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Whirlpool Cuts Payroll, Closes Plants

Whirlpool is eliminating 4,500 jobs and closing several plants in the United States, Canada and Mexico, including the former Maytag corporate headquarters in Newton, Iowa, as part of its acquisition of its former rival.

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 (see story this page).

“We are taking these actions to rapidly restore the competitiveness of the Maytag brands,” said Jeff Fettig, Whirlpool chairman and CEO. “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.”

Plans include consolidation of 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 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; and
  • 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.

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.

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.

Whirlpool continues to analyze integration costs and benefits associated with the acquisition and will be hosting a conference call on May 23 to update guidance for the year.