Archive for December, 2005

Pure capitalism equally unhealthy

December 30, 2005
Pure capitalism equally unhealthy
 
Date December 30, 2005
Section(s) Opinion
Brief  
 
To the Editor:

The big economic news of ’05? Profits depend on cutting costs, especially health care costs. A main reason for Maytag profit woes. Giants of industry like GM and Ford are in financial trouble mainly because of health care costs. It was not that far in the near past that employer-paid health care was a standard for both large numbers of employees and small numbers of employees of factories and businesses.

I’m sorry, but I listen to business talk shows. The Republican talking-heads tell us that not only is employer-paid health care a thing of the past but so are labor unions, the main bargaining tool to get employer paid health care.

It’s the bragging about the “great” economy by the Republicans that bothers me. But how can the economy be “great”? Employer-paid health care was a “standard of living,” not a perk. The economy is great in the rarefied air at the top, but the masses simply lost part of their standard of living. And by the claims that labor unions have no part in this “kind” of economy, it seems that that standard of living is gone forever.

One letter writer touched on the need for employer-paid health care. Most blue collar workers at Maytag needed work-related medical services because of the demands of their job. Without paid health care, factories can “burnout” their employees without consequence.

The Republicans are showing the purity of capitalism and the “what is mine is mine and all I can get is mine” attitude. They’re bound and determined to learn the hard way that the far opposite end of socialism (pure capitalism) is equally unhealthy.

Stuart Allspach

Baxter

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Whirlpool pleased by Maytag shareholder vote

December 23, 2005
Whirlpool pleased by Maytag shareholder vote
 
Date December 23, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Whirlpool officials said they were pleased shareholders agreed to the sale of the iconic American appliance maker Maytag to its Benton Harbor, Mich.-based rival on Thursday and that Newton workers will soon learn how they might take advantage of employment opportunities in the merged companies.

“We are very pleased that Maytag‘s shareholders have fully endorsed the merger,” said Jeff Fettig, Whirlpool’s chairman and CEO. “The combination of Whirlpool and Maytag will create very substantial benefits for consumers, trade customers and our shareholders. We believe this transaction will result in better products, quality and service, as well as efficiencies, which will enhance our ability to succeed in the increasingly competitive global home appliance industry.”

Maytag shareholders approved the merger plan at a special meeting in Newton on Thursday. Nearly 98 percent of the votes cast were in favor of the $1.7 billion buyout in a $21 per share cash and stock offer.

The antitrust division of the U.S. Department of Justice continues to review the buyout offer. In order to facilitate the federal review, Whirlpool and Maytag have agreed not to close the merger before Feb. 27, 2006, without Justice Department approval. The Department also may request additional time for review.

Maytag became the target of a bidding war earlier this year after Maytag directors approved a $14 per share buyout offer from a New York City-based private equity firm, Ripplewood Holdings. Unsolicited bids from China-based Haier and Whirlpool raised the ante for the company with the board eventually cancelling the Ripplewood deal, with Whirlpool agreeing to pay the $40 million buyout clause of the contract, and raising its offer three times before reaching the $21 a share final bid.

In a letter to Maytag employees on Thursday, Fettig called the pending merger “one of the great mergers in our industry.”

“Whirlpool’s vision is what drives our business strategy, and it’s simple: We want to have our products in every home, everywhere in the world,” Fettig said in the statement.

The Whirlpool CEO also gave a brief indication of what may lie in store under a combined Whirlpool and Maytag operation.

“Innovation is critical to our future success, and I believe that when joined with Maytag‘s strong heritage and dedicated people, our combined company will compete more effectively against strong domestic and global manufacturers,” he said.

He also said employment opportunities will exist for current Maytag workers.

“Until all regulatory approvals are achieved, I recognize that uncertainty exists as to what the future holds for many employees. Be assured that leaders of both companies understand this and we look forward to communicating clearly and regularly with you as appropriate when new information becomes available.

“To that end, we believe that the growth of our company will create employment opportunities. In the near future, we expect to share with you the process that we will follow for filling positions, including details on how you can actively participate in the process. We believe that the need for talented, experienced professionals in the combined company will create many exciting opportunities.”

In a proxy statement filed as part of the merger plan, Whirlpool said it plans to take one-time costs and capital investments in the $350 million to $500 million range. It also said it expects to generate approximately $300 million to $400 million of annual pre-tax savings by the third year following completion of the merger.

“Whirlpool believes that its strong operating and financial position, focus, brand management and global capabilities will enable it to enhance the Maytag brands,” the proxy stated.

A combined Whirlpool and Maytag company would create the world’s largest appliance manufacturer.

Regulatory review continues despite shareholders’ OK

December 22, 2005
Regulatory review continues despite shareholders’ OK
 
Date December 22, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

AP Business Writer

DES MOINES — Even though Maytag Corp. shareholders have approved the proposed merger with Whirlpool Corp., it is far from a done deal, as federal regulators have a big say in whether deal goes through, analysts said.

Whirlpool has offered to buy Maytag for $1.79 billion, or $21 a share and will assume Maytag‘s debt of $977 million.

Industry analysts differ in their opinions on whether the antitrust division of the U.S. Department of Justice will permit the nation’s largest and third-largest appliances manufacturers to join forces.

Many analysts believe that a Whirlpool-Maytag combination gives the new company more than 70 percent of the North American washer and dryer market. Normally, such a concentration would prompt regulators to require the companies to sell off parts of the business to more evenly balance competition.

“I can assure you that this merger, the numbers in it, would suggest reasons for grave concern,” said Stephen Calkins, a law professor at Wayne State University and a former Federal Trade Commission attorney.

However, many other factors are considered in complex mergers, he said. Among them are the presence of foreign manufacturers and the likelihood that they can effectively compete.

Regulators also may consider efficiencies that would be gained by the merger and whether one of the competitors is seeing a declining market share going into the merger.

Industry analyst David MacGregor, of Ohio-based Longbow Research, said he believes the government will consider the merger in the broader context of a global market, which has significant competition from more than half a dozen companies.

“When we look at the Justice Department review, I think the basis upon which they consider this transaction is two American companies competing within a global marketplace and one of them’s not doing so well and that they decide proactively to allow this,” he said.

Analysts said Maytag has continued to weaken since it lost floor space for Maytag brand appliances at Best Buy Co. retail stores in January.

A Best Buy spokesman said customers turned to other brands focusing more on style and innovation, including South Korea-based LG and Samsung Electronics Co.

LG and Samsung, recent entrants into the U.S. home appliance market, already have captured as much as 4 percent of the market.

The government is concerned about competition because when one company controls too large a share, it can manipulate prices and leverage its power with retailers to reduce floor space for competitors. Too little competition could slow product innovation.

Department of Justice attorneys working on the case could ask for an extension of time if more fact-finding is needed beyond Feb. 27. Maytag and Whirlpool have agreed not to close the deal before that date.

The attorneys then will make a recommendation to Assistant Attorney General Tom Barnett. The government will either approve the deal or require changes before it could be approved.

“A consent order can involve limited or sometimes quite massive divestitures of plants or brands or physical assets,” Calkins said. “It’s simply a process of the government indicating areas of concern and the parties deciding which ones they can accommodate.”

If an agreement can’t be reached, the companies could agree to enter into negotiations with the government or file a lawsuit.

Shareholders vote to sell

December 22, 2005
Shareholders vote to sell
 
Date December 22, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

and ANDY KARR

Staff Writer

As expected, shareholders today approved the sale of troubled appliance manufacturer Maytag to rival Whirlpool in a $1.7 billion cash and stock offer.

Maytag, in a five-minute special meeting at the Sodexo DMACC Conference Center this morning, announced preliminary results that showed overwhelming support for the merger. Of the 56 million votes cast in advance of today’s meeting, 97.8 percent of the votes were cast in support of the merger. There are a total of 80 million shares outstanding. A final tally will be released later.

Shareholder approval of the sale was one of the two remaining steps for the merger to move forward. The antitrust division of the U.S. Justice Department is reviewing the merger proposal and needs to lend its approval before the takeover can be finalized. Maytag and Whirlpool have said closure on the deal will not be completed prior to Feb. 27, 2006, or later depending upon federal regulator approval.

Maytag Chairman and CEO Ralph Hake, in brief comments prior to the preliminary vote announcement, thanked the generations of Maytag employees who helped build the company into an American icon.

“I would like to acknowledge the many generations of Maytag employees who contributed to this American icon,” he said. “I want to thank you for your hard work. This company was built with integrity.”

But, he noted, shareholder approval of the sale could mean “painful” changes for workers and the community.

“We have to have an ending to have a beginning,” he said. “We need to proceed with optimism.”

The DMACC auditorium was packed to overflowing as shareholders, many former Maytag workers, waiting to here the fate on the historic vote to end the Newton-based American icon.

Most of the shareholders in attendance indicated they voted in favor of the merger, although those who spoke to the Daily News said they did so with a heavy heart.

Retired Newton stockbroker Richard Means was one of those shareholders.

“It’s in the best interest of the company, probably not for the community,” he said, adding that he saw no other option for Maytag at this point.

Ed Smith of Newton worked for Maytag for nearly 38 years as a tool and dye maker. He faulted recent management for Maytag‘s falling share prices and ultimate sale to Whirlpool.

“It seems that everything went downhill pretty quick,” he said. “It’s a sad thing to see what’s happening.”

Former UAW president Lonnie White huddled with other Maytag retirees and shareholders on the sidewalk outside DMACC in what they called a “silent protest” — not a protest of the sale, but what they view as poor management over the last 15 years that led Maytag to today’s merger.

“I think the board of directors should be investigated for allowing the management to do what they did to the company,” White said.

While the sale itself had members of the group shaking their heads, they said they voted in favor of the move. For them, there was no other option.

“I’d just as soon see it go to Whirlpool as Electrolux or General Electric — or China,” White said. “If there had to be a buyer, I prefer Whirlpool. It’s just sad that it’s got to be sold.”

The thought of the Newton-founded Maytag leaving the community that drove it into a Fortune 500 corporation is perhaps the bitterest pill to swallow.

“Five minutes for a 112-year-old company,” White said, shaking his head at the brevity of today’s meeting.

Cristina Nedrow, spokesperson for the machinist’s union, which represents Maytag employees in Herrin, Ill., issued a statement saying, “Despite the tremendous drop in stock price, sales, profitability — Hake and clan got a windfall … In total, without the most recent additional stock option grants, the top executives are expected to obtain a windfall totaling $26.5 million. This begs the question, was this intentional?”

Maytag has seen its position in the appliance marketplace slip in recent years due to the influx of foreign competitors. It has attempted to cut costs to remain competitive, slashing 20 percent of its salaried workforce last year, closing a refrigeration factory in Illinois and moving the product to Mexico and Amana and announced the closure of another washing machine factory in South Carolina. Maytag lost $18 million in the last quarter.

Maytag has long said the Newton plant has been its highest cost operation and last year said no new product platforms would be launched from the facility until a number of factors, including costs, were trimmed. Workers at the plant went on strike for three weeks in the summer of 2004 before agreeing on a four-year contract that contained a number of cost-saving concessions, including the assumption of additional health care costs. Maytag said the concessions were still not enough to allow Newton to be considered for new product platforms and began a program to concentrate specific product platforms at lower cost facilities.

The future of Maytag operations in Newton are uncertain pending the outcome of the merger. In information provided in the shareholder proxy statement concerning the sale, Maytag put together future financial forecasts based on the closure of its Newton washer and dryer facility and its North Canton, Ohio-based Hoover vacuum unit. Its Florence, S.C., washing machine factory, acquired with the acquisition with Amana, also was targeted for closure, an action Maytag has already taken.

Most appliance industry analysts believe positions at Maytag‘s headquarters will be eliminated as part of the transition into Whirlpool. What the future holds for the production facility in Newton remains unknown though local labor representatives have said they would be willing to work with Whirlpool in an effort to retain local jobs.

UAW Local 997 President Ted Johnson said the union looks forward to the possibility of increasing its local operations.

“It’s an exciting time. We want to rejuvenate this plant and this community and the UAW is wholeheartedly interested in engaging Whirlpool,” he said. “I think our people pretty much sell themselves. That plant is operating at 30 percent capacity. We’ve got the capacity. We’ve got the manpower.”

If local Maytag operations in Newton should close following completion of the merger, the big question is just how bad it will be?

On the surface, the loss of some 2,000 local jobs could be expected to buckle this community of 16,000 people. But a number of factors indicate that Newton is in better shape to weather the blow than it would first appear.

In the last few years, Maytag has already shed some 2,000 local jobs at its factory and headquarters facilities. At the same time, U.S. Census data shows the community growing. Birth rates at Skiff Medical Center are on target to surpass the record of 260 in 1978. The number of school children entering the district also has shot up, forcing the district to expand the number of sections offered. Student enrollment figures this year showed growth for the first time in several years.

Newton’s housing market also remains strong. Although the number of homes on the market has increased, buyers are still out there and paying higher prices for the properties.

“Through November, we’ve sold more homes, for a substantially higher price, than we ever have,” said Dennis Combs, a local realtor and member of the Newton Community Board of Education. “Buyers are still out there.”

Newton Mayor Chaz Allen said today that Newton is working to expand and diversify its economy at the same time offering a hand to Whirlpool to become a part of the community.

“With this vote, as one of the first steps in the successful Whirlpool acquisition of Maytag, our community stands ready to work with Whirlpool to retain and expand employment in Newton,” he said.

Allen said the city also is working locally, and also in collaboration with state and federal officials, on new initiatives to spur growth. He said Newton plans to aggressively pursue recruitment of all facets of business activity. He cited recent discussions on the establishment of a venture capital fund to assist local business entrepreneurs, the possible use of a local option sales tax to spur development opportunities and a new regional marketing effort comprised of a five-county east central Iowa consortium.

“We have a long and successful history of partnering with businesses looking to locate in our community,” he said. “If you are a business considering relocation or expansion, we invite you to take a look.”

Allen also said the development of the Iowa Speedway in Newton will serve as a catalyst for additional development. The $70 million facility is under construction with races slated for late next summer.

“Though it is not yet certain what effect the purchase of Maytag by Whirlpool will have, the addition of the Iowa Speedway, the multi-million dollar expansion of the airport and an ideal location in the center of Iowa directly on Interstate 80 gives Newton a strong base from which to build a future full of promise,” he said.

Newton Development Corporation Executive Director Kim Didier sees this morning’s meeting as just another step in the merger process.

“I think everybody is hoping that the process is as short as possible,” she said. “It’s nice to get to the next step and move the process along.”

NDC is examining different options that could help influence Whirlpool to keep jobs in Newton once the merger is finalized. Options discussed include capturing revenue with a 1-cent Local Option Sales Tax and working with the state to put together an incentive package to keep or lure jobs to Newton.

“We’re poised to do what we can in making a very convincing argument to Whirlpool,” Didier said. “In addition, we’re also working on other things around the community, around entrepreneuralship.”

Didier noted that Newton has a lot to offer potential employers, like the recently renovated Newton Airport, which can handle corporate jets; new developments like the Iowa Speedway and a great neighborhood-based school system.

As time goes by and the community becomes more accustomed to the idea of life after Maytag, its easier for Didier to get people to see the potential for positive changes.

“I think significant change always brings some anxiety, but as people can learn to live with it and see the positive, it gets better and better,” Didier said. “We’re not only surviving, we’re thriving and that’s what we need to let people understand.”

Shareholders to vote on Maytag sale

December 21, 2005
Shareholders to vote on Maytag sale
 
Date December 21, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Shareholders are nearly certain to approve the sale of long-struggling Maytag Corp. to rival home appliance manufacturer Whirlpool on Thursday which means the end of the Newton-based company’s 112-year run as an independent company.

A special shareholder meeting to vote on the proposed sale of Maytag is scheduled for 10:30 a.m. Thursday at the Sodexo DMACC Conference Center, a former Maytag warehouse converted to a higher education facility with significant help from the Fortune 500 company.

In late August, the Maytag board of directors voted to throw in the towel on continued independent operation of the U.S. appliance icon after years of dismal financial results. Maytag became the subject of a bidding war after the board of directors initially approved the company’s sale to Ripplewood Holdings in late May. That $14 a share offer brought unsolicited bids from China-based Haier and eventually led to Whirlpool’s entry into the fray and its winning bid.

The meeting on Thursday is expected to be short, but bittersweet.

John Daggett, Maytag‘s corporate spokesperson, said he expects the meeting to be “very short,” lasting no longer than 15 minutes.

“There’s only one major proposal, but it’s more of a procedural meeting,” Daggett said. “There may be a preliminary announcement of the vote total (at Thursday morning’s meeting), but there will be a final tally later in the day.”

While Maytag shareholder approval is nearly certain, the U.S. Department of Justice still needs to give its assent for the merger to move forward. The Justice Department is still reviewing the buyout offer, which upon completion would make Whirlpool the world’s largest home appliance manufacturer. Both Maytag and Whirlpool said no final takeover will be completed prior to Feb. 27, 2006, although the need for additional review by federal authorities may delay that target date.

Analysts are split on the eventual outcome of the Justice review. Some believe the combination of the two companies, which would give Whirlpool as much as a 70 percent share of the U.S. washing machine market, could lead federal officials to require a partial divestiture of Maytag assets. Others believe the Justice Department will view the merger in the broad global context of appliance industry competition and allow it to move forward.

Maytag shareholders are being offered $21 for the approximate 80 million outstanding shares in a stock and cash offer valued at $1.7 billion. In addition, Whirlpool will assume nearly $1 billion in Maytag debt.

Maytag has struggled in recent years due to the onslaught of global competition. Foreign competitors, and American manufacturers that have been able to take better advantage of the economies of low-cost production operations, have continued to drive appliance pricing points below Maytag‘s ability to remain competitive. The company has also been hurt by the loss of retail floor space to market its brands, health costs, pension benefits and product litigation issues. For the third quarter 2005, Maytag reported a loss of $18 million.

Home appliance analysts say Maytag shareholder approval of the sale to Whirlpool just three days before Christmas could put a lump of coal in Newton’s economy. Speculation by analysts, although not backed by any formal company statements, is that a successful merger will likely mean the demise of Maytag corporate headquarters in Newton and the potential loss of local production operations. That could mean the loss of as many as 2,000 current local jobs. In proxy statements prepared for the sale, Maytag has identified the prospects of closing its Newton, North Canton, Ohio, and Florence, S.C., facilities in its future financial forecasts. The pending closure of the Florence facility was announced last month.

The demise of Maytag in Newton will bring to an end a company started as a farm implement company in 1893 and later named after one of the company’s founding members, F.L. Maytag. The Parsons Band Cutter and Self Feeder Company produced an accessory for threshing machines, but later moved into the production of washing machines due to the seasonal nature of the farm industry. The company’s first model, the Pastime, was introduced in 1907. Its second model, the Hired Girl, followed in 1909, the same year Maytag assumed full ownership of the company and gave it his name.

Maytag offers no answers on Hoover future

December 20, 2005
Maytag offers no answers on Hoover future
 
Date December 20, 2005
Section(s) Local News
Brief  
 
By Edd Pritchard

Canton Repository

Special to the Daily News

NORTH CANTON — No major announcements were made following meetings Monday between Maytag Corp. and local officials.

And there were no answers to questions about the future of local Hoover operations.

“There was nothing earth shattering,” Mayor David Held said.

Maytag owns the Hoover factory and offices. The Iowa-based appliance maker has reduced the local work force during the last three years, and cuts have fueled concerns that Maytag might close local operations.

Maytag officials met with the International Brotherhood of Electrical Workers Local 1985 during the morning and with local government officials during the afternoon.

Jim Repace, Local 1985 president, called the session an informational meeting. Company officials reviewed the state of the floor-care business and Hoover’s year-to-date performance, as well as the cost structures for competing floor-care companies.

Union officials also heard about Project Phoenix, a program Maytag launched to review its business operations. An outside consulting firm hired by Maytag still is compiling a report and doesn’t expect to make any recommendations until early next year, Repace said.

“It’s my understanding that we will probably be facing some challenges during the first quarter,” Repace said.

Maytag is proceeding with changes that will cut about 300 hourly jobs from the local work force. The company is moving production of Hoover’s Eagle line cleaners to factories in the Southwest.

The changes with Hoover are taking place as Maytag moves forward on a proposed merger with Whirlpool Corp. The deal is supposed to close at the end of February, pending government approval.

Maytag shareholders are scheduled to meet Thursday to vote on the merger. A proxy statement sent to shareholders last month implies that Maytag plans to close operations in North Canton. The proxy also gives financial forecasts assuming the closure of the Newton appliance manufacturing plant.

Held said Maytag officials said the proxy statement makes assumptions about a closing, but that no decision has been made.

Maytag and Local 1985 have an agreement guaranteeing the company will keep 800 hourly jobs in North Canton until 2008, Held noted. The number will drop to about 775 because of the Eagle line cuts.

There also are about 200 salaried jobs in Hoover’s research operations, Held said.

Because of the labor agreement, Held remains optimistic that some jobs will remain.

“I think that right now, it looks promising,” he said, but added, “From a competitive standpoint, they are struggling.”

Held said he wants to maintain an open dialogue with Maytag.

Development efforts to focus on keeping Maytag jobs

December 20, 2005
Development efforts to focus on keeping Maytag jobs
 
Date December 20, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Local development officials are looking into the possibility of using proceeds from a 1-cent local option sales tax to help entice Whirlpool to keep at least some Maytag operations in Newton after the merger is complete.

The prospect of using the sales tax for economic development purposes came up during a luncheon sponsored by the Newton Development Corporation at the Sodexo DMACC Conference Center on Monday.

Kim Didier, executive director of the NDC, said one of the main goals for the organization in the coming months is to identify the incentive programs available at the state and local level that will help make the case that Newton remains a profitable location for Whirlpool to grow its appliance business.

Details of the local option sales tax plan were not presented on Monday. However, the Newton City Council will hold a special work shop at 6:30 p.m. today at the Newton Arboretum to discuss the proposal.

Didier, in speaking on both the past year of economic activity and the future goals of the organization, said that efforts are also under way to develop a venture capital fund for entrepreneurial activity.

“We need to put together the infrastructure to support them,” Didier said, noting that entrepreneurialship is one of the growing aspects of economic development activity.

Didier also noted recent efforts to market the Newton area through television advertisements and the “101 Things to Love About Newton” campaign. She said additional and broader efforts in that arena will be forthcoming next year.

Didier also noted several recent development accomplishments, including the Grinnell Reinsurance expansion into Newton and Artesan Jewelers locating on the square.

She also said the group worked to relocate businesses at the Newton Mall. Hy-Vee has begun asbestos removal at the mall in preparation of making way for its new superstore.

Craig Hamilton, executive director of the Jasper County Economic Development Corporation, said the county is looking to take advantage of state programs that encourage regional development cooperation. He said the state is offering up to $175,000 in matching funds to help regional areas in the state market their economic development initiatives. He said JEDCO is working to put together a five-county regional marketing area including Jasper, Poweshiek, Marshall, Tama and Benton counties.

With potentially $350,000 to work with for marketing purposes, Hamilton said local development groups “can do a lot of talking on Jasper County’s story.”

Hamilton also noted that the capital drive for the new biodiesel plant to be located just north of Newton has been completed and construction efforts should soon begin.

Bryan Friedman, Newton’s community development director, said the city is focusing on enhancing its cultural resources, utilizing the talent and creativity of the community and capitalizing on the Iowa Speedway project.

The area surrounding the track has the potential for a great deal of new development, Friedman said, although he hopes to direct it in such a way so that it does not become a “hodge-podge of sprawl.” He said the area around the track has been dubbed the Prairie Fire Development Area.

“I see 2006 as a real pivotal year,” he said. “The two biggest economic stories in the state are going on here.”

Maytag axes apprentice

December 20, 2005
Maytag axes apprentice
 
Date December 20, 2005
Section(s) Local News
Brief  
 
Maytag‘s repairman will find himself even lonelier next year.

The company said the repairman’s apprentice, who was added to its advertising in 2001, will no longer appear in ads next year.

Mark Devine, who played the apprentice, joined veteran actor Gordon Jump, who played “Ol’ Lonely,” the character created in 1967 to symbolize the reliability of the company’s appliances. The repairman was lonely because he never received phone calls to repair Maytag appliances.

Jump died in 2003, but the company continued the campaign with actor Hardy Rawls as the lonely repairman, who continued to appear with Devine at trade shows and in commercials.

The company said the younger apprentice would represent Maytag‘s future of innovation in new products.

Town hit by Maytag plant closing better off than expected

December 19, 2005
Town hit by Maytag plant closing better off than expected
 
Date December 19, 2005
Section(s) Local News
Brief  
 
By JAN DENNIS

Associated Press Writer

GALESBURG, Ill. — Two years ago, even the rosiest optimists worried this western Illinois city’s factory-fueled economy would be running on fumes because of plant shutdowns that have siphoned away nearly 2,000 high-paying jobs.

Today, officials say unemployment is less than a third of the 20 percent jobless rate some feared, thanks to more than 300 new positions added this year by a growing rail yard and other businesses, along with hundreds of hirings at nearby factories in Peoria and the Quad Cities.

Business leaders say spending has also held steady, spawning interest in Galesburg from two national retailers and giving holiday shoppers more downtown storefronts to browse than before the plants closed down.

At Innkeeper’s, an upscale downtown coffee shop, sales are up 17 percent despite the plant closings and three rival brew houses that opened this year, said co-owner Johan Ewalt.

“It definitely could be so much worse than what it is. We’re still holding our breath, but at least we’re not 20 feet under holding our breath,” said Eric Voyles, president and CEO of the Galesburg Regional Economic Development Association.

Officials are quick to point out that the better-than-hoped recovery masks some who are still struggling after the closings of a 1,600-employee Maytag refrigerator factory and a Butler Manufacturing plant where more than 300 workers churned out pre-engineered steel buildings.

Social service officials say demand increased at least 25 percent this year for food, housing and other assistance programs in this city of about 33,000. About 2,000 people had to be turned away when money ran out to help families pay utility bills.

“It’s heartbreaking. These folks were faithful contributors to lots of social and human service organizations and now to not be able to meet their needs is frustrating,” said Kristyne Bradford, executive director of the United Way of Knox County.

Officials say the next few months will give a clearer picture of whether Galesburg’s economy stays on the road to recovery or hits another bump.

By fall, unemployment benefits that were extended for two years instead of the usual 26 weeks will run out for most former Maytag workers who enrolled in approved retraining programs after their jobs were moved to Mexico, officials say.

In addition, most of the more than 700 displaced workers who took advantage of state-paid job retraining will finish school next year and enter the job market for the first time since the plants closed.

Robin Eastburg, a 20-year Maytag worker, wrapped up her schooling in November but hasn’t yet found work as a medical office assistant. For now, the 48-year-old who earned $15 an hour at Maytag is making $6.50 an hour in a seasonal retail job that will end early next year along with her extended unemployment benefits.

“I’m worried, but I have a few more weeks. … My house is paid for, so I’d rather not move, but I guess I would if I have to,” Eastburg said.

Most workers who have completed training have landed jobs in fields ranging from health care and computers to truck driving, said Mike Haptonstahl, manager of a state-run transition center that has spent about $4.5 million for schooling and other assistance programs since it opened in 2004.

Hundreds more were hired when Moline-based Deere & Co. and Caterpillar Inc. in Peoria targeted displaced Galesburg workers to fill jobs created by surging demand for heavy equipment, officials said.

“It offers a pretty neat talent pool, so we certainly want to reach out to anyone who has that kind of experience and is looking for an opportunity,” said Caterpillar spokesman Rusty Dunn.

Officials say Galesburg is steadily creating its own jobs through small business development programs that have brought in several new shops and light manufacturers in the last year and helped existing businesses expand.

The goal, officials say, is a diverse job base that will make the city resistant to setbacks like the recent plant closings or a similar double whammy in the 1980s when a boat motor manufacturer and state mental health center shut down, eliminating about 3,000 jobs.

“Any mid-sized town like Galesburg is better off with several 50- to 300-employee companies than it is with one or two 1,000- or 2,000-employee companies because we’ve all seen what can happen,” Mayor Gary Smith said.

Officials predict the jewel of Galesburg’s economic turnaround is a city-owned industrial park now ready for development by small manufacturers and distribution companies. The sprawling site along Interstate 74 could ultimately yield several new businesses and more than 1,500 jobs, said Voyles, head of the region’s economic development group.

“We’ve got more interest in the property than we’ve ever had. Now, all we need now is that first big break,” Voyles said.

Smith said the city is also banking on the resiliency of its residents.

“This is a community of people who really, really care. We’re going to be back,” Smith said.

Dave Bevard, union president at Maytag when the plant was shut down, agreed.

“Galesburg is a pretty resilient community,” Bevard said. “It’s not the first time they’ve seen this. They suck it up and work at surviving.”

Maytag to discuss future with North Canton leaders

December 13, 2005
Maytag to discuss future with North Canton leaders
 
Date December 13, 2005
Section(s) Local News
Brief  
 
Special to Daily News

NORTH CANTON — Maytag Corp. officials plan to meet with North Canton city leaders Monday afternoon to discuss the company’s “footprint for the future.”

Mayor David Held told city council members Monday evening about next week’s meeting with Maytag, which owns the Hoover plant and offices.

The mayor’s announcement prompted new council member James Repace to ask if he can attend the meeting of Maytag and city officials. Repace, president of International Brotherhood of Electrical Workers Local 1985, expects to meet with Maytag officials Monday morning.

Held said he will check with Maytag officials to see if Replace, chairman of council’s economic development committee, can join the meeting.

Maytag officials plan no formal announcement after the meeting, Held said.

He said he hopes to hear that Maytag will continue to maintain some production and office operations in the city.

In the last three years, Maytag has reduced production and closed offices at the former Hoover headquarters. The moves have cut the local Hoover work force from more than 2,500 to less than 1,000.

Held said he will be joined in the session by county and state officials.

Replace declined to say much about the meetings next week.

He said Maytag hired an outside consultant to review operations at different facilities. He expects to hear the results of that review next week.

Maytag, based in Newton, Iowa, is in the midst of a possible $1.7 billion merger with Whirlpool Corp. The proposed deal is on hold until Feb. 27 to allow time for the U.S. Justice Department’s antitrust review.