Shareholders Chide Maytag on Move Plan Thursday May 12, 5:20 pm ET By David Pitt, Associated Press Writer Maytag Shareholders Chide Company for Plan to Possibly Move Jobs Overseas HDI MYG 47.00 10.48 0.00 0.00 News News
NEWTON, Iowa (AP) -- Maytag Corp. Chief Executive Ralph Hake took harsh criticism from shareholders Thursday at the company's annual meeting, but reaffirmed a plan that may include closing the company's flagship factory in this central Iowa town and moving the jobs overseas. ADVERTISEMENT
Shareholders complained that exporting jobs is bad for Maytag's corporate image.
"Shifting production offshore will harm Maytag's brand name in the United States, where significant sales take place," said Joe Cooper, a shareholder who owns nearly 8,000 shares.
Cooper suggested that Maytag look at motorcycle producer Harley Davidson Inc. as an example of a company that was near bankruptcy in the 1980s and returned to profitability after it focused on becoming an American-made classic.
Cooper said moving jobs to Mexico or overseas leaves U.S. workers unemployed or forced into low-paying jobs, leaving them unable to purchase Maytag's wide array of home appliances.
"Have you thought ahead? Who's going to buy those products when we're working at McDonald's?" Cooper said.
Hake responded that moving jobs to Mexico and outsourcing agreements with Asian companies are part of the company's strategy to compete with low-cost imported appliances.
"We must do more to meet fierce offshore competition," he said.
Hake denied reports that the company was building a new laundry plant in Reynosa, Mexico, and said an industry analyst's discussion of bankruptcy for Maytag was inappropriate.
"We have sufficient cash resources to meet all our growth areas, to pay our suppliers, to take care of our employees. That is not the issue. The issue is earnings, margins and profitability," Hake said.
He said the company is determining where a line of newly designed front-load washers and dryers will be built.
"What we want the union leadership and membership here to know is we would like to do that in Newton, but that they have other internal competition for that product," he said. "If they choose to maintain their current wage benefit and work rules ... we will not be able to make that investment here."
Hake said he is talking with union officials about the future of the Newton plant, which employs about 1,200 workers, and expected that production would stay at least through the end of the current contract in 2008, but the number of jobs could not be guaranteed.
At the same time, he reassured shareholders that Maytag plans to maintains its headquarters in the town where it was founded 112 years ago.
"As long as I'm here, the headquarters is going to be here," he said. "I believe it's an important component how this company functions, the ethic of the company, how people feel about it."
He said he was taking full responsibility for the poor performance of the company. Maytag shares fell 1 cent, to close at $10.48 Thursday on the New York Stock Exchange, versus a peak of more than $70 in 1999.
"I realize action speaks louder than words. We have much to prove in coming years," Hake said.
Also Thursday, Maytag's board voted to cut the company's dividend by half, to 9 cents per share. The company said it made the decision so it would have more money to pay for its restructuring plans and to reduce debt. The dividend is payable June 15 to shareholders of record June 1.
Shareholders voted for annual election of board members, a proposal that was approved by 86 percent of shareholders and their proxies.
"Election of all directors annually ensures the company is managed in a manner that is in the best interest of shareholders," said Sue Wilson, a representative of the Machinists' union.
Wilson said if the company had had annual elections previously, "it would not have taken such a long time for the directors to ensure better management of the company."
Maytag produces appliances under the Maytag, Amana, Hoover, Jenn-Air and Magic Chef brand names.
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