Maytag to close Florence plant

Maytag to close Florence plant
Date November 07, 2005
Section(s) Local News


Maytag Corp., announced today that it plans to close its Florence, S.C., laundry plant as part of its effort to reduce excess manufacturing capacity.

The shutdown, expected to be completed early next year, will affect 60 employees.

“Closing a plant is never an easy decision,” said Steve Ingham, Maytag senior vice president — supply chain. “Unfortunately we have too much laundry manufacturing capacity and we need to reduce it.”

Today’s announcement is part of Maytag‘s ongoing efforts to address its excess manufacturing capacity in its laundry and floor care operations. The company has four laundry plants, including its flagship plant in Newton, and three floor care operations. The excess capacity and associated cost of operations has had a negative impact on the company’s financial performance, Maytag has said.

Ingham said that the decision had nothing to do with employee performance at Florence.

“Our Florence employees are a hard working and dedicated group, but in today’s highly competitive global marketplace, we can no longer afford to keep underutilized plants open,” Ingham said.

The decision to close the plant follows Maytag CEO’s statement in releasing disappointing third quarter results that the company needs to “urgently address” its manufacturing capacity issues.

“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,” CEO Ralph Hake said in announcing an $18.2 million loss for the third quarter.

The future of production operations in Newton remain uncertain. Maytag has long said that its Newton plant is its highest cost laundry operation. That cost structure has led the company to announce that the Newton facility is not eligible for any new product platforms, even with the concessions employees voted to accept in last year’s contract following a three-week strike.

The company is in the process of concentrating its vertical-axis laundry production at its plant in Herrin, Ill., with the corresponding dryer production concentrating at its Searcy, Ark., facility.

Employment levels at the Newton plant have dropped significantly in recent years, dropping from a high of approximately 2,600 production workers five years ago to 1,000 workers today.

The Florence plant was acquired by Maytag as part of its 2001 purchase of Amana. The plant was converted from a cooking facility under Amana to a laundry production operation under Maytag. Company officials said the work force levels at the plant have dropped over time due to a number of layoffs.

Affected employees will be eligible to receive severance packages as well as career counseling assistance. Maytag said it would work with state and local workforce development agencies to help workers find new positions.

Restructuring charges associated with the plant closing are expected to range between $40 and $50 million, including $10 million in cash related to severance and fulfilling purchase commitments.

Maytag shareholders will vote on Dec. 16 on whether to allow Whirlpool’s proposed $1.7 billion purchase. In addition to the cash and stock offer, Whirlpool would assume approximately $1 billion in Maytag debt.

U.S. Justice Department officials are currently reviewing the acquisition. Company officials said the deal could be completed as early as the first quarter 2006.


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