Whirlpool Delays Decision
Dec 23, 2004
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Workers at the Whirlpool refrigerator plant in Fort Smith, AR, U.S. will have to wait beyond January for news of how much production will move from there to Mexico.

"We won't know enough in January to make the announcement we'd anticipated before," said Christopher Wyse, Whirlpool spokesman.

Benton Harbor, MI, U.S.-based Whirlpool Corp. announced on Nov. 10, 2003 that it would move some side-by-side refrigerator production from Fort Smith to Mexico. The company had been expected to announce in early 2005 how much production would be moved there from the Fort Smith plant, which employs about 4,600 people.

“We are extending the timeline is a good way to characterize it,” Mr. Wyse said. “We're not exactly sure when the startup of production in Mexico will happen, so we are assessing all those schedules. The delay is going to take some period of time. It could take up to 1 year, but we don't know exactly at this point.”

He said 1 year would be the maximum time he would expect the decision to be delayed.

That delay doesn't suggest reversal of the overall plan to shift production to Mexico, Mr. Wyse said.

“Construction of the plant in Mexico remains on schedule,” he said. “We're going to continue with that. There's a lot of scenarios on when we would scale that plant up and make it operational. That will still happen.” Through a study called the Global Operating Platform, the company is engaged in an internal examination of its production methods and lines.

Part of the reason for the delay is that Whirlpool needs more time to gather data necessary for a decision, Mr. Wyse said. As to whether the cost of materials or machinery going into the new facility in Mexico might have factored into the delay, Mr. Wyse couldn't comment. “It's difficult to point to one single factor,” he said. “It is costly and the scope and scale of this project is big.”

According to three sources within Whirlpool, the company held meetings this week to inform employees of the delay. The sources said the delay is primarily the result of machinery costs, quality control issues at the Mexico plant, and a desire by Whirlpool executives to control costs in 2005 by delaying investments in its reorganization plan. Whirlpool announced in May 2004 it would spend U.S. $180 million on new production lines and new refrigerator models. Of that, about $80 million was to be spent on a new laundry production plant in Monterrey, Mexico, and a new refrigerator plant in Ramos Arizpe, near Monterrey. All the sources said the top 2005 resolution for Fort Smith employees is to cut production costs.

“Frankly, this is a one-year reprieve. It gives Fort Smith another year of opportunity to close the gap ... the cost gap between Mexico and the U.S.,” said a management employee at Whirlpool's Fort Smith plant. (Times Record)

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