Return to Nicholas Johnson's Main Web Site

Return to Nicholas Johnson's Coralville Rain Forest Web Site

Despair in Newton

Iowa Town Sustained by Maytag Suffers Serious Blow
Whirlpool Cuts 4,500 Jobs

Associated Press

The Gazette

May 11, 2006

[Note: This material is copyright by The Gazette, and is reproduced here as a matter of "fair use" for non-commercial, educational purposes only. Any other use may require the prior approval of The Gazette.]

    Newton, the central Iowa town that became synonymous with Maytag Corp., was stunned Wednesday to learn that it will lose its longtime major employer.

    Whirlpool Corp., which acquired the Newton-based appliance maker in April, said it would close Maytag’s corporate headquarters and its washer-dryer plant in 2007, eliminating about 2,000 jobs in the community.

    The Newton plant is one of three former Maytag washer-dryer plants slated for closing, the others being in Herrin, Ill., and Searcy, Ark. Washer and dryer manufacturing will be moved to Whirlpool plants with excess capacity in Clyde, Ohio, and Marion, Ohio.

    Benton Harbor, Mich., the longtime headquarters of Whirlpool, will benefit from the consolidation of headquarters functions.

    Dave Russell, 45, who has worked at the Newton laundry factory for 22 years, worried about how he, his wife and three children would go on.

    ‘‘It’s gonna hurt severely,’’ he said. ‘‘It’s not only devastating, but I’m sure it will, basically, turn into a very spiteful kind of feeling.’’

    Russell said that for many of his co-workers, Maytag was the biggest part of their lives.

    ‘‘Some people don’t have any other type of life,’’ he said.

    A total of 4,500 former Maytag jobs will be eliminated, but Whirlpool will create 1,500 jobs at the other locations. The closings will cost Whirlpool more than $175 million in termination and relocation costs.

    Job cuts often give spring to a company’s stock price on Wall Street, but Whirlpool’s shares fell 92 cents at $92.17 on the New York Stock Exchange.

    ‘‘This is what everybody expected, and it was built into the stock price,’’ said Eric Brossard, a stock analyst at FTN Midwest Research.

    Brossard said major job cutbacks were ‘‘part of the deal’’ in Whirlpool’s Maytag acquisition.

    Iowa Gov. Tom Vilsack said that offering more than $100 million and a new modern factory was not enough to persuade Whirlpool to keep jobs in central Iowa.

    The state had offered to build a state-of-the-art plant for Whirlpool, but Vilsack said the company declined, saying it already had such a plant in Ohio.

    Vilsack said the state is prepared to put $10 million forward for Newton and Jasper County to help them fill the Maytag plants or build a facility to bring jobs to the community.

    Newton Mayor Chaz Allen said the community would begin working immediately with displaced workers.

    ‘‘Today is a disappointment,’’ he said. ‘‘A lot of people put a lot of time into the retention of jobs.’’

    Dan Dannels, 51, a Maytag employee for more than 29 years, said knowing for sure what will happen is a relief.

    ‘‘It gives a guy something to think about,’’ he said. ‘‘Before, the not knowing was worse.’’

    He said workers were called into a meeting Wednesday morning and read a letter by their department head about the plant closing.

    ‘‘They told us to go home and be with our families,’’ said Dannels, a production machinist whose father retired from Maytag.

    David Swift, president of Whirlpool’s North American operations, called the cuts a ‘‘difficult, but necessary step that will further improve the cost-efficiency of our laundry operations.’’

    Whirlpool said it would review for potential sale its Hoover floor care operations, Dixie-Narco vending operations, Jade commercial appliance business and Amana commercial microwave business.