Market Report:The Appliance Sector Is Coming Back

When the housing market hit the skids, the appliance sector also slumped badly. As building permits fell for new homes - a huge market for the appliance industry - bulk demand for new appliances fell also. But the good news is that the appliance sector is coming back, both literally and figuratively.

Reshoring
Some appliance manufacturing is being reshored from China and Mexico. GE Appliance made a $250 million investment in its Louisville, Kentucky, Appliance Park, representing the second GE facility to open within a month, and the first new plants at the park in more than 50 years. On March 20, Kentucky's Governor Steve Beshear hosted the grand opening of the new factory that will support 600 jobs. This latest expansion will produce GE's bottom freezer, French-door refrigerators. It comes on the heels of February's grand opening of GE's GeoSpring™ Hybrid Water Heater manufacturing facility at Appliance Park, which represents a $38 million investment and will support 1,000 new jobs.

Meanwhile, Whirlpool Corporation, headquartered in Benton Harbor, Michigan, has opened a new manufacturing plant in Cleveland, Tennessee, replacing a 123-year-old facility. The $200 million investment will add about 130 jobs to the current Whirlpool work force of 1,500 people in Cleveland. The nearly one-million-square-foot facility will produce premium cooking products under the KitchenAid, Jenn-Air, Maytag, and Whirlpool brands, and under the IKEA brand. Whirlpool's Chairman and CEO Jeff Fettig reiterated the company's commitment to manufacturing in the United States, stating in a letter to the editor of the Cleveland Daily Banner (11/11/11), "Eighty percent of what we sell in America is made in America. No other appliance manufacturer can come close to that commitment to the U.S. work force."

Realignment of Facilities
Some appliance makers have used the economic slowdown to realign their manufacturing. Sub-Zero Inc. (Madison, Wisconsin) recently acquired a 440,000-square-foot manufacturing facility in Goodyear, Arizona, a western suburb of Phoenix, where it already has a 165,000-square-foot facility that produces its integrated line of refrigeration products, including wine storage and under-the-counter refrigeration.

During the fourth quarter of 2011, Sub-Zero transferred approximately 100 jobs to Arizona to "streamline production and consolidate manufacturing," according to a release from the company. The Goodyear facility is meant to handle the production of a new line of refrigeration the company intends to introduce. Also scheduled to move are the jobs that handle Sub-Zero's and its affiliate Wolf Appliance Inc.'s service parts and sales accessories, as well as the service cell that produces non-current model service parts, which was scheduled to move to Arizona during the second quarter of 2012. The company also has a new 80,000-square-foot manufacturing facility in Richmond, Kentucky.

"Madison and Fitchburg (Wisconsin) are home to our corporate offices and the majority of production for our two companies," according to Chuck Verri, Sub-Zero's vice president of human resources. "The move of these production jobs and the service parts area is meant to make us more efficient and cost-effective at producing the finest appliances without compromising quality. We are committed to keeping our manufacturing in the United States, but we must continuously look at more efficient ways to produce our appliances to stay competitive," concluded Verri.