Explore how public/private partnerships might help them grow.
• Assemble a team of people who can travel at a moment’s notice to respond to potential business opportunities for the community.
• Establish a database of Maytag employees and their particular skill sets.
• Work closely with state legislators.
• Establish a local networking system to help local business people explore growth opportunities. The network could include business problem-solving and support services and could expand business contacts.
• Establish a local health insurance program as a means of bringing development to the community, as Wisconsin has done.
• Develop a business corridor parallel to I-80.
• Continue efforts to revitalize the downtown area in Newton.
• Market the Maytag distribution facilities in Newton. The company has a 175,000 square foot space with 10 docks on 20 acres. This could be tied to promoting increased use of the intermodal facility for shipping purposes. The high cost of gasoline and diesel fuel make rail shipping more cost efficient for distributors.
• Better city/county cooperation, especially on economic development. Local elected officials need to understand the importance at this juncture of working together for the betterment of the whole community. Leadership work sessions between all local governments could be established.
• Look away from manufacturing toward other sectors of the economy – such as services, technology, health care, artisans – for expanded development opportunities.
• Develop a leadership strategy process/program.
• Create a jointly-funded grant writer position (United Way model) that can apply for grants to help fund local growth initiatives (i.e. incubator system for entrepreneurs).
• Make the community’s presence and rich resources known to business relocation firms.
• Come up with a plan for redevelopment of Maytag properties. Develop plans that would include city and county financial assistance/incentives for the potential use by new firms
• Move away from an “us-versus-them” mentality in local leadership/city government.
• Explore the possibility that current Maytag employees/investors might want to buy the plant and begin their own product line should Whirlpool not want the property. Also look at foreign firms that might have interest in having a U.S.-based manufacturing operations.
• Lobby federal lawmakers.
• Take advantage of Iowa’s strong educational system by attracting international students to educational opportunities in the community. Also conduct English language instruction to foreign students out of a system based locally.

When each participant was asked to identify the five most promising strategies among those above, the top vote-getters were as follows:
45: Campaign to keep Maytag/Whirlpool in Newton
36: Develop a Newton/Jasper County traveling team to pursue potential business opportunities
35: Develop comprehensive website to showcase the community’s assets
30: Promote better working relationships between the city and the county
25: Create jointly-funded grant writer position
24: Pursue non-industrial growth (services, technology, healthcare, arts)
23: Tell Newton story (ad campaign) to a broader area.
17: Move away from “us-versus-them” scenario
13: Develop Maytag employee skill sets by reaching out to entrepreneurs.
10: Expand educational opportunities/programs to promote development and growth.
8: Do on-site visits of successful communities.
8: Promote best business plan development.
7: Develop and expand use of the intermodal facility.

Outcomes
Forum participants concluded the day by discussing how the ideas above
could be turned into action.
While most felt it was important for the community to tell its story to Whirlpool – and the benefits the expanded company could glean from a continued presence in the community – it was the consensus that the community should not adopt an “all our eggs in one basket” model approach.
Several people argued, to what appeared to be general approval, that the effort should be made, but that the intent and approach should be much different from the “Keep Maytag in Newton” campaign 10 years ago.
The standard economic model has been to tell a company how many “goodies” the community can give away to win an employer. Today, however, the company needs to understand the “goodies” Newton has to offer and why the company might want to locate here because of them.
Forum participants also discussed what efforts should be taken next, how the momentum generated at the meeting can be continued in the weeks and months ahead.
The barriers between development entities, the group concluded, must be broken down so a broad-based effort can move forth. Barriers to progress need to be broken down and replaced by an inclusive, broad-based mindset: positive movement toward constructive solutions.
The group said the City of Newton’s Community Development position, the Newton Development Corporation and Jasper County Economic Development Corporation should work more closely together.
It was also suggested that specific efforts can be undertaken. Individuals can be assigned responsibilities, such as securing a grant writer to help finance development initiatives (i.e. finding seed money from philanthropic groups to develop an entrepreneurial development incubator system.)
Efforts to foster an expansion into service, technology and health care segments of the economy can be initiated as well as fostering new strategies in developing educational offerings (i.e. foreign language programs for international students).
Others said the new mindset must also include new modes of thinking about community. Partnering in a regional marketing initiative can expand the local capabilities to foster growth while leveraging current resources. Local networks can be established that both improves communication and strategies for development.
Moderator Gray ended the day by urging participants to communicate a sense of movement, action, progress and participation with others in the community.
“If your goal is high, don’t shoot low,” he said.

Local groups discuss possible loss of Maytag

October 20, 2005
Local groups discuss possible loss of Maytag
 
Date October 20, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Strategies to spur business growth and job opportunities in the face of the possible loss of Maytag were discussed by about 100 community leaders gathered at a day-long forum sponsored by the Daily News.

Business, industry, labor, education, social service and local government officials from throughout Jasper County gathered at the DMACC campus Wednesday to take stock of the community’s current situation — the risks it faces, the assets it possesses and promising opportunities for successful outcomes.

The event, “Forging Ahead: A Community Dialogue” was put together by the Daily News as part of its on-going effort to focus community attention on the broad-range impacts of Maytag‘s potential closure. The event was facilitated by Steve Gray, a former editor and publisher of a family-owned newspaper in Monroe, Mich., and past publisher of the Christian Science Monitor.

In his opening remarks to the broad-base of guests, Gray likened Newton’s situation to a group of people in a raft heading toward Niagra Falls.

“We all share the same risk or jeopardy,” he said. “We have to think how we can all avoid the dramatic danger.”

After spending the morning identifying specific risks to the community should Maytag leave and the assets the community has to offer, attendees focused attention on what strategies might be best for the community to follow and what specific opportunities exist for growth outcomes.

A wide-range of possibilities surfaced. Attendees felt some effort should be made to contact Whirlpool officials about the benefits it could see by keeping local Maytag operations, although an “all our eggs in one basket” approach to new job creation opportunities should be avoided.

Other tactics identified for their potential benefits included the development of an “away team” that would be prepared to travel and tell Newton’s location benefits to business and industry, a comprehensive Internet site for use by business locators, fostering better relationships between city and county governmental agencies, creation of a grant writing position for job growth benefits, efforts to expand the local job base beyond its industrial emphasis toward technological, health care and service industries and national, regional and local advertising efforts to tell Newton’s story.

The group also discussed the potential for helping to foster new business ventures by displaced Maytag workers. An entrepreneurship incubator program could be developed that could take advantage of the varied skill sets held by current Maytag employees. The use of angel funds and philanthropic donations to help set up these programs was also suggested as a method for financing such efforts.

The possibility of an employee-owned Maytag operation was also discussed should the plant close sometime in the future. Expanded use of the community’s intermodal railroad loading facility was also targeted as an opportunity, especially with the vacant warehousing space that exists near Maytag.

The brainstorming ideas generated at Wednesday’s meeting will be tabulated over the next several days and posted on the Daily News’ Web site, http://www.newtondailynews.com.

Whirlpool’s 3Q profit rises 13 percent

October 20, 2005
Whirlpool’s 3Q profit rises 13 percent
 
Date October 20, 2005
Section(s) Local News
Brief  
 
BENTON HARBOR, Mich. (AP) — Appliance maker Whirlpool Corp., which is buying rival Maytag Corp., today said earnings for the third quarter rose 13 percent despite higher costs for raw materials.

Net income increased to $114 million, or $1.66 per share, from $101 million, or $1.50 per share, a year earlier. The net income beat the average estimate of $1.62 per share from analysts surveyed by Thomson Financial.

Sales rose 9 percent to $3.6 billion from $3.32 billion.

Whirlpool, the No. 1 home appliance maker in the U.S., said material and oil-related costs totaled $110 million in the latest quarter. Higher restructuring and compensation costs, and unfavorable currency translation also hurt results for the quarter. These factors were offset by price increases, cost-control initiatives and productivity improvements, Whirlpool said.

“The combination of actions we began implementing last year to address the significantly higher material and oil-related cost environment have proven to be effective,” said Jeff M. Fettig, the company’s chairman, president and chief executive officer. “These actions included driving higher levels of controllable productivity, leveraging our global operating platform, reducing non-product-related spending, accelerating the rate of innovation to the market and implementing cost-based price adjustments.”

The Benton Harbor-based company’s sales in North America rose 10 percent to $2.3 billion, while sales in Europe increased 4 percent to $811 million, or 3 percent excluding currency translation. Sales in Latin America were up 5 percent.

Whirlpool maintained its forecast for full-year earnings of $5.90 to $6.10 per share. The company continues to expect full-year material and oil-related costs to be at the high end of a range of $500 million to $550 million.

Analysts are expecting the company to post a full-year profit of $6.01 per share.

“We expect continued positive year-over-year earnings expansion during the fourth quarter,” Fettig said. “Our positive sales momentum, strong demand for our branded product innovation, productivity initiatives and strong cost controls are expected to offset the unfavorable material and oil-related cost environment.”

Whirlpool agreed in August to buy Maytag with a cash and stock bid of about $1.7 billion, topping an offer by an investor group headed by Ripplewood Holdings LLC.

New models drive economic growth

October 17, 2005
New models drive economic growth
 
Date October 17, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

If Maytag were to close, what would save Newton and Jasper County?

Would it be another Maytag? Could the city and county be successful at landing another big manufacturer with hundreds or thousands of jobs?

Not likely these days, the experts say. The days of chasing smokestocks appear to be nearing an end.

But it just might be another Frederick Louis Maytag, a Newton farm-hand who grew his big idea for a new product into a dominant position in the world.

Many new answers for community recovery have emerged in recent years as hundreds of communities have been forced to look for creative solutions after suffering massive job losses. One of the most promising of those is community-fostered entrepreneurship. Industry clustering, regionalism and philanthropy are several more.

In a search for solutions that might work for Newton, the Daily News looked around the country to see how other communities had successfully met similar challenges. Here’s what we found.

Rural Uncertainty

As director of the Center for the Study of Rural America, Mark Drabenstott says Newton is not alone.

“What Newton is passing through is a trend happening in a lot of places,” the Iowa State University-educated banker with the Federal Reserve in Kansas City says.

Globalization, Drabenstott says, is reshaping all facets of the U.S. economy. Rural areas, he says, are being especially hard hit because they have typically built their economies around single business activities, whether it be agricultural, like processing beef, or industrial, like building washing machines. When companies find this work can be done more efficiently or at lower cost in other parts of the world, these rural communities often have little else to offset the losses. The result is often a downward spiral.

What can a community do?

Creating an environment that fosters local entrepreneurs could be a big part of the solution, Drabenstott says.

“Newton has a choice,” he said. “Newton can try to hunt for the next Maytag, although I would argue it would be cost-exorbitant, and the likelihood for success would be low. The question is not how to attract and replace Maytag but finding the next Mr. Maytag and making sure you have enough of them in the pipeline that one might grow to a mighty oak.”

Eau Claire, Wis., is an example.

In the early 1990s, Uniroyal announced the closing of its tire plant there, putting about 1,400 people out of work. The community established task forces to deal with the immediate unemployment problems, job training issues and short- and long-term economic development efforts. Another group focused on what could be done with the 1.9 million square feet of empty production space.

But it was the vision of a local family that made all the difference, said Craig Carlson, industrial development director for Eau Claire at the time of the plant closing.

“I call it the eighth wonder of the world,” Carlson said.

The old tire plant was purchased by Cigan Properties –owned by Bill and Patti Cigan, and her son, Jack Kaiser. The property now houses more than 130 businesses, ranging from light manufacturing operations, commercial warehousing, service, retail, public/private offices and even a day care center. In addition, luxury warehouse style residential apartments have been constructed, as well as a 35-unit apartment complex.

Banbury Place, named after a tire machine used in the old plant, now employs nearly as many people as worked at the plant before it was shut down.

Carlson said it’s hard to imagine, but the closing of the tire plant has benefited the Eau Claire community.

“Long-term, it caused the community to come together,” he said. “It diversified the economy and brought about a positive outcome.”

Asset-based approach

Drabenstott warns, however, that a community’s focus on fostering entrepreneurship cannot be scattershot. It must focus on what the community can best bring to the global economic table.

“Your community has to do some soul searching,” he said. “The real onus lies with you. The answer to your economic future is not coming from Des Moines, it’s coming from Newton. You’re the captain of your own destiny.”

Deb Markley, co-director of the Rural Policy Research Institute’s Center for Rural Entrepreneurship, agrees. She says her work in North Carolina with individuals impacted by the downturn in the American textile industry shows successes can be found when individuals focus on what they do best.

Markley, whose institute just put out a new book, “Energizing Entrepreneurs: Charting a Course for Rural Communities,” notes that several textile firms have found success in niche manufacturing activities. One firm, she said, just opened a production facility for high end women’s apparel.

“You have to be rooted in reality,” she said. “You have to know what assets you have and build a world for tomorrow. You have to look where you want to be five years from now.”

Do what you do best

Looking ahead is what drove Jim Haguewood in his efforts to reverse the downward trends in his rural Washington state county’s economy.

For 20 years, Haguewood worked in the restaurant business in Port Angeles, Wash., a picturesque community in the state’s northern peninsula. But for all its natural assets, Clallam County had been in a state of decline for more than 30 years.

In 2000, Haguewood was recruited to run the county’s economic development council. Once on board, he soon realized that the traditional business recruitment model had not been successful. Slowdowns in the fishing and timber industry, caused to some degree by federal regulations, were forcing people to move. That hurt property values, the local tax base and retail activity.

Working with a Maryland consulting firm, ViTAL Economy, Haguewood pushed the area’s development efforts in a different direction. Again, it focused primarily on the area’s existing assets and how they could best be leveraged for success.

“To change a rural economy requires a facilitated disciplined approach,” he said. “It must start with community activation and assessment to determine the current community climate, strength of leadership, existing industry clusters, defining a goal, identification of key indicators to measure the health of the economy and, lastly, the development of a strategic plan.”

Community buy-in, coupled with a sense of urgency, are critical to success.

“This is the foundation to change a community culture,” he said. “The past approaches to economic and community development are not going to work in Newton and Jasper County in the future. The economy is changing and will not be the same again.”

In the past five years, Clallam Networks has proven successful. A new $23 million timber processing plant is near completion — the result of convincing business owners it made sense to process trees close to their source instead of trucking them hundreds of miles. And the new West Port Shipyards is producing 160-foot production yachts that sell for about $30 million each.

“What we’ve been able to do is change both the local belief that we had a terrible economy and the reputation that we were a bad place to invest,” Haguewood said.

Regionalism

Northwest Washington’s successes highlight another point stressed by Drabenstott: Future economic development efforts will likely need to focus on regions rather than stand-alone communities.

“Is Newton big enough on its own or would it gain power partnering with other communities?” he asks. “I feel that any region that does its homework, that’s willing to build new partnerships, will be given an edge in the global marketplace.”

A look north shows regionalism’s benefits and the power of non-traditional partners.

Joe Sertich knew the Arrowhead Region of northern Minnesota had been slowly bleeding for years. Twenty years ago, mining accounted for 50 percent of the jobs and 60 percent of the income. Today, it accounts for 10 percent of both.

In 2000, LTV Steel Mining Company closed, putting 1,400 people out of work. Other mines, paper mills and wood product plants were announcing layoffs or threatening to close. The region was in a serious decline.

As president of the Northeast Minnesota Higher Education District, a consortium of five community colleges, Sertich saw an opportunity for higher education “to serve as a catalyst and coordinator for the region.”

The goal, Sertich said, was to align the private sector, government and higher education under one umbrella with the goal of revitalizing the regional economy.

What local leaders realized, Sertich said, was that new opportunities were likely not to arise from outside the area but rather through development within the region. A strong emphasis was placed on putting together education and training programs for displaced workers.

The major emphasis was placed on technology.

“Technology supports the infrastructure that allows individuals to be more productive in the workplace and in their pursuit of opportunities as lifelong learners,” Sertich wrote about the Arrowhead model.

“Technologically trained and equipped individuals can be at the cutting edge of the changes and innovations that will serve the region.

“The greatest danger to the viability of rural communities is not globalization but a retreat into isolationism and protectionism, so technology was used as a tool to create living wage jobs across the region. This was the best way for communities to preserve their local control and become more competitive globally.”

The area has rebounded since the model was unveiled in 2000.

Blue Cross has an adjudication call center in the area. Delta Dental does billings while World Perks operates a worldwide reservation system. Software design firms are also growing.

“People grew up here often wondering who they were going to work for,”

Sertich said. “Now we are building an entrepreneurship model — find an asset, find a niche and push hard.”

Hometown

Competitiveness

The sandhills of northern Nebraska might not seem a likely setting for a cutting-edge economic initiative, but the Kellogg Foundation Board of Directors sees it differently. Earlier this year, the Kellogg Foundation awarded Hometown Competitiveness $2 million for its efforts to bring growth to rural areas.

Based in Lincoln, HomeTown Competitiveness provides a framework for rural communities to help them identify reachable goals and strategies designed to reverse rural decline. The plan is built on four cornerstones: building leadership and community capacity, engaging young people, fostering local philanthropy and supporting entrepreneurship.

Craig Schroeder, a program coordinator with the group, said HTC is an asset-based approach that attempts to bring the four facets together in a single drive toward community improvement.

“This is not rocket science,” he said. “We sit down with a group and look at where they are at, what are their goals and what challenges they face in bringing changes about. Then we look to see how we can leverage all that to revitalize the economy of the town.”

But the program’s entrepreneurship element has received some of the most notice. Nationwide, two-thirds of job creation and business growth comes from entrepreneurial ventures, according to the National Commission on Entrepreneurship. Chuck Hassebrook, director of the Center for Rural Affairs, said that is important, especially for rural areas.

“Small entrepreneurship is especially important as companies that formerly looked to rural areas are now moving offshore for lower wage labor,” he said in a statement announcing the HTC award.

“Entrepreneurial development keeps local people in control of their community’s future. It keeps profits at home and enables local people to build assets and earn middle class incomes.”

UAW members contribute a lot

October 14, 2005
UAW members contribute a lot
 
Date October 14, 2005
Section(s) Opinion
Brief  
 
To the Editor:

What will happen to Newton if Maytag shuts down? I’m sure I don’t know, but I believe that this town will come to understand how important the United Auto Workers Union has been to this community.

I have never seen an article or letter to the editor in the Newton Daily News about it, but the local 997 people over the years have donated thousands and thousands of dollars to organizations and causes that were of benefit to this community.

As a former shop chairman at the Winpower Corporation, I also was a member of the executive committee, where the votes were taken to give out with no strings attached, thousands of dollars. You probably never knew about it because the amounts were small. Fifty dollars here, $100 there. The money faucet of those great men and womenn of local 997 just kept running and I suspect it is still on today. All through the years, they have never bragged about it. There should be some way to thank them.

As for me, I’ll just say I am so proud to have been a member.

Olen Lambert

Newton

Maytag lays off workers at S.C. plant

October 11, 2005
Maytag lays off workers at S.C. plant
 
Date October 11, 2005
Section(s) Business
Brief  
 
FLORENCE, S.C. (AP) — A Maytag washing machine plant laid off 60 to 70 workers at a plant here because of “market conditions,” a company official said.

The workers learned Monday they no longer had jobs but would receive wages and benefits through Dec. 10, John Daggett from Maytag‘s corporate offices said.

The Newton-based company laid off 75 workers in April and 24 employees last year. Florence, along with Maytag‘s Newton and North Canton, Ohio facilities, have been mentioned for possible shutdown although no decisions have been made.

“The layoffs were a result of market conditions, and have nothing to do with our employees’ productivity,” Daggett said.

The company is trying to sort out the details of a takeover bid by rival Whirlpool.

The corporation’s primary brands are Maytag, Hoover, Jenn-Air, Amana, Dixie-Narco and Jade.

The company bought the Florence plant from Amana four years ago and converted it from making kitchen ranges to high-end energy efficient washing machines.

U.S. regulators seek more information on Whirlpool’s proposed purchase of Maytag

October 7, 2005
U.S. regulators seek more information on Whirlpool’s proposed purchase of Maytag
 
Date October 07, 2005
Section(s) Local News
Brief  
 
BENTON HARBOR, Mich. (AP) — The Justice Department’s antitrust arm is asking for more information about Whirlpool Corp.’s proposed $1.7 billion acquisition of rival Maytag Corp.

The companies, each among the top makers of dishwashers, refrigerators and other home appliances, said today they are working closing with the Justice Department and plan to fully cooperate with and respond to the agency’s requests.

Whirlpool is the nation’s largest appliance manufacturer, while Newton, Iowa-based Maytag ranks third.

The proposed deal has raised antitrust concerns because it would give Whirlpool, based in Benton Harbor, close to half of the U.S. market for major appliances and as much as 70 percent of the U.S. laundry market.

Both companies have said they expect the deal to close as early as the first quarter of 2006.

Whirlpool agreed in August to buy Maytag with a cash and stock bid that topped an offer by an investor group headed by Ripplewood Holdings LLC.

Whirpool shares rose 73 cents to $74.02 in morning trading on the New York Stock Exchange, while Maytag shares were steady at $17.65.