End of an era: Whirlpool to elimante 4,500 jobs

Whirlpool to eliminate 4,500 jobs
Date May 10, 2006
Section(s) Local News
Brief Photo:40083,left,;By PETER HUSSMANNEditor

Whirlpool will pull the plug on all Maytag operations in Newton in the coming months as part of the integration of the two home appliance manufacturers.

In an announcement early this m



Whirlpool will pull the plug on all Maytag operations in Newton in the coming months as part of the integration of the two home appliance manufacturers.

In an announcement early this morning, Whirlpool said it plans to consolidate laundry washer and dryer production from Maytag manufacturing sites in Newton, Herrin, Ill., and Searcy, Ark., with Whirlpool laundry operations in Clyde and Marion, Ohio.

In addition, the Maytag Corporate headquarters building in Newton and its research and development facility will be eliminated, along with administrative office operated by Maytag in Illinois, Canada and Mexico. Approximately 4,500 jobs will be eliminated as a result of the closures.

“We are taking these actions to rapidly restore the competitiveness of the Maytag brands,” said Whirlpool CEO Jeff Fettig. “This is an important step in our integration process that will allow us to drive continuing performance improvements and will better align our brands, products and operations with the markets we serve domestically and globally.”

Maytag workers at Plant 2 were notified of the decision shortly after 8 a.m. today. Workers were told the Newton production facility would close by October 2007. Production will continue through May 2007, when efforts to close the facility will begin. After the announcement, workers were allowed to leave for the rest of the day with pay. They are to report back as scheduled on Thursday.

Employment at the plant has recently dipped below 1,000 for the first time in decades. In early 2000s, as many as 2,700 workers were producing Maytag Neptune, Atlantis and Dependable Care washers and dryers at the facility. Workers were told that production levels at the plant will continue to be guided by sales figures and that corresponding employment adjustments will occur as a result. Two weeks ago, 65 workers were laid off from the plant. On Friday, 10 more workers will be let go.

Whirlpool officially acquired Maytag nearly six weeks ago in a $2.7 billion cash, stock and debt assumption deal that was approved by Justice Department regulators. Whirlpool said it planned to review Maytag operations and announce how the integration process would proceed within 30 to 60 days.

Under the initiative announced today, the Maytag laundry facility in Herrin, Ill., which employs about 1,000 workers, will continue production until the end of the year. The Searcy, Ark., dryer plant, which employs about 700, also will continue production until December 2006.

David Swift, president of Whirlpool’s North American operations, said while the decision to close Maytag production operations was difficult, it was necessary due to the competitive nature of the appliance industry.

“Our manufacturing sites in Clyde and Marion are two of the most efficient facilities in the world, with capacity to grow,” he said. “This was a difficult, but necessary, decision that will further improve the cost efficiency of our laundry operations, providing consumers with industry-leading innovation and competitively produced washers and dryers from U.S.-based manufacturing operations.”

Whirlpool said it plans to open negotiations with labor unions at its Newton and Herrin facilities. Discussions over a close-out agreement will be held. Whirlpool said affected workers will receive severance pay, health benefits continuation and job search assistance. The plant in Searcy, Ark., is not covered by a union contract, but employees there also will be entitled the assistance package.

Whirlpool also said it will work with local and state officials to redevelop the facilities to be closed and to ensure that available job training resources are made available.

Maytag administrative offices will be consolidated in the United States. The Newton operation will move to Benton Harbor, Mich., and other Whirlpool locations. Maytag operations in Canada will move from Burlington to Mississauga and its Mexican facilities will consolidate with Whirlpool operations in Monterrey. The Newton-based research and development center and the administrative office of Maytag International, based in Schaumburg, Ill., also will be closed.

Whirlpool said that of the 4,500 jobs to be eliminated, 1,800 are salaried positions. However, several hundred Maytag salaried employees from the affected administrative offices will be offered jobs in other Whirlpool locations. A total of 1,500 new positions will be created within Whirlpool as a result of the Maytag acquisition bringing net employment level reductions to 3,000 when all the changes have been accomplished.

Currently, Whirlpool has been in discussion with Maytag salaried workers in Newton. Many have been given termination papers while others have been notified that they will continue to have a position until later this year. The headquarters is expected to be closed by the end of 2006. Corporate officials will not give an exact figure but it is estimated there are about 800 employees working at the Newton headquarters facility.

Former Maytag operations in Amana and North Liberty are not impacted by the integration. In its statement, Whirlpool said “the company currently plans no further manufacturing facility closures related to the Maytag integration process, though it will continue to aggressively pursue ongoing productivity improvements across its global operating platform.”

Whirlpool also said it will continue to review former Maytag floor care, commercial vending, commercial appliance and commercial microwave businesses, including their potential sale.

“Whirlpool will continue to evaluate strategic options for, including the potential sale of, the Hoover floor-care and the Dixie-Narco, Amana commercial microwave and Jade commercial appliance businesses,” the statement said.

The preliminary estimate of termination and relocation costs resulting from consolidation of Maytag administrative offices is approximately $135-to $145 million. Non-employee exit costs associated with laundry facility closings are approximately $30 million. The company said it is unable to estimate at this time the termination costs associated with the manufacturing facility closings.

Whirlpool will hold a conference call with members of the investment community on May 23 to update guidance for the rest of the year.


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