Whirlpool's Investment Plan Targets up to $300 million for Michigan, CEO says
date: March 9, 2011
SOURCE:Crain's Detroit Business
Fettig, chairman and CEO of the Benton Harbor-based company since 2004, told more than 250 people at a luncheon of the Detroit Economic Club that Whirlpool expects to spend around $1 billion on U.S. operations by 2014 and increase revenue to about $24 billion by then.
Around $300 million of that could be spent in Michigan, he said —
most of it in research and development, design work, a new headquarters
campus and other needs for its 4,000 or so "knowledge economy" jobs in
the state.
At least $85 million of that spending will be for a campus under
construction for the appliance-maker's new headquarters in Benton
Harbor, a building that will finish the first phase of construction by
year's end. Another additional $20 million to $40 million a year goes
into research and development, laboratories and other investments within
the state, Fettig said.
"We have historical reasons (for staying), as well as having 4,000
good people here, and we are invested in various laboratories and
buildings," he said. "All that could change that equation for us is
whether in the future we can continue to attract talent" to the state.
Whirlpool has 71,000 employees worldwide, including 21,000 in the
U.S., but it has not sourced any manufacturing here since 1986. About
10,000 of its manufacturing jobs are in Ohio, with more in Arkansas,
Tennessee, Oklahoma and Iowa. Most of its Michigan work force is
white-collar.
The return on its local investment could be slow. Whirlpool plans to
raise product prices about 8 percent 10 percent across its brands
starting April 1, in response to a global price increase of more than
$300 million for raw materials.
Fettig told reporters after the luncheon that he still expects
negative performance early in the year compared with the first half of
2010, followed by a "more positive" second half of 2011 to finish with 3
percent total growth.
Other detractors from growth include the loss of consumer tax credits
that expired in 2010 on the sale of energy-efficient appliances and a
much smaller market for new-home construction. That construction, which
used to account for 15 percent to 20 percent of sales, was only 8
percent of sales in 2010, Fettig said, but replacement purchases have
seen recent recovery and now account for more than 50 percent of unit
sales.
But Fettig also called for the largest growth to come to come in U.S.
sales during the year, even though Whirlpool North America's sales were
off about 1 percent to $2.6 billion in the fourth quarter.
Fettig also called on state and federal government officials to
"rethink the best, most cost-effective way of governing" to offset an
estimated 17 percent to 18 percent operating penalty for sourcing
production within the U.S.
Said Fettig "We're very bullish on U.S. manufacturing, but we're also
very sympathetic to the voices within our country, that are saying we
do need to eliminate that disadvantage and become more competitive."