"The United States market is very different from that of China,
where much of the population survives on a monthly income of $100 or so.
In China, there is a market for
a combination washing machine and potato peeler
that would be a non-starter with Americans."


Members of Congress are expected to try to block or delay
the sale of Maytag to a Chinese company.
Fears have grown as traditional American manufacturing giants
have become vulnerable to foreign takeover.

People outside North America may not understand the symbolism of the washing machine company, Maytag, being sold to the Communist Chinese. Maytag washing machines are the embodiment of high-quality "Made In America" products and a cultural icon:

See the Maytag Repairman (watch original commercial)

See the story of the Maytag commercial, the "loneliest man in town"
On December 1, 1991 Bob's Specialty Service in Monroe, Wisconsin started a Maytag washing machine during a Maytag promotion and expected it to run about 2 and 1/2 years. Amazingly, the machine ran until August 16, 1996 and stopped after 32,500 hours. The machine pumped over 56 cycles a day and cost about a $1 a day in electricity - the equivalent of 193 years of use by a family of four

The United States - by allowing China to buy Maytag - is literally "all washed up". ~ Jackie Jura

China making bid on Maytag
Des Moines Register, June 23, 2005

Appliance maker Haier could be looking to Maytag Corp. to relieve crushing competition in the world's most populous nation, according to an expert on Chinese businesses. Although Haier Group is the dominant appliance manufacturer in China, innovative products brought to market there are often quickly copied by cheaper rivals, author Usha Haley said. "It's not so much an invasion of the United States, but an escape from China," Haley said. Haier America Trading LLC has joined with two U.S. venture capital firms to make a preliminary bid of $16 per share for Maytag. That offer is subject to review after the Haier buyout group looks over Maytag's books for the next six to eight weeks. The Newton-based company already has a firm offer to sell itself to a group led by New York investment firm Ripplewood Holdings for $14 per share.

Haley is author of "The Chinese Tao of Business: The Logic of Successful Business Strategy," and she is a professor at the University of New Haven in West Haven, Conn. Haley said Haier (pronounced higher) may want into the United States because its market is very different from that of China, where much of the population survives on a monthly income of $100 or so. "What they can afford is quite different from the United States," Haley said.

In China, there is a market for a combination washing machine and potato peeler that would be a non-starter with Americans, Haley said. But Haier already has staked a claim in the United States with a line of wine chillers. The Maytag brand would let Haier move to a higher-priced market, said David Bachman, chairman of the China studies program at the University of Washington in Seattle. Like U.S. manufacturers, Haier is being squeezed by Wal-Mart and other discount chains, where it sells much of its appliances. Haley said it's far from certain whether Haier could succeed with Maytag. Though Chinese manufacturers are efficient and managers can make decisions quickly, she said they often do poorly on branding and service. But Maytag could solve those problems, and also give Haier access to research and development technology that it lacks in China.

Haley and Bachman differed on whether a Haier takeover could threaten jobs at Maytag. Haley said it's a good bet that Haier would at least move the manufacturing of appliance components to plants in China, where labor rates are a fraction of their level in the United States. But Bachman said fears that Haier would dismantle Maytag are overstated. "Haier is not buying in to move things back to China, but to gain access to the U.S. market," he said. Bachman said he expects members of Congress to try to block or delay the sale of Maytag to a Chinese company, even if no national security issues are involved. Fears have grown as traditional American manufacturing giants have become vulnerable to foreign takeover.

Iowa town worries about effects of Maytag sale
The Wall Street Journal, May 27, 2005

NEWTON, Iowa -- This may be the only town in the world built on dirty laundry. Nearly a century after local farm-implement maker F.L. Maytag unveiled his Pastime washer, a wooden tub that used a hand crank to clean shirts and trousers, Maytag Corp.'s future in Newton is the subject of intense local debate. Between corporate headquarters and its local factory, Maytag employs 2,800 people here, or nearly one in five of the roughly 16,000 residents in this central-Iowa town. Faced with larger rivals employing cheaper labor overseas, Maytag agreed to go private last week in a $1.13 billion deal. The buyer: Ripplewood Holdings LLC, a New York private-equity firm. Maytag has warned the United Auto Workers union, which represents many production workers here, that if the two can't find ways to cut costs fast, doom could await the Newton factory. Roughly 12 percent of Maytag's production comes from low-cost labor overseas, a much smaller proportion than that of U.S. rivals including appliance-industry leader Whirlpool Corp.

Ripplewood agreed to pay $14 a share for the company, but the stock has been trading higher, prompting rumors that a foreign buyer may emerge. At their Thursday close on the New York Stock Exchange composite trading, Maytag's shares were at $14.76. Regardless of the buyer, the result is likely to be similar to a recent string of deals in which private-equity firms gobbled up old-line U.S. companies and shipped jobs overseas. In these increasingly common deals, hedge funds and private-equity funds buy companies and overhaul them, to recover their investments; but the change isn't always good for Main Street. Buyout specialist Wilbur Ross bought Burlington Industries in 2003 and undertook a buyout of Cone Mills in 2004. The firm now plans factories in Guatemala and China. After Hicks, Muse, Tate & Furst acquired control of Viasystems Group Inc., of St. Louis, the circuit-board maker emerged from bankruptcy protection in January of 2003 with much of its production shifted to China.

The Maytag deal could mean the end of an era deep in rural Iowa and to the dream that product dependability or "Made in America" could command a premium price. The deal also will likely end Maytag's long resolve to keep nearly all of its manufacturing jobs in the U.S., a determination that contributed to the company's troubles and, arguably, to the current angst in Newton. The town hasn't always helped itself. "People come in the door, and the first thing they want is cheap appliances," says Marilyn Deppe, whose husband is Don of Don's Town & Country Appliances here. In addition to Maytag ranges and washers, the store carries televisions from Japan's Toshiba Corp. and Matsushita Electric Industrial Co.'s Panasonic. Mr. Deppe says he has seen local Maytag plant workers opt for less expensive Amana brand washers -- made by another Maytag division but not at the Newton plant. The Amanas run $100 to $150 less than the Newton-made Maytags, he says.

Yet the locals are panicked by the prospect of losing the Maytag plant. "The real-estate market isn't moving, people are unsure of their wages, the whole town is on hold," says Norma Jean Sharp, owner of Something Beautiful, a local boutique on the town square. "I didn't mean to be a nonprofit business, but it's what we've become." The six-member Monday morning coffee club at Uncle Nancy's Coffeehouse & Eatery was in prime grumbling mood this week, thanks to the Maytag sale. "We should have done something a while ago," one silver-haired woman said. "Like what?" asked another. "I don't know," the first woman said, "but surely something." The griping turned to executive wages, perils for pensions and whether wage cuts could save the town's largest employer.

"If Maytag closes," declared one club member, Jane Davis, "we're a ghost town." In Newton, nearly everybody works at Maytag, used to work there or is related to someone who does. Locally, they are called Maytaggers. A Maytag sign stands atop the scoreboard at the Eversman Field baseball diamond. One of the largest parks around is 40-acre Maytag Park. There is the Maytag Dairy, which makes wheels of a blue-cheese variety beloved by cheese connoisseurs in the U.S. and abroad. In 1941, E.H. Maytag, son of the appliance maker's founder, took a herd of show cattle and a new process for making blue cheese and devised Maytag Blue. The farm isn't connected to the washer and dryer company. It makes about a million pounds of cheese a year.

Aside from small units in the United Kingdom, Australia and Canada, Maytag returned to foreign markets in a big way by opening a refrigerator plant in Mexico last year. It was hardly enough to prop up Maytag's plummeting stock price or to keep the company from halving its dividend this month. Asked last week about Maytag's tardiness in outsourcing abroad, Chief Executive Officer Ralph Hake would say only that the company is working on it in earnest now. Ripplewood Chief Executive Timothy Collins vowed to push Maytag brands deeper into foreign markets and called Maytag's foreign sales "a diamond in the rough."

Ripplewood's arrival throws a shiver into Newtonians such as Jan Babcock, owner of the Interior Accents gift shop. Her father retired from Maytag in the late 1980s after working there most of his life. In the two days after Maytag announced its sale last week, Ms. Babcock's sales were off about 33 percent. "We're afraid a lot of people are going to be leaving," she says. Some are having more trouble than others. Inside the Newton Pawn & Gun Shop stands a glass case filled with toy models of antique Maytag delivery trucks. One 1937 model, bearing the slogan "You're Money Ahead With Maytag" on the side panel, runs $30. Surveying the souvenirs, 45-year-old owner David Hulsizer says, "They ain't been selling real good."


Jackie Jura
~ an independent researcher monitoring local, national and international events ~

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