Louisville, KY - Electrolux's $3.3 billion deal to buy General Electric's appliances division touched off a wave of questions Monday about the future of Louisville's Appliance Park and its 6,000 workers.
In announcing the sale agreement, Sweden-based Electrolux and GE executives avoided predicting what's ahead for operations in Louisville and elsewhere — except to say that Electrolux's North American headquarters would remain in Charlotte, N.C.
In an interview, Electrolux CEO Keith McLoughlin declined to estimate what the sale means to employees at Appliance Park, but he expressed confidence that the two companies would make a "powerful" combination that should strengthen the enlarged business.
"One plus one should equal three," McLoughlin said, while declining to outline specific plans for Appliance Park.
"Unfortunately, I know people want to have more answers" about jobs, he said, but the first step is to get regulatory approval for the purchase.
Leslie Branham, a quality inspector who works in Building 1 at Appliance Park, said the news of the sale has made her and co-workers "a little bit scared, a little nervous."
"We're hoping it's a positive change," said Branham, 42, of Taylorsville, Ky.
She said her husband has a good job at another company, which is reassuring, but she worries about co-workers who have a spouse also working at the park. Two paychecks tied to GE would be stressful now, she said.
Getting little information now about what's ahead for employees may be better in the long run, she said, because "I would rather they say nothing (about jobs) than say something and it's changed" later.
Press operator Ashley Snider said she has tried to think positively, but Monday was an emotional roller coaster for her and fellow workers.
"If you start freaking out, it doesn't do any good," said Snider, a single mom who lives in Shelbyville. "There's nothing we can do but do our jobs."
Chip Blankenship, Appliance Park's president and chief executive officer, said he has no idea about whether GE's local workforce will grow or shrink. But he said the fact that terms of the agreement involved a long-term licensing deal to continue the GE Appliances brand is positive — and a nod to the quality of GE's products and the local workforce.
Blankenship expressed excitement about the potential opportunities. "Now we have some clarity and purpose," he said.
In recent years, GE invested more than $1 billion to renew its domestic appliance manufacturing operation, powered by hefty federal, state and local tax incentives in the wake of the recession.
Roughly $800 million went to modernize Appliance Park, where dishwashers, hybrid water heaters, washing machines, dryers and bottom-freezer refrigerators are produced daily.
"GE has been an important part of Louisville's economy and culture for decades," Louisville Mayor Greg Fischer said in a statement. "Electrolux is a fantastic global brand that we welcome to our city. GE has made unprecedented investments in its people, innovation capabilities and manufacturing plants in Louisville in the past few years."
U.S. Rep. John Yarmuth, D-Louisville, said he's optimistic that Electrolux and the employees at Appliance Park can work together "to keep us moving forward."
Larry Hayes, secretary of the Kentucky Economic Development Cabinet, said Gov. Steve Beshear intends to speak with Electrolux officials this week and make a case for preserving and growing local operations.
"We always have concerns when there's a change in ownership," Hayes said, but the fact is that GE's operation in Louisville is profitable. "It's not as if something is broken out there."
GE's economic footprint in Louisville and the region is enormous, driving over $600 million in direct payroll and multiplier payroll annually, so any acquisition is a big cause for concern, observed Kent Oyler, chief executive officer of Greater Louisville Inc., the region's chamber of commerce.
The fact that Electrolux designs appliances and handles its North American research and development for laundry products in Charlotte, Oyler said, raises questions about what's ahead for design engineers and other professionals who handle similar functions in Louisville.
Global research on cooking products has been centralized at Appliance Park, where GE maintains a chef and state-of-the-art kitchen. But Electrolux's research and development for cooking products is in Springfield, Tenn., 162 miles south of Louisville.
In 2011, Electrolux expanded that plant at a cost of $5 million and added 75 engineering and technical jobs.
GE's local research and development jobs "are good jobs and we need to keep them here," Oyler said, adding that 20 local companies also supply $200 million in parts and services to the park.
That network is strong, and "we would hope they get a chance to supply to Electrolux," Oyler said.
Jerry Carney, a recently retired president of IUE Local 761, which represents the majority of GE factory workers at Appliance Park, said the focus should be on persuading Electrolux to stay in Louisville.
"This could be a great place to work for another 50 years," he said.
In the last year, GE has added 2,200 factory workers, Carney said. "GE has been a wonderful employer and gave a lot of people good livelihoods. I'm confident we can continue that with Electrolux."
Electrolux, which includes Frigidaire among its brands, was seen as the leading contender to acquire the operations at Appliance Park in recent weeks. If the deal is approved by regulators, it would represent the single-largest purchase for Electrolux, which is looking to expand its sales beyond Europe.
Electrolux's North American headquarters have been based in Charlotte since 2010.
Before the GE deal, Electrolux pledged to grow its Charlotte workforce from 925 workers to 1,600 in two years, the Charlotte News & Observer reported Monday.
McLoughlin, Electrolux's CEO, said during Monday's interview that during a visit this summer to Appliance Park, he and other executives were impressed with GE's facilities and staff devoted to research, development and innovation. "That's going to be a great addition to our team," he said.
In the future, the new Electrolux will push growth — in innovation, in products and service, he said, because "we're in a very competitive marketplace."
General Electric doesn't break out its appliance business earnings, but the combined Appliance and Lighting unit had $381 million in profit in 2013, on sales of $8.3 billion.
"GE Appliances is a great business and we are proud of the role it has played in GE's history," said Jeff Immelt, chairman and chief executive of General Electric — and former head of Appliance Park. "GE Appliances' people, valuable home appliances brand, products, distribution, and service capabilities make it a perfect fit with Electrolux and its goal of accelerating growth in the U.S."
GE has been looking to pare some of its many businesses, and Appliance and Lighting is the third-smallest of the conglomerate's seven industrial businesses based on revenue. GE is trying to focus its industrial efforts on products such as jet engines, power turbines and oil industry equipment.
"This transaction is consistent with our strategy to be the world's best infrastructure and technology company," Immelt said.
The acquisition is a result of an expanding global appliance industry, Dinesh Kithany, senior analyst for IHS, a global consulting firm, said in a report. The move "shows good signs of recovery and growth" in the North American appliance market.
For example, global home appliance shipments are up 4.8 percent this year, on the heels of a 4.5 percent increase in all of 2013.
GE Appliance employs about 12,000 workers, half of which are located at Appliance Park. Other major GE factories are in LaFayette, Ga., and Bloomington, Ind.
But many of those factories are state of the art. After failing to sell in 2008, GE invested more than $1 billion into its appliance business, replacing aging equipment and training employees in new technology.
A modernized factory and workforce are likely part of what made the company an attractive acquisition for Electrolux, which recently opened an oven factory in Memphis, Tenn., and operates factories in Anderson, S.C., and St. Cloud, Minn. GE's workforce is unionized, with workers in Louisville represented by several unions. Electrolux workers are non-union.
The acquisition could affect 20,000 GE retirees, including James Pierce, 77, of Leitchfield, Ky. He and his wife, Linda, 72, rely on his benefits to make medication affordable.
"I don't know what we would do if they messed our pension up," Linda Pierce said, adding her arthritis is eased by an expensive medication she obtains via GE insurance for just a $35 co-pay for a 90-day supply.
"We have always been scared whenever anything comes up with GE."
Wayne Salsman, 64, left Appliance Park in 2007 with full retirement benefits as GE winnowed its blue collar workforce.
From his mobile home off Preston Highway, he said he lives comfortably on a combined GE pension and Social Security income of $36,000 annually.
"I am curious to see how it works," Salsman said of the sale. "Electrolux builds a good product."
Electrolux at a glance
Headquarters: Stockholm
North American HQ: Charlotte, N.C., with plants in Kinston, N.C.; Anderson, S.C.; Springfield, Tenn.; Memphis, Tenn.; St. Cloud, Minn. and Juarez, Mexico.
Employees: 61,000
Products: Large appliance, including refrigerators, freezers, wall ovens, ranges, dryers, washers, dishwashers, vacuum cleaners, coffee makers and slow cookers.
The Deal
• Electrolux will acquire General Electric's Appliances division for $3.3 billion.
• The transaction includes a long-term agreement to continue use of the GE Appliances brand.
• Sale includes GE's production facilities in Louisville, LaFayette, Ga., Bloomington, Ind., Decatur, Ala., and Selmer, Tenn.
• Following expected regulatory approval, the transaction should close in 2015.