By Kevin Meyer
We’ve been following the story of Whirlpool’s Evansville refrigerator factory for several years. Back in August of 2006 we told you about one round of layoffs.
The first was Whirlpool's announcement that they will lay off between 300 and 500 workers at the Evansville, Indiana plant. This is due to "continuing efforts to adjust production to market demands." But the line that really explains what is probably going on: "the company will continue to have committees explore lean manufacturing or efficiency practices."
That was in contrast to Sealy who on nearly the same day said something a bit different: "Sealy will employ lean manufacturing techniques in the design and operation of the plant." There’s a difference between “committees to explore” and “will employ.” That difference began to play out a few months later in December.
A few days before Christmas I received a long email with the subject of "Help me to understand." It was from a worker a Whirlpool's Evansville factory, who was among 500 people laid off earlier in the month. To avoid causing him any further grief, I'll just call him "Bob."
500 people, including the very real human named Bob.
Whirlpool's rationale for the layoff is that demand for top-mount freezers has been shifting to side-by-side models, which aren't made at Evansville. However, at the same time Whirlpool is adding over a thousand new jobs existing factories in Clyde and Mason, Indiana, as well as Amana, Iowa. But those jobs need to be netted against almost a thousand jobs soon to be lost at the Fort Smith, Arkansas plant due to the rapid expansion of the Ramos Arizpe plant in Mexico.
So let me get this straight… tens of thousands of years of manufacturing knowledge are being disposed of in Evansville and Fort Smith, huge hiring and training costs in Clyde, Mason, and Amana to bring workers up to a few weeks of manufacturing knowledge, it's "too expensive to retool" the Evansville plant but easy to swallow a hundred million bucks of severance charges (not to mention what the taxpayers shoulder). A few bucks an hour savings in Mexico is worth a much longer multinational supply chain that requires more oversight, longer transportation of thousands of heavy objects a day, far more training expenditure to handle a foreign language in an area notorious for extremely high turnover, and the resulting quality problems from such a lack of long-term manufacturing knowledge.
That is some wacky accounting. Actually it’s traditional accounting.
He went on to describe the environment at Whirlpool, which played right into the “committees to explore” versus “will employ” difference.
Bob's first email to me described several situations that unfortunately make perfect sense when you think about the statement in their August press release:
- "Management is consumed with operating like Toyota. I heard it everyday for more than a two years."
- "Management was not willing to make the necessary changes in conjunction with their employees."
- "Meetings, meetings, meetings all day long. All that really gets accomplished is a re-hash of the previous meeting."
- "Waste is abundant. They talk about it being a problem but every year it seemed to multiply."
Yes, that sounds like a lot of talking, committees, and meetings with no action.
So what would you expect after a couple years of ignoring the value of knowledge, obsessing about committees, and basically doing everything except focus on creating value instead of reducing cost? Yep, you guessed it. Thanks again to “Bob” we have the final obituary.
Indiana will lose another industrial icon next year when Whirlpool closes its Evansville refrigerator plant, wiping out 1,100 jobs. Known a half-century ago as the world refrigerator capital, Evansville will see its last remaining refrigerator plant close next summer when Whirlpool moves production to Mexico.
Rest in peace Whirlpool of Evansville. With a management team focused on the cost of hands instead of the value of brains we’ll probably be saying the same for Whirlpool as a whole in a few years.