GE Appliances CEO: Business to continue expanding under Haier - WDRB 41 Louisville News

GE Appliances CEO: Business to continue expanding under Haier

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Chip Blankenship Chip Blankenship
GE Appliance Park Zoneline production line GE Appliance Park Zoneline production line
GE Appliance Park Zoneline production line GE Appliance Park Zoneline production line
GE Appliance Park Zoneline production line GE Appliance Park Zoneline production line

LOUISVILLE, Ky. (WDRB) – The leader of General Electric’s Louisville-based appliance division said the business should continue to thrive with little disruption under the ownership of the Haier Group of China, a global “appliance powerhouse” with $33 billion in annual sales.

GE Appliances CEO Chip Blankenship spoke to local media for the first time Tuesday since the $5.4 billion sale to Haier was announced Jan. 15.

Blankenship was quick to point out that, under Haier, the appliance division’s headquarters will remain in Louisville with its current leaders in charge. That’s a significant difference from GE’s failed attempt to sell GE Appliances to Electrolux, which would have run the business from its U.S. headquarters in Charlotte.

“We’re very excited that (Haier’s) track record on acquisitions is to keep the management team intact and have the local team be empowered to run the business,” Blankenship said.

Unlike Electrolux, Haier has little presence in the United States. It has a U.S. headquarters many times smaller than that if GE Appliances in Wayne, New Jersey and a refrigerator factory in South Carolina.

Blankenship said it’s too soon to say whether there is any overlap between Haier’s New Jersey office and the appliance division headquarters in Louisville. He also could not say whether Haier’s South Carolina plant will become part of GE Appliances.

But GE Appliances should benefit from becoming part of Haier, which operates in 100 countries but has  85 percent of its sales in China, Blankenship said.

“They’ve got enormous scale that they can bring to our business” in areas such as the supply chain and research / development, Blankenship said.

Blankenship added that he expects Haier will allow the appliance division to keep investing about 4 percent of its annual sales on things like research and development, which lead to new business. That would be about $236 million a year based on GE Appliance’s 2014 results.

“We’ve shown we can bring a lot of new products to market with that level of investment and we’d like that to continue,” he said.

As for about 3,800 unionized production workers at Appliance Park, Blankenship said Haier has agreed to recognize the bargaining unit and negotiate in “good faith” for pay and benefits.

Dana Crittendon, president of IUE-CWA Local 761 in Louisville, said Tuesday that it “looks like we will be negotiating a new (labor) contract” with Haier after the sale closes, though he did not know exactly when.

“We’d like to maintain the pay scale that we have with some improvement in benefits and things of that nature,” he said.

Blankenship’s comments came at an event to showcase Appliance Park’s newest product, the Zoneline packaged terminal air conditioners for hotel rooms.

The air conditioners are the latest example of an appliance GE once outsourced to Asian factories but is now making at Appliance Park, Blankenship said.

“We’ve been on a business transformation journey for last four years,” Blankenship said, referring to the $1 billion that GE has invested in its appliance business.

GE has retooled factories at Appliance Park, brought in new products for the first time in decades and added about 3,000 production jobs since 2010.

“It had been a while since we had stood up new factories and invested in new operations,” Blankenship said.

The effect of that turnaround is evident in the difference between the Haier’s $5.4 billion offer for GE Appliances and Electrolux’s $3.3 billion offer.

Haier was among “more than 5 strategic company suitors” and “more than 30 private equity firms” that were “interested in bidding” on GE Appliances after the Electrolux sale was scuttled in November, Blankenship said.

Blankenship said Haier’s offer was based on GE Appliance’s profits in 2014 and 2015, whereas the mid-2014 deal with Electrolux had been based on the division’s 2013 performance.

In its press release last month, Haier said GE Appliance’s 2015 profit was “up nearly 50 percent” from 2013. Haier did not disclose the division’s profit in 2015, but other figures Haier included suggest GE Appliances made about $658 million in 2015.

GE Appliances made $400 million on $5.9 billion in revenue in 2014, Haier said.

Blankenship said those results are a testament to the performance of the appliance division’s employees “in the face of a lot of noise” the last two years.

“The market hasn’t gotten that much better in terms of our ability to charge more for an appliance; in fact, it gets tougher and tougher,” Blankenship said. “But in fact we are accelerating our business capability, our manufacturing capability, our design capability to have better overall business performance.”

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