DES MOINES, Iowa “” First two parts plants, then a refrigerator plant have marched on to Mexico.
Moving appliance production to countries with cheap labor has heightened concerns that Maytag may export even more jobs, fears fueled further by the company’s purchase of 62 acres in an industrial park south of the U .S. -Mexic an border at Reynosa, Mexico.
Maytag has two parts factories there and is gearing up to move some refrigerator manufacturing operations from Galesburg, Ill., to a 160,000-square-foot plant under construction.
Maytag’s appliance workers aren’t the only ones concerned about a production shift abroad. In Louisville, for example, General Electric has struggled to make its Appliance Park manufacturing operations profitable.
U.S. appliance makers are seeing increasing competition from Asian competitors , such as LG Electronics and Haier.
GE has argued that , by moving production to Mexico, Asia, Canada and other domestic plants outside of Louisville, the division is more profitable. Some of those profits are being plowed back into the business. GE plans to spend more than $700 million in the next four years to develop almost 300 products.
Maytag grew from making a few farm implements in the central Iowa town of Newton, population 15,579, to the third – largest North American appliance manufacturer , with a work force of more than 20,000 . The company has drawn bitter criticism for moving jobs outside the United States.
Chief E xecutive Ralph Hake, who joined the company in June 2001, is getting much of the heat.
“Maytag has always sold their name as the American classic,” said Sue Wilson, a former worker at the Galesburg plant and now a representative for the International Association of Machinists and Aerospace Workers. “Maybe Hake doesn’t understand the heritage he’s inherited but the board of directors certainly understands that , and to me they’ve sold the soul of their name to the lowest bidder.”
Hake, who declined requests for an interview, told analysts in a conference call Ju ly 15 that Maytag has no plans to shut more factories.
“Our goal is to grow enough to have all our plants running well,” he said. “I do not anticipate multiple plant shutdowns or restructuring,” he said.
The past two years have been challenging for appliance manufacturers , and Maytag has struggled to maintain market share in the highly competitive industry.
The company, with second – quarter earnings down nearly 63 percent from the year before, has cut 510 jobs or about 8 percent of its work force this year.
Maytag also had announced job cuts in October 2001 at the Hoover Co. vacuum manufacturing plant in North Canton, Ohio, where 55 white-collar workers lost their jobs.
Also that month, 225 salaried positions were eliminated as Maytag integrated Amana Appliances into its operation. About 60 jobs were eliminated in Newton and 70 in Amana.
Last week , Maytag said earnings dropped to $25.2 million from $68 million the year before in the April-June quarter. Included in the results were after-tax charges of $18.8 million for the closing of the Galesburg plant.
Hake stressed that most of Maytag’s large appliances continue to be assembled in the United States, although some parts are made off s hore. Even with the Reynosa plant in operation next summer, some 90 percent of Maytag’s refrigerators still will be made in the United States, Hake said.
Maytag employs about 3,540 workers on production lines for washers, dryers and other appliances and has plants in Iowa, Illinois, Tennessee, South Carolina, Arkansas, California, Ohio and Texas, as well as Mexico. It also has Hoover floor – care distribution and sales offices in Canada.
The exodus of manufacturing jobs from the United States to Mexico began about 13 years ago, said Mike Allen, president of the McAllen Economic Development Corp. The group recruits businesses for industrial parks in McAllen, Texas, and across the border in Reynosa.
About 204 companies, including Black & Decker and Whirlpool, employ 70,000 workers in that area. There are about 10 industrial parks in Reynosa, filled with “maquiladoras” “” companies from outside Mexico that take advantage of government programs offering cheap taxes, little regulation and low-cost labor.
Workers in the Mexican industrial plants earn $2.60 to $3 per hour , including benefits. The average wage at the Galesburg, Ill., plant is around $15 an hour.
Wilson started her new union job the day Maytag announced it was planning to close the Galesburg plant.
For now, she said, the union plans to make Maytag the “poster child” of a campaign to anger consumers by painting corporate officials as greedy.
“On the products they bring back , they do not pass that lower cost of the labor on to the consumer,” she said. “They still sell a refrigerator for $2,000. What’s in this for the consumer?”