Officials with Whirlpool Corp. on Tuesday released more details about changes to its North American operations, but details about the potential loss of production and jobs at its Fort Smith operation are still unknown.
Benton Harbor, Mich.-based Whirlpool manufactures about 1.4 million refrigerators a year and employs about 4,500 people at its Fort Smith plant. Whirlpool announced in November it would move refrigerator production for Fort Smith to Mexico.
The company announced Tuesday it will invest $180 million in new production sites and new model lines. About $100 million will go toward initiatives at the company’s U.S. facilities, including the completion of a new production line for counter-depth, side-by-side refrigerators in Fort Smith.
The other $80 million will be used to begin work on the expansion of the company’s laundry production facility in Monterrey, Mexico, and the construction of a new refrigeration facility in Ramos Arizpe, just west of Monterrey.
The Ramos Arizpe site will be home to refrigerator production expected to be moved from Whirlpool’s Fort Smith plant, Whirlpool Spokesman Christopher Wyse confirmed Tuesday.
Wyse said Tuesday he does not have information about the new facility.
“The final particulars, I don’t have handy,” Wyse said.
However, a memo issued Tuesday to Whirlpool’s Fort Smith employees from Brian Gahr, Whirlpool’s division vice president in Fort Smith, listed several particulars.
The new building, according to the memo, will be approximately 620,000 square feet and “equipment purchases for this facility are planned to support up to 500,000 units/year.”
Wyse said the company still does not know which product lines and how much production will be moved to Mexico. Wyse reiterated the company’s plan to release details on the move “in early 2005.”
Gahr’s memo notes that “one of the options being considered is to move some lower-feature products to Mexico and keep higher-featured products in Fort Smith.”
That option is likely according to Neal Catlett, a Whirlpool employee for more than 34 years and former president of the plant’s local union. Catlett said Tuesday the 20- and 22-cubic-foot refrigerator models will “probably be the ones that go to Mexico” and production of the larger models would stay in Fort Smith. Catlett has estimated that the production move will result in up to 1,200 job losses at the plant.
Nick Heymann and Igor Maryasis, both leading appliance industry analysts with Prudential Securities, said in an Oct. 23 report on Whirlpool that the company eventually will have to move all U.S. refrigerator production to Mexico to remain competitive and meet lower-pricing demands from Sears, Lowe’s, Best Buy and other major appliance retailers.
The demand from retailers to cut prices has resulted in a 2 percent drop in the average selling value of Whirlpool refrigerators in 2003, according to a May 3 report from Heymann and Maryasis. The 2003 average selling price for washers was up 1 percent and flat for dryers and dishwashers.
Heymann and Maryasis also note in the May 3 report that the pressure to move to lower-cost countries to reduce production costs has not abated.
“(Whirlpool) is now projecting that as much as 50 percent or more of its production will occur in (low-cost countries) by 2005, up from 35 percent in 2004 and just 12 percent in 2001. (Whirlpool) believes this should give it a cost advantage of 10 percent to 15 percent,” Heymann and Maryasis wrote in the report.
Prudential Equity and Heymann and Maryasis do not have a financial interest in Whirlpool.
The investment strategy announced Tuesday is part of the company’s global product and marketing study began in February 2003. According to previous Whirlpool statements, the plan is a “comprehensive worldwide effort to optimize the company’s regional manufacturing facilities, supply base, product platforms and technology resources to better support its global brands and customers.”
Other Whirlpool plant and product investments announced Tuesday include:
“¢ New cooking products at Tulsa.
“¢ New line of top-mount refrigerators at Evansville, Ind.
“¢ New built-in refrigerator models at LaVergne, Tenn.
Whirlpool, with more than $12 billion in 2003 sales, is the world’s leading manufacturer and marketer of home appliances. Whirlpool employs 68,000 at nearly 50 manufacturing and technology research centers and markets products in more than 170 countries.
From The Times, Arkansas