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Maytag Layoffs Won't Affect Searcy, IA, U.S. Plant
Apr 29, 2004
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Maytag Corporation laid off more 100 employees at its Newton, IA, U.S. plant on April 23, but said there are no plans to cut workers from the company's Searcy, IA, U.S. plant.

Both plants, along with two others in the United States, manufacture laundry machines, said corporate spokesperson Lynne Dragomier.

"Our laundry business is up," she said. "But the volume of sales from the Newport plant is down."

Ms. Dragomier would not release sales figures for its plants, nor say how many employees work at each site.

But union officials in Newton announced that 107 employees were let go Friday. About 700 people have been laid off in the past 2 years, with 1,525 production workers still on the job.

According to the Searcy Chamber of Commerce, Maytag added 280 jobs at its Searcy plant in 2003, for a total workforce of about 600.

A union does not represent workers at the Searcy plant.

The layoffs in Newton came one day after Maytag reported first quarter earnings of U.S. $38.7 million, up from $34.5 million in the first quarter of 2003. Total sales for the first quarter were $1.219 billion, up 7.3 percent from $1.136 billion a year earlier.

"Maytag Appliances gained market share for the third consecutive quarter in an environment of strong industry growth," said the company in a press release.

Still, investors were disappointed and sent Maytag shares down $1.34, or 4.4 percent, to close Thursday at $29.28 on the New York Stock Exchange.

"Put all together, all this was really kind of a little less than what people had expected," said analyst David MacGregor, of Cleveland, OH, U.S.-based Longbow Research.

Investors cited unimpressive sales from Maytag's Hoover floor care division, which saw a 22-percent drop in sales from the previous quarter.

Ralph Hake, chairman and chief executive of Maytag, said in a conference call to investors that the company would increase profitability by continuing to outsource manufacturing to Asia. It has already reached agreements with Korean companies Daewoo and Samsung to make some refrigerators and laundry products, he said.

"I believe sourcing from China will be fundamental for us as a company and anybody who will be successful in the major appliance business," Mr. Hake said.

The goal, said Mr. Hake, is to outsource from 30 to 40 percent of products to Asian manufacturers.

Last year, Mr. Hake announced that the company will close its Galesburg, IL, U.S. refrigerator factory later this year. Operations will be moved to Reynosa, Mexico. Workers in Galesburg reportedly make $15 an hour, while workers in Reynosa make an average of $2 an hour.

The company said in its January proxy statement that Mr. Hake was paid $841,667 last year, up from $800,000 in 2002. But Mr. Hake was not awarded a bonus because the company did not meet financial goals outlined by its board of directors in January of 2003.

Ms. Dragomier, the corporate spokeswoman, said continued outsourcing of jobs to China will not affect employment at Searcy.

"Outsourcing is for new products and additional models," she said. "And Maytag has far more U.S. manufacturing than our major competitors."

The Searcy laundry facility began in 1970 as a Speed Queen factory. Raytheon bought Speed Queen in 1979, and began manufacturing the Amana line of products at Searcy in 1982. Maytag bought Amana in 2001. (Associated Press/The Daily Citizen)

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