Best bet for saving jobs at Maytag

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.

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