Image: Maytag appliances
Kiichiro Sato  /  AP
Maytag washers and dryers soon won't be getting produced at plants in Herrin, Ill.; Newton, Iowa and Searcy, Ark.
updated 5/10/2006 2:38:18 PM ET 2006-05-10T18:38:18

Whirlpool Corp. said Wednesday it will eliminate 4,500 jobs by closing three plants and consolidating corporate offices and other sites following its purchase of rival appliance maker Maytag Corp.

The moves come less than six weeks after Whirlpool completed its acquisition of Maytag, extending its lead as the nation’s biggest appliance maker with brands that include Whirlpool, Maytag, KitchenAid, Jenn-Air and Amana, among others.

Federal antitrust regulators raised no objection to the combination.

The cuts represent about 5.6 percent of Whirlpool’s current work force of about 80,000 employees. But Whirlpool said it will add about 1,500 jobs, many at two Ohio plants, reducing the net loss of jobs to 3,000 positions, or 3.8 percent of its work force.

“We are taking these actions to rapidly restore the competitiveness of the Maytag brands,” Jeff M. Fettig, Whirlpool chairman and chief executive, said in a statement. “This is an important step in our integration process that will allow us to drive continuing performance improvements and will better align our brands, products and operations with the markets we serve domestically and globally.”

The Benton Harbor-based appliance maker plans to close washer and dryer plants in Newton, Iowa; Herrin, Ill.; and Searcy, Ark. Laundry manufacturing sites in Clyde, Ohio, and Marion, Ohio, will absorb the production, Whirlpool spokesman Daniel Verakis said.

Also slated to close are Maytag’s corporate headquarters and research center in Newton, Iowa, as well as administrative offices in Schaumburg, Ill., Canada and Mexico.

“The loss of jobs in this community will not be easy to swallow, which is why we must begin acting right now to support this community and its workers during their difficult transition period,” Iowa Gov. Tom Vilsack said in a statement.

The factory in Herrin, Ill., which employs about 1,000 people, will continue production until the end of this year, as will the plant in Searcy, Ark., which has about 700 workers.

The Newton, Iowa, factory, which employs 1,000 workers, will continue production into 2007, the company said.

Whirlpool still has to negotiate the terms of the closings with unions at the Newton, Iowa, and Herrin, Ill., plants. The Arkansas plant is nonunion.

The 4,500 positions to be cut include 1,800 salaried jobs, but several hundred people at the affected offices will be offered posts at other Whirlpool locations, the company said.

Whirlpool said it will cost an estimated $135 million to $145 million for severance payments or relocation expenses for administrative employees under the consolidation. No estimate was available on manufacturing job elimination costs. Non-employee costs will be about $30 million, the company said.

“We knew that they were going to make some changes and today was probably the beginning of the process,” said Eric Bosshard, an analyst with FTN Midwest Securities Corp.

Expect Whirlpool to continue evaluating the performance of the combined companies and to make any necessary adjustments down the road, he said.

Whirlpool paid about $1.7 billion in cash and stock to buy Maytag on March 31. It also assumed about $900 million in Maytag debt that boosted the total value of the transaction to about $2.6 billion. Chinese appliance-maker Haier America had offered $1.28 billion for Maytag, but it was withdrawn when Whirlpool made a higher bid.

Maytag, an independent company since 1893, then became a subsidiary of Whirlpool.

The combined company has more than 60 manufacturing and research centers around the world. Whirlpool has 26 manufacturing plants in North America, and the company said it will evaluate all of them to determine the most efficient way to do business.

David L. Swift, president of Whirlpool North America, said in a statement the Ohio factories are “two of the most efficient facilities in the world, with capacity to grow.”

He said the decision was difficult for the company, but necessary to improve its cost efficiency.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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