Archive for February, 2006

Maytag finanical inquiry sought by UAW

February 24, 2006
Maytag financial inquiry sought by UAW
 
Date February 24, 2006
Section(s) Local News
Brief  
 
By DAVID PITT

AP Business Writer

Maytag Corp. will lay off about 50 workers at its Newton washer and dryer factory today, union officials said, adding that they plan to seek an investigation into how the company has tumbled so quickly in the past few years.

The number of workers after the layoffs will be about 1,000, said Ted Johnson, president of the United Auto Workers Local 997.

Last August, the company laid off 200 workers causing the factory to dip to its lowest work force level in nearly 60 years — about 1,000.

About 50 workers had been called back since then, the union said.

The plant’s work force was 2,600 in 2001.

Johnson also said the company has stopped promoting the models of washers and dryers made in Newton, the home of the company headquarters.

He criticized CEO Ralph Hake for making comments that the company will not invest in the Newton plant or promote its products.

Johnson said he plans to send letters to Iowa Attorney General Tom Miller and New York Attorney General Eliot Spitzer “to investigate how this American icon could be totally dismantled in the few years that Mr. Hake has been the CEO.”

Neptune, Atlantis and Dependable Care washers and dryers are made at the factory, which Hake has said is the company’s highest cost plant and that costs must be cut to earn future investment.

“The corporation claiming that it’s because of foreign competition simply isn’t enough, especially when Maytag Corporation refuses any attempt to market the products specifically made in Newton, Iowa,” Johnson said.

Maytag spokesman John Daggett said, “Employment adjustments take place occasionally at our plants across our system and it’s our policy not to release exact numbers regarding these or any level changes.”

The pending sale of Maytag also has generated nervousness that if rival Whirlpool Corp. is the new owner, it will close factories such as the Newton plant and the corporate headquarters.

Benton Harbor, Mich.-based Whirlpool, the nation’s largest appliance maker, has offered $1.79 billion, or $21 a share for Maytag. Including the assumption of $977 million of Maytag debt, the deal is valued at $2.7 billion.

Maytag and Whirlpool announced last week that antitrust regulators at the Department of Justice requested more time to review the acquisition, which will now not close before March 30.

Some industry analysts believe the deal may be rejected because it would concentrate up to 70 percent of the North American laundry appliance market in one company.

What’s a bonus for?

February 17, 2006
What’s a bonus for?
 
Date February 17, 2006
Section(s) Opinion
Brief  
 
To the Editor:

A bonus is for hard work and success. Right? Did Mr. Hake and his executives earn millions of dollars as a bonus? If they did, why is Maytag in trouble and sold to Whirlpool?

All this bonus money should go to our UAW retirement and health care fund. The workers have earned it.

Something else.

Bush wants to take away the $255 Social Security death benefit and other changes.

Reminds me of the crows in Newton picking through the bags for every little morsel of food on garbage pick up days in winter time.

Stanley Rooda

Newton

Justice to extend Maytag-Whirlpool merger review

February 14, 2006
Justice to extend Maytag-Whirlpool merger review
 
Date February 14, 2006
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

The U.S. Justice Department will extend its review of Whirlpool’s proposed $1.7 billion buyout of appliance-maker rival Maytag, the companies announced in a joint statement late Monday.

Maytag and Whirlpool said they have agreed with the Justice Department’s Antitrust Division to extend the review until March 30. The companies have agreed not to close the deal until that time without Justice approval.

Whirlpool’s chief executive said he was not surprised by the need for additional time to review the proposed acquisition due to the complexity of the issues involved.

“We appreciate the work of the Department of Justice staff to date and will continue to work with them cooperatively as they complete their review,” said Jeff Fettig, Whirlpool’s chairman and CEO. “The agreed upon extension is simply a continuation of the review process. This is a complex and rapidly changing industry, and it is not surprising that some additional time is required to fully understand and fairly evaluate it.”

On Monday, the Wall Street Journal reported that the Justice Department may be preparing to block the merger over concerns of the combined company’s dominance over the home appliance market. The paper said federal regulators were beginning to seek sworn statements from competitors and customers on the potential impact of the merger. However, the paper said no decision on what action to take had been made and the deal still could go through.

If approved, the combined companies would control as much as 70 percent of the U.S. laundry market and as much as 50 percent of the dishwasher home appliance category.

Whirlpool and Maytag officials contend market pressures from foreign competitors in the appliance industry overstate the concentration levels critics state in opposing the merger.

“We strongly believe that the combination will create substantial benefits for consumers, trade customers and our shareholders,” Fettig said in the prepared statement on Monday. “This transaction will translate into better products, quality and service, as well as other efficiencies that will allow us to offer a more competitive, wider range of products to a much broader consumer base in the highly competitive global home appliance industry.”

Maytag stock rollercoastered on the report falling to a low of $15.50 before rebounding to close 40 cents higher at $16.61. In early trading today, Maytag was trading 22 cents down at $16.39 while Whirlpool was up 32 cents at $86.15.

Last August, Whirlpool outbid two other Maytag suitors, Qingdao Haier and Ripplewood Holdings, with its $21 cash and stock offer. In December, the companies said they had certified substantial compliance with federal regulators reviewing the merger and said they would not close the deal prior to Feb. 27, without the Justice Department’s approval.

Should the Justice Department act to block the merger or force a divestiture of some of Maytag‘s assets, the merger agreement allows Whirlpool to walk away from the agreement by paying Maytag a $120 million reverse break-up fee.

Maytag CEO Ralph Hake said he believes the merger will be completed.

“We believe this additional time will be sufficient for the review to be completed, and we are confident that the acquisition will close rapidly upon completion of the review,” he said.

Who’s playing partisan politics?

February 14, 2006
Who’s playing partisan politics?
 
Date February 14, 2006
Section(s) Opinion
Brief  
 
To the Editor:

The Jan. 20 edition of the Daily News carried a guest commentary by Jeff Lamberti whereby he attempts to profess his concern for the workers at Maytag in Newton. In his commentary, he speaks to the announcement of Senator Tom Harkin and Congressman Leonard Boswell to ask the U.S. Department of Justice to block Maytag takeover by Whirlpool. He states “this action by Leonard Boswell is a shortsighted partisan political ploy…”

This comes from a person who has 10 percent (favorable) lifetime voting record on labor issues (Source: AFL-CIO).

That is a very poor record of support for labor in Iowa.

But, let’s not forget he is now running for Congress, so he wants you to believe he is concerned about working men and women. There is no doubt in my mind that his commentary is a “partisan political ploy.”

Max L. Tipton

Newto

’64 model runs fine

February 14, 2006
’64 model runs fine
 
Date February 14, 2006
Section(s) Opinion
Brief  
 
To the Editor:

… A lot has been said lately about Maytag quality. Well, consider this. I bought a Maytag washer three years ago and it’s still working perfect, with no repairs needed.

But then again, it was built in 1964.

Rich Harris

Newton

Report: Whilrpool faces antitrust fight over Maytag takeover

February 13, 2006
Report: Whirlpool faces antitrust fight over Maytag takeover
 
Date February 13, 2006
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

The Wall Street Journal reported today that Whirlpool may be facing a court challenge to its proposed takeover of Maytag to prevent the combined companies from dominating the nation’s home appliance market.

The paper said the Justice Department has yet to decide whether to file a case and that the merger may still be cleared but is beginning to seek sworn statements from competitors and customers to prepare a request for court injunction to block the merger. The newspaper cited “people close to the case” in sourcing the story.

Shares of Maytag stock have fallen over the past week losing 3.1 percent of their value on Friday to close at $16.21, down 51 cents for the day. The stock continued to fall today on The Wall Street Journal report. In the first hour of trading, the stock had fallen another 46 cents to $15.75.

The price is well below the $21 cash and stock offer Whirlpool has made for the 112-year-old Newton-based company.

Critics of the merger point to the 70 percent concentration level the combined companies would have in the U.S. laundry market and the 50 percent marketshare the companies would have in dishwashers. U.S. Sen Tom Harkin and Rep. Leonard Boswell previously wrote to the Justice Department seeking to block the merger or force Whirlpool to divest itself of Maytag‘s laundry unit. A Washington, D.C.-based pro-competition watchdog group also has written to oppose the merger.

The newspaper said that under federal guidelines, a rise in market concentration like the Whirlpool-Maytag deal would usually draw a court challenge.

Maytag, Whirlpool and Justice Department officials declined to comment for the story, the newspaper said.

In August, the Maytag board of directors approved the Whirlpool offer over the $14 per share offer made by Ripplewood Holdings. Whirlpool paid the $40 million breakup fee included in the Ripplewood takeover agreement.

Should the Justice Department force a divestiture, the Whirlpool contract with Maytag allows it to rewrite or end the merger.

The contract also calls for Whirlpool to pay Maytag $120 million in a reverse breakup fee if the deal fails to receive federal regulatory approval.

Maytag and Whirlpool have agreed not to close the deal prior to Feb. 27 to give the Justice Department to complete its investigation.

In related news, Maytag on Friday announced a quarterly dividend of 9 cents a share on the firm’s common stock.

In the event the pending merger with Whirlpool is not completed prior to the record date of March 1, the dividend is payable on March 15.

Best bet for saving jobs at Maytag

February 13, 2006
Best bet for saving jobs at Maytag
 
Date February 13, 2006
Section(s) Business
Brief  
 
By Sen. Tom Harkin

and Rep. Leonard Boswell

rom the moment that Maytag announced its decision to be sold to an outside purchaser, we have had one overriding concern: protecting good jobs in the Newton community. In the wake of the August announcement that Whirlpool would be the purchaser, we studied the facts and looked at multiple analyses in an effort to determine whether this purchase would be good for Newton and good for Iowa. Unfortunately, the evidence that we have seen points to the opposite conclusion. Indeed, there is ample reason to fear that Whirlpool would likely move to eliminate the jobs at both the plant and headquarters in Newton. That is the major reason why we urged the U.S. Department of Justice to block Whirlpool’s proposed takeover.

We believe that Whirlpool’s silence, to date, is not a good sign. The company has pointedly refused to say that it would work to keep jobs in Newton. Bear in mind that Whirlpool already has a headquarters in Benton Harbor, Mich., and it owns other plants that can perform the same manufacturing functions currently performed in Newton. Whirlpool’s silence stands in sharp contrast to a previous bidder, which did not have competing manufacturing facilities and which forthrightly indicated that it would take steps to preserve Newton jobs. That bidder remains interested in Maytag if the Whirlpool offer is rejected by the Justice Department.

If the Whirlpool merger is ultimately approved, we stand ready to go to bat with Whirlpool on behalf of the Newton community. We will do everything in our power to persuade Whirlpool that Iowa’s workers are the most productive in the world and that keeping production in Iowa is the best business decision.

On that score, we applaud the governor’s office, the Iowa Department of Economic Development, state legislators from the Newton area, Mayor Allen’s office and the Newton Economic Development Corporation, as well as other local groups, who are collaborating on a package of incentives that might help persuade Whirlpool not to close the Newton facility. Because Whirlpool’s offer has been accepted by Maytag shareholders, this step is entirely appropriate and necessary. Unfortunately, if the merger is completed, we are concerned that these efforts will be unsuccessful.

That is why we wrote to the Department of Justice recommending against the merger. In our letter to Justice, we outlined our belief that the acquisition would be anti-competitive, inasmuch as the combined corporation would control nearly 50 percent of the appliance marketplace and would dominate the washer-dryer business. We suggested that, if the merger ends up winning approval, Justice should consider requiring Whirlpool to divest the washer-dryer division of the company to another entity “able and willing” to operate it. Spinning off the most anti-competitive division to a buyer able and willing to operate it is an option that federal regulators have often used in the past. There is an established procedure for requiring the sale of a part of a company to a viable purchaser who has the ability to continue production and preserve jobs. We are pleased by indications that Justice is taking those concerns seriously.

Some Maytag executives, who stand to gain golden parachutes from a merger with Whirlpool, have argued that the choice is either Whirlpool or nothing. This is not the case. As we noted, there continues to be at least one U.S. company that is interested in purchasing Maytag if the Whirlpool offer is not approved, and that would-be purchaser has indicated that it is inclined to keep the production and headquarters jobs in Newton. We believe a new buyer is the best bet for preserving jobs in Newton over the long term.

We appreciate that this is an extremely difficult time for people in the Newton community. Many in the community believe that a quick resolution is essential because uncertainty itself is damaging. We respect this point of view. But we believe it is best to work for a long-term outcome that has the best chance of maintaining jobs in Newton and elsewhere in Iowa, even if this may add some months to the process.

We cannot guarantee a successful outcome. We cannot magically sweep away the cloud of risk and uncertainty that has settled over the Newton community. But we pledge that we will continue to work diligently and in good faith to produce the best possible outcome for Maytag‘s employees and for the Newton community.

Maytag severance checks could keep Newton’s promise

February 9, 2006
Maytag severance checks could keep Newton’s promise
 
Date February 09, 2006
Section(s) Opinion
Brief  
 
To the Editor:

If and when the Maytag/Whirlpool merger happens and the current executives are leaving our community with millions of dollars in severance packages from Maytag — a company that has been prosperous for many years under the leadership of Mr. Hadley and those before him coupled with the hard work of many Newton generations of families — it seems a fair request to Mr. Hake and the others that they donate all or a good portion of their severances to our Newton Promise proposal. Their severances alone would finance the scholarship program for many years to come.

Jewel Gullett

Newton

Elvis next to weigh in on Maytag

February 7, 2006
Elvis next to weigh in on Maytag
 
Date February 07, 2006
Section(s) Opinion
Brief  
 
To the Editor:

I am inclined to believe that Sen. Harkin and Rep. Boswell do not know “sic” from “sic ’em” about Maytag‘s problems or potential. If so, they are in the company of Maytag‘s CEO, whose intermittent natterings about Maytag‘s weaknesses seem largely intended to disguise his own weaknesses and display his brilliant plumage.

Then who should leap on stage following them but the Great Lamberti. Not about to be out-pioused or outpompoused, he looked like nothing so much as a child splashing through a mud puddle shouting, “I’m swimming the English Channel!”

Who will be next? Elvis?

Joel Wormley

Newton

Hake will receive no bonus for year

February 7, 2006
Hake will receive no bonus for year
 
Date February 07, 2006
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

For the second year in a row, Maytag Chairman and CEO Ralph Hake will not receive a bonus due to the company’s poor performance.

In a filing with the Securities and Exchange Commission late Monday, Maytag‘s Compensation Committee announced that Hake “would receive no payout under the 2005 Incentive Compensation Plan because threshold levels of performance for fiscal 2005 were not achieved.”

In its earnings announcement last week, Maytag said that it lost $81.9 million in 2005 on net sales of $4.9 billion, up 3.8 percent from the $4.72 billion reported in 2004. Maytag reported a net loss of $9 million in 2004.

The SEC filing indicates that only Arthur Learmonth, the recently named acting president of Maytag Appliances, will receive a year end bonus. That decision was based on his previous work as head of the Maytag Services unit, which reported double-digit revenue gains for the year. Learmonth was named acting president of the Major Appliances division in November.

No other Maytag executive will receive a bonus for the year.

Each, however, stands to gain millions upon successful completion of Maytag‘s merger with Whirlpool. Proxy statements filed in connection with the buyout bid indicate Hake will receive compensation of $10 million with other executives sharing another $16.5 million. However, including long-term cash incentive awards, full vestment of stock options and performance units ,and those figures jump with Hake expected to receive approximately $20 million in total compensation.

The Antitrust Division of the U.S. Justice Department is currently reviewing Whirlpool’s $1.7 billion buyout offer. Both companies have said they will not complete the merger prior to Feb. 27, without Justice Department approval.