Friday, October 14, 2016

Maytag, Mexico and Nafta

I decided to put the word NAFTA into the subject you would be forewarned about this blog post.

It is bordering on "political". A land I try to NEVER EVER visit...

But, in the last week or so, as I was writing a few posts about washing machines, I got a little misty about the way things "used to be". I mean, honestly -- when my mother died, her perfectly good washing machine was 30 years old. Remember those good old days??

Here in Iowa, we take our washing machines very seriously. Maybe because Maytag was an Iowa corporation. Remember those commercials about the lonely Maytag repair man? THAT WAS REAL, PEOPLE. For over a hundred years, Maytag proudly built a quality washing machine that housewives all over America expected to last for decades.  Newton, Iowa, was Maytag headquarters since 1893.

But -- that was then. This is now. Whirlpool bought Maytag, and largely thanks to Nafta, they moved their manufacturing to Mexico. As many as 16,000 American jobs -- many in Newton, Iowa and Galesburg, Illinois -- were lost forever.

Maytag was easy prey for Whirlpool is because -- guess what? They jumped into the FRONT LOADING washing machine business...and it was a bad idea right out of the gate.

In 1997 or so -- Maytag developed the Maytag Neptune line of front-load washers. A matching dryer was introduced to accompany the expensive new washer. The company claimed that the new Neptune model saved energy costs over traditional washer/dryer sets. The company was slow to react to customer complaints regarding its Neptune washer and dryer line (labeled the Stinkomatic by dissatisfied customers because they would become moldy in a way that could not be easily cleaned), resulting in damage to the company's reputation and a $33.5 million payout to settle several class-action lawsuits arising from the Neptune problems. By 2005, Maytag's market share had declined to all-time lows, sales were flat, and customer satisfaction surveys ranked Maytag near the bottom of the appliance field. The problems with the Neptune line continued; in 2007, 250,000 Neptune washing machines became part of a nationwide safety recall.

On April 1, 2006, Whirlpool completed its acquisition of the Maytag Corporation. In May 2006, Whirlpool announced plans to close the former Maytag headquarters office in Newton. Most Maytag employees were terminated, but the board of directors of Maytag all received five years' severance pay. Maytag chairman and CEO, Ralph F. Hake, presided over the sale of Maytag, and cut a pretty good deal for himself -- retiring to Las Vegas via his golden parachute of $10 million.

This post is like one of those boring books Lilly complains about "there aren't any pictures, Grandma...

I'm simplifying things....and there's much I don't understand. But it is very interesting to me when I consider how something that seemed strictly political, and therefore -- NOT MY PROBLEM (Nafta) -- ended up impacting my peaceful laundry life...

If you want to see how Galesburg and Mexico have fared since the Maytag exodus -- check out this article by a Professor and some think-tank types.

1 comment:

  1. Right up there with mattresses. Remember, they used to last over 20 years. In fact, we just replaced our 25 year old mattress. Now, mattresses last less than 10 years. Sad.