Whirlpool to Cut 5,000 Jobs as U.S. Economy Slows (Update1)

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Whirlpool to Cut 5,000 Jobs as U.S. Economy Slows (Update1)

By Carol Wolf
Oct. 28 (Bloomberg)

-- Whirlpool Corp., the world's largest appliance maker, plans to cut a total of 5,000 jobs by the end of 2009, and forecast lower annual profit as the global credit crunch and U.S. housing slump clips sales.

Net income fell 6.9 percent to $163 million, or $2.15 a share, in the third quarter, the Benton Harbor, Michigan-based maker of Maytag and KitchenAid appliances also said in a statement. The company has about 73,000 employees worldwide, it said today in a regulatory filing.

The global financial crisis, declining home values, rising unemployment and low consumer confidence will keep appliance sales from rebounding anytime soon, Chief Executive Officer Jeff Fettig said in a statement. The company will ``rapidly make the necessary changes to adapt,'' he said.

``The outlook for any company that is selling products to the consumer right now is pretty bleak,'' David MacGregor, an Independence, Ohio-based analyst with Longbow Research, said in a telephone interview. ``Good companies will move quickly to get their costs down and position themselves for an extended downturn. Whirlpool appears to be doing that, and management deserves credit for it.''

Raw Materials
In July, the company raised its 2008 projection for the increase in the cost of steel, copper and other raw materials used to make appliances to as much as $650 million. Customers also deferred purchases as U.S. consumer confidence fell by the most on record in September.

Sales advanced 1.3 percent, the slowest pace since the third quarter of last year, to $4.9 billion in the quarter, matching the average estimate of three analysts surveyed by Bloomberg.

Full-year profit excluding some items will be $5.75 to $6 a share, the company said, down from previous forecasts of $7 to $7.50 and $8.50 to $9.

Since January, the company has eliminated 2,000 jobs through the closure of four plants in LaVergne, Tennessee; Oxford, Mississippi; Puebla, Mexico and Reynosa, Mexico.

Whirlpool said today it will also shut down its plant in Jackson, Tennessee, shifting production to Findlay, Ohio. That will result in 500 job cuts. The company plans an additional reduction of 500 positions in North America and of 1,900 jobs overseas, mainly in Europe.

Whirlpool declined 1.3 percent to 40.98 euros at 12:28 p.m. in Frankfurt trading. The shares added 87 cents, or 1.8 percent, to $50.03 in New York Stock Exchange composite trading yesterday. Before today, the shares dropped 39 percent this year.

To contact the reporter on this story: Carol Wolf in Cleveland at cwolf@bloomberg.net.
Last Updated: October 28, 2008 07:32 EDT