ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Sunday, March 30, 1997 TAG: 9703280025
SECTION: BUSINESS PAGE: 4 EDITION: METRO
DATELINE: NEWTON, IOWA
SOURCE: TOM SEERY ASSOCIATED PRESS|
``We have sold or shut down 15 product lines...we are no longer in anything we're not good at,'' says CEO Leonard Hadley.
Maytag Corp. is putting a new spin on its home appliance operations.
Rebounding from an ill-fated overseas expansion, the company is refocusing on its core U.S. market. It introduced a new line of refrigerators last month, and a new design of its Hoover upright vacuum cleaner is due out later in the year.
Maytag also has unveiled a horizontal-axis washing machine - which tumbles clothes in and out of a shallow pool of water rather than agitating them in a full tub.
``We have not been noted for moving quickly in the past,'' said Leonard Hadley, Maytag's chairman and chief executive. ``I've tried to rev it up a bit.''
Hadley is a 38-year Maytag veteran who began pulling in the reins at the company when he became CEO in 1992. He sold Maytag's appliance operations in Europe and Australia, closed its Jenn-Air kitchen range plant and offices in Indianapolis and consolidated management of its four appliance brands - Maytag, Jenn-Air, Magic Chef and Admiral - at the Newton headquarters under a new executive, Lloyd Ward.
``We have sold or shut down 15 product lines. We continue in seven,'' Hadley said. ``We are no longer in anything we're not good at.''
The changes have caught the eyes of securities analysts.
``The company has done a good job over the past few years,'' said Susan Gallagher, who follows Maytag for NatWest Securities Corp. ``With the hiring of Lloyd Ward last year, I think that they will have a much more marketing-oriented focus.''
She added, ``They do have potentially a pretty critical year this year.''
Hadley's immediate concern after taking over the top job at Maytag was getting out of the European appliance business that Maytag entered in 1989 with its purchase of Chicago Pacific, a company whose Hoover unit sold appliances in Europe.
``From hindsight, we can see that it was probably doomed from the outset,'' Hadley said. ``Hoover is an outstanding floor-care company, but in Europe it was not a good [appliance] company.''
A disastrous promotion, in which customers in Europe were offered free airline tickets for buying a Hoover vacuum cleaner, cost Maytag about $72 million.
Hadley, 62, is due to retire as chief executive in three years. But Ward, 48, is his heir apparent, having joined Maytag last April from Pepsico Inc., where he was president of the Frito-Lay central division. Ward is increasing the marketing program for Maytag appliances.
``I'm used to a very competitive environment. The appliance business is every bit as competitive as the snack wars and the cola wars,'' Ward said.
Hadley and Ward are trying to expand the market share held by Maytag, which despite having $3 billion in sales in 1996 ranks a distant third in the major appliances industry in the United States behind Whirlpool Corp. and General Electric Co.
The company does have a strong position in the upscale appliance market, but needs to expand into the lower end. So it recently introduced a $399 washing machine; the lowest-price Maytag washer had been $439.
``If we've got a price point of $439, that's 40 percent of the market we can't go after,'' Ward said. ``Consumers want a Maytag. The No. 1 reason consumers say they don't buy a Maytag is price.''
But Maytag is still concentrating on high-end products.
The new washing machine, with a horizontal axis design that conserves water and does a better job of spin-drying clothes, will carry a premium price. And some of Maytag's new refrigerators cost more than $1,000.
Refrigerators are currently Maytag's weakest market segment, barely meeting the 10 percent market share Hadley considers necessary for long-term survival. Still, he said, ``We're going after it,'' having invested $180 million in the new line.
Analyst Gallagher said Maytag's heavy investment in the new refrigerator line could diminish its possible interest in the Amana appliance division of Raytheon Co., which is looking for a buyer for the business.
Amana's headquarters in eastern Iowa is only about 60 miles away from Newton. Hadley declined to say whether Maytag is interested in buying Amana.
Before Hadley took over, Maytag was periodically mentioned as a takeover target. Some analysts have said recently the trimmed-down Maytag might again be ripe for a takeover, but Hadley disagrees.
``When the stock price was $11 when I took over, we might have been vulnerable,'' he said. Although Hadley feels Maytag stock is undervalued at about $22 a share now, he does not think the company is a takeover target because the U.S. appliance market is so competitive.
``You have to realize if you do that you're entering a catfight against Whirlpool and GE,'' Hadley said. ``It's just not an attractive place to try to pick up a quick buck.''
LENGTH: Medium: 96 lines ILLUSTRATION: PHOTO: AP. Lloyd Ward, 48, likely to be the next Maytag leader,by CNBjoined the company last April from Pepsico Inc., where he was
president of the Frito-Lay central division. He is increasing the
marketing program for Maytag appliances. color.