Whirlpool’s Fate on Hold Until Early 2006

The 4,600 employees of Whirlpool Corp. in Fort Smith have spent more than a year waiting for the other shoe to drop, and they will continue to wait for many more months.

Since November 2003, executives at Whirlpool’s global headquarters in Benton Harbor, Mich., have been mulling the benefits of offshoring jobs to Mexico. A new plant is currently being built south of the border and construction delays there are blamed for the lack of a decision on just what exactly Whirlpool executives might have in store for Fort Smith workers.

A decision was expected in January, but Whirlpool officials are now saying Fort Smith will have to wait until January 2006 before finding out if and when jobs are leaving town.

“It’s up in the air and we’re just still waiting to see,” said Larry Ryan, president of PACE Local 0-5370, the union representing Whirlpool workers. “We have no idea. We don’t even know if they’ll even lay off anybody. There’s nothing we can do but wait. It’s frustrating to think about, but at least we know we’ll have another year, I guess.”

With nearly 20 percent of all manufacturing employees in Sebastian County arriving at Whirlpool for work every day, mainly for the production of refrigerators and trash compactor assembly, what’s happening on the corporate level is of interest to more than just those working inside.

“Obviously it’s an enormous payroll and the largest employer in the region, so it would have an enormous impact on the city, the region and even the state,” said Tom Mansky, president of the Fort Smith Chamber of Commerce. “They’ve got a large work force and over a million square feet under their roof out there, so they’re a large property tax payer. They have roughly 4,750 good-paying jobs, so they’re very important for us to have here and we certainly want to do everything we can to keep them.”

But with wages in Mexico generally between $2.60 and $3 an hour compared with the average Fort Smith Whirlpool workers’ hourly $14.50, there might not be much anyone can do to keep the manufacturing jobs on Arkansas soil.

Work Smarter

The option for Whirlpool to follow a national epidemic of exporting jobs to low-wage countries like Mexico and China could spring from a $100 million investment, something called the Global Platform Operating Study. The study is expected to more than pay for itself by identifying ways for the company to save money in the long run.

According to Whirlpool spokesman Christopher Wyse, the study is geared toward finding ways to help the company’s U.S. plants operate more efficiently. The results include the consolidation of some company operations and a new plant in Mexico.

Production at seven other U.S. Whirlpool plants — Evansville, Ind.; Oxford, Miss.; Clyde, Findlay and Marion, Ohio; Tulsa; and LaVergne, Tenn. — were originally expected to expand after the Mexico plant opens.

So while it’s possible that Fort Smith could lose any number of jobs, the study also indicates that jobs from some of Whirlpool’s other plants and operating facilities across the country could end up being moved to Fort Smith. Late last year, for instance, the company made two announcements that saved or added a total of 330 jobs in Arkansas.

Whirlpool decided against moving 80 jobs and its ice-maker production from Fort Smith to a plant in China, citing the study and a need to focus on cutting costs through suppliers to reduce the price of components in ice-maker assembly.

According to Mona Mendosa, a spokeswoman for the Fort Smith plant, the company still would have retained the 80 employees in other areas had the production been shifted to China.

Last November, Whirlpool announ-ced the addition of 250 jobs and a third production shift due largely to in-creased demand for side-by-side refrigerator-freezers.

So despite early indications that a large portion of the Fort Smith plant could soon be phased out in favor of a Mexican alternative, the state’s second-largest employer of manufacturing workers has indeed seen some positive findings from the Global Platform Operating Study.

Solution in Sight?

Though details are hard to come by, Whirlpool said it has kept an open line of communication with local and state officials, including the Arkansas Department of Economic Development.

Mitch Chandler, a spokesman for the ADED, said Whirlpool is a large piece of the state’s economic puzzle and that his agency is doing what it can to keep jobs in Fort Smith, though specifics were not disclosed.

“We’re happy to see that they’ve added some jobs throughout the last year and we hope that trend continues,” he said. “Whirlpool has been a great partner with Arkansas for many years and we hope that continues.”

Multiple ideas for a solution have come and gone, including federal legislation introduced by U.S. Sen. Blanche Lincoln, D-Ark., but none of the ideas would have provided a safe house for the 4,600 Fort Smith workers, according to the Fort Smith Chamber’s Manskey.

“We’re talking incentives in the ballpark of hundreds and hundreds of millions of dollars,” he said. “I think Whirlpool basically says that there’s no amount of incentives available to keep them here. You can’t really compete with other countries that have wages that are pennies on the dollar compared with what’s available here.”

Ryan, who runs the union local, said wages for 5,000 employees would cost about $15,000 per production hour in Mexico compared with $75,000 in Fort Smith.

“Until they tell us what’s going to happen, all we’re doing is trying to cut costs and narrow it down and save as much as we can here by making the margins smaller,” said Ryan. “Lean manufacturing is what we’re trying to do. Cut out all the wastes. That’s all we can really do at this point.”

The Paper, Allied-Industrial, Chem-ical and Energy Workers Union, also known as PACE, recently merged with the United Steelworkers Union. The consummation makes the USW 850,000 members strong and the largest industrial union in North America.

“It gives us a stronger voice,” he said. “I think the morale of the workers here is still good, despite not being able to see very far into the future.”

Ryan’s local is expected to change its name with the merger, but he said it will stay the same until he hears more from regional headquarters.

Dead End

Thomas Kline, a Whirlpool spokes-man with the title corporate director for global reputation, said the delay in a decision stems from being off schedule with the construction of a new Whirlpool plant in Mexico.

“In January we told our employees that there was a delay in Mexico and that we would not be able to provide any details on any potential impact at that time,” he said. “We told them we will get back to them in early 2006, possibly January. It has to do with construction being behind down there and the logistics of what it will be capable of servicing.”

Kline said Whirlpool has remained in close contact with workers at the plant and that no new information will be provided until construction of the facility in Mexico is stable and a plan of action is decided upon.

“This is a complex situation and there’s a lot at stake for everybody involved,” added Kline. “There’s just simply not many more details we have right now.”

Baldor ‘On Target’ With New Plant

Baldor Electric Co. is in the process of importing a new division that could end up adding a minor chunk of new employment to Fort Smith.

Baldor, which manufactures industrial electric motors, motor drives and generators, is in the process of relocating its linear motor manufacturing plant from Santa Clarita, Calif.

“We expect this business and the number of jobs to more than double in the next couple of years,” said John McFarland, chairman and CEO of Baldor. “Relocation of the plant is already under way and completion is expected by mid-July.”

Baldor purchased the California facility in 1998 to produce small linear motors. The company is looking to expand that sector of its business, which will be cheaper to do in Fort Smith.

The division currently has 42 employees in California, all of whom were offered relocation to Fort Smith.

“We expect some of these employees to make the move, and we are already bringing them to Fort Smith to take a look at the area,” said Roger Bullock, vice president of the company’s drives division.

But it is not likely that all of those offered relocation will accept, creating new job opportunities for Fort Smith residents.

“The jobs that aren’t filled after relocation will be open to current employees already with the company,” said Charlie Hubbard, Baldor’s director of corporate communications. “And then their former jobs would be open to prospective employees in Fort Smith.”

Hubbard said that a handful of workers from California have been to Fort Smith to see real estate and to get a feel for the city, but it’s “too early to tell how many will come and how many won’t.”

The new linear motor manufacturing plant will be located in the Baldor Drives facility across the street from the company’s corporate headquarters in Fort Smith.

“At this point, we’re right on target with our plans,” added Hubbard.

Baldor, which just celebrated its 85th anniversary in March, currently employs 1,700 in Fort Smith and about 3,800 companywide. Total sales for the company in 2004 reached $648 million.