Maytag Corporation

403 West Fourth Street North
Newton, Iowa 50208
U.S.A.
(515) 792-7000
Fax:(515) 791-8793
Web site: http://www.maytag.com

Public Company
Incorporated: 1925 as Maytag Company
Employees: 20,464
Sales: $3.00 billion (1996)
Stock Exchanges: New York
SICs: 3581 Automatic Vending Machines; 3582 Commercial Laundry, Dry Cleaning & Pressing Machines; 3631 Household Cooking Equipment; 3632 Household Refrigerators & Home & Farm Freezers; 3633 Household Laundry Equipment; 3635 Household Vacuum Cleaners; 3639 Household Appliances, Not Elsewhere Classified

Maytag Corporation is one of the leading appliance manufacturers in the United States. It sells washers, dryers, ovens, refrigerators, and dishwashers under both premium brands (Maytag and Jenn-Air) and mid-to-lower price value brands (Magic Chef and Admiral). The Maytag brand is also used on coin-operated and commercial laundry equipment. The company also sells Hoover vacuum cleaners and other floor-care products in North America; Dixie-Narco vending machines and glass-front coolers; and commercial ovens, fryers, and charbroilers for the food service industry under the Blodgett Ovens, Piteo Frialator, MagiKitch’n, and Blodgett-Combi Ovens brands. More than 90 percent of Maytag’s revenues are derived in North America; Maytag International is the company’s export arm, while a joint venture produces the RSD brand washing machine in China. Maytag’s reputation rests on the dependability of its machines, and the Maytag “lonely repairman”—featured in company advertising since 1957— has become an American icon.

Dependability Became Company Watchword Early On

Maytag Company was started by Frederick Louis Maytag and three partners in 1893 to produce threshing-machine band cutters and self-feeder attachments. The company soon began to produce other pieces of farm machinery, not all of it top quality: its corn husker, called the Success, caused the partners many problems because of its poor quality, and farmers often called Maytag out to their fields to fix the Success. When Maytag bought out his partners in 1907, he had learned his lesson; a Maytag product would always be dependable.

Maytag built his first washer in 1907, to bring his agricultural-equipment company through the slow-selling season as well as to fill a need for home-use washing machines. Home washing machines were already on the market, but Maytag wanted to make them more efficient. His first washer, called the Pastime, revolutionized washing. It had a cypress tub with a hand crank that forced the clothes through the water and against corrugated sides. The washer was a hit, and Maytag continued to improve on it. In 1911 he brought out the first electric washing machine, and in 1914 he introduced the gas-engine Multi-Motor for customers without access to electricity. The first aluminum washer tub was brought out in 1919, and the Gyrofoam, the first washer to clean with only water action, rather than friction, entered the marketplace in 1922. This revolutionary washer was the first with an agitator at the bottom of the tub instead of the top. This change allowed for the elimination of friction. Sales of this machine pushed Maytag, previously the 38th-largest U.S. washing machine company, into first place.

At this juncture, the farm-implement portion of the business was discontinued. L. B. Maytag, son of the founder, became president of the company in 1920. Under his direction the company began to market nationally. In 1925 Maytag incorporated and was listed on the New York Stock Exchange. In 1926 another Maytag son, E. H. Maytag, assumed the presidency and held the position until his death in 1940. Over the next several years, a number of interesting attachments were offered on washers. A butter churn and a meat grinder were two options offered to buyers. By 1927 Maytag had produced one million washers.

During the Great Depression, Maytag held its own; the company even made money. At his father’s death in 1940, Fred Maytag II, grandson of the founder, took over the presidency. During World War II, the company made only special components for military equipment. In 1946 production of washers started up again, and in 1949 the first automatic washers were produced in a new plant built for that purpose. In 1946 Maytag began marketing a line of ranges and refrigerators made by other companies under the Maytag name. During the Korean War the company again produced parts for military equipment, although washer production continued.

Reputation as Premium Brand Secured in Postwar Years

During the 1950s the appliance industry grew rapidly. Maytag first entered the commercial laundry field at this time, manufacturing washers and dryers for commercial self-service laundries and commercial operators. During these years full-line appliance producers began targeting Maytag’s market. Full-line operators—such as General Electric, Whirlpool, and Frigidaire— provided washers and dryers, refrigerators, stoves, and other appliances. Maytag was much smaller than the full-line producers. It limited itself to the manufacture of washers and dryers, which it marketed with ranges and refrigerators built by other companies, and established its reputation as a premium brand.

The ranges and refrigerators Maytag had been marketing with its washers and dryers were dropped in 1955 and 1960, respectively, but the company soon reentered the field with its own portable dishwasher and a line of food-waste disposers in 1968. When Fred Maytag II, the last family member involved in the company’s management, died in 1962, E. G. Higdon was named president and George M. Umbreit became chairman and CEO.

By the late 1970s over 70 percent of U.S. households were equipped with washers and dryers. Laundry-equipment sales had peaked in 1973 and the lifetime of such equipment was 10 to 12 years—often longer for Maytag. To help boost sales, prices became more competitive. Chairman Daniel J. Krumm, who had been elected president in 1972, set the company in a new direction in 1980 when he made the decision to make Maytag into a full-line producer, eventually selling a wide range of major appliances rather than just washers, dryers, and dishwashers.

Transformed into Full-Line Producer in the 1980s

The expansion was effected by acquisition. The first purchase was Hardwick Stove Company in 1981, followed in 1982 by Jenn-Air Corporation, the leading manufacturer of indoor electric grills with stove-top vent systems. These products added a full line of gas and electric cooking appliances to the Maytag line and were sold under the Maytag umbrella. Maytag Company intended this diversification to increase its sales in both the new-home market as well as the replacement market; companies make bids to developers based on kitchen packages, not individual components. The larger replacement market had also changed: large chains selling several brands side by side dominated the market. Chairman Krumm felt the diversification was necessary despite the cyclical nature of the building industry.

The new strategy paid off. Consumers began to buy again, and Maytag’s sales increased in all areas in 1983. In May 1986 the move toward becoming a full-line producer continued with the purchase of the Magic Chef group of companies in a $737 million stock swap. Magic Chef’s Admiral brand gave Maytag a presence in the refrigerator and freezer sector. Besides Admiral refrigerators, Magic Chef also produced other home appliances under the names Toastmaster, Magic Chef, and Norge. The merger gave Maytag the fourth-largest share of the U.S. appliance market. It also brought vending machine manufacturer Dixie-Narco Inc., with its number one position in soft-drink vending equipment, into the fold.

The Magic Chef purchase also helped protect Maytag from the threat of takeover. As the industry consolidated and other companies began to sell higher-priced appliances—Maytag’s traditional forte—Krumm responded by moving into the medium-priced market. Magic Chef was Maytag’s first step into that market.

The merger of Maytag and Magic Chef doubled Maytag’s size and necessitated a restructuring. Maytag Company’s name was changed to Maytag Corporation and three major appliance groups were formed: the Maytag appliance division, Magic Chef, and the Admiral appliance division (the Admiral division was consolidated into the other groups in 1988). Hardwick Stoves and Jenn-Air were included in the Maytag division. The president of Magic Chef remained as head of that division, which included Toastmaster—sold in 1987—Dixie-Narco, and Magic Chef air conditioning operations. The Admiral division included Norge and Warwick product lines, part of the old Magic Chef. Each division was given a great deal of autonomy. Other mergers within the industry during 1986 resulted in four companies—Whirlpool, General Electric, White Consolidated Industries, and Maytag—controlling 80 percent of the industry.

Company Perspectives:

Maytag Corporation designs, builds, and markets products that make life easier, simpler, and more convenient. With a heritage of more than 100 years and a name synonymous with dependability, Maytag has evolved into a corporation built on great brands, great products, great distribution, and strong financial discipline. Maytag is a leading producer of premium brand major appliances, commercial and coin-operated laundry equipment, floor care products, and soft-drink vending machines. The corporation’s businesses are linked through a strategy based on brand strength, product innovation, and dependability in meeting consumer needs.

By the late 1980s Krumm was ready to move Maytag into foreign markets. With the aim of being a European competitor before the unification of the European Economic Community in 1992, Maytag bought Chicago Pacific Corp. in early 1989 for $961 million. The primary reason for this purchase was Chicago Pacific’s Hoover division. Hoover produced and sold high-quality washers, dryers, refrigerators, dishwashers, and other products primarily in Great Britain and Australia, but also in continental Europe. It also sold vacuum cleaners in the United States, a new product for Maytag. (Chicago Pacific also owned furniture operations, which Maytag sold later in 1989 to Ladd Furniture for $213.4 million.) Another reason for the Chicago Pacific purchase was to further ward off takeover. The $500 million debt the company assumed with the acquisition helped make the company less attractive to raiders. Meanwhile, 1989 also saw the debut of the first refrigerators bearing the Maytag brand.

1990s Retrenchment

May tag’s acquisitions spree led directly to a troubled period in the early 1990s. Profits declined each year from 1990 to 1992 as the company was hit hard by the recession and the increased competition that it engendered, and was further weakened by a continuing high debt load. The acquisition of Hoover was turning into a near-disaster as the European operations were in the red year after year, a situation made even worse in 1992 when Hoover Europe made a serious miscalculation in offering two free transatlantic airline tickets to anyone buying a Hoover product in the United Kingdom for as little as $165. More than 220,000 people responded to this almost-too-good-to-be-true deal, leading not only to a financial folly but also to a near public relations disaster when the company delayed getting tickets to people claiming them, as well as to litigation that continued for years to come. The fiasco led to the firing of three top executives at Hoover Europe, as well as Maytag being forced to take a $30 million charge in 1993 to cover the costs of the ill-fated promotion.

In the midst of these troubles, Krumm—the architect of the 1980s expansion—retired in late 1992, and was succeeded as chairman and CEO by Leonard A. Hadley, who had been company president. It did not take Hadley long to determine that it would be best in the long run if Maytag pulled back from its overseas ambitions and concentrated on putting its North American house in order. Hoover Europe alone had lost a total of $163 million from the date of its purchase by Maytag through 1994. In late 1994 Maytag sold its Hoover Australia unit to Southcorp Holdings for $82.1 million in cash, resulting in an after-tax loss of $16.4 million. In the second quarter of the following year, Maytag sold Hoover Europe to Italian appliance maker Candy SpA for $164.3 million in cash, resulting in an after-tax loss of $135.4 million. Maytag retained the Hoover North America operation. Proceeds from these sales were largely used to pay down the company’s long-term debt, which stood at just $488.5 million by 1996, compared to nearly $800 million in the early 1990s.

By 1996, Maytag was on the upswing. Although revenues of $3 billion were slightly lower than at the beginning of the decade in part due to the divestments of 1994 and 1995, the net income of $162.4 million represented a high point for the decade so far. That figure would have been even higher, if it were not for the $24.4 million restructuring charge the company took early that year in connection with the consolidation of its two separate major appliance operations into a single operation called Maytag Appliances, which was handed responsibility for all sales, marketing, manufacturing, logistics, and customer service functions for the Maytag, Jenn-Air, Admiral, and Magic Chef brands. Freed from its overseas headache, Maytag also began to revitalize its appliance lines through record 1996 capital spending of $220 million, much of which went toward new product development and improvements in existing lines. Among new products introduced were washers and dryers tagged with a new brand: Performa by Maytag; these were priced lower than Maytag brand products but carried some of the Maytag cachet. On the high end of the scale, the company jumped onto the front-loading washer bandwagon with the March 1997 debut of the Neptune high-efficiency model. In the refrigerator arena—Maytag’s weakest product line—a three-year, $180 million redesign effort culminated with the April 1997 introduction of a new generation of Maytag, Jenn-Air, Magic Chef, and Admiral models that had increased capacity, were quieter, included several pull-out features, and boasted of faster temperature recovery following the opening of the freezer or refrigerator door. Some of the credit for these innovations went to Lloyd D. Ward, whom Hadley had recruited from PepsiCo’s Fri to-Lay unit in early 1996 to become executive vice-president of Maytag and president of Maytag Appliances—and perhaps heir apparent to Hadley.

Despite the heavy investments in North America, Maytag had not entirely given up on overseas growth. Like numerous other companies in the mid-1990s, Maytag decided to move into the burgeoning Chinese market. It did so in September 1996 with an initial $70 million investment to set up a series of joint ventures with the Hefei Rongshida Group Corporation, the leading washing machine firm in China, marketing its products under the well-known RSD brand. Maytag initially teamed with Hefei Rongshida in the production and marketing of washing machines, but planned to extend the venture into refrigerators during a second phase.

Further evidence of the stronger financial position of Maytag came with the $93.5 million purchase of G.S. Blodgett Corp. in late 1997. The privately held Blodgett—which traced its origins to the Blodgett Oven Co. founded in Burlington, Vermont, in 1848—was a manufacturer of commercial ovens, fryers, and charbroilers for the food service industry, thus representing a logical extension of Maytag’s product lines and customers. Blodgett was the company’s first acquisition since that of Chicago Pacific in 1989.

The Maytag Corporation of the late 1990s was stronger than it had been in years. Through heightened new product introductions; strategic, manageable acquisitions; and selective overseas ventures the company was positioning itself for steady, profitable growth, while at the same time maintaining its reputation for quality.

Principal Subsidiaries

G.S. Blodgett Corp.; D.N. Holdings, Inc.; Dixie-Narco Inc.; Maytag Foreign Sales Corporation (Virgin Islands); The Hoover Company; Maytag International Inc.; Maharashtra Investment, Inc.; Hoover Mexicana S.A. de C.V. (Mexico); Hoover Holdings Inc.; Juver Industrial S.A. de C.V. (Mexico); Maytag International Limited (U.K.); Maytag Ltd. (Canada); Maytag Worldwide N.V. (The Netherlands Antilles); AERA Limited (Hong Kong); Maytag International Investments, Inc.; Maytag International Investments B.V. (The Netherlands Antilles); Hefei Rongshida Co. Ltd. (China; 50.5%).

Further Reading

“At 80, Maytag Feels Terrific,” Appliance Manufacturer, November 1987, p. 28.

Bremner, Brian, and Mark Maremont, “Maytag’s Foreign Fling Isn’t Much Fun After All,” Business Week, September 4, 1989, pp. 32-33.

Bulkeley, William M., “Wring in the New: Washers That Load from Front Are Hot,” Wall Street Journal, April 29, 1997, pp. Al, A5.

Byrne, Harían S., “Maytag Corp.: Hope for Growth Lies in European Operations,” Barren’s, May 25, 1992, pp. 35-36.

_____, “The Predator or the Prey?,” Barron’s, March 3, 1997, pp. 22, 24.

_____, “Remaking Maytag,” Barron’s, August 21, 1989, pp. 12-13.

David, Gregory E., “Breaking the Spell,” Financial World, May 10, 1994, pp. 34, 36.

Dubashi, Jagannath, “Taken to the Cleaners,” Financial World, August 4, 1992, p. 28.

Geisi, Steve, “Maytag Revs $35M in Product Noise,” Brandweek, February 17, 1997, pp. 1, 6.

_____, “Spin-Cycle Doctor,” Brandweek, March 10, 1997, pp. 38-40.

Gold, Howard, “Maytag Steps Out: Boxed in for Years in Its Traditional Markets, Maytag Is Starting to Behave in an Uncharacteristically Venturesome Way,” Forbes, December 17, 1984, p. 96.

Hannon, Kerry, “Damned If You Do . . .,” Forbes, March 20, 1989, p. 201.

Harris, John, “Wake Up, Maytag Man!,” Forbes, November 13, 1989, pp. 308, 310.

Hill, Andrew, and Michael Cassell, “Candy Pulls Hoover Away from the Mangle,” Financial Times, May 31, 1995, p. 21.

Hillinger, Charles, “Washdays, Birthdays: Maytag Notes 80 Years,” Los Angeles Times, May 8, 1987.

Hoover, Robert, and John Hoover, An American Quality Legend: How Maytag Saved Our Moms, Vexed the Competition, and Presaged America’s Quality Revolution, New York: McGraw-Hill, 1993, 239 p.

“In Pursuit of Quality,” Appliance Manufacturer, November 1987, p. 38.

Kelly, Kevin, Fred Guterl, and Roon Lewald, “Can Maytag’s Repairman Get Out of This Fix?,” Business Week, October 26, 1992, pp. 54-55.

“Maytag: Wizard of White Goods,” Dun’s Business Month, December 1985, p. 34.

Quintanilla, Carl, “Lloyd Ward Puts a New Spin on Maytag,” Wall Street Journal, November 26, 1996, pp. Bl, B8.

Remick, Norman C., Jr., “Maytag: A China Connection,” Appliance Manufacturer, February 1997, p. G16.

The Spirit of Maytag: 100 Years of Dependability: 1893-1993, Newton, Iowa: Maytag Corporation, [1993].

Upbin, Bruce, “Global, Schmobal,” Forbes, March 10, 1997, pp. 64, 66.

—Vera A. Emmons

—updated by David E. Salamie

Maytag Corporation

2000 North M-63
Benton Harbor, Michigan 49022-2692
U.S.A.
Telephone: (269) 923-5000
Fax: (269) 923-5443
Web site: http://www.maytag.com

Division of Whirlpool Corporation
Incorporated: 1925 as Maytag Company
Employees: 20,870
Sales: $4.9 billion (2005)
NAIC: 335224 Household Laundry Equipment Manufacturing; 335221 Household Cooking Appliance Manufacturing; 335222 Household Refrigerator and Home Freezer Manufacturing

Maytag Corporation, purchased by Whirlpool Corporation in 2006, manufactures washers, dryers, refrigerators, ranges, cooktops, irons, freezers, wall ovens, microwaves, disposers, dishwashers, central heating and cooling, and water heaters. In 2005, its Home Appliances business segment was responsible for over 95 percent of company sales. Its products are sold under the Maytag, Amana, Hoover, Jenn-Air, and Magic Chef brand names. Whirlpool secured its position as the leading home appliance manufacturer in the United States after its acquisition and integration of Maytag. A well-known and successful company since the late 1800s, Maytag will continue to operate as a brand of Whirlpool.

ORIGINS

Maytag Company was started by Frederick Louis Maytag and three partners in 1893 to produce threshing-machine band cutters and self-feeder attachments. The company soon began to produce other pieces of farm machinery, not all of it top quality: its corn husker, called the Success, caused the partners many problems because of its poor quality, and farmers often called Maytag out to their fields to fix the Success. When Maytag bought out his partners in 1907, he had learned his lesson; a Maytag product would always be dependable.

Maytag built his first washer in 1907, to bring his agricultural-equipment company through the slow-selling season as well as to fill a need for home-use washing machines. Home washing machines were already on the market, but Maytag wanted to make them more efficient. His first washer, called the Pastime, revolutionized washing. It had a cypress tub with a hand crank that forced the clothes through the water and against corrugated sides. The washer was a hit, and Maytag continued to improve on it. In 1911 he brought out the first electric washing machine, and in 1914 he introduced the gas-engine Multi-Motor for customers without access to electricity. The first aluminum washer tub was brought out in 1919, and the Gyrofoam, the first washer to clean with only water action, rather than friction, entered the marketplace in 1922. This revolutionary washer was the first with an agitator at the bottom of the tub instead of the top. This change allowed for the elimination of friction. Sales of this machine pushed Maytag, previously the 38th-largest U.S. washing machine company, into first place.

At this juncture, the farm-implement portion of the business was discontinued. L. B. Maytag, son of the founder, became president of the company in 1920. Under his direction the company began to market nationally. In 1925 Maytag incorporated and was listed on the New York Stock Exchange. In 1926 another Maytag son, E. H. Maytag, assumed the presidency and held the position until his death in 1940. Over the next several years, a number of interesting attachments were offered on washers. A butter churn and a meat grinder were two options offered to buyers. By 1927 Maytag had produced one million washers.

During the Great Depression, Maytag held its own; the company even made money. At his father's death in 1940, Fred Maytag II, grandson of the founder, took over the presidency. During World War II, the company made only special components for military equipment. In 1946 production of washers started up again, and in 1949 the first automatic washers were produced in a new plant built for that purpose. In 1946 Maytag began marketing a line of ranges and refrigerators made by other companies under the Maytag name. During the Korean War the company again produced parts for military equipment, although washer production continued.

PREMIUM BRAND IN POSTWAR YEARS

During the 1950s the appliance industry grew rapidly. Maytag first entered the commercial laundry field at this time, manufacturing washers and dryers for commercial self-service laundries and commercial operators. During these years full-line appliance producers began targeting Maytag's market. Full-line operators—such as General Electric, Whirlpool, and Frigidaire—provided washers and dryers, refrigerators, stoves, and other appliances. Maytag was much smaller than the full-line producers. It limited itself to the manufacture of washers and dryers, which it marketed with ranges and refrigerators built by other companies, and established its reputation as a premium brand.

The ranges and refrigerators Maytag had been marketing with its washers and dryers were dropped in 1955 and 1960, respectively, but the company soon reentered the field with its own portable dishwasher and a line of food-waste disposers in 1968. When Fred Maytag II, the last family member involved in the company's management, died in 1962, E. G. Higdon was named president and George M. Umbreit became chairman and CEO.

By the late 1970s over 70 percent of U.S. households were equipped with washers and dryers. Laundry-equipment sales had peaked in 1973 and the lifetime of such equipment was 10 to 12 years—often longer for Maytag. To help boost sales, prices became more competitive. Chairman Daniel J. Krumm, who had been elected president in 1972, set the company in a new direction in 1980 when he made the decision to make Maytag into a full-line producer, eventually selling a wide range of major appliances rather than just washers, dryers, and dishwashers.

FULL-LINE PRODUCER IN 1982

The expansion was effected by acquisition. The first purchase was Hardwick Stove Company in 1981, followed in 1982 by Jenn-Air Corporation, the leading manufacturer of indoor electric grills with stove-top vent systems. These products added a full line of gas and electric cooking appliances to the Maytag line and were sold under the Maytag umbrella. Maytag Company intended this diversification to increase its sales in both the new-home market as well as the replacement market; companies make bids to developers based on kitchen packages, not individual components. The larger replacement market had also changed: large chains selling several brands side by side dominated the market. Chairman Krumm felt the diversification was necessary despite the cyclical nature of the building industry.

The new strategy paid off. Consumers began to buy again, and Maytag's sales increased in all areas in 1983. In May 1986 the move toward becoming a full-line producer continued with the purchase of the Magic Chef group of companies in a $737 million stock swap. Magic Chef's Admiral brand gave Maytag a presence in the refrigerator and freezer sector. Besides Admiral refrigerators, Magic Chef also produced other home appliances under the names Toastmaster, Magic Chef, and Norge. The merger gave Maytag the fourth-largest share of the U.S. appliance market. It also brought vending machine manufacturer Dixie-Narco Inc., with its number one position in soft-drink vending equipment, into the fold.

COMPANY PERSPECTIVES

The combination of Whirlpool and Maytag will create significant value for our shareholders and direct benefits for consumers, trade customers, employees and shareholders. Whirlpool, together with the Maytag brands, will continue to provide the highest-quality products to consumers around the world.

The Magic Chef purchase also helped protect May-tag from the threat of takeover. As the industry consolidated and other companies began to sell higher-priced appliances—Maytag's traditional forte—Krumm responded by moving into the medium-priced market. Magic Chef was Maytag's first step into that market.

The merger of Maytag and Magic Chef doubled Maytag's size and necessitated a restructuring. Maytag Company's name was changed to Maytag Corporation and three major appliance groups were formed: the Maytag appliance division, Magic Chef, and the Admiral appliance division (the Admiral division was consolidated into the other groups in 1988). Hardwick Stoves and Jenn-Air were included in the Maytag division. The president of Magic Chef remained as head of that division, which included Toastmaster—sold in 1987—Dixie-Narco, and Magic Chef air conditioning operations. The Admiral division included Norge and Warwick product lines, part of the old Magic Chef. Each division was given a great deal of autonomy. Other mergers within the industry during 1986 resulted in four companies—Whirlpool, General Electric, White Consolidated Industries, and Maytag—controlling 80 percent of the industry.

By the late 1980s Krumm was ready to move Maytag into foreign markets. With the aim of being a European competitor before the unification of the European Economic Community in 1992, Maytag bought Chicago Pacific Corp. in early 1989 for $961 million. The primary reason for this purchase was Chicago Pacific's Hoover division. Hoover produced and sold high-quality washers, dryers, refrigerators, dishwashers, and other products primarily in Great Britain and Australia, but also in continental Europe. It also sold vacuum cleaners in the United States, a new product for Maytag. (Chicago Pacific also owned furniture operations, which Maytag sold later in 1989 to Ladd Furniture for $213.4 million.) Another reason for the Chicago Pacific purchase was to further ward off takeover. The $500 million debt the company assumed with the acquisition helped make the company less attractive to raiders. Meanwhile, 1989 also saw the debut of the first refrigerators bearing the Maytag brand.

RETRENCHMENT

Maytag's acquisitions spree led directly to a troubled period in the early 1990s. Profits declined each year from 1990 to 1992 as the company was hit hard by the recession and the increased competition that it engendered, and was further weakened by a continuing high debt load. The acquisition of Hoover was turning into a near-disaster as the European operations were in the red year after year, a situation made even worse in 1992 when Hoover Europe made a serious miscalculation in offering two free transatlantic airline tickets to anyone buying a Hoover product in the United Kingdom for as little as $165. More than 220,000 people responded to this almost-too-good-to-be-true deal, leading not only to a financial folly but also to a near public relations disaster when the company delayed getting tickets to people claiming them, as well as to litigation that continued for years to come. The fiasco led to the firing of three top executives at Hoover Europe, as well as Maytag being forced to take a $30 million charge in 1993 to cover the costs of the ill-fated promotion.

KEY DATES

1893:

Frederick Louis Maytag and three partners establish a company to produce threshing-machine band cutters and self-feeder attachments.

1907:

Maytag buys out his partners and builds his first washing machine.

1911:

Maytag launches his first electric washing machine.

1922:

The Gyrofoam, the first washer to clean with only water action rather than friction, enters the marketplace.

1925:

Maytag incorporates and lists on the New York Stock Exchange.

1949:

The first automatic washers are produced.

1981:

Maytag purchases Hardwick Stove Company.

1982:

Jenn-Air is acquired.

1986:

The move toward becoming a full-line producer continues with the purchase of the Magic Chef group of companies.

1989:

Chicago Pacific Corp. is acquired.

1997:

The Neptune high-efficiency front-loading washing machine is launched.

2001:

Amana Appliances is purchased.

2006:

Whirlpool Corporation completes its acquisition of Maytag.

In the midst of these troubles, Krumm—the architect of the 1980s expansion—retired in late 1992, and was succeeded as chairman and CEO by Leonard A. Hadley, who had been company president. It did not take Hadley long to determine that it would be best in the long run if Maytag pulled back from its overseas ambitions and concentrated on putting its North American house in order. Hoover Europe alone had lost a total of $163 million from the date of its purchase by Maytag through 1994. In late 1994 Maytag sold its Hoover Australia unit to Southcorp Holdings for $82.1 million in cash, resulting in an after-tax loss of $16.4 million. In the second quarter of the following year, Maytag sold Hoover Europe to Italian appliance maker Candy SpA for $164.3 million in cash, resulting in an after-tax loss of $135.4 million. Maytag retained the Hoover North America operation. Proceeds from these sales were largely used to pay down the company's long-term debt, which stood at just $488.5 million by 1996, compared to nearly $800 million in the early 1990s.

By 1996, Maytag was on the upswing. Although revenues of $3 billion were slightly lower than at the beginning of the decade in part due to the divestments of 1994 and 1995, the net income of $162.4 million represented a high point for the decade so far. That figure would have been even higher, if it were not for the $24.4 million restructuring charge the company took early that year in connection with the consolidation of its two separate major appliance operations into a single operation called Maytag Appliances, which was handed responsibility for all sales, marketing, manufacturing, logistics, and customer service functions for the Maytag, Jenn-Air, Admiral, and Magic Chef brands.

Freed from its overseas headache, Maytag also began to revitalize its appliance lines through record 1996 capital spending of $220 million, much of which went toward new product development and improvements in existing lines. Among new products introduced were washers and dryers tagged with a new brand: Performa by Maytag; these were priced lower than Maytag brand products but carried some of the Maytag cachet. On the high end of the scale, the company jumped onto the front-loading washer bandwagon with the March 1997 debut of the Neptune high-efficiency model. In the refrigerator arena—Maytag's weakest product line—a three-year, $180 million redesign effort culminated with the April 1997 introduction of a new generation of Maytag, Jenn-Air, Magic Chef, and Admiral models that had increased capacity, were quieter, included several pull-out features, and boasted of faster temperature recovery following the opening of the freezer or refrigerator door. Some of the credit for these innovations went to Lloyd D. Ward, whom Hadley had recruited from PepsiCo's Frito-Lay unit in early 1996 to become executive vice-president of Maytag and president of Maytag Appliances—and perhaps heir apparent to Hadley.

Despite the heavy investments in North America, Maytag had not entirely given up on overseas growth. Like numerous other companies in the mid-1990s, Maytag decided to move into the burgeoning Chinese market. It did so in September 1996 with an initial $70 million investment to set up a series of joint ventures with the Hefei Rongshida Group Corporation, the leading washing machine firm in China, marketing its products under the well-known RSD brand. Maytag initially teamed with Hefei Rongshida in the production and marketing of washing machines, but planned to extend the venture into refrigerators during a second phase.

Further evidence of the stronger financial position of Maytag came with the $93.5 million purchase of G.S. Blodgett Corp. in late 1997. The privately held Blodgett—which traced its origins to the Blodgett Oven Co. founded in Burlington, Vermont, in 1848—was a manufacturer of commercial ovens, fryers, and charbroilers for the food service industry, thus representing a logical extension of Maytag's product lines and customers. Blodgett was the company's first acquisition since that of Chicago Pacific in 1989.

The Maytag Corporation of the late 1990s was stronger than it had been in years. Through heightened new product introductions; strategic, manageable acquisitions; and selective overseas ventures the company was positioning itself for steady, profitable growth, while at the same time maintaining its reputation for quality.

CHANGES IN THE NEW MILLENNIUM

Despite the success of the late 1990s, problems were on the horizon for Maytag as it entered the new millennium. Falling profits brought on by a slowing economy, increased competition, and high costs forced the company into action. Maytag began to implement a $100 million cost-cutting reorganization program that included plant closures and employee layoffs. At the same time, chairman and CEO Lloyd Ward resigned suddenly, citing differences with the company board concerning Maytag's strategic direction. Leonard Hadley came out of retirement and took over until Ralph Hake was named CEO in 2001.

Hake immediately set plans in motion to get Maytag back on track. He shuttered unprofitable businesses and continued cutting costs including moving various plant operations to Mexico where labor was cheaper. On the acquisition front, the company added Amana Appliances to its arsenal in 2001. Even with these efforts, sales continued to fall well into 2004 and high material costs ate into company profits.

As early as 2000, takeover talks began to surface as changes in the company's corporate bylaws allowed for an easier acquisition process. Sure enough, Maytag announced in May 2005 that Triton Acquisition Holding Company, an investment group led by Ripplewood Holdings LLC, had made an offer to take the company private in a $1.13 billion leveraged buyout. The company's share prices rose nearly one dollar upon news of the deal, and Whirlpool Corporation swooped in with a $1.62 billion offer including the assumption of $977 million in debt. Whirlpool had outbid Ripple-wood by nearly 43 percent and had sweetened the deal by offering to pay Triton a $40 million termination fee if the Whirlpool/Maytag deal went through. It also offered to pay Maytag $120 million if the deal failed to meet regulatory guidelines and an additional $15 million to retain certain Maytag employees.

Triton chose not to raise its bid for Maytag, paving the way for Whirlpool to complete its purchase. The acquisition cleared regulatory hurdles and in March 2006, Whirlpool completed its acquisition of Maytag and secured its position as one of the world's top manufacturers of home appliances. The company began the integration process immediately with Whirlpool management heading up the combined company in Benton Harbor, Michigan. Nearly 4,500 positions were cut as manufacturing facilities in Iowa, Illinois, and Arkansas were consolidated into Whirlpool's plants in Ohio.

Whirlpool was optimistic about its future with the Maytag brand. Still, as an independent company, Maytag was finished. Former CEO Hadley made his feelings about the acquisition and Maytag's performance known in a June 2006 interview. "I'm extremely disappointed with what has been happening in the last five years. Just extremely disappointed," he stated. "I can't tell you how it hurts. That was my life for 40 years." Indeed, Maytag Corporation had a long run as a venerable appliance manufacturer in the United States. While economic changes, shifts in consumer demand, and heightened competition got the better of Maytag Corporation, Maytag brand appliances would no doubt remain in stores for years to come under Whirlpool's watchful eye.

                                          Vera A. Emmons

             Updated, David E. Salamie; Christina M. Stansell

PRINCIPAL COMPETITORS

AB Electrolux; LG Electronics Inc.

FURTHER READING

"At 80, Maytag Feels 'Terrific,'" Appliance Manufacturer, November 1987, p. 28.

Barboza, David, "Maytag's Chief Executive Resigns, Citing Differences," New York Times, November 10, 2000.

Berman, Dennis K., "Ripplewood Won't Raise Maytag Bid; Whirlpool Closes In," Wall Street Journal, August 22, 2005, p. A3.

Bremner, Brian, and Mark Maremont, "Maytag's Foreign Fling Isn't Much Fun After All," Business Week, September 4, 1989, pp. 32-33.

Bulkeley, William M., "Wring in the New: Washers That Load from Front Are Hot," Wall Street Journal, April 29, 1997, pp. A1, A5.

Byrne, Harlan S., "Maytag Corp.: Hope for Growth Lies in European Operations," Barron's, May 25, 1992, pp. 35-36.

――――――, "The Predator or the Prey?," Barron's, March 3, 1997, pp. 22, 24.

――――――, "Remaking Maytag," Barron's, August 21, 1989, pp. 12-13.

David, Gregory E., "Breaking the Spell," Financial World, May 10, 1994, pp. 34, 36.

Dubashi, Jagannath, "Taken to the Cleaners," Financial World, August 4, 1992, p. 28.

"Former Maytag CEO Hadley Reacts to Sale," AFX Asia, June 24, 2006.

Geisi, Steve, "Maytag Revs $35M in Product Noise," Brandweek, February 17, 1997, pp. 1, 6.

――――――, "Spin-Cycle Doctor," Brandweek, March 10, 1997, pp. 38-40.

Gold, Howard, "Maytag Steps Out," Forbes, December 17, 1984, p. 96.

Hallinan, Joseph T, "Whirlpool Raises Maytag Bid Again," Wall Street Journal, August 9, 2005.

Hannon, Kerry, "Damned If You Do …," Forbes, March 20, 1989, p. 201.

Harris, John, "Wake Up, Maytag Man!," Forbes, November 13, 1989, pp. 308, 310.

Hill, Andrew, and Michael Cassell, "Candy Pulls Hoover Away from the Mangle," Financial Times, May 31, 1995, p. 21.

Hillinger, Charles, "Washdays, Birthdays: Maytag Notes 80 Years," Los Angeles Times, May 8, 1987.

Hoover, Robert, and John Hoover, An American Quality Legend: How Maytag Saved Our Moms, Vexed the Competition, and Presaged America's Quality Revolution, New York: McGraw-Hill, 1993, 239 p.

"In Pursuit of Quality," Appliance Manufacturer, November 1987, p. 38.

Kelly, Kevin, Fred Guterl, and Roon Lewald, "Can Maytag's Repairman Get Out of This Fix?," Business Week, October 26, 1992, pp. 54-55.

"Maytag: Wizard of White Goods," Dun's Business Month, December 1985, p. 34.

Quintanilla, Carl, "Lloyd Ward Puts a New Spin on Maytag," Wall Street Journal, November 26, 1996, pp. B1, B8.

Remick, Norman C, Jr., "Maytag: A China Connection," Appliance Manufacturer, February 1997, p. G16.

The Spirit of Maytag: 100 Years of Dependability: 1893–1993, Newton, Iowa: Maytag Corporation, 1993.

Upbin, Bruce, "Global, Schmobal," Forbes, March 10, 1997, pp. 64, 66.

Wee, Heesun, "Maytag Is Cleaning Up Its Act," Business Week Online, May 17, 2002.

Maytag Corporation

403 West Fourth Street North
Newton, Iowa 50208
U.S.A.
(515) 792-8000
Fax: (515) 791-8115

Public Company
Incorporated: 1925 as Maytag Company
Employees: 26,019
Sales: $3.09 billion
Stock Exchange: New York

Maytag Corporation’s reputation rests on the dependability of its machines, and this dependability has enabled the company to charge premium prices. As acquisitions were made during the 1980s, and multiple lines of a product sold in different price ranges, it has taken sophisticated marketing to maintain separate images for brands made in the same factories. While Maytag traditionally sold in the upper quarter of the appliance market, its acquisitions expanded its sales to all but the lowest fifth of the appliance market. Maytag maintains quality through tight control over production. It makes almost all of its own parts, coats its own screws, and tests all machines coming off of the assembly line.

Maytag Company was started by Frederick Louis Maytag and three partners in 1893 to produce threshing-machine band cutters and self-feeder attachments. The company soon began to produce other pieces of farm machinery, not all of it top quality: its corn husker, called the Success, caused the partners many problems because of its poor quality, and farmers often called Maytag out to their fields to fix the Success.

When Maytag bought out his partners in 1907, he had learned his lesson; a Maytag product would always be dependable. Today, each Maytag appliance is tested before it comes off the assembly line, and the company has documented proof to back up its claim of fewer washer repairs.

Maytag built his first washer in 1907, to bring his agricultural-equipment company through the slow-selling season as well as to fill a need for home-use washing machines. Home washing machines were already on the market, but Maytag wanted to make them more efficient. His first washer, called the Pastime, revolutionized washing. It had a cypress tub with a hand crank that forced the clothes through the water and against corrugated sides. The washer was a hit, and Maytag continued to improve on it. In 1911 he brought out the first electric washing machine, and in 1914 he introduced the gas-engine Multi-Motor for customers without access to electricity. The first aluminum washer tub was brought out in 1919, and the Gyrofoam, the first washer to clean with only water action, rather than friction, entered the marketplace in 1922. This revolutionary washer was the first with an agitator at the bottom of the tub instead of the top. This change allowed for the elimination of friction. Sales of this machine pushed Maytag, previously the 38th-largest U.S. washing machine company, into first place.

At this juncture, the farm-implement portion of the business was discontinued. L.B. Maytag, son of the founder, became president of the company in 1920. Under his direction the company began to market nationally. In 1925 Maytag incorporated and was listed on the New York Stock Exchange. In 1926 another Maytag son, E.H. Maytag, assumed the presidency and held the position until his death in 1940. Over the next years, several interesting attachments were offered on washers. A butter churn and a meat grinder were two options offered to buyers. By 1927 Maytag had produced one million washers.

During the Great Depression, Maytag held its own; the company even made money. At his father’s death in 1940, Fred Maytag II, grandson of the founder, took over the presidency. During World War II, the company made only special components for military equipment. In 1946 production of washers started up again, and in 1949 the first automatic washers were produced in a new plant built for that purpose. In 1946 Maytag began marketing a line of ranges and refrigerators made by other companies under the Maytag name. During the Korean War the company again produced parts for military equipment, although washer production continued.

During the 1950s the appliance industry grew rapidly. Maytag first entered the commercial laundry field at this time, manufacturing washers and dryers for commercial self-service laundries and commercial operators. During these years full-line appliance producers began targeting May tag’s market. Full-line operators like General Electric, Whirlpool, and Frigidaire provided washers and dryers, refrigerators, stoves, and other appliances. Maytag was much smaller than the full-line producers. It limited itself to the manufacture of washers and dryers, which it marketed with ranges and refrigerators built by other companies, and established its reputation as a premium brand.

The ranges and refrigerators Maytag had been marketing with its washers and dryers were dropped in 1955 and 1960, respectively, but the company soon re-entered the field with its own portable dishwasher and a line of food-waste disposers in 1968. When Fred Maytag II, the last family member involved in the company’s management, died in 1962, E.G. Higdon was named president and George M. Umbreit became chairman and CEO.

By the late 1970s over 70% of U.S. households were equipped with washers and dryers. Laundry-equipment sales had peaked in 1973 and the lifetime of such equipment was 10 to 12 years—often longer for Maytag. To help boost sales, prices became more competitive. Chairman Daniel J. Krumm, who had been elected president in 1972, set the company in a new direction in 1980 when he made the decision to make Maytag into a full-line producer, eventually selling a wide range of major appliances rather than just washers, dryers, and dishwashers.

The expansion was effected by acquisition. The first purchase was Hardwick Stove Company in 1981, followed in 1982 by Jenn Air Corporation, the leading manufacturer of indoor electric grills with stove-top vent systems. These products added a full line of gas and electric cooking appliances to the Maytag line and were sold under the Maytag umbrella. Maytag Company meant this diversification to increase its sales in both the new-home market as well as the replacement market; companies make bids to developers based on kitchen packages, not individual components. The larger replacement market had also changed: large chains selling several brands side by side dominated the market. Chairman Krumm felt the diversification was necessary despite the cyclical nature of the building industry.

The new strategy paid off. Consumers began to buy again, and Maytag’s sales increased in all areas in 1983. In 1986 the move toward becoming a full-line producer continued with the purchase of Magic Chef in May. Magic Chef’s Admiral brand gave Maytag a presence in the refrigerator and freezer sector. Besides Admiral refrigerators, Magic Chef also produces other home appliances under the names Toastmaster, Magic Chef, and Norge. The merger gave Maytag the fourth-largest share of the U.S. market.

The Magic Chef purchase also helped protect Maytag from the threat of takeover. As the industry consolidated and other companies began to sell higher-priced appliances—Maytag’s traditional forte—Krumm responded by moving into the medium-priced market. Magic Chef was Maytag’s first step into that market.

The merger of Maytag and Magic Chef doubled Maytag’s size and necessitated a restructuring. Maytag Company’s name was changed to Maytag Corporation and three major appliance groups were formed: the Maytag appliance division, Magic Chef, and the Admiral appliance division. Hardwick Stoves and Jenn Air were included in the Maytag division. The president of Magic Chef remained as head of that division, which included Toastmaster—sold in 1987— Dixie-Narco, and Magic Chef air conditioning operations. The Admiral division included Norge and Warwick product lines, part of the old Magic Chef. Each division was given a great deal of autonomy. Other mergers within the industry during 1986 resulted in four companies—Whirlpool, General Electric, White Consolidated Industries, and Maytag—controlling 80% of the industry.

By the middle 1980s Krumm was ready to move Maytag into foreign markets. With the aim of being a European competitor before the unification of the European Economic Community in 1992, Maytag bought Chicago Pacific in early 1989. The primary reason for this purchase was Chicago Pacific’s Hoover division. Hoover produces and sells high-quality washers, dryers, refrigerators, dishwashers, and other products primarily in Great Britain and Australia, but also in continental Europe. It also sells vacuum cleaners in the United States, a new product for Maytag. The European market will not be an easy one for Maytag to enter, however; brand loyalty is high in Europe, and people are used to machines constructed in a certain way.

Another reason for the Chicago Pacific purchase was to further ward off takeover. The $500 million debt the company assumed with the acquisition helped make the company less attractive to raiders.

During the late 1980s, Daniel Krumm spent at least $2 billion in cash and stock to expand Maytag. Sales tripled, but the acquisition of Chicago Pacific was a long-term commitment, not expected to pay off immediately. Maytag continues to use quality as a marketing tool in the fiercely competitive world of appliance selling. Even Maytags need repairs sometimes. When the company stopped making wringer washing machines in 1983, it ran off enough replacement parts to last for 25 years.

Principal Subsidiaries

Admiral Company; Dixie-Narco, Inc.; Hoover North America; Hoover PLC (U.K.); Hoover Trading; Hoover Australia; Jenn-Air Company; Magic Chef Company; Maytag Company; Domicor, Inc.; Maycor Appliance Parts & Service Company; Maytag Financial Services Corp.

Further Reading

Hillinger, Charles, “Washdays, Birthdays: Maytag Notes 80 years,” Los Angeles Times, May 8, 1987.

—Vera A. Emmons

Maytag Corporation

founded: 1893

Contact Information:

headquarters: 403 west fourth street
newton, ia 50208-0039 phone: (641)792-7000 fax: (641)787-8376 url: http://www.maytag.com

OVERVIEW

Maytag Corporation, in business since 1893, is the third largest manufacturer of major household appliances in the United States, trailing Whirlpool Corporation and GE Appliances. Originally founded as a manufacturer of farm implements, the company today concentrates on the production of clothes washers and dryers, dishwashers, electric ranges and ovens, and refrigerators. Its full line of home appliances is marketed under the brand names of Admiral, Amana, Dynasty, Jenn-Air, Magic Chef, and Maytag. Through its Hoover subsidiary, the company is the market leader in floor care products.

In addition to its full range of household appliances, Maytag manufactures a wide range of products for commercial applications, including cooking, floor care, laundry, and vending. Maytag sells specially modified washers and dryers for use in coin laundries, restaurants, hotels, health care facilities, athletic clubs, apartment buildings, and colleges and universities. Its Hoover subsidiary produces a number of floor care products designed for use in office buildings, hotels, restaurants, and schools.

One of Maytag's subsidiaries, Dixie-Narco, is a major U.S. manufacturer of soft drink bottle and can vending machines. The vending machines are primarily sold by Dixie-Narco to soft drink bottlers, including Coca-Cola and Pepsico. Another Maytag subsidiary, Jade Range, manufactures premium-priced commercial ranges and refrigerators, as well as commercial-style ranges for the home market.

COMPANY FINANCES

Maytag executives voiced some disappointment with the company's financial performance in 2001. Although revenue climbed to $4.3 billion in 2001, the company's profit fell sharply to $47.7 million, or $1.41 per share, from $201 million, or $2.44 per share, in 2000, when revenue totaled $4.2 billion. Reasons for the decline in net income included higher marketing, distribution, and support costs; coupled with low price points in the household appliance market. Other factors contributing to the drop in profit included lower volume in the floor care business and reduced revenue in the company's vending machine business. In the 52 weeks ended May 24, 2002, Maytag's stock traded between a low of $22.25 and a high of $47.94. The company's price earnings ratio, as of May 24, 2002, was 24.83. During 2001, Maytag took a number of special charges against income, including a restructuring connected with the company's reduction in its salaried workforce and the discontinuation of some of its operations. In 2000, Maytag posted net income of $201 million, or $2.44 a share, on sales of $4.2 billion, down from a 1999 profit of almost $329 million, or $3.66 per share, on revenue of $4.3 billion.

After the first quarter of 2002, things were looking up for Maytag, although company executives were quick to point out that they didn't expect the first quarter buoyancy in their key markets to be sustained throughout the year. In the first quarter of 2002, the company's earnings per share jumped to 75 cents per share, compared with 46 cents a share in the first quarter of 2001. Net income for the first quarter in 2002 totaled $56.7 million, compared with $36.6 million a year earlier. When interviewed by Bill Griffeth on cable television's CNBC business network, Ralph Hake, Maytag's chairman and chief executive officer, attempted to temper optimism for the remainder of 2002, based on the company's performance in the first quarter by offering his analysis. "The first quarter in our industry was up 9.5 percent, really quite a surprise to everyone. Next quarter it will be up about 5 and for the year it will be up 2 or 3. So the environment is going to mitigate performance here going forward."

ANALYSTS' OPINIONS

After the announcement of Maytag's earnings for the first quarter of 2002, Lawrence Horan, research director at Parker/Hunter Inc., said it appeared that the company might be cutting prices. "Gross margin was considerably below a year ago, so I suspect that they are pumping the volume to get the units out. Under their interim CEO [Leonard A. Hadley, who served as president and CEO from November 2000 until June 2001] last year, they were vehement about holding the minimum suggested retail price. Maybe they are looking the other way to move the stuff." As of mid-April 2002, analysts' full-year estimates of Maytag earnings per share ranged from $2.45 to $2.60, with a mean of $2.52, according to First Call.

Reacting to a February 2002 prediction from Maytag Chairman Ralph Hake that the company's 2002 earnings would increase 20 percent on a sales increase of 12 to 15 percent, analyst Nicholas P. Heymann of Prudential Securities sounded a cautiously optimistic note. "They're moving along, getting work done. They're getting more products, trying to upmix. They're doing all the right stuff."

HISTORY

Founded in 1893 by Frederick Louis Maytag and three partners, Maytag Company was originally a manufacturer of farm implements, specializing at first in the production of threshing machine band cutters and self-feeder attachments. Before long the company added other farm equipment to its product line, some of it of questionable quality. Rampant customer complaints about the company's Success corn husker caused a rift between Maytag and his partners. He bought them out in 1907 and vowed that from that point on, Maytag products would be known for their quality and dependability.

In 1907 Frederick Maytag added a clothes washer to his company's product line, mostly to provide some sort of balance for the company during its off-season when farming equipment sold slowly. Maytag's washer quickly caught on with consumers, and by 1922 its revolutionary Gyrofoam washer, which had an agitator at its bottom rather than at the top, pushed Maytag into first place among U.S. washing machine companies. So successful had Maytag's washing machine business become that in the early 1920s its farm equipment business was discontinued. In 1925 the company was incorporated, and its stock was listed on the New York Stock Exchange. A year later the presidency of the company passed from L.B. Maytag, son of the founder, to another of his sons, E.H. Maytag, who remained in the presidency until his death in 1940.

Under the direction of E.H. Maytag, the company managed to weather the Great Depression fairly well, even managing to eke out a profit while scores of other companies went under. After the death of E.H. Maytag in 1940, the leadership of the company passed to his son, Fred Maytag II. During the years of World War II, Maytag produced nothing but parts for military equipment. The production of washers resumed in 1946, and the company began marketing a line of refrigerators and cooking ranges that were manufactured by other companies under the Maytag brand name. During the 1950s, a decade of rapid growth for the home appliance industry, Maytag began manufacturing equipment for the commercial self-service laundry businesses as well as institutional laundry operators. The 1950s also saw increased competition from full-line appliance companies, including General Electric, Frigidaire, and Whirlpool. Despite the increased competition, Maytag continued to manufacture only clothes washers and dryers, which were marketed alongside ranges and refrigerators manufactured by other companies. During this period the Maytag line of laundry equipment acquired a reputation as a premium brand.

FAST FACTS: About Maytag Corporation

Ownership: Maytag is a publicly owned company traded on the New York Stock Exchange.

Ticker Symbol: MYG

Officers: Ralph F. Hake, Chmn. and CEO, 53, 2001 base salary $409,821; Steven H. Wood, EVP and CFO, 44, 2001 base salary $260,000; William L. Beer, Pres. Maytag Appliances Division, 49, 2001 base salary $275,000

Employees: 21,755

Principal Subsidiary Companies: Maytag owns a number of subsidiaries in North America, the majority of which are based in the United States. One of its best-known subsidiaries is Hoover Company, the designer and manufacturer of floor care products for both home and commercial applications based in North Canton, Ohio. Other subsidiaries include Maytag Appliances, Newton Laundry Products, Herrin Laundry Products, Jackson Dishwashing Products, Galesburg Refrigeration Products, Cleveland Cooking Products, Jefferson City Component Parts, Amana Refrigeration Products, Florence Cooking Products, Searcy Laundry Products, and Jade Products Company. Subsidiaries based in Canada and Mexico include Maytag Canada, Hoover Canada, and Maytag Mexico Appliance Products.

Chief Competitors: As the third largest manufacturer of home appliances in the United States, Maytag faces its primary competition from Whirlpool Corporation, which is the number one U.S. appliance manufacturer; GE Appliances, number two in the United States; and Sweden's Electrolux AB, the world's largest manufacturer of household appliances.

In 1955 Maytag dropped cooking ranges from its product line and five years later it dropped refrigerators, returning to its core products of washing machines and dryers. After the death in 1962 of Fred Maytag, the direction of the company passed into the hands of non-family members. George Umbreit was named chairman and chief executive officer, while E.G. Higdon was appointed president. After laundry equipment sales peaked in the early 1970s, the company began pricing its washers and dryers more competitively, but beginning in 1980, under the direction of Chairman Daniel J. Krumm, Maytag started its return to the marketing of a full line of household appliances. To accomplish this transformation and maintain the corporate reputation for quality and dependability, Maytag began to acquire a number of appliance manufacturers that had also established a reputation for quality products. Acquired in 1981 was Hard-wick Stove Company, followed in 1982 by the Jenn-Air Corporation, a leading manufacturer of indoor electric grills with stove-top ventilation systems. In 1986 Maytag took over Magic Chef, giving the company a means to re-enter the refrigerator and freezer market through Magic Chef's Admiral division. Other Magic Chef brand names included Toastmaster, Norge, and Magic Chef. At about the same time, Maytag moved into the soft drink vending industry in a big way with the purchase of Dixie-Narco Inc., the biggest player in the U.S. soft drink vending market.

In 1989 Maytag moved into the floor care equipment market in a big way with the purchase of Chicago Pacific Corporation, primarily to acquire Chicago Pacific's Hoover division. The company's almost frenzied acquisition pace during the 1980s eventually caused acute financial problems, forcing the company, now under the direction of Chairman and CEO Leonard Hadley, to back away from most of its overseas operations and focus on putting its North American house in order.

Maytag's retrenchment in the early 1990s paid off in the latter half of the decade. In 1996 the company posted a healthy profit of $162 million, its best showing up to that point in the 1990. The following year, Maytag acquired G.S. Blodgett Corporation, manufacturer of commercial ovens, fryers, and charbroilers for the food service industry. In 2001 Blodgett was sold by Maytag to Middleby Corporation, and the company acquired the Amana major appliance and commercial microwave oven businesses from Goodman Manufacturing.

STRATEGY

Maytag looks to the future with optimism, hoping to ensure business success "by building on our traditions, continuously improving those, and seeking even greater opportunities for our innovation and operational excellence strategies," according to the company's 2001 Annual Report. For Maytag, innovation is not limited to the development of new products but also about finding new and creative ways to manage its business operations. Examples of this type of innovation in Maytag's management of its business include LeanSigma, a program that pinpoints ways to eliminate waste in operations and variations in parts and processes that can undermine product quality.

Maytag also hopes to extend its dominance in the laundry and floor care businesses into the kitchen sector. A major step toward this ambitious goal came in 2001 with the acquisition of Amana, part of Maytag's initiative to "own the kitchen." A strong result for the company's major appliance business in 2001 was expected to be followed in 2002 by still further growth. To support its initiative to "own the kitchen," Maytag plans an expanded advertising and marketing effort "designed to build presence and identity with customers."

Another important element in Maytag's strategy is its effort to develop world-class logistics. To that end, the company contracted with Exel Direct in late 2001 to handle the distribution of Maytag's major appliances to retail and builder customers. Exel Direct is also providing direct home delivery and installation of Maytag appliances to customers who desire that service. In its 2001 Annual Report, the company observed, "Teaming up with Exel has improved the quality of our service to customers and consumers, and we are experiencing cost benefits associated with having a single third party perform this part of our logistics function."

CHRONOLOGY: Key Dates for Maytag Corporation

1893:

Maytag Co. founded as farm implement manufacturer

1907:

Maytag markets its first washing machine

1921:

Maytag begins selling its products nationwide

1941:

Maytag suspends washer production to make parts for military aircraft

1948:

Maytag introduces automatic washers

1981:

Purchase of Hardwick Stove Co. sets off Maytag acquisition frenzy

1982:

Maytag acquires Jenn-Air

1986:

Maytag acquires Magic Chef group of companies

1989:

Maytag acquires Hoover Co.

2001:

Maytag acquires Amana

INFLUENCES

For much of its history, Maytag has adjusted its corporate strategy to reflect changing trends in the marketplace as well as outside forces exerting an influence on retail sales in the company's markets or retail markets in general. In its earliest years, Maytag Company, originally founded to manufacture farm implements, added the production of clothes washers to help balance the company's year-round business and offset the sharp drop in demand for farming equipment during the off-season. By 1920 Maytag's success in the laundry market prompted a decision to abandon the farm equipment market altogether.

As the household appliance industry grew rapidly during the 1950s and competition became keener, particularly from full-line appliance manufacturers, Maytag expanded its product line to include cooking ranges and refrigerators produced by other companies but marketed under the Maytag brand name. Within a few years, however, the company decided to return to its core product line of clothes washers and dryers, although it soon added to those a portable dishwasher and food-waste disposable systems manufactured in its own plants.

After sales in the laundry equipment market peaked in the 1970s, the company once again began to move towards marketing a full line of household appliances. To accomplish this, Maytag embarked on an ambitious campaign of acquisition, looking specifically for manufacturers of appliances that, like Maytag, had earned a reputation for producing dependable, high-quality products. During the 1980s, Maytag acquired Hardwick Stove Company, Jenn-Air Corporation, and Magic Chef. Also acquired during this period was vending machine manufacturer Dixie-Narco Inc., giving Maytag a leading position in the soft drink vending equipment market. In 1989 the company purchase Chicago Pacific Corporation, mostly to gain entry into the floor-care industry, in which Chicago Pacific's Hoover Division was a major player.

By the early 1990s Maytag's frenetic acquisition pace led to hard times for the company during the economic recession of that period. Maytag trimmed back its overseas operations sharply, choosing to focus instead on its North American markets. More recently, however, the company has begun to add to its product line through selective acquisitions and to expand its operations abroad. In 2001 Maytag acquired Amana's major appliance business from Goodman Manufacturing, although only after selling its G.E. Blodgett commercial cooking equipment manufacturer to Middleby Corporation.

CURRENT TRENDS

Perhaps the most significant trend for Maytag in recent years has been its carefully studied transformation from its core business of clothes washers and dryers into a full-line household appliance manufacturing. The company has made clear its intention to continue this transformation in 2002, stating in a recent corporate release: "Now we need to move into the kitchen to own it the way we own the laundry room and floor care. To the extent we can develop elegant, innovative kitchen products, we can own the most active and involved room in the household-the kitchen." The information explosion that has accompanied the rapid spread in popularity of the Internet has resulted in changes in Maytag's marketing strategy. In his letter to shareholders in the company's 2001 Annual Report, Chairman Ralph Hake commented: "We will continue to build our relationship with consumers in other ways, particularly with the Internet where close to 30 percent of all appliance shoppers-nearly 11 million consumers-research products before going to a retail outlet to make their purchase. The influence of the Internet as a valuable resource will grow exponentially over the years, and Maytag will be there to help educate and influence shoppers online."

PRODUCTS

Today, in addition to its core laundry equipment business, Maytag markets a broad range of major household appliances. These products include cooking ranges and ovens, microwaves, dishwashers, and refrigerators, as well as numerous specially designed products for commercial applications. These products are marketed under the following brand names: Maytag, Amana, JennAir, Dynasty, Magic Chef, and Jade Range. A wide range of floor care products are produced and sold by Maytag's Hoover subsidiary, and its Dixie-Narco subsidiary is a leader in the production and sale of vending equipment.

CORPORATE CITIZENSHIP

Maytag takes seriously its responsibilities to the communities in which it operates. The three main areas of Maytag's social commitment are community involvement, its contributions program, and environmental efforts. In the realm of community involvement, Maytag endeavors to give back to the community through company-sponsored programs and the efforts of Maytag employees who volunteer for community service. In Canton, Ohio, more than 300 Hoover Company employees built a Habitat for Humanity home. A similar project for Habitat for Humanity was undertaken by employees at Maytag's plant in Cleveland, Tennessee.

Through its contributions program, Maytag has sought to finance programs and projects that make a difference in people's lives. The company in 2000 contributed more than $4 million in cash and products through its foundation and direct giving program to meet some of the needs and support worthy causes in Maytag's operating communities. Of this sum, approximately 43 percent supported education, while 35 percent was dedicated to community improvement, largely through youth programs and arts and culture. Most of the remainder was committed to community support, including the United Way.

In the area of environmental responsibility, Maytag has taken the lead within the appliance industry in pushing for stronger energy and water standards. The company has worked closely with the Department of Energy to develop new Energy Star criteria for appliances. Maytag has twice been named Energy Star Appliance Partner of the Year by the Department of Energy and the Environmental Protection Agency.

GLOBAL PRESENCE

Responsible for the coordination of Maytag's presence in foreign markets is Maytag International, headquartered in Chicago. Maytag International directs all the corporation's international efforts, including export sales and marketing and the licensing of brands and joint ventures. Maytag's presence in overseas markets includes direct sales operations in Mexico, the United Kingdom, Australia, and Puerto Rico.

LEANSIGMA HELPS TRIM WASTE

In its quest to keep down the costs of manufacturing operations while maintaining high quality and finding new efficiencies, Maytag has turned to LeanSigma. This program helps identify waste in operations, as well as variations in parts and processes that can undermine product quality. A shining example of LeanSigma's benefits can be found at Maytag's plant in Jackson, Tennessee. The program resulted in the transformation of a half-mile-long, continuous-line dishwasher assembly line operation into seven separate assembly cells capable of a wide range of product-mix capabilities. This transformation improved productivity at Jackson by 22 percent and freed up 43,000 square feet of manufacturing floor space. Perhaps most importantly, the changes resulted in an improvement in product quality of 55 percent. To achieve similar efficiencies elsewhere, Maytag is implementing LeanSigma at all its major manufacturing facilities.

EMPLOYMENT

According to its 2001 annual report, Maytag Corporation employed a workforce of 21,755 people, as of December 31, 2001. This represented an increase of about 18.5 percent from its workforce of 18,350 at the end of 2000 and is explained largely by the company's acquisition of Amana during 2001, which added roughly 4,000 employees to the corporate payroll.

Maytag's Web site carries this profile of the type of employee the company is looking for: "At Maytag, we reach out for the best people. . .people with a need to succeed, people who make things happen, people committed to quality, people who understand innovation."

SOURCES OF INFORMATION

Bibliography

"business description: maytag corporation." multex investor, 2002. available at http://www.marketguide.com.

cohen, rachel. "maytag earnings to top estimates; shares surge." reuters business report, 12 march 2002.

——. "maytag net income falls; sees slower sales growth." reuters business report, 16 april 2002.

griffeth, bill. "maytag-chmn. & ceo-interview." cnbc/dow jones business video, 16 april 2002.

"maytag corp.—history." gale business resources, 2002. available at http://galenet.galegroup.com/servlet/gbr

"maytag corporation." hoover's online, 2002. available at http://www.hoovers.com.

maytag corporation 2001 annual report. newton, ia: maytag corporation, 2002.

maytag corporation home page, 2002. available at http://www.maytag.com.

For an annual report:

on the internet at: http://www.maytag.comor write: shareholder relations, maytag corporation, 403 w. 4th st. n., newton, ia 50208

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. maytag corporation's primary sics are:

3581 automatic vending machines

3582 commercial laundry equipment

3589 service industry machinery nec

3631 household cooking equipment

3633 household laundry equipment

3635 household vacuum cleaners

3639 household appliances nec

also investigate companies by their north american industrial classification system codes, also known as naics codes. maytag corporation's primary naics codes are:

333311 automatic vending machine manufacturing

335212 household vacuum cleaner manufacturing

335221 household cooking appliance manufacturing

335224 household laundry equipment manufacturing

MAYTAG CORPORATION

The Maytag Corporation was started in Newton, Iowa by Frederick Louis Maytag and three partners in 1893 to produce threshing machine band-cutters and self-feeder attachments. The company soon began to produce other pieces of farm machinery, not all of it top quality. The Maytag corn husker, called the Success, caused the partners many problems because of its poor quality, and farmers often called Maytag personnel out to their fields to fix the Success. By the time Maytag bought out his partners in 1907 he had learned his lesson; a Maytag product would always be dependable.

Maytag built his first washer in 1907 to bring his agricultural equipment company through the slow-selling season as well as to fill the growing need for home-use washing machines. Home washing machines were already on the market, but Maytag wanted to make them more efficient. His first washer, called the Pastime, revolutionized washing. It had a cypress tub with a hand crank that forced the clothes through the water and against corrugated sides. The washer was a hit, and Maytag continued to improve on it. In 1911 he brought out the first electric washing machine, and in 1914 he introduced the gas-engine Multi-Motor for customers without access to electricity. The first aluminum washer tub was brought out in 1919, and the Gyrofoam entered the marketplace in 1922. This revolutionary washer was the first with an agitator at the bottom of the tub instead of the top. This change allowed for the elimination of friction, making it the first washer to clean with only water action. Sales of this machine pushed Maytag from the 38th largest U.S. washing machine company to first place.

At this juncture the farm implement portion of the business was discontinued. L.B. Maytag, son of the founder, became president of the company in 1920. Under his direction the company began to market nationally. In 1925 Maytag incorporated and was listed on the New York Stock Exchange. By 1927 Maytag had produced one million washers.

During the Great Depression (1929–1939) Maytag held its own; the company even made money. During World War II (1939–1945), Maytag shut down normal operations and devoted itself to producing special components for military equipment. In 1946 the production of washers started up again, and in 1949 the first automatic washers were produced in a new plant built for that purpose. In 1946 Maytag began marketing a line of ranges and refrigerators made by other companies to be sold under the Maytag name.

The appliance industry grew rapidly during the 1950s, fueled by the postwar consumer boom. Maytag first entered the commercial laundry field at this time, manufacturing washers and dryers for commercial self-service laundries and commercial operators. During these years full-line appliance producers began targeting Maytag's market. Full-line operators such as General Electric, Whirlpool, and Frigidaire provided washers and dryers, refrigerators, stoves, and other appliances. Maytag was much smaller than the full-line producers. It limited itself to the manufacture of washers and dryers, which it marketed with ranges and refrigerators built by other companies, and established its reputation as a premium brand.

The ranges and refrigerators Maytag had been marketing with its washers and dryers were dropped in 1955 and 1960 respectively, but the company soon reentered the kitchen appliance field with its own portable dishwasher in 1966 and a line of food waste disposers in 1968. Maytag created a U.S. icon in 1967 when the Maytag "lonely repairman" appeared in advertising for the first time. The character was lonely because Maytag appliances were supposedly so reliable they never needed repairs, and helped to solidify Maytag's reputation for the dependability of its products.

Laundry equipment sales peaked in 1973, and by the late 1970s more than 70 percent of U.S. households owned a washer and dryer. The lifetime of such equipment was 10 to 12 years, often longer for Maytag. A turning point came in 1980 when Maytag decided to become a full-line producer, eventually selling a wide range of major appliances rather than just washers, dryers, and dishwashers. This diversification was achieved through a series of acquisitions. By the late 1990s Maytag sold washers, dryers, ovens, refrigerators, and dishwashers under both premium brands (Maytag and Jenn-Air) and mid-to-lower price value brands (Magic Chef and Admiral). The Maytag brand was also used on coin-operated and commercial laundry equipment. The company also sold Hoover vacuum cleaners and other floor care products in North America; Dixie-Narco vending machines and glass-front coolers; and commercial ovens, fryers, and charbroils for the food service industry under the brand names of Blodgett Ovens, Pitco Frialator, MagiKitch'n, and Blodgett-Combi Ovens.

See also: Agricultural Equipment Industry

FURTHER READING

Geisi, Steve. "Spin-Cycle Doctor." Brandweek, March 10, 1997.

Hoover, Robert, and John Hoover. An American Quality Legend: How Maytag Saved Our Moms, Vexed the Competition, and Presaged America's Quality Revolution. New York: McGraw-Hill, 1993.

Maytag Corporation. The Spirit of Maytag: 100 Years of Dependability, 1893–1993. Newton, IA: Maytag Corporation, 1993.

"Maytag: Wizard of White Goods." Dun's Business Month, December 1985.

Upbin, Bruce. "Global, Schmobal." Forbes, March 10, 1997.