Approximately 4,500 positions will be eliminated as a result of the changes. Moving forward, about 1,500 new positions will also be created at other Whirlpool locations, resulting in a net total elimination of 3,000 positions when all changes have been completed. Details on the number and location of new positions created at other Whirlpool locations will be announced in the near future.
"We are taking these actions to rapidly restore the competitiveness of the Maytag brands," said Jeff M. Fettig, Whirlpool chairman and chief executive officer. "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."
Laundry Manufacturing Consolidation
The announcement includes plans to consolidate laundry washer and dryer production from Maytag manufacturing sites in Newton, Iowa; Herrin, Ill.; and Searcy, Ark., with Whirlpool laundry factories in Clyde and Marion, Ohio. The series of moves will build upon the efficiency of Whirlpool's manufacturing capabilities and enhance the company's ability to compete within the highly competitive global home appliance industry. The changes follow an extensive review of Maytag operations by Whirlpool, and the company's commitment to quickly communicate any operational decisions to clarify employee status moving forward.
"Our manufacturing sites in Clyde and Marion are two of the most-efficient facilities in the world, with capacity to grow," said David L. Swift, president, Whirlpool North America. "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 locations."
The timetables for the affected manufacturing operations include an orderly closure process, with complete closure targeted on the dates included below:
* The factory in Herrin, Ill., which manufactures washers and dryers and employs about 1,000, will continue production until the end of 2006.
* The factory in Searcy, Ark., which manufactures dryers and employs about 700, will continue production until the end of 2006.
* The factory in Newton, Iowa, which manufactures washers and dryers and employs about 1,000, will continue production into 2007.
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. At the same time, 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.
Administrative Consolidation
Maytag administrative offices will be consolidated in the United States - from Newton, Iowa, to Benton Harbor, Mich., and other Whirlpool locations; in Canada - from Burlington to Mississauga; and in Monterrey, Mexico where both companies have offices. The Newton-based research and development center, and the administrative office of Maytag International, based in Schaumburg, Ill., also will be closed.
Approximately 1,800 salaried positions, included in the 4,500 affected positions, will be eliminated as a result of these changes. Several hundred salaried employees from the affected administrative offices are expected to be offered jobs in other Whirlpool locations.
Whirlpool's review of Maytag operations will continue, and further decisions related to office facilities are expected in the future.
Cost Estimates
The preliminary estimate of termination and relocation costs resulting from consolidation of Maytag administrative offices is approximately $135 million to $145 million. Non-employee exit costs associated with laundry facility closings are approximately $30 million. Whirlpool is unable to estimate, at this time, the termination costs associated with the manufacturing facility closings. Cost associated with today's announcement will be recognized as an assumed liability and accounted for as part of the purchase price for Maytag in accordance with generally accepted accounting principles.