Whirlpool likely to expand Amana operations in future

Whirlpool likely to expand Amana operations in future
 
Date May 24, 2006
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

While Whirlpool operations in Newton are set to be shuttered in the coming year, its operations at its Iowa Amana refrigeration plant are likely to expand in the future.

Whirlpool officials laid out that scenario during an investor conference call on Tuesday where they gave an update on the intergration of Maytag into Whirlpool operations.

Two weeks ago, Whirlpool announced plans to close all of its Maytag facilities in Newton, putting approximately 1,800 people out of work. The world’s largest home appliance manufacturer also said it would close two other Maytag operations in Searcy, Ark., and Herrin, Ill., and transfer all Maytag laundry operations to two Whirlpool plants in Ohio where more than 1,100 jobs would be created.

Whirlpool closed its $2.8 billion purchase of Maytag on March 31 and since that time has been working to integrate the companies. On Tuesday, Whirlpool officials told investors that the merger is expected to generate annualized cost savings in excess of $400 million, even more than initially expected when the merger plan was announced. The May 10 announcement about the Maytag laundry closings has already produced an estimated $300 million in annual savings, company officials said.

In commenting on its integration strategy, Whirlpool said it planned to sell off the Maytag commercial operations, including Hoover floor care, Dixie-Narco vending machine and Amana and Jade commercial cooking businesses.

“The decision to divest the floor-care and commercial businesses will allow us to focus on our core appliance business,” said Whirlpool CEO Jeff Fettig. “We have received strong interest from a number of potential buyers and anticipate completing these transactions by the end of the year.”

David Swift, president of Whirlpool’s North American operations, outlined the benefits to Maytag brands operating under the Whirlpool platform. Noting that Maytag in recent years suffered from a high cost structure and a lack of innovation, he said efforts would be made to revitalize the brand by focusing on its heritage of quality and dependability in bringing products to market.

Swift also said the Amana brand would be expanded.

“Amana is the most underutilized (former Maytag brand),” Swift said. “We will clarify its position and grow the brand. We will build on that segment strength.”

Amana produces refrigerators at its Iowa plant, including the highly successful new bottom freezer unit. Swift noted that Whirlpool did not have a similar product in its pipeline and had planned to expend significant amounts of money to enter the product segment. With the purchase of Maytag, Whirlpool can avoid that step and fund increased investment in innovative capabilities for the product. He also noted that the Amana plant can be expanded.

Plans call for Maytag top-load washers and companion dryers made at Whirlpool’s Newton, Herrin and Searcy plant to begin production at its Ohio plants by the fourth quarter of this year. The Maytag front load washer made in Newton will continue to be produced into the fourth quarter of 2007 but its future production site has yet to be announced.

Whirlpool would not comment whether a new Maytag brand laundry product line is being planned.

The company also revised its earnings guidance for the year due to the costs associated with the merger. The Benton Harbor, Mich.,-based company said it expects full year earnings for 2006 to be between $6 and $6.25 per share compared to $7 to $7.25 per share prior to the merger. The company said it expects full year earnings in 2007 to be in the $9 per share range.

Whirlpool said it will host another investor conference call in July.

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