Executive Q&A: With Maytag Buy, Whirlpool Is Awash in Sales
Dave Swift hasn't just been selling dishwashers. One of his first jobs after being appointed president of Whirlpool North America last January was to manage the $2.6 billion acquisition of rival Maytag, which made Whirpool the largest appliance manufacturer in the world, with annual sales of about $19 billion. The company's third-quarter earnings edged up 3 percent, to $117 million, but the stock fell on investor concerns about rising material prices and costs related to the Maytag purchase. Swift sat down recently with Deputy Business Editor Rick Newman to discuss the Maytag acquisition, Korean and Chinese competitors, and the latest in home appliances.
How is the Maytag acquisition going?
Whirlpool has five major consumer brands now. And all must have differentiation. The Whirlpool consumer is the "active balancer." Somebody who wants an easy user interface. These are busy people. KitchenAid is for the home enthusiast. Amana is the practical person. The proud gourmet is JennAir. And the demanding loyalist, that's Maytag.
We also have Hoover, one of Maytag's businesses. We're selling Hoover. There are a lot of tough issues there. Globalization is one of them. Hoover is fixable; there's value. But we don't have the time or the desire to go after that.
Tell me how you're absorbing the Maytag assets.
The deal closed on March 31. On May 10, we announced the shutdown of three Maytag factories [in Newton, Iowa; Herrin, Ill.; and Searcy, Ark.]. All that work is moving to two plants in Ohio.
Why those three plants?
The Maytag closings have been focused on laundry, where we can leverage our quality and innovation. Maytag was not in a good cost position. They hadn't worried so much about costs. There was not enough innovation. They were really starving the brands. Maytag was always a mass premium brand, not on the scale of Whirlpool or with the same technology. It was underscaled in the U.S.
What will change at the Ohio plants?
The Ohio plants are very efficient. They used to operate 24 hours a day, five days a week. Now they'll go to 24-7 at two plants.
And what's the net change in jobs?
There will be about 4,500 jobs lost, and about 1,500 jobs added in Ohio. So a net job loss of about 3,000.
What about the other old Maytag plants?
There are four other Maytag plants. At Amana in Iowa, we'll add more jobs. That's a good business. Whirlpool used to buy refrigerators from Amana. And it has turned out to be an even better business than we thought.
What do you think about Haier, the big Chinese appliance maker? And LG of Korea? Are they going to become tough competitors in the United States?
What makes a company successful in appliances in the U.S. is understanding customers, what their needs aresomething you don't learn overnight. You also must get on the floor at the big-box retailers. For Haier, I think it will be difficult to get space in U.S. distribution networks. Their question is where to focus their resources.