Archive for July, 2006

Maytag plans to recall laid-off workers

July 13, 2006
Date July 13, 2004
Section(s) Local News

NDN Staff Writer

NEWTON — Maytag plans to recall approximately 100 to 120 previously laid-off workers early next week at the Plant 2 laundry facility here.

According to company spokesperson Lynn Dragomier, the employees would return to active work Monday so the facility can increase production levels to meet increasing consumer demand for Maytag laundry products.

“We increase production when market demand rises and that is exactly what is happening now,” she said.

Dragomier attributed the increased demand to several factors, including stronger consumer confidence and purchase incentives offered to laundry customers.

Recalled employees would come from the pool of workers who were on layoff prior to the June 10 strike of United Auto Workers Local 997.

Since the strike ended, the status of those workers has been unclear.

During the three-week strike, Maytag recalled approximately 400 laid-off workers. Some of those workers did not respond or declined the recall, Dragomier said. But most or all of the workers who accepted Maytag‘s offer to return to work, walked off the job a short time later to join strikers.

After the current contract was ratified and employees returned to work July 6, previously laid-off employees reported for work. An associted press story quoted one of the workers saying she was told the laid-off workers were “unreinstated strikers.”

That has left benefits — including unemployment pay and health insurance — for those workers in doubt.

Union officials have previously said they still viewed those workers as being on layoff and would file a grievance on their behalf.

Dragomier said Maytag has no comment on the issue and she again declined to comment on those workers’ classification this morning.

Calls to union officials were not immediately returned this morning.


Sen. Black and Rep. Bell deserve credit

July 12, 2006
Sen. Black and Rep. Bell deserve credit
Date July 12, 2006
Section(s) Opinion
To the Editor:

On Friday evening, we attended a meeting in Altoona where Gov. Vilsack was the speaker. The governor made several references to Newton and the changes that will occur as the result of Whirlpool’s acquisition of Maytag.

During his talk, the governor gave full credit to Sen. Dennis Black and Rep. Paul Bell for their proposal that the Iowa Values Fund be used to “jump start” Newton’s incentives for seeking new and expanded business and industry with a $10 million state grant. Their proposal, announced by the governor, was later approved by the Values Fund Board, and Newton is now eligible to use those funds for the intended purpose.

On Monday, we talked with Sen. Black and asked if his constituents were aware that he and Bell had instigated the funding to the city. He told us that they probably did not, although a news release had been issued the day the governor was in Newton at the city hall. That news release was never printed.

We want the people of Newton and surrounding communities to know that it was our senator and representative that went to bat at the statehouse to ensure our local economic developers had state money available to them for seeking new or expanded business in our city that was so hard hit with the layoffs and loss of Maytag.

We are proud of the work Black and Bell do in Des Moines to represent us. We are fortunate to have two representatives that work so hard for our interests. Both need to be returned to the capitol in the election on Nov. 7.

Fritz and Carol Kramer


Newton faces another tough budget year

July 11, 2006
Newton faces another tough budget year
Date October 04, 2005
Section(s) Local News


When Newton City Administrator Dave Schornack looks out his office window, Maytag looms large on the Newton skyline. And while many worry about losing thousands more Maytag jobs, Schornack must also face the threat that the city could lose large amounts of Maytag tax revenue.

Maytag currently pays a whopping $936,000 in taxes to the city, so this could mean a big blow to the city’s payroll, and therefore to city services. And it could create an awkward financial predicament for a multi-million-dollar city program designed to promote growth.

It wouldn’t be the first time declining Maytag taxes have caused pain. Just this year, the city was forced to lay off 15 workers, eliminate dozens of seasonal positions and cut funding to many worthwhile local organizations, largely because Maytag‘s tax bills went down.

Times are tough, Schornack thinks, when the city can’t even fund its own municipal band. These problems resulted from a change already in place. Looking ahead, it’s already clear that Maytag taxes will be going down again. And if any Maytag facilities are closed in the Whirlpool merger, it will mean yet another set of problems.

Taxes already lost

Ironically, a major cause of Newton’s 2005 budget problems was a decision made for Newton’s benefit 10 years ago by state lawmakers.

Back then, Newton was competing with an Illinois Maytag factory for the chance to build the then-new Neptune washer. To boost the incentive package offered by local and state officials, the state legislature voted to abolish taxes on new factory machinery and equipment and phase out taxes on existing equipment over a 10-year period.

The phase-out ended last year, and Newton’s tax revenue dropped by a half million dollars. That was the primary cause of this year’s layoffs and cutbacks at city hall.

Looking ahead

Meanwhile, Schornack points out another disturbing development: The value of Maytag‘s 30 properties in Newton fell by $2.36 million in 2005. Company officials asked for a reduction at its Plant 2 and headquarters buildings ,and the county assessor agreed. Taxes are based on property values, so lower values mean lower taxes. Therefore Newton will capture $38,000 less in taxes next year, based on current levy rates.

Maytag also has more than $1 million in property that is exempt from taxes this year because of tax abatements. And the rollback on residential property values is expected to decline 3.7 percent, so the city will receive less tax revenue from homes as well.

And then there’s the question of Maytag‘s future.

Looking at Maytag‘s big, blue lights from his office at city hall, Schornack wonders whether appliance industry analysts will prove to be correct. Many of them believe that if Whirlpool succeeds in its Maytag buyout, it will close Maytag headquarters, maybe as early as the first quarter of 2006.

A blow to a growth plan

Such a scenario could wreak havoc with a major Newton tax increment financing fund, Schornack says.

Since it was created in 1986, the North Central Urban Renewal Area has seen property valuations grow within its district by nearly $40 million. However, the taxes on this growth all go to a Newton TIF fund, with the proceeds paying off debt the city has accumulated in helping the district expand.

Newton has spent $22 million for roadwork, streetscape and infrastructure in the area but still owes more than $7 million. And the Maytag headquarters building is by far the largest property tax payer in the area.

The TIF fund gets 78 percent, or $479,00, of the $608,000 in local property taxes that Maytag pays on the headquarters building. Without that money, Schornack says, the revenues from the area may not be enough to pay the outstanding debt.

“That could hammer that TIF fund to the point that we may not have enough to pay our debt obligations,” he said. “We may have to renegotiate some refinancing.”

A delayed impact

Schornack knows he has some time before drastic impacts to Newton’s budget could be felt. Values assessed in 2005 will determine the taxes paid in 2006 and 2007. The merger appears unlikely to be completed before valuation figures come out next year, which means the city has at least until 2008 before the revenue crunch sets in. But the impacts could be severe, not even counting what could happen to residential and commercial property values in the future. Pull Maytag out of the property tax mix and Newton may have difficulties down the road in providing basic services to its residents.

“We’re talking about jobs if we’re required to cut much more from the General Fund,” Schornack said, noting that 80 to 85 percent of city expenditures go to salaries and benefits. “There’s not much left. We’re talking about closing down complete departments.”

Tomorrow: A detailed look at the city’s tax situation, past and present.

Judge dismisses lawsuit against former Maytag CEO Ralph Hake, others

July 11, 2006
Judge dismisses lawsuit against former Maytag CEO Ralph Hake, others
Date July 11, 2006
Section(s) Local News

AP Business Writer

DES MOINES — A federal judge dismissed a lawsuit filed by a New York investment adviser against Maytag Corp. and its former chief executive and chief financial officer.

Barry Yellen, an investment adviser for trust and retirement funds, accused former Maytag chairman and CEO Ralph Hake and former CFO George Moore of deceiving the public about the company’s business outlook last spring.

The lawsuit, filed in July in U.S. District Court in Des Moines, alleged that the deception in March 2005 prompted thousands of people to buy the company’s stock at artificially inflated prices that later plummeted.

New York attorney Ralph Stone said Monday that Yellen will likely take the case to the U.S. 8th Circuit Court of Appeals.

“We’re still looking at the decision, but an appeal is anticipated,” he said.

The lawsuit alleged that Hake and Moore were trying to increase the purchase price of the company because they were trying to sell Maytag and they both owned thousands of shares of Maytag stock.

Court documents said Hake had 789,438 shares of company stock and Moore held 88,187 shares.

The lawsuit focuses on public comments made by Hake and Moore at the March 7, 2005, Raymond James Institutional Investors Conference in Orlando, Fla., and other events. The executives said they expected Maytag to earn between $1.10 and $1.30 per share in 2005.

After the statements, Maytag shares rose, closing at $15.93, up from $14.70 the previous business day.

The lawsuit said that on April 22, 2005, the company publicly changed its business forecast, announcing first-quarter financial results and lowering its 2005 earnings forecast to a range of 45 to 55 cents a share.

Shares closed that day at $10.89, down from $15.10 the previous day.

The lawsuit alleges that the defendants knew in February 2005 that internal forecasts had been reduced to less than $1 a share.

According to documents filed with the Securities and Exchange Commission, the Maytag board and management discussed earnings forecasts of 97 cents to $1.77 on Feb. 10, 2005.

Attorneys for Maytag, Hake and Moore said Maytag‘s public forecasts were consistent with forecasts discussed internally at private board meetings. They also claimed they had included cautionary language in their forecasts that warned investors that numerous factors could affect earnings.

Yellen had sought class-action status on behalf of all buyers of Maytag stock between March 7 and April 21, 2005.

U.S. District Judge Robert W. Pratt concluded in his ruling filed Friday that Yellen had not provided sufficient facts to show that Hake and Moore knew that their public statements were false or misleading.

Pratt said Yellen’s claim failed under the requirements of the Private Securities Litigation Reform Act.

Pratt found that the public announcements made by Hake and Moore were accompanied by the required cautionary statements indicating that earnings results could differ from those discussed. Those statements entitled the executives immunity from liability under federal law, Pratt ruled.

Hake and Moore left Maytag after the company was sold to larger rival Whirlpool Corp. in March. Maytag stock is no longer traded since it is now a subsidiary of Whirlpool.

Former Maytag vice president appointed to Lennox post

July 11, 2006
Former Maytag vice president appointed Lennox International’s new controller
Date July 11, 2006
Section(s) Business
DALLAS — Lennox International announced the pending retirement of Dave Inman, vice president, controller, and chief accounting officer, and the appointment of Roy Rumbough, formerly vice president, corporate controller for Maytag Corporation, to assume Inman’s responsibilities.

The transition will begin immediately with Inman serving in an advisory and support role through the end of this year, at which point he will retire from LII.

“Dave’s plans to accelerate his retirement are understandable given recent events involving personal family matters,” said Sue Carter, chief financial officer. “We are especially grateful he has planned to assist Roy during the transition of his responsibilities. Roy brings a number of excellent qualifications and deep experience to his new position, but he and LII will undoubtedly benefit greatly from Dave’s support through the end of this year.”

Rumbough was most recently vice president, corporate controller of Maytag Corporation, a position he held since June 2002. His 17-year career at Maytag included internal audit, financial planning and analysis, and business unit controller roles. Prior to his career at Maytag, Rumbough was a senior auditor with Deloitte and Touche.

He received his bachelor of arts degree in accounting from North Carolina State University, and his MBA from the Kellogg School of Management, Northwestern University.

“Roy has extensive financial leadership experience in appliance manufacturing, acquisitions and international operations, all of which will serve us extremely well in his new position,” Carter said.

Inman’s long and successful career at LII spanned 28 years, during which he was appointed to financial leadership positions of increasing responsibility. He was appointed vice president, controller for Lennox International in 2001.

“While we will certainly miss working with Dave, we welcome Roy’s expertise and look forward to his guidance and leadership in the years ahead,” Carter said.

Operating in more than 100 countries, Lennox International Inc. is a global leader in the heating, ventilation, air conditioning and refrigeration markets.