NE Ohio Hoover Operations May Head South of the Border

Here is a perfect case study to learn from in terms of how major manufacturing companies are making facility location decisions in today's "dog eat dog" world marketplace. See the non-traditional solution I promise at the end of the article.

One way or the other, the future of Hoover Co. will be decided in the next few weeks. The struggling vacuum maker will either leave Stark County in 2005 or it won't. Company officials say the choice is up to members of International Brotherhood of Electrical Workers Local 1985.

Maytag Corp., which owns Hoover, has Hoover workers over a barrel. After months of sluggish sweeper sales hurting Maytag's bottom line, the parent company is asking for changes in the union contract to help cut costs. The most contentious requests involve health insurance and other benefits.

if you recall, Maytag recently completed a major set of US facility evaluations that concluded that the majority of Maytag's manufacturing operations will be relocated to Mexico over the next 12-18 months.

Maytag wants to require a co-payment for employee health insurance. Union members now receive 100 percent coverage. Employees also may be in for changes in their retirement-benefit plans. Any decision on that would not affect current retirees, Repace said.

On the production side of the contract, Maytag wants to adopt leaner manufacturing techniques and change job-security rules. The latter would let Maytag shuffle the production of certain vacuums among its plants in North Canton, El Paso, Texas, and Juarez, Mexico. That could save a lot of money because manufacturing is far more expensive in the North.

This is a project that will require a full-court press by Stark County and NE Ohio economic development officials. The question is whether anything can prevent Maytag from pulling the plug on the North Canton operations. Efforts in Iowa and illinois were unsuccessful in reversing corporate decisions to close local facilities in those states. My suggestion is to go to Maytag with a North American production and distribution solution that links operations across its various existing and new operating locations to produce an overall competitive advantage that the company cannot achieve by just moving to Mexico.

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