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Whirlpool Cuts 1,100 Jobs In Indiana, Moving To Mexico

Fri, 08/28/2009 - 1:43pm
Tom Murphy, AP Business Writer

INDIANAPOLIS (AP) -- Whirlpool Corp. announced Friday that it will close its refrigerator factory in Evansville, Ind., by next year and cut 1,100 jobs as it continues a push to trim excess capacity.

Whirlpool said it will move the production of refrigerators with freezers on top to a company location in Mexico, where they are cheaper to produce. Ice makers produced in Evansville will be moved to a yet-to-be-decided location.

The jobs will be eliminated in mid-2010. The Benton Harbor, Mich.-based appliance maker has aggressively cut costs as demand for big-ticket items has shrunk in the recession.

Whirlpool spokeswoman Jill Saletta, speaking at a Friday morning press conference Webcast by Evansville television station WFIE, said the plant closing had nothing to do with worker performance.

"This decision is around cost," she said. "We had to take a look at which plant we could get the best cost position in, and because top-mount refrigerators are not in the demand that they used to be and they're more of a commodity item, Mexico offers us the best cost platform to continue to produce (them)."

The "difficult but necessary decision" to close the plant allows Whirlpool to streamline its operations and reduce product overlap, said Al Holaday, Whirlpool's vice president for North American manufacturing facilities, in a statement.

Evansville Mayor Jonathan Weinzapfel said in a separate Webcast from WFIE that Whirlpool officials told him they have lost money in Evansville for several years.

"We're talking about a dramatic impact on the economy and the work force," he said, regarding the factory closing. "Our job is to try to find ways to absorb these folks into other positions in the economy."

Weinzapfel noted that companies like Evansville-based pediatric nutrition products maker Mead Johnson Nutrition Co. are still doing well in the area.

City officials said they hope to keep Whirlpool's refrigeration product development center, but Whirlpool said it has not decided the fate of the center's 300 employees. It expects to in the "near future."

Last year, Whirlpool cut 120 jobs at the Evansville plant.

Its closing fits into Whirlpool's bigger plan of reducing excess capacity that it built between 2004 and 2007, said Brian Sozzi, an analyst with Wall Street Strategies.

Cowen and Co. analyst Laura Champine noted that most Whirlpool factories are only running one shift, and the bigger plants have room to take up production from smaller locations like Evansville. She estimated that Evansville accounted for about 2 percent of Whirlpool's work force.

"If you look at what they've done over the past few years, it's been all about closing their smaller plants so they can maximize production at their larger plants," she said.

The company's profit outlook for 2009 remains unchanged from a July forecast of $3.50 to $4 per share. Whirlpool shares rose $1.15 cents to $65.28 in afternoon trading Friday.

Evansville sits in the southwest corner of Indiana, a state battered by manufacturing job losses during the recession. Elkhart County in northern Indiana has seen unemployment rates approaching 20 percent due to the collapse of recreational vehicle manufacturing.

Other parts of the state have been hurt by automotive bankruptcies. Indiana's unemployment rate dropped slightly in July to 10.6 percent, as some auto workers returned to their jobs. But the state ranked ahead of the national average of 9.4 percent.

AP Retail Writer Vinnee Tong contributed to this report from New York.

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