News analysis | For Louisville, lots of unanswered questions in - WDRB 41 Louisville News

News analysis | For Louisville, lots of unanswered questions in GE, Electrolux deal

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LOUISVILLE, Ky. (WDRB) -- Monday's announcement that Sweden's Electrolux will buy General Electric's appliance business finally puts to rest a rumor mill so rampant it's detracted from workers' productivity at Louisville's Appliance Park.

“Now we have some clarity and purpose about what we're doing and we can keep everybody motivated,” GE Appliances CEO Chip Blankenship told reporters in a brief news conference.

But there are more questions than answers about the planned $3.3 billion sale and its implications for GE's Louisville-based appliance business -- the fourth-biggest employer in Jefferson County by payroll and the ninth-biggest in total employees.

GE has about 6,000 workers in Louisville, from the factory floor at Appliance Park, to the customer service operation in eastern Jefferson County, to the Louisville-based management team overseeing a division with about $5.7 billion in revenue.

GE's $370 million Louisville payroll works out to an average of nearly $62,000 per employee. The union line workers at Appliance Park start at $15 hourly and can earn well above $20 an hour.

The deal, slated to close in the next year, raises the prospect that about 2,200 well-paying headquarters jobs in Louisville – IT, finance, human resources, sales, marketing – could be consolidated with Electrolux's North American headquarters in Charlotte.

“Charlotte is the headquarters and will be the headquarters, and the size of the business just doubled,” Electrolux CEO Keith McLoughlin told the Charlotte Observer. “I would say that the opportunity in Charlotte just got better.”

In a presentation to investors, Electrolux said it expects the deal to result in $300 million in “synergies” – mainly through the shared “sourcing” of materials, but also through “operations.”

Meanwhile in Louisville, Blankenship could not say whether he and his management team will continue to run the appliance division. “After (the sale closes), it's up to Electrolux…We haven't had those discussions,” Blankenship said Monday.

Asked if corporate functions in Louisville and Charlotte will be consolidated, Blankenship said: “No decisions have been finalized. Each company has numerous manufacturing, research and sales capabilities. That's all part of the process, going forward, of integration – post (the deal's) close.”

Electrolux spokeswoman Eloise Hale said it's “too soon to determine” whether any white-collar jobs will be moved to Charlotte. She would only say: “Louisville is becoming part of integrated, global company, and we want to grow our North American business and invest in our people, our innovation and in economic growth.”

An internal Q&A distributed to GE's rank-and-file Louisville employees Monday provided no assurances on jobs following the Electrolux deal, saying: “Our performance and competitiveness in the market is what determines our success and as a result our employment. If business conditions dictate reductions we will communicate as appropriate.”

One comforting fact is that GE Appliances -- whose exact financial results were previously unpublished -- is just as profitable as Electrolux, albeit only a third of the size.

Figures released as part of the deal announcement show both GE Appliances and Electrolux had a 6.8 percent profit margin in 2013.

Labor relations

The deal also casts uncertainty on the employer relationship with about 3,800 production workers represented by IUE-CWA Local 761.

Local 761 President Eric Sims said Monday that Electrolux will not simply assume GE's current contract with the union, which governs pay and working conditions at Appliance Park.

“It wouldn't be an automatic transfer. It'd be a new (set of) negotiations,” Sims said. “We're going to have to negotiate with them also because they are a different business and they may have different thoughts as to how they want to run their business as to what GE wants to do.”

The GE letter to employees says Electrolux “will recognize and bargain in good faith” with unions representing GE Appliances workers.

Electrolux has five factories producing appliances in the U.S., according to a fact sheet distributed to reporters. Only one of those factories – in St. Cloud, Minn. – has a union representing rank-and-file workers, Hale said.

At the Monday news conference, Blankenship couldn't even say whether the 900-acre plot of land on which the 60-year-old Appliance Park sits would be part of the sale to Electrolux.

What's clear, Blankenship said, is that GE's appliance division is better off in the hands of Electrolux – a company focused on consumer products. In recent years, GE has morphed into “a pure-play technology and infrastructure business focused on regions of global growth.”

For the appliance business, the deal with Electrolux “represents the best opportunity for our successful long term growth -- compared to standing still,” he said.

Louisville Mayor Greg Fischer expressed confidence Monday that Electrolux sees value in GE's Louisville operations.

"Electrolux is not buying GE because they are going to tear them apart," Fischer said. "Electrolux is buying GE because they've gto a great brand full of great people that are innovating and producing products."

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