Tiffany
Hayden Shellabarger
Marketing
710
Dr.
Timothy Johnston
June
25, 2001
Maytag
– Research Update
Introduction
Maytag Corporation traces its roots
to 1893 when F.L. Maytag began
manufacturing
farm implements in Newton, Iowa. In an
effort to offset
seasonal
slumps in business, he introduced a wooden-tub washing machine in
1907. The washing machines proved so popular that
Maytag devoted himself
full-time
to the washing machine business.
Maytag Corporation today is a
$4.3
billion home and commercial appliance company focused in North America
and in
targeted international markets.
Maytag’s
home appliance businesses include major appliances and floor care.
In
major appliances, Maytag is among the top three companies in the North
American
market, offering a full line of washers, dryers, dishwashers,
refrigerators
and ranges. Brands include Maytag,
Jenn-Air, Magic Chef,
Admiral
and Dynasty. In floor care, Maytag
Corporation owns the Hoover
brand,
which is the market leader in North America and the floor care brand
with
the highest consumer recognition and buying preference.
Maytag’s
commercial appliance businesses include laundry, cooking, floor
care
and vending. Washers and dryers are
equipped and sold for commercial
use. Modified Hoover brand floor care products
are sold for commercial use.
Blodgett cooking appliances are sold to food
industry customers such as
McDonald’s,
Kentucky Fried Chicken, Pizza Hut, etc.
Other commercial
cooking
brands include Blodgett Combi, Pitco Frialator and MagiKitch’n, and
the
Jade brand features customized cooking and refrigeration equipment.
Dixie-Narco
brand equipment is a leader in refrigerated soft drink and
specialty
vending machines and is primarily sold to major soft drink
bottlers
such as Coca-Cola and Pepsi Co.
Employing
20,000 in North America and 4,000 in China, Maytag is publicly
held,
trading on the New York Stock Exchange under the symbol MYG.
1. How is Lloyd Ward doing as CEO?
Lloyd
Ward became CEO on August 12, 1999. On
November 18, after the CFO
Gerald
J. Pribanic announced his intention to retire, Lloyd Ward announced
his
intention to create a group president position to lead the corporation’s
Home
Solutions group, which encompasses the corporation’s major appliance
and
floor care divisions. Newly created
positions and other retirements
were
announced.
On November 9, 2000, Lloyd D. Ward
resigned due to a difference by the
Board
of Directors and Lloyd Ward over the company’s strategic outlook and
direction. He had been with Maytag since 1996. Leonard Hadley was
appointed
as interim President and CEO.
On June 19, 2001, Ralph F. Hake was
elected chairman of the board and CEO.
Previously
he has served in executive positions at Whirlpool Corporation.
Most
recently he was CFO and executive vice president at Flour Corporation,
a $10
billion engineering, construction, and professional services firm.
Hake is
52 and holds an M.B.A. from the University of Chicago and a B.S. in
business
administration and economics from the University of Cincinnati.
2. Has Maytag entered overseas markets again?
Maytag’s
presence in markets around the world includes a joint venture with
Chinese
appliance manufacturer Rongshida, as well as direct sales operations
in
Australia, Mexico, Puerto Rico and the United Kingdom. The corporation’s
international
efforts, including export sales and marketing, licensing of
brands
and joint ventures, are coordinated by Maytag’s Worldwide Division,
which
is headquartered in Chicago, Illinois.
According to the annual business
presentation on May 10, 2001, Len Hadley
announced:
“In
global procurement, we have set a cost reduction and productivity
improvement
goal of more than five-percent annually.
· In achieving this improvement, we expect to
reduce significantly the
number
of suppliers during the next two years and leverage more effectively
our
size as a four billion-dollar corporation.
· We also expect to make greater use of
global supply opportunities. We
have
established an office in Hong Kong to support Asian sourcing. We plan
to
establish a purchasing office in Mexico and in Europe.
In
e-Commerce, we continue to add capability both to improve efficiency in
our
supply chain and to connect with consumers who wish to learn more about
our
products or make purchases over the Internet.”
3. How is the Neptune washer doing?
The
Neptune is doing very well. The New
Century Neptune is the latest in
Maytag’s
line of number-one-rated, front-loading clothes washers. Both
Neptune
and the top-loading Atlantis have been on back order.
4. Has Maytag brought out any other innovative
products?
Dishwasher
-- a Maytag line with stainless steel tubs.
Jenn-Air
– newer version of the downdraft cook top
Ovens/Stove
– Maytag Accellis range and the double-oven Gemini range and the
Blodgett
Combi-Oven
Refrigerator
– Wide-by-Side (named best new product at the annual Kitchen
and
Bath show)
Vacuum
– Hoover’s WindTunnel, SteamVac, and a new line of top-performing
Bagless
vacuum cleaners
Vending
– new Glass Front Vender for Coca-Cola
5. Future outlook/Current views
Maytag
is looking into the purchase of Amana and the sale of Blodgett.
· Since 1995, net sales have grown at a
compound annual growth rate of 7.3
percent.
· Gross profit shows a similar trend, with
compound growth rates for the
period
at 8.3 percent.
· Operating income has grown at 12 percent.
· During this period Maytag’s return on
assets strengthened, as did
normalized
EPS.
· Strong cash flow was used to return to
shareowners nearly $1.8 billion in
dividends
and share repurchases.
While
financial results during the past five years established solid growth
trends,
those results lost momentum during the past five quarters.
Specifically,
the results in 2000 were a disappointment.
In response,
Maytag
took a number of actions to flatten the organization, redirect
business
initiative, and tap the creativity and know-how of the employees.
First quarter focus was on building trend
lines that demonstrate steady
improvement
in consecutive quarters throughout the year and re-establish
business
momentum across the corporation, even though Maytag was well below
previous
performance levels.