Whirlpool Corporation

2000 M–63 North
Benton Harbor, Michigan 49022
U.S.A.
(616) 926–5000
Fax: (616) 923–5486

Public Company
Incorporated: 1929 as Nineteen Hundred Corporation
Employees: 35,500
Sales: $8.10 billion
Stock Exchanges: New York Midwest London
SICs: 3630 Appliances; 6141 Personal Credit Institutions

From its beginning as a manufacturer of electrically powered clothes washers, Whirlpool Corporation has become a leading producer of a complete line of household appliances. The company is the number–one source of home laundry equipment in the United States, and also markets appliances such as dishwashers, refrigerators, ovens, ranges, and air conditioners worldwide under the Whirlpool, KitchenAid, and Roper brand names.

The company that preceded Whirlpool was founded in 1911 by Lou Upton and his uncle, Emory Upton, who lent their family name to the machine shop they opened in Saint Joseph, Michigan. Lou Upton, a life insurance salesman, had recently lost his investment in a small appliance dealership that had failed. In an attempt to compensate Upton for his loss, the dealer gave him the patent for a manually operated clothes washer. Emory Upton was able to outfit the machine with an electric motor, and—with a $5,000 stake from L. C. Bassford, a Chicago retailing executive—the Upton Machine Company began producing electric wringer washers. The company soon snared its first customer, the Federal Electric division of Chicago–based Commonwealth Edison.

The relationship lasted three years, until Federal Electric began manufacturing its own washers. Although losing this customer was a major blow, the company stayed afloat by manufacturing toys, camping equipment, and automobile accessories until it rebounded in 1916 with an agreement to produce two types of wringer washers for Sears, Roebuck and Company, which at that time operated exclusively through mail order. Sales of Upton’s washers through the Sears catalog grew rapidly during and after World War I. In order to avoid total dependence on the Sears account, however, Upton also launched a washer under its own brand name in the early 1920s.

During the 1920s, Sears’s expansion into retailing and its selection of Upton as its sole supplier of washing machines forced the company to find a way to increase its manufacturing capacity and distribution efficiency. This was accomplished through a merger, in 1929, with the Nineteen Hundred Washer Company of Binghamton, New York. The post–merger company, known as the Nineteen Hundred Corporation, survived the Great Depression without any lasting damage and even expanded and modernized its production facilities during this time to handle increasing sales volume.

During World War II the company manufactured weapons parts and related products needed for the war effort. The company also focused on the development of an automatic, spinner–type washer during the 1940s. This machine, nicknamed the “Jeep,” was introduced by Sears in 1947 under that company’s Ken–more brand name, and then under Nineteen Hundred’s own newly introduced Whirlpool brand one year later.

In 1949 Elisha “Bud” Gray II succeeded retiring Lou Upton as president and led the company through the postwar period, which was characterized by heavy consumer demand for convenience products. The Nineteen Hundred Corporation aggressively launched a complete line of Whirlpool home laundry appliances, including wringer and automatic clothes washers, electric and automatic clothes dryers, and irons. In 1950 the company changed its name to Whirlpool Corporation.

Although sales continued to climb, it became clear by the mid–1950s that the company’s emphasis on laundry equipment made it vulnerable to increasing competition from more diversified manufacturers. In 1955 Whirlpool merged with the Seeger Refrigerator Company and added a line of refrigerators. The company also began to make air conditioners and cooking–range products in 1955. The two lines had formerly been produced by Radio Corporation of America (RCA), and were marketed under the RCA–Whirlpool name. The company itself operated under the name of Whirlpool–Seeger Corporation until 1957. Between 1955 and 1957 the company introduced its first full line of home appliances under the RCA–Whirlpool brand. The line consisted of 12 types of machines and 150 models. The 1957 merger with Chicago’s Birtman Electric Company brought a vacuum cleaner line under Whirlpool’s expanding product umbrella.

As its product line grew, Whirlpool’s network of independent dealers and distributors assumed an increasingly important role in the company’s marketing and sales efforts. A subsidiary called Appliance Buyers Credit Corporation was formed in 1957 to provide financing to these distributors and to help strengthen Whirlpool’s position as an industry leader. Also in 1957, the company broadened its reach beyond the United States by initiating the first of several acquisitions of major Brazilian appliance manufacturers.

Intensifying consumerism in the 1960s created growing pressure on appliance manufacturers to offer better quality and service. As a result, Whirlpool launched new support services, as well as a continuing stream of new products, such as the home trash compactor. Its toll–free Cool–Line service enabled Whirlpool appliance owners to obtain immediate information on subjects like installation and repair. At the same time, however, price reductions, caused by the softening demand for appliances, and growing competition led the company to institute a series of measures designed to streamline production and decrease manufacturing costs. Since the Whirlpool name itself had gained wide acceptance, the company also reached a friendly agreement with RCA during the mid–1960s to drop RCA’s brand name from the company’s products.

Further attempts to diversify yielded mixed results. The company’s purchase of Heil–Quaker Corporation in 1964 enlarged Whirlpool’s scope beyond consumer appliances to central heating and cooling equipment. But this subsidiary was sold to Inter–City Gas Corporation of Canada in 1986 as Whirlpool refocused its attention on home appliances. Its 1966 entry into the consumer–electronics market with the acquisition of Warwick Electronics ended in failure ten years later, at which time the business was sold to Sanyo Electric Company. To close out the decade, the company penetrated the Canadian market for the first time with its 1969 purchase of Inglis, a home appliance manufacturer. Inglis has since served as Whirlpool’s Canadian arm.

Continued emphasis on consumerism combined with the 1973 energy crisis, a slump in the housing industry, and an economic recession increased pressure on the appliance industry to produce more energy–efficient products and to improve manufacturing efficiency. Faced with sluggish retail sales, Whirlpool dealers and Sears, still the company’s largest customer, liquidated their inventories, a move which forced Whirlpool to lay off over one–third of its workforce. A 1974 strike at its Evans–ville, Indiana, plant, which produced refrigeration and air conditioning equipment, further tested the company’s ability to weather the downturn in the appliance market. Although the strike ended after four months, the plant’s compressor facilities closed permanently in 1983 as part of a company wide initiative to reduce manufacturing costs. These developments stood in marked contrast to the period between 1967 and 1973, when manufacturers had built, delivered, and sold one appliance every 3.2 seconds.

By 1977 the market cycled upward, and Whirlpool and its competitors were again experiencing strong demand for labor–saving devices from first–time buyers of the postwar generation, from households replacing existing appliances, and from the military post exchanges with which the company had established a buying arrangement in 1967. As Whirlpool grew, however, traditional appliance retailers struggled against the increasing sales strength of mass merchandisers.

Whirlpool’s progress during the 1970s was guided by chairman John H. Platts, who had started his career with the company in 1941 on the assembly line and was hand–picked to succeed Elisha Gray II in 1971. Improvement of products for residential use remained an important priority for Whirlpool during this period. In 1977 it introduced the first automatic clothes washer with solid–state electronic controls and a line of microwave ovens. The company had originally entered the microwave market in the late 1950s and quickly withdrew due to limited potential.

A move toward vertical integration was also initiated in 1977, when the company started producing its own appliance motors to reduce its dependence on outside suppliers. One of Whirlpool’s few failures during the decade involved the launch of a commercial ice–making system for use in hotels and motels and by food purveyors. The product never met sales goals and the business was sold in 1982.

In 1980 Whirlpool was found guilty of discrimination in a suit brought by the Department of Labor, alleging that Whirlpool had taken inappropriate disciplinary action against two employees who had refused to perform what they considered to be hazardous work in the company’s Marion, Ohio, plant. After several years of litigation, the Supreme Court ruled in the employees’ favor, stating that the act of placing letters of reprimand in their personnel files was discriminatory.

Upon Platts’s retirement in November 1982, vice chairman Jack D. Sparks became chairman and CEO, and set about broadening the company’s focus. Sparks’s sales and marketing experience was felt important as Whirlpool faced an environment of increasing foreign competition in the United States, industry consolidation, and changing consumer preferences. Under Sparks’s leadership, Whirlpool embarked upon a major capital spending program to increase manufacturing productivity and instituted a five–year plan to address industry trends.

One result of this planning process was the expansion of the company’s product line beyond appliances and into related consumer durable goods. In 1985 Whirlpool entered the lucrative kitchen–cabinet market by acquiring Mastercraft Industries Corporation, followed by the purchase of another cabinet manufacturer, St. Charles Manufacturing Company, the next year. The cabinet business did not produce the hoped for results— Whirlpool was unable to capture a satisfactory share of the residential–construction market—and the cabinet operation was sold in 1989.

Sparks also oversaw the acquisition of the KitchenAid division of Hobart Corporation, which added a popular line of higher–priced dishwashers, ovens, and other kitchen appliances to the Whirlpool product line. Initiated in 1985, the transaction’s completion was delayed for a year as White Consolidated Industries alleged antitrust violations. White’s suit eventually proved unsuccessful and the acquisition was finalized in 1986.

Sparks also emphasized growth in the company’s international markets and formed Whirlpool Trading Company in 1984, to explore overseas opportunities. Two years later the company attempted to forge a joint venture with Dutch company N. V. Philips to manufacture and market household appliances overseas. The project fell through due to unstable currency and market conditions.

In 1987 David R. Whitman, succeeding Jack Sparks as president and CEO, took over the direction and implementation of the company’s five–year global strategy. The company continued to focus on increasing manufacturing productivity and reducing costs, while applying new technology to appliance production. Whirlpool contracted with McDonnell Douglas Astronautics Company to develop prototypes of appliances for use in U.S. space stations.

Until 1988 the company operated under a centralized structure, with decision–making concentrated at the senior management level. In 1988 Whirlpool reorganized its activities into seven units in order to maximize efficiency and market responsiveness. These units were: the Kenmore, Kitchen Aid, and Whirlpool appliance groups; Whirlpool International; Inglis Limited; Whirlpool Finance Corporation; and the company’s export group.

Shortly thereafter, the company attempted to acquire Roper Corporation, another major manufacturer and supplier of appliances to Sears. This move was hoped to strengthen Whirlpool’s cooking–appliance product line with electric and gas ranges and open new opportunities in the outdoor–equipment market Roper served with its lawn mowers and garden tractors. The Roper purchase was stymied, however, by General Electric Company (GE), which alleged that Roper had not solicited competitive bids upon receiving the Whirlpool offer as it was required to do so by the Securities and Exchange Commission. As the controversy intensified, Whirlpool withdrew its tender offer and reached a settlement with GE in which GE would acquire Roper’s manufacturing facilities while Whirlpool would obtain the rights to the Roper name. The rivals also forged a two–year agreement under which GE would supply Whirlpool with appliance motors and gas and electric ranges.

In 1988 the company successfully revived its proposed joint venture with N. V. Philips. This effort was spurred primarily by Whirlpool’s desire to participate in the post–1992 European market for home appliances. The ensuing agreement cleared the way for Whirlpool to market a full line of major home appliances in Europe. Philips’s appliances were more appropriately designed for European customers than Whirlpool’s models. The following year, the Whirlpool name was added to the Philips product line to strengthen recognition in the European market.

Whirlpool’s initiatives in Europe reflected the company’s aggressive international strategy, which earned it a reputation as one of the most globally diversified companies in the world during the early 1990s. Indeed, during this period Whirlpool expanded its overseas operations at a steady pace and lengthened its lead as the largest producer of appliances in the world. By late 1994, Whirlpool was manufacturing in 11 countries and marketing its products under ten brand names in 120 nations. The company enjoyed hefty sales gains in its giant European market in the early and mid–1990s. But it was pinning its hopes for greatest growth on Asia. Whirlpool shipped 700,000 units in Asia in 1994, was hoping to sell three million in that region in 1995, and expected similar growth to continue through at least the late 1990s. Similarly, sales in Latin America leapt 40 percent in 1994.

Besides surging global sales, Whirlpool worked to improve its operations in the flattening North American appliance market by restructuring. In 1994 it announced plans to cut about nine percent of its global work force, primarily through plant closures in Canada and the United States. Similar restructuring during the early 1990s resulted in a restructuring charge that cut 1994 profits by 32 percent, to about $158 million. During the same year, though, Whirlpool’s total revenues jumped more than eight percent and profits were growing at record levels in 1995. Massive untapped global markets, combined with Whirlpool’s combative global tactics under Whitman’s command, suggested healthy long–term performance for the appliance maker.

Principal Subsidiaries

Kitchen Aid, Inc.; North American Appliance Group; Whirlpool Financial Corporation; Whirlpool Asia; Whirlpool Europe.

Further Reading

Heinrich, Erik, “Ontario Jobs Lost in Whirlpool Shakeup,” Financial Post, November 16, 1994, p. 8.

Maurer, Mitch, “Whirlpool Cuts 3,200; Tulsa Plans Unchanged,” Tulsa World, November 16, 1994, p. B1.

–––, “Whirlpool Income Rises,” Tulsa World, October 14, 1994, p. B2.

Reid, T. R., “Whirlpool Enters China with Joint Ventures in Microwave Ovens and Refrigerators,” Business Wire, December 7, 1994.

–––, “Whirlpool’s Full–year 1994 Operating Results are Best Ever,” Business Wire, January 26, 1995.

Whirlpool Corporation 1911–1986: Progressing Toward the 21st Century, Benton Harbor, Mich.: Whirlpool Corporation, 1986.

—Sandy Schusteff

—updated by Dave Mote

Whirlpool Corporation

Benton Harbor, Michigan 49022
U.S.A.
(616) 926-5000
Fax: (616) 926-5486

Public Company
Incorporated: 1929 as Nineteen Hundred Corporation
Employees: 39,411
Sales: $6.29 billion
Stock Exchanges: New York Midwest London

From its beginning as a manufacturer of electrically powered clothes washers, Whirlpool Corporation has become a leading producer of a complete line of household appliances. The number-one source of home laundry equipment in the United States, the company also markets appliances such as dishwashers, refrigerators, ovens, ranges, and air conditioners worldwide under the Whirlpool, Kitchen Aid, and Roper brand names.

The company that preceded Whirlpool was founded in 1911 by Lou Upton and his uncle Emory Upton, who lent their family name to the machine shop they opened in Saint Joseph, Michigan. Lou Upton, a life insurance salesman, had recently lost his investment in a small appliance dealership that had failed. In an attempt to compensate Upton for his loss, the dealer gave him the patent for a manually operated clothes washer. Emory Upton was able to outfit the machine with an electric motor, and—with a $5,000 stake from L.C. Bassford, a Chicago retailing executive—the Upton Machine Company began producing electric wringer washers. The company soon snared its first customer, the Federal Electric division of Chicago-based Commonwealth Edison.

The relationship lasted three years, until Federal Electric began manufacturing its own washers. Although losing this customer was a major blow, the company stayed afloat by manufacturing toys, camping equipment, and automobile accessories until it rebounded in 1916 with an agreement to produce two types of wringer washers for Sears, Roebuck and Company, which at that time operated exclusively through mail order. Sales of Upton’s washers through the Sears catalog grew rapidly during and after World War I. In order to avoid total dependence on the Sears account, however, Upton also launched a washer under its own brand name in the early 1920s.

During the 1920s, Sears’s expansion into retailing and its selection of Upton as its sole supplier of washing machines forced the company to find a way to increase its manufacturing capacity and distribution efficiency. This was accomplished through a merger, in 1929, with the Nineteen Hundred Washer Company of Binghamton, New York. The postmerger company, known as the Nineteen Hundred Corporation, survived the Great Depression without any lasting damage and even expanded and modernized its production facilities during this time to handle increasing sales volume.

During World War II the company manufactured weapons parts and related products needed for the war effort. The company also focused on the development of an automatic, spinner-type washer during the 1940s. This machine, nicknamed the “Jeep,” was introduced by Sears in 1947 under that company’s Kenmore brand name, and then under Nineteen Hundred’s own newly introduced Whirlpool brand one year later.

In 1949 Elisha “Bud” Gray II succeeded retiring Lou Upton as president and led the company through the postwar period, which was characterized by heavy consumer demand for convenience products. The Nineteen Hundred Corporation aggressively launched a complete line of Whirlpool home laundry appliances, including wringer and automatic clothes washers, electric and automatic clothes dryers, and irons. In 1950 the company changed its name to Whirlpool Corporation.

Although sales continued to climb, it became clear by the mid-1950s that the company’s emphasis on laundry equipment made it vulnerable to increasing competition from more diversified manufacturers. In 1955 Whirlpool merged with the Seeger Refrigerator Company and added a line of refrigerators. The company also began to make air conditioners and cooking-range products in 1955. The two lines had formerly been produced by Radio Corporation of America (RCA), and were marketed under the RCA-Whirlpool name. The company itself operated under the name of Whirlpool-Seeger Corporation until 1957. Between 1955 and 1957 the company introduced its first full line of home appliances under the RCA-Whirlpool brand. The line consisted of 12 types of machines and 150 models. The 1957 merger with Chicago’s Birtman Electric Company brought a vacuum cleaner line under Whirlpool’s expanding product umbrella.

As its product line grew, Whirlpool’s network of independent dealers and distributors, outside of the Sears chain, assumed an increasingly important role in the company’s marketing and sales efforts. A subsidiary called Appliance Buyers Credit Corporation was formed in 1957 to provide financing to these distributors and to help strengthen Whirlpool’s position as an industry leader. Also in 1957, the company broadened its reach beyond the United States by initiating the first of several acquisitions of major Brazilian appliance manufacturers.

Intensifying consumerism in the 1960s created growing pressure on appliance manufacturers to offer better quality and service. As a result, Whirlpool launched new support services, as well as a continuing stream of new products, such as the home trash compactor. Its toll-free Cool-Line service enabled Whirlpool appliance owners to obtain immediate information on subjects like installation and repair. At the same time, however, price reductions caused by the softening demand for appliances and growing competition led the company to institute a series of measures designed to streamline production and decrease manufacturing costs. Since the Whirlpool name itself had gained wide acceptance, the company also reached a friendly agreement with RCA during the mid-1960s to drop RCA’s brand name from the company’s products.

Further attempts to diversify yielded mixed results. The company’s purchase of Heil-Quaker Corporation in 1964 enlarged Whirlpool’s scope beyond consumer appliances to central heating and cooling equipment. This subsidiary was sold to Inter-City Gas Corporation of Canada in 1986 as Whirlpool refocused its attention on home appliances. Its 1966 entry into the consumer-electronics market with the acquisition of Warwick Electronics ended in failure ten years later, at which time the business was sold to Sanyo Electric Company. To close out the decade, the company penetrated the Canadian market for the first time with its 1969 purchase of Inglis, a home appliance manufacturer. Inglis has continued to serve its market as Whirlpool’s Canadian arm.

Continued emphasis on consumerism combined with the 1973 energy crisis, a slump in the housing industry, and an economic recession increased pressure on the appliance industry to produce more energy-efficient products and to improve manufacturing efficiency.

During this period, faced with sluggish retail sales, Whirlpool dealers and Sears, still the company’s largest customer, liquidated their inventories, a move which forced Whirlpool to lay off over one-third of its workforce. A 1974 strike at its Evansville, Indiana, plant, which produced refrigeration and air conditioning equipment, further tested the company’s ability to weather the downturn in the appliance market. Although the strike ended after four months, the plant’s compressor facilities closed permanently in 1983 as part of a companywide initiative to reduce manufacturing costs. These developments stood in marked contrast to the period between 1967 and 1973, when manufacturers had built, delivered, and sold one appliance every 3.2 seconds.

By 1977 the market cycled upward, and Whirlpool and its competitors were again experiencing strong demand for labor-saving devices from first-time buyers of the postwar generation, from households replacing existing appliances, and from the military post exchanges with which the company had established a buying arrangement in 1967. As Whirlpool grew, however, traditional appliance retailers struggled against the increasing sales strength of mass merchandisers.

Whirlpool’s progress during the 1970s was guided by Chairman John H. Platts, who had started his career with the company in 1941 on the assembly line and was hand-picked to succeed Elisha Gray II in 1971. Improvement of products for residential use remained an important priority for Whirlpool during this period. In 1977 it introduced the first automatic clothes washer with solid-state electronic controls and a line of microwave ovens. The company had originally entered the microwave market in the late 1950s and quickly withdrew due to limited potential.

A move toward vertical integration was also initiated in 1977, when the company started producing its own appliance motors to reduce its dependence on outside suppliers. One of Whirlpool’s few failures during the decade involved the launch of a commercial ice-making system for use in hotels and motels and by food purveyors. The product never met sales goals and the business was sold in 1982.

In 1980 Whirlpool was found guilty of discrimination in a suit brought by the Department of Labor, alleging that Whirlpool had taken inappropriate disciplinary action against two employees who had refused to perform what they considered to be hazardous work in the company’s Marion, Ohio, plant. After several years of litigation, the Supreme Court ruled in the employees’ favor, stating that the act of placing letters of reprimand in their personnel files was discriminatory.

Upon Platts’s retirement in November 1982, vice chairman Jack D. Sparks became chairman and CEO, broadening the company’s focus. Sparks’s sales and marketing experience was felt important as Whirlpool faced an environment of increasing foreign competition in the United States, industry consolidation, and changing consumer preferences. Under Sparks’s leadership, Whirlpool embarked upon a major capital spending program to increase manufacturing productivity and instituted a five-year plan to address industry trends.

One result of this planning process was the expansion of the company’s product line beyond appliances and into related consumer durable goods. In 1985 Whirlpool entered the lucrative kitchen-cabinet market by acquiring Mastercraft Industries Corporation, followed by the purchase of another cabinet manufacturer, St. Charles Manufacturing Company, the next year. The cabinet business did not produce the hoped for results—Whirlpool was unable to capture a satisfactory share of the residential-construction market—and the cabinet operation was sold in 1989.

Sparks also oversaw the acquisition of the KitchenAid division of Hobart Corporation, which added a popular line of higher-priced dishwashers, ovens, and other kitchen appliances to the Whirlpool product line. Initiated in 1985, the transaction’s completion was delayed for a year as White Consolidated Industries alleged antitrust violations. White’s suit eventually proved unsuccessful and the acquisition was finalized in 1986.

Sparks also emphasized growth in the company’s international markets and formed Whirlpool Trading Company in 1984, to exploré overseas opportunities. Two years later the company attempted to forge a joint venture with Dutch N. V. Philips to manufacture and market household appliances overseas. The project fell through due to unstable currency and market conditions.

In 1987 David R. Whitwam, succeeding Jack Sparks as president and CEO, took over the direction and implementation of the company’s five-year global strategy. The company continued to focus on increasing manufacturing productivity and reducing costs, while applying new technology to appliance production. Whirlpool contracted with McDonnell Douglas Astronautics Company to develop prototypes of appliances for use in U.S. space stations.

Until 1988 the company operated under a centralized structure, with decision-making concentrated at the senior management level. In 1988 Whirlpool reorganized its activities into seven units in order to maximize efficiency and market responsiveness. These units are: the Kenmore, KitchenAid, and Whirlpool appliance groups; Whirlpool International; Inglis Limited; Whirlpool Finance Corporation; and the company’s export group.

Shortly thereafter, the company attempted to acquire Roper Corporation, another major manufacturer and supplier of appliances to Sears. This move would have strengthened Whirlpool’s cooking-appliance product line with electric and gas ranges and would also have opened new opportunities in the outdoor-equipment market Roper served with its lawn mowers and garden tractors. The Roper purchase was stymied, however, by General Electric Company (GE), which alleged that Roper had not solicited competitive bids upon receiving the Whirlpool offer as it was required to do so by the Securities and Exchange Commission. As the controversy intensified, Whirlpool withdrew its tender offer and reached a settlement with GE in which GE would acquire Roper’s manufacturing facilities while Whirlpool would obtain the rights to the Roper name. The rivals also forged a two-year agreement in which GE would supply Whirlpool with appliance motors and gas and electric ranges.

In 1988 the company successfully revived its proposed joint venture with N. V. Philips. This effort was spurred primarily by Whirlpool’s desire to participate in the post-1992 European market for home appliances. The ensuing agreement cleared the way for Whirlpool to market a full line of major home appliances in Europe. Philips’s appliances were more appropriately designed for European customers than Whirlpool’s models. The following year, the Whirlpool name was added to the Philips product line to strengthen recognition in the European market. This operation, with Whirlpool’s businesses in Brazil, Canada, Italy, and Mexico, is the cornerstone of its global strategy.

Whirlpool is positioned to capitalize on growth opportunities in the global marketplace with a comprehensive line of home appliances. Led by chairman, president, and CEO Whitwam, the company faces flattening U.S. demand for its products due to a decreasing number of family households. It has responded by growing on the international front, where greater opportunities exist for expansion. The company must further develop and strengthen its presence while also preserving the profit margins essential for its overseas operation to remain viable.

Principal Subsidiaries

Áspera S.r.l. (Italy); Inglis Limited (Canada); Kitchen Aid, Inc.; Whirlpool Financial Corporation; Whirlpool International B.V. (Netherlands).

Further Reading

Whirlpool Corporation 1911-1986: Progressing Toward the 21st Century, Benton Harbor, Michigan, Whirlpool Corporation, 1986.

—Sandy Schusteff

Whirlpool Corporation

2000 North M-63
Benton Harbor, Michigan 49022-2692
U.S.A.
Telephone: (269) 926-5000
Toll Free: (800) 253-1301
Fax: (269) 923-5443
Web site: http://www.whirlpoolcorp.com

Public Company
Incorporated: 1929 as Nineteen Hundred Corporation
Employees: 68,272
Sales: $11.02 billion (2002)
Stock Exchanges: New York Chicago
Ticker Symbol: WHR
NAIC: 333415 Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing; 335211 Electric Housewares and Household Fan Manufacturing; 335221 Household Cooking Appliance Manufacturing; 335222 Household Refrigerator and Home Freezer Manufacturing; 335224 Household Laundry Equipment Manufacturing; 335228 Other Major Household Appliance Manufacturing

From its beginning as a manufacturer of electrically powered clothes washers, Whirlpool Corporation has become the world's leading producer of major household appliances. Its main products include home laundry equipment, dishwashers, refrigerators, freezers, ovens, ranges, room air conditioners, and mixers and other small household appliances. The company's appliances are sold in more than 170 countries worldwide under such brand names as Whirlpool, KitchenAid, Roper, Estate, Bauknecht, Ignis, Laden, Polar, Brastemp, Consul, and Eslabon de Lujo. Whirlpool is a major supplier of appliances to Sears, Roebuck and Co., which accounts for about one-fifth of Whirlpool's net sales; these include Whirlpool-made products marketed under Sears' Kenmore brand, as well as Whirlpool and KitchenAid brand products. The corporation has 47 manufacturing locations, ten of which are in the United States; the remainder are in Canada, Mexico, France, Germany, Italy, Poland, Slovakia, South Africa, Sweden, Brazil, China, and India. Two-thirds of sales are generated in North America, 20 percent in Europe, and 11 percent in Latin America.

Washing Machine Beginnings

The company that preceded Whirlpool was founded in 1911 by Lou Upton and his uncle, Emory Upton, who lent their family name to the machine shop they opened in St. Joseph, Michigan. Lou Upton, a life insurance salesman, had recently lost his investment in a small appliance dealership that had failed. In an attempt to compensate Upton for his loss, the dealer gave him the patent for a manually operated clothes washer. Emory Upton was able to outfit the machine with an electric motor, and—with a $5,000 stake from L.C. Bassford, a Chicago retailing executive—the Upton Machine Company began producing electric wringer washers. The company soon snared its first customer, the Federal Electric division of Chicago-based Commonwealth Edison.

The relationship lasted three years, until Federal Electric began manufacturing its own washers. Although losing this customer was a major blow, the company stayed afloat by manufacturing toys, camping equipment, and automobile accessories until it rebounded in 1916 with an agreement to produce two types of wringer washers for Sears, Roebuck and Co., which at that time operated exclusively through mail order. Sales of Upton's washers through the Sears catalog (under the Allen trade name) grew rapidly during and after World War I. In order to avoid total dependence on the Sears account, however, Upton also launched a washer under its own brand name in the early 1920s.

During the 1920s, Sears's expansion into retailing and its selection of Upton as its sole supplier of washing machines forced the company to find a way to increase its manufacturing capacity and distribution efficiency. This was accomplished through a merger, in 1929, with the Nineteen Hundred Washer Company of Binghamton, New York. The post-merger company, known as the Nineteen Hundred Corporation, survived the Great Depression without any lasting damage and even expanded and modernized its production facilities during this time to handle increasing sales volume.

During World War II the company manufactured weapons parts and related products needed for the war effort. The company also focused on the development of an automatic, spinner-type washer during the 1940s. This machine, nicknamed the "Jeep," was introduced by Sears in 1947 under that company's Kenmore brand name, and then under Nineteen Hundred's own newly introduced Whirlpool brand one year later.

In 1949 Elisha "Bud" Gray II succeeded retiring Lou Upton as president and led the company through the postwar period, which was characterized by heavy consumer demand for convenience products. The Nineteen Hundred Corporation aggressively launched a complete line of Whirlpool home laundry appliances, including wringer and automatic clothes washers, electric and automatic clothes dryers, and irons. In 1950 the company changed its name to Whirlpool Corporation.

Diversifying the Product Line: 1950s–60s

Although sales continued to climb, it became clear by the mid-1950s that the company's emphasis on laundry equipment made it vulnerable to increasing competition from more diversified manufacturers. In 1955 Whirlpool merged with the Seeger Refrigerator Company and added a line of refrigerators. The company also began to make air conditioners and cooking-range products in 1955. The two lines had formerly been produced by Radio Corporation of America (RCA), and were marketed under the RCA-Whirlpool name. The company itself operated under the name of Whirlpool-Seeger Corporation until 1957. Between 1955 and 1957 the company introduced its first full line of home appliances under the RCA-Whirlpool brand. The line consisted of 12 types of machines and 150 models. The 1957 merger with Chicago's Birtman Electric Company brought a vacuum cleaner line under Whirlpool's expanding product umbrella.

As its product line grew, Whirlpool's network of independent dealers and distributors assumed an increasingly important role in the company's marketing and sales efforts. A subsidiary called Appliance Buyers Credit Corporation was formed in 1957 to provide financing to these distributors and to help strengthen Whirlpool's position as an industry leader. In 1958 the company broadened its reach beyond the United States by initiating the first of several acquisitions of major Brazilian appliance manufacturers, taking a stake in Brasmotor S.A.

Intensifying consumerism in the 1960s created growing pressure on appliance manufacturers to offer better quality and service. As a result, Whirlpool launched new support services, as well as a continuing stream of new products, such as the home trash compactor. Its toll-free Cool Line service enabled Whirlpool appliance owners to obtain immediate information on such subjects as installation and repair. At the same time, however, price reductions, caused by the softening demand for appliances, and growing competition led the company to institute a series of measures designed to streamline production and decrease manufacturing costs. Because the Whirlpool name itself had gained wide acceptance, the company also reached a friendly agreement with RCA during the mid-1960s to drop RCA's brand name from the company's products.

Further attempts to diversify yielded mixed results. The company's purchase of Heil-Quaker Corporation in 1964 enlarged Whirlpool's scope beyond consumer appliances to central heating and cooling equipment. But this subsidiary was sold to Inter-City Gas Corporation of Canada in 1986 as Whirlpool refocused its attention on home appliances. Its 1966 entry into the consumer electronics market with the acquisition of Warwick Electronics ended in failure ten years later, at which time the business was sold to Sanyo Electric Company. To close out the decade, the company penetrated the Canadian market for the first time with its 1969 purchase of a 33 percent stake in John Inglis Co. Ltd., a home appliance manufacturer. This company was renamed Inglis Limited in 1973, and Whirlpool increased its ownership interest to majority status in 1985; Inglis served as Whirlpool's Canadian arm.

Negotiating the Economic Uncertainties of the 1970s

Continued emphasis on consumerism combined with the 1973 energy crisis, a slump in the housing industry, and an economic recession increased pressure on the appliance industry to produce more energy-efficient products and to improve manufacturing efficiency. Faced with sluggish retail sales, Whirlpool dealers and Sears, still the company's largest customer, liquidated their inventories, a move that forced Whirlpool to lay off over one-third of its workforce. A 1974 strike at its Evansville, Indiana, plant, which produced refrigeration and air conditioning equipment, further tested the company's ability to weather the downturn in the appliance market. Although the strike ended after four months, the plant's compressor facilities closed permanently in 1983 as part of a companywide initiative to reduce manufacturing costs. These developments stood in marked contrast to the period between 1967 and 1973, when manufacturers had built, delivered, and sold one appliance every 3.2 seconds.

By 1977 the market cycled upward, and Whirlpool and its competitors were again experiencing strong demand for laborsaving devices from first-time buyers of the postwar generation, from households replacing existing appliances, and from the military post exchanges with which the company had established a buying arrangement in 1967. As Whirlpool grew, however, traditional appliance retailers struggled against the increasing sales strength of mass merchandisers.

Company Perspectives:

At Whirlpool, we believe that innovative thinking comes from anyone and anywhere within our company. That's why, in 1999, we launched a worldwide effort to instill innovation as a core competency throughout our organization. Since then, Whirlpool people worldwide have participated in and contributed to innovation-related activities that have resulted in new ideas, products and services that deliver real value to our consumers in ways never before seen in either our company or our industry.

Innovation is Whirlpool Corporation's differentiating strategy, one we believe provides us with a significant competitive advantage. Innovation also brings us closer to our consumers and enables us to meet their unmet needs.

Whirlpool's progress during the 1970s was guided by Chairman John H. Platts, who had started his career with the company in 1941 on the assembly line and was hand-picked to succeed Elisha Gray II in 1971. Improvement of products for residential use remained an important priority for Whirlpool during this period. In 1977 it introduced the first automatic clothes washer with solid-state electronic controls and a line of microwave ovens. The company had originally entered the microwave market in the late 1950s and quickly withdrew because of limited potential.

A move toward vertical integration was also initiated in 1977, when the company started producing its own appliance motors to reduce its dependence on outside suppliers. One of Whirlpool's few failures during the decade involved the launch of a commercial ice-making system for use in hotels and motels and by food purveyors. The product never met sales goals and the business was sold in 1982.

1980s: Adding the KitchenAid and Roper Brands, Penetrating Europe

In 1980 Whirlpool was found guilty of discrimination in a suit brought by the Department of Labor, alleging that Whirlpool had taken inappropriate disciplinary action against two employees who had refused to perform what they considered to be hazardous work in the company's Marion, Ohio, plant. After several years of litigation, the U.S. Supreme Court ruled in the employees' favor, stating that the act of placing letters of reprimand in their personnel files was discriminatory.

Upon Platts's retirement in November 1982, Vice-Chairman Jack D. Sparks became chairman and CEO, and set about broadening the company's focus. Sparks's sales and marketing experience was felt important as Whirlpool faced an environment of increasing foreign competition in the United States, industry consolidation, and changing consumer preferences. Under Sparks's leadership, Whirlpool embarked upon a major capital spending program to increase manufacturing productivity and instituted a five-year plan to address industry trends.

One result of this planning process was the expansion of the company's product line beyond appliances and into related consumer durable goods. In 1985 Whirlpool entered the lucrative kitchen-cabinet market by acquiring Mastercraft Industries Corporation, followed by the purchase of another cabinet manufacturer, St. Charles Manufacturing Company, the next year. The cabinet business did not produce the hoped for results—Whirlpool was unable to capture a satisfactory share of the residential-construction market—and the cabinet operation was sold in 1989.

Sparks also oversaw the acquisition of the KitchenAid division of Hobart Corporation, which added a popular line of higher-priced dishwashers, ovens, and other kitchen appliances to the Whirlpool product line. Initiated in 1985, the transaction's completion was delayed for a year as White Consolidated Industries alleged antitrust violations. White's suit eventually proved unsuccessful and the acquisition was finalized in 1986.

Sparks also emphasized growth in the company's international markets and formed Whirlpool Trading Company in 1984, to explore overseas opportunities. Two years later the company attempted to forge a joint venture with Dutch company N.V. Philips to manufacture and market household appliances overseas. The project fell through because of unstable currency and market conditions.

Key Dates:

1911:

Lou Upton and his uncle, Emory Upton, found Upton Machine Company in St. Joseph, Michigan, to begin producing electric wringer washers.

1916:

Upton begins making washers for Sears, Roebuck and Co., which markets them under the Allen trade name.

1929:

Manufacturing capacity is increased through a merger with the Nineteen Hundred Washer Company of Binghamton, New York, forming Nineteen Hundred Corporation.

1947:

Company introduces the first automatic, spinner-type washer under Sears' Kenmore brand.

1948:

Sale of Whirlpool brand washers begins.

1950:

Company adds automatic dryers to its product line and changes its name to Whirlpool Corporation.

1955:

Whirlpool gains line of refrigerators via merger with Seeger Refrigerator Company and changes its name to Whirlpool-Seeger Corporation; company acquires air conditioner and cooking range lines of Radio Corporation of America (RCA), which are marketed under the RCA-Whirlpool name until the mid-1960s.

1957:

Company changes its name back to Whirlpool Corporation.

1958:

In its first move outside the United States, Whirlpool buys a stake in Brasmotor S.A., a major Brazilian appliance maker.

1969:

Whirlpool takes a 33 percent stake in John Inglis Co. Ltd., entering the Canadian home appliance market.

1986:

Company acquires the KitchenAid division of Hobart Corporation.

1989:

Whirlpool secures the rights to the Roper brand name; it joins with the Dutch company N.V. Philips to establish Whirlpool Europe B.V., a joint venture through which Whirlpool will market a full line of major home appliances in Europe.

1991:

Whirlpool buys out its European partner, taking full control of Whirlpool Europe.

1997:

Company launches a global restructuring involving the elimination of 4,700 jobs, the closure of plants and other facilities, and a charge of $350 million.

2000:

Another major restructuring is launched that includes more than 7,000 job cuts and $373 million in charges over the following two years.

In 1987 David R. Whitwam, succeeding Jack Sparks as president and CEO, took over the direction and implementation of the company's five-year global strategy. The company continued to focus on increasing manufacturing productivity and reducing costs, while applying new technology to appliance production. Whirlpool contracted with McDonnell Douglas Astronautics Company to develop prototypes of appliances for use in U.S. space stations. Also in 1987 Whirlpool and Sundaram-Clayton Limited of Madras, India, formed a joint venture called TVS Whirlpool Limited to make compact washing machines for the Indian market. One year later, Whirlpool entered the Mexican appliance market through the formation of Vitromatic, S.A. de C.V., a joint venture with Vitro S.A., a glass manufacturer based in Monterrey.

Until 1988 the company operated under a centralized structure, with decision-making concentrated at the senior management level. In 1988 Whirlpool reorganized its activities into seven units in order to maximize efficiency and market responsiveness. These units were: the Kenmore, KitchenAid, and Whirlpool appliance groups; Whirlpool International; Inglis Limited; Whirlpool Finance Corporation; and the company's export group.

Shortly thereafter, the company attempted to acquire Roper Corporation, another major manufacturer and supplier of appliances to Sears. This move was made to strengthen Whirlpool's cooking-appliance product line with electric and gas ranges and open new opportunities in the outdoor-equipment market Roper served with its lawn mowers and garden tractors. The Roper purchase was stymied, however, by General Electric Company (GE), which alleged that Roper had not solicited competitive bids upon receiving the Whirlpool offer as it was required to do by the Securities and Exchange Commission. As the controversy intensified, Whirlpool withdrew its tender offer and reached a settlement with GE in 1989 in which GE would acquire Roper's manufacturing facilities while Whirlpool would obtain the rights to the Roper name. The rivals also forged a two-year agreement under which GE would supply Whirlpool with appliance motors and gas and electric ranges. Meantime, the addition of Roper provided the company with a three-tier brand structure in North America consisting of the high-end KitchenAid, the popular-priced Whirlpool, and the value-priced Roper.

In 1989 the company successfully revived its proposed joint venture with N.V. Philips. This effort was spurred primarily by Whirlpool's desire to participate in the post-1992 European market for home appliances. The ensuing agreement cleared the way for Whirlpool to market a full line of major home appliances in Europe through a joint venture called Whirlpool Europe B.V. Philips's appliances were more appropriately designed for European customers than Whirlpool's models. The Whirlpool name was added to the Philips product line to strengthen recognition in the European market. By the end of the 1980s, Whirlpool's initiatives at home and abroad had paid off in the form of revenues in excess of $6 billion, more than tripling the 1978 total of $2 billion.

Global Ambitions in the 1990s

Whirlpool's initiatives in Europe reflected the company's aggressive international strategy, which earned it a reputation as one of the most globally diversified companies in the world during the early 1990s. Indeed, during this period Whirlpool expanded its overseas operations at a steady pace and lengthened its lead as the largest producer of appliances in the world. By late 1994, Whirlpool was manufacturing in 11 countries and marketing its products under ten brand names in 120 nations. The company enjoyed hefty sales gains in its giant European market in the early and mid-1990s, particularly following Whirlpool's mid-1991 buyout of its European joint venture partner in a $600 million deal. Further European growth came via an expansion into the newly opened markets of central and eastern Europe, with the first ventures centering on Hungary and Slovakia; later in the decade, the firm moved into Poland, the Czech Republic, Romania, Bulgaria, and Russia. Whirlpool, however, was pinning its hopes for greatest growth on Asia, to which it shipped 700,000 units in 1994. Similarly, sales in Latin America leapt 40 percent in 1994.

Besides surging global sales, Whirlpool worked to improve its operations in the flattening North American appliance market by restructuring. In 1994 it announced plans to cut about 9 percent of its global workforce, primarily through plant closures in Canada and the United States. A $250 million restructuring charge cut 1994 profits by 32 percent, to about $158 million. During the same year, though, Whirlpool's total revenues jumped more than 8 percent.

During the mid-1990s Whirlpool made a big push into Asia, forming several joint ventures in China and India. In 1994 the company had gained control of Kelvinator of India, Ltd., which it merged two years later with another majority-owned Indian firm, Whirlpool Washing Machines Limited, to form Whirlpool of India. Asia nonetheless accounted for only 6 percent of the 1996 revenues of $8.5 billion, and the ventures in this region were yet to be profitable. The firm lost $70 million in Asia that year. Late in 1997, as part of a global restructuring effort, Whirlpool announced that it was pulling out of two money-losing joint ventures in China. The company's European push had also been less than fully successful. It had proved very difficult to establish the Whirlpool brand on that continent, where there was stiff competition from entrenched players and where appliance manufacturers had to cater to specific demands of customers from a wide variety of cultures—a key contrast to the largely homogenous U.S. market. This was a lesson that Maytag Corporation, one of Whirlpool's main U.S. rivals, had already learned, having abandoned the European market in 1995 after encountering its own problems there. Although Whirlpool stayed the course in Europe, its operations there were thoroughly overhauled as part of the restructuring launched in late 1997. This restructuring involved the elimination of about 4,700 positions (about 10 percent of the payroll), mainly in Europe and Asia, the shuttering of various manufacturing and service facilities, and a $350 million charge that led to a net loss for the year of $15 million. Whirlpool also announced that it would sell its consumer-financing unit, Whirlpool Finance Corporation, to Transamerica Corporation for $1.35 billion.

By the late 1990s the European operations had been successfully turned around and returned to profitability. Leading the effort as head of Whirlpool Europe was Jeff M. Fettig, who was rewarded for his efforts by being named president and chief operating officer of Whirlpool Corporation in June 1999. Whitwam, who had been named chairman in 1992, remained CEO. Whirlpool ended the decade with record 1999 revenues of $10.51 billion and record net earnings of $347 million. More than 40 percent of the revenues and 30 percent of the profits originated outside of North America.

Developments in the Early 2000s

Whirlpool continued its international expansion efforts in the early 2000s. In January 2000 the firm spent $283 million to increase its equity interests in its two key Brazilian subsidiaries, Brasmotor S.A. and Multibrás S.A. Eletrodomésticos, to 94 percent. Whirlpool gained full ownership of the Mexican venture Vitromatic in a July 2002 transaction involving $151 million in cash and the assumption of $143 million in debt. Vitromatic was subsequently renamed Whirlpool Mexico, S.A. de C.V. Over in Europe, a 95 percent interest in Polar S.A., a leading maker of home appliances in Poland, was acquired for $48 million in cash and assumed debt. In August 2003 Whirlpool entered into a global strategic alliance with Fisher & Paykel Appliances, a major New Zealand-based home appliance maker. The alliance was set up to market existing appliances as well as develop new ones.

The global economic downturn of this period had a significant negative impact on the major appliance industry, prompting Whirlpool to begin another major global restructuring in late 2000. Much of the restructuring involved the corporation's European operations, which remained less profitable than those in North America. Over the next two years, Whirlpool eliminated more than 7,000 positions, paring the workforce by more than 10 percent. It aimed to achieve annual savings of $200 million by boosting cost-effectiveness worldwide. Restructuring charges totaled $273 million in 2001 and 2002. Whirlpool incurred additional extraordinary expenses from two recalls. Certain dishwasher models were recalled in 2000 because some had been catching fire. Then in October 2001 Whirlpool issued the largest recall in its history. Some 1.8 million microwave ovens were recalled because they could catch fire. Whirlpool set aside $300 million to handle the problem. The company barely eked out a profit of $21 million in 2001, before posting a net loss of $394 million in 2002 on record revenues of $11.02 billion. The 2002 loss, however, resulted from implementation of a change in accounting principles relating to goodwill impairment. Whirlpool took an aftertax charge of $613 million in implementing this change.

As it moved through the difficult times that the new century brought, Whirlpool worked aggressively to develop successful new products. During 2002 the Whirlpool Duet washer and dryer were introduced, with the washer featuring 60 percent more capacity than standard front-load washers. Also introduced that year were the KitchenAid Briva in-sink dishwasher and the Whirlpool Polara refrigerated range, which was the first range to combine both cooking and refrigeration functions. But Whirlpool was also moving beyond the kitchen and the laundry room. New products in 2002 also included the company's first line of jetted baths as well as the Gladiator GarageWorks line of organizing products for the garage. Whirlpool's core, however, remained its lines of major home appliances, and its continued innovation in that area promised to keep the company in the lead of the global appliance market.

Principal Subsidiaries

Empreso Brasileira de Compressores S.A. (Brazil; 94%); Multibrás S.A. Eletrodomésticos (Brazil; 94%); Whirlpool Canada Inc.; Whirlpool do Brasil Ltda. (Brazil); Whirlpool Europe B.V. (Netherlands); Whirlpool Financial Corporation; Whirlpool Mexico, S.A. de C.V.; Whirlpool Patents Company; Whirlpool Properties, Inc.

Principal Operating Units

Whirlpool North America; Whirlpool Europe; Whirlpool Latin America; Whirlpool Asia.

Principal Competitors

GE Consumer Products; Maytag Corporation; AB Electrolux; BSH Bosch und Siemens Hausgeräte GmbH; Merloni Elettrodomestici S.p.A.; El.Fi Elettrofinanziaria S.p.A.

Further Reading

Bary, Andrew, "Unbalanced Spin," Barron's, August 14, 2000, pp. 18, 20.

Beatty, Gerry, "Breaking Away: Whirlpool Realigns to Spur Impulse Purchases of Major Appliances," HFD—The Weekly Home Furnishings Newspaper, November 23, 1992, pp. 58+.

Benway, Susan Duffy, "Giving Growth a Tumble: Whirlpool Pushes Expansion," Barron's, February 10, 1986, pp. 32+.

Berss, Marcia, "Whirlpool's Bloody Nose," Forbes, March 11, 1996, pp. 90+.

DuPont, Ted, "Whirlpool's New World," HFD—The Weekly Home Furnishings Newspaper, July 6, 1987, pp. 1+.

Hussey, Allan F., "No Dry Cycle: Despite Recent Slump, Whirlpool Boasts String of Record Profits," Barron's, April 2, 1984, pp. 55+.

"Innovation Runs Rampant in Benton Harbor," Appliance, October 2002, pp. 54–55.

Jancsurak, Joe, "Whirlpool: U.S. Leader Pursues Global Blueprint," Appliance Manufacturer, February 1997, p. G21.

Johnson, Robert, and Matthew Winkler, "Venture Is Set by Whirlpool and N.V. Philips," Wall Street Journal, August 19, 1988.

Kindel, Stephen, "World Washer: Why Whirlpool Leads in Appliances, Not Some Japanese Outfit," Financial World, March 20, 1990, pp. 42+.

Maruca, Regina Fazio, "The Right Way to Go Global: An Interview with Whirlpool CEO David Whitwam," Harvard Business Review, March/April 1994, pp. 134+.

Maurer, Mitch, "Whirlpool Cuts 3,200; Tulsa Plans Unchanged," Tulsa World, November 16, 1994, p. B1.

Oster, Patrick, and John Rossant, "Call It Worldpool," Business Week, November 28, 1994, pp. 98+.

Palmer, Jay, "Oh Boy, a Washer!," Barron's, September 26, 1994, pp. 17+.

Prichard, James, "Whirlpool Puts New Spin on Its Future," Grand Rapids (Mich.) Press (from Associated Press), September 8, 2002, p. B1.

Quintanilla, Carl, "Despite Setbacks, Whirlpool Pursues Overseas Markets," Wall Street Journal, December 9, 1997, p. B4.

Schiller, Zachary, et al., "Whirlpool Plots the Invasion of Europe," Business Week, September 5, 1988, p. 70.

Singhania, Lisa, "Whirlpool Looks to Innovation to Boost Appliance Sales," Grand Rapids (Mich.) Press (from Associated Press), February 6, 2000, p. F1.

Steinmetz, Greg, and Carl Quintanilla, "Tough Target: Whirlpool Expected Easy Going in Europe, and It Got a Big Shock," Wall Street Journal, April 10, 1998, p. A1.

Verespej, Michael A., "Whirlpool's New Kitchen Recipe," Industry Week, September 21, 1987, pp. 56+.

Vlasic, Bill, "Did Whirlpool Spin Too Far Too Fast?," Business Week, June 24, 1996, pp. 132+.

"Whirlpool: A Marketing-Minded CEO Tries to Set Sales Spinning," Business Week, May 16, 1983, pp. 46+.

Whirlpool Corporation, 1911–1986: Progressing Toward the 21st Century, Benton Harbor, Mich.: Whirlpool Corporation, 1986.

Woodruff, David, "Whirlpool Goes Off on a World Tour," Business Week, June 3, 1991, pp. 98+.

Zellner, Wendy, and Zachary Schiller, "A Tough Market Has Whirl pool in a Spin," Business Week, May 2, 1988, pp. 121+.

—Sandy Schusteff

—updates: Dave Mote,

David E. Salamie

Whirlpool Corporation

founded: 1911

Contact Information:

headquarters: 2000 n. m-63
benton harbor, mi 49022-2692 phone: (616)923-5000 fax: (616)923-5443 email: [email protected] url: http://www.whirlpoolcorp.com

OVERVIEW

Whirlpool originally operated as a family-owned small town business, but it eventually grew into the world's largest manufacturer and marketer of major home appliances, including washers and dryers, refrigerators, freezers, dishwashers, ranges, compactors, room air conditioners, and microwaves. The company also manufactures portable appliances including stand mixers, hand mixers, and blenders. The company's major brands—Whirlpool, KitchenAid, Roper, Bauknecht, Ignis, Brastemp, and Consul—are marketed in more than 170 countries. The firm is also Sears, Roebuck and Co.'s largest supplier, providing the department store with major appliances under the Kenmore brand name. In fact Sears accounted for more than 20 percent of sales in 2001.

Intense competition, slowing economies in several of its key markets, and industry consolidation forced Whirlpool to revamp its strategy early on in the new millennium. The company's focus included restructuring certain operations, expanding globally, developing new and existing products, and fostering customer loyalty.

COMPANY FINANCES

Whirlpool's sales in 2001 were $10.34 billion, less than 1 percent higher than the previous year. Sales had increased from $6.5 billion in 1991 to $10.5 billion in 1999, but fell in 2000 to $10.32 billion. The home refrigerators and freezers product segment and the home laundry appliances division both accounted for 30 percent of sales, while home cooking appliances brought in 16 percent of sales. Other products, including room air-conditioning equipment and hand appliances, secured 24 percent of total sales in 2001.

Whirlpool's net income fell from $367 million in 2000 to $21 million in 2001 due to restructuring charges. The firm's stock ranged from a low of $45.87 per share to a high of $74.20 per share over a 52-week period. Its annual dividend in 2001 was $1.36 per share and its operating profit margin was three percent.

ANALYSTS' OPINIONS

As a market leader, Whirlpool believes it is well positioned to secure future revenue and profit growth. Agreeing with that assessment, Standard & Poor's (S&P) analysts rated the stock a "buy", due to favorable demographics, cuts in interest rates, strong housing activity, and economic improvement in the United States during early 2002. S&P also favored the company because it continued to grow faster than its domestic counterparts. In addition, a larger portion of the company's sales are stemming from higher profit margin products.

HISTORY

Whirlpool began as a small, family-owned business in St. Joseph, Michigan. Lou Upton established the Upton Machine Co. to manufacture electric motor-driven wringer washing machines. The company's first years were rocky, and it found itself producing toys, camping equipment, and automotive accessories to stay afloat. Upton's first big break came in 1916, when it landed a contract with Sears, Roebuck & Co. to supply the store with washing machines. The firm's good fortune continued through the first World War, and in 1925, it launched its own brand name of washers.

Upton merged with New York-based Nineteen Hundred Washer Co. in 1929 to form Nineteen Hundred Corp. The company made it through the Depression and World War II, when most of its facilities were used to manufacture weapon parts. In 1948, Nineteen Hundred launched the Whirlpool brand of automatic washers, which it began manufacturing along with the Sears' Ken-more brand. The following year, a complete line of Whirlpool appliances—including wringers, washers, and dryers—was introduced.

The firm officially adopted the name Whirlpool Corp. in 1950 to promote its new line of home appliances. Whirlpool added automatic dryers to its product line and then began a series of acquisitions in order to expand further. In 1951, Whirlpool purchased Clyde Porcelain Steel of Ohio, gaining access to one of the largest washing machines plants in the world. In 1955, the firm purchased Seeger Refrigerator Co. and started manufacturing refrigerators, as well as air conditioning units and cooking ranges. Vacuum cleaners were also added to Whirlpool's product mix when Birtman Electric Co. was merged into the company's operations.

Expansion continued into the 1960s, and the firm established a 24-hour toll-free hotline for consumers. It also constructed a new manufacturing facility in Findlay, Ohio. By the end of the decade, sales had reached $1 billion, and Whirlpool had expanded into the Canadian market through the purchase of an interest in Inglis Ltd. International expansion had started in the late 1950s when Whirlpool began investing in the Brazilian market. In 1976, the firm acquired Consul S.A. and Embraco S.A.

Well on its way to becoming a leading force in the appliance industry, Whirlpool began manufacturing trash compactors, microwave ovens, and Whirlpool vacuum cleaners in the 1970s. The firm also introduced the first solid-state electronic washing machines. Revenues climbed to $2 billion in 1978.

Growth continued in 1986 with the purchase of the KitchenAid division of Hobart Corp. Whirlpool also expanded into Italy with the purchase of compressor manufacturer Aspera s.r.l. The company entered the Indian market the following year when it teamed up with Madras-based Sundaram-Clayton Ltd. In 1987, David Whitwam was named president and CEO of Whirlpool, and he set out to turn the company into an international powerhouse. That year, Whirlpool partnered with McDonnell Douglas Astronautics Company to develop appliances used in space. In 1988, Vitromatic S.A. de C.V. was created as a joint venture with Vitro S.A. of Monterrey, Mexico. One year later, the company joined with N.V. Philips in partnership that gave Whirlpool greater access to the European market.

The company continued its global expansion throughout the 1990s with a focus on European and Asian operations. Subsidiaries were created in Hungary, Poland, and the Czech Republic. The company also began producing washers in Slovakia, and continued its expansion in Latin America. In 1997, the firm restructured its operations to capture greater profit from its overseas businesses. It also divested its appliance financing business and organized its North American operations into two major segments: brand management and product delivery.

Whirlpool continued to focus on global expansion and reorganization in the new millennium. In 2000, it purchased the remaining shares in its two Brazilian subsidiaries, Brasmotor S.A. and Mutlibras S.A. In early 2002, it set plans in motion to acquire Polar S.A., a major home appliance manufacturer in Poland. Amid fierce competition, industry consolidation, and a weakening global economy, Whirlpool's long-standing history of success left management confident that the company would remain a leader in the appliance industry.

STRATEGY

Whirlpool's strategies of product diversification and global expansion have persevered through much of the firm's history, and they remain part of its long-term business plan. According to Whirlpool, many appliance manufacturers utilize similar strategies that focus on lowering costs, increasing product quality, expanding distribution, and increasing the share of floor space at retail locations. A cornerstone to Whirlpool's strategy in the new millennium, however, was building customer loyalty, a strategy that the company believed was quite different from its competitors' business plans.

Whirlpool revamped its research and development strategy in 1999 and began to focus on consumer behavior. Company engineers went to the homes of consumers to study behavior. The findings were then used to develop new products believed to be well suited to consumer lifestyles. Roughly 20 percent of the firm's $400 million capital budget was reserved for the creation of these new products. In addition, executive pay was linked to the revenue that stems from new products or services. By 2003, the company expected to spend 35 percent of its budget on new product development.

FAST FACTS: About Whirlpool Corporation

Ownership: Whirlpool is a public company traded on the Chicago and New York Stock Exchanges.

Ticker Symbol: WHR

Officers: David R. Whitwam, Chmn. and CEO, 59; Jeff M. Fettig, Pres., COO and Dir., 44; Mark E. Brown, EVP and CFO, 50

Employees: 59,000

Principal Subsidiary Companies: Whirlpool has subsidiary companies and facilities in North and South America, Europe, and Asia. Its products are marketed in over 170 countries. The company's main subsidiaries are Whirlpool Europe B.V., Whirlpool Properties Inc., Whirlpool Patents Company, Bras-motor S.A., and Multibras S.A. Eletrodomesticos.

Chief Competitors: As the world's largest manufacturer and marketer of major home appliances, Whirlpool competes with other appliance manufacturers on the basis of product features, price, product quality and performance, service, warranty, advertising, and promotion. Its primary competitors are Electrolux AB, GE Appliances, and Maytag Corp.

Whirlpool also employs innovative consultants who help to turn employee ideas into new products. The company has an intranet site where employees can post a product idea. The site averages about 300,000 hits per month. Once an idea gets approval from senior management, employees and innovative consultants are given 100 days and $100,000 to test the idea, conduct market research, and develop initial prototypes. Whirlpool believes its aggressive strategy of new product development will allow it to remain one step ahead of competitors.

INFLUENCES

The company's strategy is influenced by intense competition. For example, in the late 1990s, competitor Maytag Corp. beat Whirlpool to market with its Neptune front-loading washing machine. Shortly thereafter, the company launched its aggressive product innovation campaign.

Whirlpool also saw its competitors become stronger in 2001 due to industry consolidation. Maytag purchased Amana Appliances in August of that year, while Italy-based Merloni Elettrodomestici acquired a 50 percent stake in General Domestic Appliances, a large UK appliance supplier. Then in early 2002, Elco Holdings Inc. acquired Brandt, one of France's largest home appliance manufacturers. Influenced by its competitor's actions, Whirlpool continues to focus heavily on its global operations.

PRODUCTS

Whirlpool has operations in North America, Asia, Latin America, and Europe. Its supplies its North American market with air purifiers, dryers, washers, built-in ovens, countertop appliances, dehumidifiers, dishwashers, freezers, hot water heaters, ice makers, jetted and soaking tubs, microwaves, ranges, refrigerators, room air conditioners, and trash compactors. In the late 1990s and early 2000s, the company introduced several new products in North America, including the AccuBake Duo System, new energy efficient refrigerators, the Calypso wash motion clothes washer, the Senseon clothes dryer, and the Duet front-loading washer and dryer.

The company provides washers, compressors, microwaves, and refrigerators to the Asian market under the Whirlpool brand name. During 2001, Whirlpool launched a vertical axis clothes washer, the Fire Genie microwave, Whitemagic Hotwash clothes washer, Ice Magic refrigerator, QuickChill frost-free refrigerator, and the MagiCook microwave oven and gas cooking ranges.

In Latin America, the company supplies washers, compressors, countertop appliances, dishwashers, freezers, microwaves, refrigerators, and room air conditioners under the Whirlpool, Brastemp, Consul, Embraco, and Eslabon de Lujo brand names. The firm launched several new appliances in this region during 2001.

In Europe, the Middle East, and Africa, Whirlpool sells washer and dryers, ovens, compressors, dishwashers, free-standing cookers, freezers, microwaves, ranges, and refrigerators. During 2001, the company introduced the Whirlpool Maximo compact microwave in these markets, and it also launched the Bauknecht brand of builtin ovens and ranges, and the Dialogue line of dishwashers, washers and dryers, and refrigerators and freezers. In each of its markets, Whirlpool completes extensive consumer research before launching a product to ensure the design and function meets with regional expectations and design tastes.

CORPORATE CITIZENSHIP

Whirlpool believes that by manufacturing efficient appliances, it will help create self-reliant individuals who are socially and environmentally responsible. During 2001, Energy Star named Whirlpool Partner of the Year for its energy efficient products. Its dedication to the environment was applauded by the Environmental Protection Agency during a ceremony in Washington D.C. in March 2001.

CHRONOLOGY: Key Dates for Whirlpool Corp.

1911:

Upton Machine Co. is established

1916:

The company begins supplying washing machines to Sears, Roebuck and Co.

1929:

Upton merges with the Nineteen Hundred Washer Company

1948:

The Whirlpool brand is launched

1950:

The company adopts the name Whirlpool Corp.

1976:

Brazil-based Consul S.A. and Embraco S.A. are acquired

1986:

The KitchenAid division of Hobart Corp. is acquired

1997:

The company launches a restructuring effort designed to improve competitiveness

2000:

Whirlpool acquires the remaining shares of its two Brazilian subsidiaries: Brasmotor S.A. and Multibras S.A.

The firm also works with nonprofit organizations, governments, schools, and businesses to enrich the communities in which it operates. In 1951, the Whirlpool Foundation was created to focus on quality of family life, cultural diversity, and lifelong learning. During 2000, the foundation awarded $6.7 million in grants.

GLOBAL PRESENCE

While North America accounted for $6.6 billion of Whirlpool's $10.34 billion in sales during 2001, the company's brand was a leader in all of its international markets. Because of the firm's overseas exposure, however, it had to contend with a variety of turbulent economies during 2001. An economic crisis in Argentina and an energy shortage in Brazil challenged the firm's growth in Latin America. A recession in Germany weakened its European sales. The economy in India—one of the firm's largest growth markets—began to experience a decline as well, due in part to the military action in South Asia. Nevertheless, Whirlpool continues to invest in its global operations.

DOING THE RIGHT THING

Whirlpool's corporate culture regarding quality and "doing the right thing" for its consumers and suppliers was set in place by founder Lou Upton. One of Upton Machine's first orders came from Federal Electric in 1911. The company shipped 100 washing machines to its first major customer; however, a cast iron gear in each and every machine proved to be faulty. Lou Upton personally worked with the Federal's management to fix the problem and replaced each gear with a new cut-steel piece. Federal, so impressed with Upton's integrity, placed another order for 100 additional machines.

EMPLOYMENT

Because of its focus on new product development, Whirlpool hires creative people. The company believes it will achieve its vision—to have a Whirlpool product is every home, everywhere—by creating pride in its employees. The firm is also dedicated to workplace diversity and believes that it can make use of each employee's talents. Nearly two-thirds of company employees are located outside of the United States.

SOURCES OF INFORMATION

Bibliography

arndt, michael. "whirlpool taps its inner entrepreneur." business week, 7 february 2002.

beatty, gerry. "a whole new range of options." hfn: the weekly newspaper for the home furnishing network, 4 february 2002.

stovall, sam. "a positive spin on appliance stocks." business week, 7 march 2002.

tatge, mark. "firestorm." forbes, 21 january 2002.

whirlpool corp. home page, 2002. available at http://www.whirlpoolcorp.com

"whirlpool corp." appliance manufacturer, october 2001.

For an annual report:

write: whirlpool corp., 2000 m-63 north, mail drop 2800, benton harbor, mi 49022

For additional industry research:

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

3631 household cooking equipment

3632 household refrigerators and home and farm freezers

3633 household laundry equipment

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

335221 household cooking appliance manufacturing

335222 household refrigerator and home freezer manufacturing

335224 household laundry equipment manufacturing