Growing up just outside of - and living in - Newton, IA for a number of years, the local economy was powered by the Maytag Corporation. At one time, Maytag was the largest washing machine company in the world with their headquarters in Newton, along with two large manufacturing facilities and a small manufacturing facility. They had a number of other manufacturing plants in places like Herrin, IL, Searcy, AR, and Jackson, TN; and they also owned the Amana refrigeration plants in the Amana Colonies and near North Liberty, IA.
Maytag got into trouble a few years ago after they acquired the Hoover brand of floor care products and were saddled with extreme amounts of debt. Never able to turn Hoover around, and with Hoover being too big of a financial albatross to cut it and run, Maytag slowly slid in profits. Their stock, which was over $70 a share a few years ago, was trading in the mid-teens late last year.
A couple of companies came in to look at taking over Maytag, and Whirlpool made an offer to buy up the stock and debt of the Maytag Corporation last year. The Justice Department took a long hard look at the takeover as it would give Whirlpool something like 70% of the appliance market in the U.S. They finally allowed the sale to go through in April and people in Newton have been sitting on pins and needles waiting to hear if the headquarters and the manufacturing facilities would be closed.
The announcement was made this morning - the headquarters in Newton would be consolidated with the Whirlpool headquarters in Benton Harbor, MI; and the factories will be closed in Newton. 2200 salaried and hourly workers will be let go sometime between now and into 2007. Factories in Herrin, IL and Searcy, AR will also be closed.
The announcement really wasn't of any big shock, a lot of people in Newton were expecting the worst. Maytag had gone through a large purge of high salaried and highly paid hourly workers over the past 18 months, and the manufacturing costs at the Newton plants (including salaries, health care and retirement plans) were extremely high. Whirlpool estimated that they can make five appliances in their factories at the same cost of what it takes to make one appliance in Newton.
There is an air of uncertainty going on in Newton today, no doubt. The population of Newton has been dropping over the past few years, going under 16,000 at the last census count in 2000. Newton High School has been losing enrollment over the years and they will go down a class in most of their major sports beginning next year.
This will affect a number of people whose life is either directly or indirectly touched by Maytag being in the community. Even though the number of Maytag employees affected who live in Newton will be around 1100 people, that's still a large chunk of the population for a city like Newton.
I talked to two buddies today, Jeff (Burph) Versteegh and Bob Jackson - both of whom have worked at Maytag for over 19 years, and they were pretty much resigned to the fact that the plants would close long before the announcement. It wasn't quite the shock to them, nor to many people in the city of Newton. But it was something they didn't want to think about until the announcement was made.
Still, both Burph and Bob kept their sense of humor about things. Burph said that he was going to move to Davenport and move into Jane's house, while Bob said that he was going to go join the Navy.
Still on the bright side of things - the infrastructure for a manufacturing facility remains in Newton. They could possibly use the two main Newton plants as an incentive for another manufacturer to come to town, or they could use the factories as an "incubator" type of facility where a number of manufacturers are housed under one roof.
My sister, Julie Rose, who is realtor in town, is optimistic that if people do move from Newton that the housing market will still stay strong because of Newton's close proximity to Des Moines (about 35 miles from downtown Newton to downtown Des Moines). She's hoping people in the Des Moines area would look toward Newton because of lower housing prices and lower property taxes.
Still, it's a considerable blow to the community. Newton certainly didn't have a lot going for it and the local chamber of commerce has been struggling for years to promote the city. The new Iowa Speedway being built just south and east of Newton will provide some economic boost, but not enough to sustain the loss of Maytag.
Earlier today, the governor of Iowa announced a proposed $10 million grant to the city of Newton and Jasper County to help spur economic development in the area after Maytag closes it's doors. Already, officials in Webster City and in Mount Pleasant were criticizing the governor's plan because both communities will be losing manufacturing facilities this year. They want to know where their economic development money is.
Still for a city like Newton, losing Maytag is a much larger blow to the psyche of its citizens. Maytag has been part of the culture of Newton for over 100 years. At one time, more washing machines were built in Newton than in any other place in the world. Years ago, the city boasted a number of washing machine companies. A lot of them went out of business or were bought out by others, but Maytag persevered.
Until today...
Will, when my career at maytag expires I wish to become a very important person just like you! Or an aging porn star.
Posted by: punker | May 12, 2006 at 07:06 AM
Punker - there's no way that you could ever become as important a person as me. LOL! (Punker is my friend, Tony Aldrich, who will be losing his job at Maytag sometime in 2007.)
Posted by: Will Veber | May 12, 2006 at 07:46 AM