Whirlpool Reports Another Plant Closure after Disappointing Third-Quarter Earnings

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Researched by Industrial Info Resources (Sugar Land, Texas)--Whirlpool Corporation (NYSE:WHR) (Benton Harbor, Michigan) recently announced disappointing third-quarter earnings and the associated closure of a facility in Jackson, Tennessee. Layoffs are a part of the global reduction in force for Whirlpool, totaling approximately 5,000 jobs. Announcements of plant closures since January 2008 include facilities in LaVergne, Tennessee; Oxford, Mississippi; and Pueblo and Reynosa, Mexico. The layoffs represent about 6.8% of the 73,000 total employees behind the Whirlpool brand family, which includes Whirlpool, Maytag, KitchenAid, Jenn-Air, and Amana household appliances.

Earnings from continuing operations decreased 7%, from $175 million in 3Q07 to $163 million. However, revenue increased slightly (1%) from $4.8 billion in 3Q07 to $4.9 billion in 2008. Whirlpool's Chairman and CEO Jeff M. Fettig said, "We do not expect demand conditions to improve in the near term." The financial report cited cost inflation, declining home values, unemployment, low consumer confidence levels and the general weakening of the economy as causes for declining demand for Whirlpool products. The company believes the plant closures and layoffs, predicted to save $275 million in annual expenses, will help maintain a cost-effective business structure through the economic downturn. Approximately 500 salaried full-time and contractor positions across North America are included in the layoff plan.

Industrial Info is currently tracking 11 operational Whirlpool Corporation plants in our North American Plant Database and published detailed reports covering the LaVernge, Tennessee, and Oxford, Mississippi, plant closures announced earlier this year. The closures have an estimated cost of $3 million each and involve dismantling and relocating production equipment to the company's Cleveland, Tennessee, facility.

From an international perspective, Whirlpool was able to highlight a few bright spots in the third-quarter report. The Whirlpool Latin American sector reported a net sales increase of 22% to $1 billion, which the company accredited to positive foreign currency rates and persistent demand. Recent product launches in the region include a line of appliances for which features and colors can be customized via internet order. Eliminating the impact of currency, Whirlpool Asia sales increased 16%, resulting in a break-even operating profit. Despite the operational cuts, Fettig continues to assert that "Whirlpool remains very well positioned to overcome these challenges and further strengthen our global operations."

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