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issue: April 2003 Whirlpool Special Section

Whirlpool Special Section
European Operations: Growth in Europe

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APPLIANCE traveled to Comerio and Cassinetta, Italy, to report on Whirlpool's European Operations.

Whirlpool's European operations are delivering a steady growth in revenues and profits while managing a diversity of brands, products, and people.

Mike Todman, president of Whirlpool Europe

Whirlpool entered the European market in 1989 through a joint venture with Netherlands-based Philips NV. Two years later, Whirlpool Europe became the wholly owned European subsidiary of Whirlpool Corporation after the company purchased the remaining shares of the appliance joint venture from Philips.

Today, Whirlpool Europe has about 14,000 employees throughout 38 countries in Europe, the Middle East, and Africa, with its regional headquarters in Comerio, Italy, north of Milan. Whirlpool's European business represents approximately 25 percent of the company's sales worldwide. Since its introduction to the market in the late 1980s, Whirlpool has become Europe's number one major appliance brand by volume. Alongside the Whirlpool brand, Whirlpool Corporation markets appliances under the Bauknecht, Ignis, Polar (in Poland), Laden (in France), and KIC (in South Africa) brands. Whirlpool Europe's principal products include automatic dryers, automatic washers, dishwashers, freezers, microwave ovens, built-in hobs, built-in ovens, free-standing cookers, and refrigerators. These are manufactured throughout Europe - including France, Germany, Italy, Slovakia, Poland, and Sweden - and in South Africa. There also are three technology centers: in Cassinetta (Italy), for refrigeration and cooking; in Neunkirchen (Germany), for dishwashing; and in Schorndorf (Germany), for laundry products.

Meeting Goals

Whirlpool Europe's goal is to deliver continued growth in revenues and profits. According to Mike Todman, president of Whirlpool Europe, the company plans to accomplish this through three elements: new innovative products, increased brand recognition, and market share growth.

"First, we'll create new product spaces," he says. "This is a long-term goal. It is important to create new products in markets that did not exist. An example of such product space is the European side-by-side refrigerator. Today, overall sales of side-by-side products in Europe are very low, but we offer a product suited to European tastes, which we think can expand the size of the market.

"In addition, our brand strategy adds value to our existing products," he adds. "We aim to sell our products at a premium to consumers who value the innovation introduced by our brands. If we have an existing product, we also look for ways to add value to existing products in ways that lead to increased sales and pricing. Through our innovation process, we offer solutions that are different from competitors.

"Another goal is market share growth in units," he says. "To achieve this growth, we are maximizing our resources within the region and focusing them on the most strategic markets. One strategic growth area for us is the built-in segment. Consumers who buy built-in products are not loyal to one particular brand, so we are working on providing consumers integrated packages of appliances to encourage them to buy more of our products."

Whirlpool's Innovations

Two double-cavity ovens for the UK market rest on a pallet. In the middle, the component tray can be seen. It enables single point-of-entry for components. In Europe, only UK consumers buy double-cavity ovens. The top oven mainly is used for toasting. (APPLIANCE magazine photo.)

Whirlpool has enjoyed success in the U.S. with its introduction of a large horizontal-drum washer and dryer line (Whirlpool brand Duet), which is manufactured in Germany and also sold in the U.S. under the Sears Kenmore brand, and in Europe under the Whirlpool and Bauknecht brands with the names Dreamspace and big, respectively.

As U.S. demand for this type of washer has developed quickly, it was only appropriate that Whirlpool develop and produce a new 8/9-kg washer for the global market. The longtime German experience in horizontal-drum washer production gave Whirlpool exceptional success in consumer tests and boosted activities at the company's Schorndorf, Germany, plant near Stuttgart. This project is seen as an example of leveraging knowledge in production, design, and consumer research on a global scale. It was the first time that large white goods were designed and produced for another continent.

As American consumers increasingly turn to European-style front-load washers and dryers, Europeans, in turn, have begun to buy side-by-side refrigerators that have long been popular in the U.S. To drive European consumer acceptance of the side-by-side product, Whirlpool Europe has adopted the U.S. platform to address regional concerns regarding size, energy use, and noise. Whirlpool dedicated part of its Cassinetta factories to side-by-side production of a version that met European tastes and expectations. American drawings, sizes, and looks were modified, but the essential U.S. platform remained. Within just 13 months, the new production line was completed within Cassinetta's existing premises. The European character of the product is expected to give Whirlpool a strong market position in this promising category. Popular stainless steel versions of the side-by-side, marketed as Conquest, are available as well.

The Whirlpool brand Maximo microwave oven exemplifies the company's innovative approach to design and small kitchen spaces. Customer feedback had indicated dissatisfaction with the traditional size microwave ovens. Consumers preferred a product that was more compact, but retained interior size of traditional microwave ovens. In addition, consumers requested that the door open wider, the operation be made simpler, and the microwave have the capability to re-heat baby bottles properly.

To watch the company's innovation process, a development team tested alternative shapes with consumer focus groups. A vertical, round mock-up, with a flat door, scored best. The Maximo microwave oven has been literally engineered around its inner turntable. Although its external width is only 39 cm, Maximo handles a 29-cm dish. The Maximo Advance microwave oven also uses Whirlpool's 3D System technology, which is said to guarantee perfect cooking and boasts a crisp function that allows perfect browning of foods from top to bottom. Maximo distinguished the Whirlpool brand with a unique and valued looking product.

Global Development - Easier Said Than Done


A special Whirlpool-designed punching station punches all of the holes in the freezer inner lining of the European side-by-side, right after the vacuum forming process. (APPLIANCE magazine photo.)

During Whirlpool Corporation's global expansion, leveraging design process worldwide was one of the first priorities. The challenges were numerous. At the time, there were no simple, standardized checkpoints, no clear time frames, no exchange between different regions, and no predictable project timetables. Eventually, Whirlpool's Customer-To-Customer (C2C) methodology helped build a single global process for product development across all regions.

The C2C was implemented worldwide 10 years ago. Paolo Tognella, director of Operations, Services and Competencies, tells APPLIANCE, "With C2C, customer ideas are transferred to customer products. The process starts with the IST (Idea Screening Tollgate) Committee. Here, all ideas are evaluated in teams of designers, marketers, and engineers. No idea can go forward without approval of this committee. The next stage consists of a thorough investigation of all design, marketing, and technological issues, leading up to approval in the CET (Concept Evaluation Tollgate). An important aspect is the way the idea creates added value for the brand, as all project aspects are addressed here and folded in a preliminary business case.

"Next is the BET (Business Evaluation Tollgate). Activities leading up to the BET consist of a full-fledged development of all business aspects associated with the project, ranging from engineering to product communication, from quality to financials, from aesthetics to manufacturing; all aspects are investigated so that a sound business decision can be made. After a BET-decision, preparations begin for actual production and market launch.

"The final stage is Key Learning Tollgate (KLT). Experiences from the total process are collected and conclusions are made. In evaluating the method, the most important experience is that the KLT delivers very insightful results. We found that because decisions are more structured, more aspects can be taken into account, and decision-making is faster, which is needed when you want a shorter cycle time. With the C2C process, timing and predictability have improved, and on a conceptual level, innovation now is much more integrated."

Global Design Cooperation

So how does the company actually realize the promise of global development? Richard Eisermann is head of the Whirlpool brand European design studios, part of Whirlpool's Benton Harbor, MI, U.S.-based Global Consumer Design (GCD) group. This group deals with industrial design: aspects such as aesthetics, visual brand language, and usability. Engineering design - technical and production - is organized under Global Product Development.

"In terms of global design, the large horizontal-drum washer project was a big achievement and a great example of global teamwork," Mr. Eisermann says. "Here we have four in two regions sharing one technical platform: two for Europe (Whirlpool and Bauknecht), and two for the U.S. (Whirlpool and Kenmore). Each brand has a separate design studio that is responsible for the visual brand language: how the product should look, what values it should express to consumers, and how the product should differentiate itself from other brands."

He continues, "The basic technology for the four versions is the same. The differences are in the front panel, the design, the colors, and finishing of the material, the graphics, and the user interface. In the visual design language, there were two extremes: at one end the Bauknecht brand for the German market, where the finishing is metallic and the controls have a systematic, left-to-right layout. The other extreme is the Whirlpool version for the U.S. Whereas the Kenmore brand has more regular, geometric forms, the Whirlpool version is more dynamic. The lines have non-geometrical or even parabolic curves, and there is more visual tension."

Mr. Eisermann says that Whirlpool is very happy with the results, as one platform is shared but final designs are localized, according to the Whirlpool slogan, "Work Globally, Act Locally." He says, "The success in the market proves the strength of the process. On a global scale, the large horizontal-drum project first focused on a common washer platform for the U.S. and Europe. Now we are focusing on adapting the platform to Latin America and the Asian markets."

In the new Cassinetta factory, a worker mounts the ice cube level detector on the freezer's inner lining. Ice cube makers are supplied from the U.S. (APPLIANCE magazine photo.)

As the front-load washers and European side-by-side refrigerators are in production, Mr. Eisermann says another current global project in development is a double-door refrigerator, with two versions, with the freezer on top as well as below. The target is to eliminate the duplicate platforms for both types for Europe and South America. The U.S. market is not part of this project, as the sizes are completely different, especially depth.

"We not only want to integrate the technical platform, but also components such as shelves and baskets," Mr. Eisermann says. "The goal is to make all parts using the same molds, where material treatment and finishing serves to localize the visual brand language."

In the dishwasher category, the global integration just began. Europeans are always surprised about the low prices and the plastic interiors of U.S. dishwashers, but this is changing. Mr. Eisermann tells APPLIANCE, "In dishwashers, there is an important trend towards stainless steel; while it's standard in Europe, it's just becoming popular for U.S. markets. Some call it 'the new white.' As I am a member of the new GPT (Global Product Team) for dishwashing, we meet every 4 to 5 months for several days to share our customer insights with the engineering teams. We try to find global synergies and a global direction; we look at how to distribute our resources globally."

European Markets As Defined By Whirlpool

If you can leverage an American refrigerator design in Europe, what about general white-goods business knowledge? Mr. Todman comments, "Europe is made up of many distinct countries and markets. In the U.S., there is basically one market, one general understanding, and one currency. There are 32 European markets, and five key countries - Germany, France, the UK, Italy, and Poland."

So how does Whirlpool master this variety in countries and markets? "Primarily through our brand strategy," says Marc Bitzer, senior vice president, Marketing, Sales and Services, Whirlpool Europe. "We have the Whirlpool brand, which accounts for more than 60 percent of total sales. The Whirlpool brand was introduced only 12 years ago in Europe, but is now the biggest pan-European brand. The target segment for this brand is the younger female, cosmopolitan customer, who likes innovative and design-oriented products. Next is the Bauknecht brand, especially in Germanic countries, which account for 20 percent of sales. The German origin of this brand makes it strategic for Germany and the Northern European market (Holland, Belgium, Switzerland, Austria, and Scandinavia). The slogan for Bauknecht is 'Intelligent Answers for Your Peace of Mind.' This Intelligence stands for smart technology in an accessible way, and 'Peaceof Mind' means German reliability and an improved service concept.

"The Whirlpool brand is targeted to a younger customer who wants an innovative design. Bauknecht is more family oriented, somewhat more traditional, with German reliability and a higher price.

"In other key markets, we use the Whirlpool brand and local brands, such as Ignis in Italy, Laden in France, and Polar in Poland. These local brands symbolize strong local heritage and we leverage that strength in the market."

In Germany, Whirlpool as a group is number three in terms of position in the marketplace. Mr. Bitzer says that German customers are very demanding and are willing to pay for quality, thus, Whirlpool offers an exceptional service, such as registering a customer's personal service history, fast 48-hr service, and a follow-up call from a service technician.

Bauknecht, on the other hand, is the main brand for the Germanic markets. This brand is one of the A-brands in Germany and surrounding countries. Bauknecht was originally a German company, and later became part of the white goods division of Philips Electronics.

Bauknecht also features great consumer service, Mr. Kornettka says. "Because we reorganized the customer service in one central unit in Schorndorf, we can offer a special service package and skilled staff. We also offer a very generous replacement service should the appliance fail beyond repair after the warranty period."

Mr. Bitzer adds, "In the UK, the market has a strong preference for British brands; retailers are very consolidated and powerful; and pricing is aggressive. But we do have more potential with the Whirlpool brand. In France, we are the market leader. With Whirlpool and Laden, we are competing successfully against the traditional French brands. France is a special market, due to its preference for top-loader washers and pyrolytic ovens."

In Italy, Whirlpool is the most preferred brand. The Whirlpool brand in Italy has a clear potential, and Mr. Bitzer says that Whirlpool is paying special attention to brand building to make the actual market share follow the consumer equity.

"In Central Europe, our company is a clear market leader," he says. "In Poland we are number one in laundry and cooling, thanks to the Polar brand. In Holland, Belgium, and Luxembourg, we learned that Whirlpool and Bauknecht can co-exist successfully as brands, because in these markets the respective market shares are about equal. Bauknecht is positioned somewhat higher here, and customers understand the difference.

"Last but not least, there's Spain, which is a large but difficult market, with very dominant local brands. All these markets present unique challenges and unique opportunities. Our goal is to be successful in all of them."

Production Follows Markets

Manufacturing in Europe also presents its unique set of challenges. What can be said about producing white goods in Europe? Roberto Coato, vice president of Operations and Technology, Home Laundry, tells APPLIANCE, "Relevant for Europe are the high labor costs. That has several effects on your organization. First, they cause a higher degree of automation. Second, for the extra money you get highly trained workers; they are motivated and have sophisticated skills. But sometimes, it also means workers do not like the simple work at conveyor belts, so the work structure calls for more sophisticated systems, such as Self Management Teams (SMT) and Integrated Process Units (IPU)."

The most important change that has been implemented in Whirlpool's European factories is the replacement of traditional multi-line belts by IPUs. For instance, in a traditional dishwasher factory there would be a single automated line for the tub, and multiple assembly lines for main and final assembly. The IPU principle includes regrouping, per function, and building independent cells for each stage in the assembly process. This has many advantages: there are more possibilities for automation and a less complicated parts flow. Because there is a single point of entry, there is no need for a central parts storage.

"This is all combined with a less hierarchical organization structure, with more responsibility and freedom for individual workers," Mr. Coato says. "We think that this empowerment is the way to go. We introduced the IPU system first in the washer factory in Naples, then in the Cassinetta cooker plant, and lastly, in the dishwasher facilities."

European Side-By-Side

Whirlpool Europe's new side-by-side refrigerator exemplifies global leverage of manufacturing knowledge. Pasquale Cipollaro, plant director of Refrigeration at Whirlpool's Cassinetta's facility, tells APPLIANCE, "In designing for the European markets we basically took American drawings and adapted them to European needs. The platform is common, but there are regional components. The refrigerator models are all A-class energy consumption, and the models produced in stainless steel are fully stainless steel, not 'normal' models with just a stainless steel cover.

"We built a new factory on the existing premises for a much higher level of automation and quality, a lean production and self-managing teams. The speed of completion of the side-by-side project was remarkable. It was just 13 months from decision to first production. There is a lot of new production technology here. The side panel line, for instance, performs more operations and manipulations than before, with fewer stations. For punching the inner lining, we have a special machine of our own design. In assembly, there is a shorter and more integrated method of assembling the side- and top-panels and the inner lining. The result is a much lower failure rate and a better process flow."

The Stargate Oven Platform

Another product platform - Stargate - exemplifies the complexities of manufacturing for diverse customer tastes within Europe. Cooking is by far the most diverse product group. In aiming to serve local cultures and habits, a pan-European manufacturer needs many different cooking products, and complexity needs to be managed rather than reduced.

Whirlpool Europe's built-in cooking production is concentrated at the Cassinetta facility, which also houses a global development center for built-in cooking, and procurement management.

Production at Cassinetta is divided by 50 percent for ovens, 25 percent for ceramic hobs, and 25 percent for gas and electric hobs. There are 10 platforms, 1,800 commercial types, and 8,000 component codes.

"The big innovation in cooking for us is the Stargate oven platform," says Giuseppe Tiziani, plant director for Cooking. "In addition to concentrating on quality, always a priority for us, we wanted to reduce costs, the number of parts, and manufacturing and assembly complexity."

"Other goals were to expand the platform to allow for more functionality and flexibility, such as different user interfaces for different European markets; more options in surface treatment; easier cleaning; pyrolytic versions for France; and energy-efficient versions for Germany.

"Many changes were made in the production of the Stargate oven," he continues. "There is now a new cooling system with an axis-based propeller instead of tangential, which delivers the extra cooling needed for the electronic controls and door. The chassis is more integrated, and is better suited for automated production and handling. Full glass doors can be mounted now, and the control panels have improved perceived quality."

In the Cassinetta factory, oven assembly takes up the largest floor space with five IPUs.

Mr. Tiziani says, "As APPLIANCE readers are well aware, the core process in any oven factory is the enameling line. This is the most difficult step in the manufacturing of ovens. We use a spray powder system with two dedicated pieces of equipment for cavity and flat parts. The cavity is produced in two lines: one for the cavity shell with two presses, and one for the front and back panel with four presses. Then, the cavity is welded together by six welding stations. In the cavity process, including the degreasing line, there is no manual labor. Final oven testing is done on seven stations and includes an automated full functional test to guarantee the right performance, on top of high perceived quality level. Quality has always been a constant goal for us. Stargate will provide a great opportunity to further enhance this attitude while simplifying oven assembly procedures."

Managing Whirlpool Europe

With all the diversity in markets, brands, customer tastes, and products, one would think that Whirlpool Europe is difficult to manage. Before becoming president of Whirlpool Europe, Mr. Todman ran Whirlpool's North American Whirlpool operations. How does he compare working in these two continents?

"It is very different, in almost all aspects," he says. "In the U.S., we based our strategy on the concentrated trade structure, in basically one market and a limited number of brands. Europe for us is 32 markets, from new markets like Russia with a high growth to the Western markets with a growth rate more like the U.S.

"But take it to the next level, and you see a tremendous variation in the trade structure across all markets in Europe. Some countries are more concentrated than others. In terms of brands, the top four brands represent about 65 percent of European sales. In the other 35 percent you have about 60 brands. So there is a totally different landscape. As a result, we have a lot more SKUs in European factories. The platforms might be the same, but the final products are tailored to local taste.

"As we know, the U.S. is a very diverse country, a real melting pot," he continues. "But the diversity in Europe is mainly an issue of national cultures. That is interesting, and I surely do enjoy the cultural richness. I have meetings with customers, and there will be a Dutchman, an Italian, as well as a German, next to English and Swedish people. Imagine the conversations that you have!"

APPLIANCE Magazine Whirlpool Special Section - April 2003



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