Maytag Caught In Wringer No. 4 Appliance Maker Reorganizing To Stay Competitive With Ge, Whirlpool

Maytag Corp. said Friday it will close its kitchen-range plant in Indianapolis and realign its major home appliance businesses under one unit to improve efficiency and become more competitive.

The No. 4 U.S. appliance maker has been streamlining operations after a period of aggressive expansion. The latest moves will result in a $50 million charge this year and should save $35 million annually, the company said.

“We are streamlining the corporation to deliver better results and to do a better job of meeting our customers’ needs,” Maytag’s chairman and chief executive, Leonard Hadley, said in a statement.

The company plans to close its Indianapolis Jenn-Air plant by year-end and consolidate Jenn-Air production at a plant in Cleveland, Tenn. Some of the 860 employees in Indianapolis will be offered transfers, the company said.

Newton-based Maytag, which has about 16,300 employees worldwide, said it also will consolidate its two major appliance units into one. The single unit will oversee Maytag’s four major home appliance brands: Maytag, Jenn-Air, Magic Chef and Admiral.

Maytag is being forced to cut costs in the highly competitive market for home appliances in North America, said John Curti, an analyst who follows Maytag for Securities Corp. of Iowa.

“The business, at least in North America, is mature. There’s not a lot of unit growth, so you’ve got to work on your costs,” Curti said. “They’re doing pretty well in a real tough market.”

However, the primary reason for the restructuring was not to reduce costs, but to improve efficiency and provide more support for the company’s field sales force - which is a key strength at Maytag, Hadley said.

“It will help us respond more effectively to all the customers who sell our appliances,” Hadley said. “It also will help us strengthen our brand positioning in the marketplace.”

The Cleveland plant will add about 500 manufacturing jobs while about 200 administrative jobs will be added at Newton, Maytag spokesman Tom Schwartz said. An undetermined number of workers will be offered transfers, he said.

Schwartz said the company is not seeking incentives to stay in Indianapolis and that the Tennessee plant was chosen for the consolidation because it is more modern and can handle an expansion.

“We think it’s going to make us a lot more competitive,” Schwartz said. “We compete against the GE’s and the Whirlpools of the world. They have both just brought on line large, new manufacturing facilities for their cooking products.”

Maytag named Donald Lorton as acting president of its consolidated appliances unit. Lorton, 65, had been acting president of the two appliance units. He will retire when a president of the new unit is named, Maytag said.

Maytag said that most of the $50 million restructuring cost will be taken as a charge against earnings in its first quarter that began Jan. 1.

The reorganization does not affect Maytag’s Hoover floor care division or its Dixie-Narco vending machine business.

The restructuring is the latest attempt by Maytag to refocus its operations after an expansion that began in the early 1980s.