Maytag CEO Defends Factory Closure
May 13, 2003
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Maytag?s chairman defended the company?s decision recently to close its Galesburg, IL, U.S. refrigerator plant. CEO Ralph Hake told the annual shareholder's meeting that competition from appliance manufacturers in China, Korea, and Germany have put increased pressure on Maytag to increase manufacturing efficiency. Closing the plant will save the company U.S. $35 million, he said. As he presided over the meeting inside a conference room adjacent to the company's corporate headquarters, more than 100 Galesburg workers and union activists protested outside.

"Some people are very angry, people are very upset," said Aaron Kemp, a member of the International Association of Machinists and Aerospace Workers Local 2063 and a Galesburg plant worker. "We have a profitable facility. We're making money and it's pretty sad they're willing to sell out American workers just to make more money when you're already making a profit."

All of the questions directed to Mr. Hake at the stockholders meeting involved the plant closing. He said the primary reason for closing the plant was that it was building an old style refrigerator designed in 1994 that needed to be updated for the company to remain competitive. "The way it is put together, it's not as good as more recent designs," he said. He said the company's purchase of Amana gave Maytag access to improved designs.

Instead of retooling the Galesburg plant, which he said had quality and safety problems, the company chose to build the new refrigerators in Mexico and at an Amana plant in Iowa. "Galesburg by far rated the lowest on safety," he said. "There were also severe issues with quality and it really was damaging our name." Mr. Hake said he doesn't blame the hourly workers for the plant's failures. "The truth is to fix our refrigeration business, which is the worst business we had, we had to fix it in both redesign and manufacturing," he said.

Mr. Hake told the shareholders 2002 was a "recovery year" in which sales grew slightly but earnings per share increased 66 percent. The company opened 20 new Maytag retail stores and plans to continue to launch new products and improve existing lines in an effort to increase sales. (AP)

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