Whirlpool Says Tax Incentive Insufficient to Stop Production Moves Outside the U.S.
Mar 25, 2004
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A last-minute move in U.S. Congress to limit an appliance tax credit to products manufactured in the U.S. will not stop Whirlpool Corp. (Benton Harbor, MI, U.S.) from considering moving some of its production from Fort Smith, AR, U.S. to Mexico, a company official said this week.
Tucked into the U.S. $31 billion energy bill, the measure offers up to $60 million in tax credits to manufacturers that produce energy-efficient washing machines and refrigerators. The Energy Bill, stalled in the Senate in November 2003, is expected to come up again this year.
Local business leaders had been looking to the appliances provision, introduced by U.S. Senator Blanche Lincoln (D-AR), to provide the home-appliance maker with an incentive to maintain its production in Fort Smith. However, company officials say it's not enough to keep business in the U.S.
"A tax credit that creates a benefit for our refrigeration business is certainly welcome, but isn't sufficient to eliminate the need for us to consider the possibility that we move some production to Mexico," said Tom Catania, Whirlpool's vice president of Government Relations.
In November 2003, Whirlpool, the Fort Smith area's largest manufacturing employer, announced that it expected to move some production from Fort Smith to a new plant in Mexico.
Mr. Catania said a decision regarding the move will be reached in January 2005.
Whirlpool also recently decided to move its ice-maker production line from Fort Smith to China.
Mr. Lincoln's spokesman Drew Goesl said the senator introduced the tax credit to make energy-efficient technology affordable for American consumers. The credits would apply to production between 2004 and 2007 and would go to manufacturers who make appliances exceeding energy efficiency standards adopted by the U.S. Department of Energy in 2000 and 2001.
Besides Whirlpool's Fort Smith plant, Newton, IA, U.S.-based Maytag Appliances' Searcy plant, which manufactures washers and dryers, also qualifies for the credit.
Initially, the credit would have applied to both foreign- and U.S.-manufactured appliances.
But in an effort to contain costs, lawmakers altered the measure during closed-door negotiations last fall, qualifying only U.S.-manufactured goods for the credit, said Jill Gerber, a U.S. Senate Finance Committee spokeswoman.
Tom Manskey, president of the Fort Smith Regional Chamber of Commerce, said he was disappointed the domestic production restriction would not alter Whirlpool's plans. "Initially, when we found the bill, we were hoping it would slow down some of the production movement to Mexico," Mr. Manskey said. "But apparently that particular bill is not going to help at this time."
Mr. Manskey said the issue of U.S. jobs moving overseas could not be tackled at the local level.
"Unless something else can come up at the federal and state level to cut their costs, I don't know what else can be done," he said. "We're certainly looking at what options are out there, but at present we haven't found anything else that would keep those jobs from moving south of the border."
Charles Samuels, counsel at the Association of Home Appliance Manufacturers (AHAM) said the change to the provision was not something they supported. "We want to incentivize these companies to sell as many energy-efficient products as possible," he said. "This language restricts it." (Arkansas News Bureau)
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