published Saturday, October 29th, 2011

Whirlpool lays off 5,000 to cut costs

Appliance maker Whirlpool Corp. plans to cut 5,000 jobs, or 10 percent of
its workforce, to reduce costs. The company is building a plant in
Cleveland, Tenn., where it employs 1,400 people.
Appliance maker Whirlpool Corp. plans to cut 5,000 jobs, or 10 percent of its workforce, to reduce costs. The company is building a plant in Cleveland, Tenn., where it employs 1,400 people.
Photo by Associated Press /Chattanooga Times Free Press.

Appliance maker Whirlpool Corp. plans to cut 5,000 jobs, about 10 percent of its workforce, as it faces soft demand and higher costs for materials.

The world’s biggest appliance maker said Friday it will close its Fort Smith, Ark. plant, which employs 884 hourly and 90 salaries workers, and shift dishwasher production out of Neunkirchen, Germany. The company expects those moves will save $400 million by the end of 2013, but Whirlpool declined to specify other cost-cutting measures.

Whirlpool employs nearly 1,400 workers at its cooking appliance division in Cleveland, Tenn., where the company is building a $120 million plant.

“We are not providing site-by-site information but can tell you that the cuts are impacting 5,000 people throughout the world with the majority being located in North America and Europe,” said Kristine Vernier, senior manager of global public and media relations.

Whirlpool announced Friday that it has cut its 2011 earnings outlook drastically after reporting third-quarter results that missed expectations. The appliance maker said it was hurt by higher costs and a slowdown in emerging markets.

The company, whose brands include Maytag and KitchenAid, has, like other appliance makers, been squeezed by soft U.S. demand since the recession and rising costs for materials such as steel and copper. Because of its size, Whirlpool’s performance provides a window on the economy because it indicates whether consumers are comfortable spending on big-ticket items.

Whirlpool has raised prices to combat higher costs, but demand for items like refrigerators and washing machines remains tight. Whirlpool is also facing discount pressure from competitors.

To offset slowing North American sales, Whirlpool has turned to emerging markets. But the company said Friday that sales have slowed there, too. The company revised its demand forecast globally. It now expects demand to decline 3 percent to 5 percent in North America, in 2011, down from a 1 percent to 2 percent prior decline forecast.

Steep costs and the dour global economy are affecting the entire appliance industry. Swedish appliance maker Electrolux said Friday that its third-quarter net income fell 39 percent and also cut its forecast for demand in North American and Europe for the year.

Whirlpool jobs to be cut are mostly in North America and Europe. They’ll cost $500 million in restructuring costs however, which will be recorded over the next three years, including a $105 million charge in the fourth quarter, $280 million charge in 2012 and $115 million charge in 2013.

Benton Harbor, Mich.-based Whirlpool’s third-quarter net income more than doubled to $177 million, or $2.27 per share, from $79 million, or $1.02 per share. Adjusted earnings of $2.35 per share fell short of analyst expectations for $2.73 per share.

Revenue rose 2 percent to $4.63 billion, short of expectations for $4.74 billion.

Whirlpool’s stock fell $8.67, or 14.3 percent, to $51.80 in trading Friday on the New York Stock Exchange.

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Echo said...

Once I bought a Kitchen-Aid refrigerator, dishwasher, and mixer, all made by Whirlpool in the same month. The dishwasher broke 3 times in the first two years, the ice machine broke and Whirlpool would not stand by their products. The component parts in these products are poorly designed, it was not an assembly issue related to workers. My last W/D appliance purchase was from Samsung. To the Whirlpool execs in Benton Harbor Michigan: I would have gladly have paid more for an American owned and made product, but to hell with you and your quarterly focused profitability mentality. Start taking care of your customers.

October 29, 2011 at 8:06 p.m.
rolando said...

My Whirlpool-made Maytag top-of-the-line frig/freezer I bought a few years back has a major design flaw in the frig section air flow. Refrigerators must be maintained between 36 and 40 degrees, according to the guv'ment, to properly store food. Its temp control must be at 8.5 [9 is maxed out] to reach that temp.

As a result, the evaporator coils in the freezer get heavily iced up...the defroster is supposed to thaw it so the air can still move through it. But its auto-defrost control fails regularly every two years [at $65 each if I fix it]. One can tell because the frig temp suddenly goes up into the 50s.

This is not solely the fault of the manufacturer, although having one company own everything kills competition and raises prices/lowers quality.

Under heavy prodding by the fed guv'ment to go "Energy STar", these appliances are designed to run on the ragged edge in the name of reduced power usage, with the environment ever so much more important than people. [Makes you wonder who we are saving the Earth for. Sure not our kids.]

These appliances have zero reserve power...have a slight brown-out and they self-destruct. [Brown-outs are guv'ment mandated -- and soon to be guv'ment controlled at your house to boot].

The fine Socialist control-freak's fingers are not only rummaging around in industry's pie they are up to the wrists in it. The only way to fight back is to buy Korean, as Echo said, unpleasant as that may be.

October 29, 2011 at 9:53 p.m.
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