GE Appliances to stop making GeoSpring water heaters, outsource - WDRB 41 Louisville News

GE Appliances to stop making GeoSpring water heaters, outsource Louisville warehouse

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Water heater production inside GE Appliance Park, Louisville Ky. Water heater production inside GE Appliance Park, Louisville Ky.
The GeoSpring hybrid electric water heater (GE Appliances) The GeoSpring hybrid electric water heater (GE Appliances)

LOUISVILLE, Ky. (WDRB) --  GE Appliances will stop making energy-efficient GeoSpring heat-pump water heaters because of low sales while following through on a previously announced plan to outsource its Louisville distribution center, the company said Friday.

The two moves, which are unrelated, will together affect about 300 hourly workers and 23 salaried employees at Louisville Appliance Park, but GE Appliances plans to fully “absorb” the workers into other jobs at the massive Louisville factory, spokeswoman Kim Freeman said.

The water heater production will stop at the end of the year, while the warehouse changeover will occur early next year, she said.

Dana Crittendon, president of IUE-CWA Local 761, the union representing about 4,000 Appliance Park hourly workers, did not immediately return a call on Friday.

GE launched the water heater line in Appliance Park’s Building 2 with much fanfare in 2012 and at a reported cost of $38 million. It was the first new product introduced to the park since 1957 and part of a renaissance of jobs and investment.  

But at $1,300 to $1,900, the water heaters are two or three times more expensive than conventional models and never achieved the sales the company had hoped for, Freeman said.

“We lose millions of dollars on GeoSpring every year,” she said.

Only about 60,000 heat-pump water heaters are made in the U.S. annually -- less than 2 percent of the market, she said. That's despite rebates in some states, incentives from certain utilities and a limited-time $300 federal tax credit.

Freeman declined to say how many GeoSpring units are made each year at Appliance Park. 

Production will stop at the end of year, she said. About 100 hourly workers are on the water heater line and a “handful” of salaried, Freeman said.

The company – which was recently purchased by Qingdao Haier of China – will also follow through with a previously announced plan to outsource its warehouse operation at Appliance Park to a third-party logistics company.

GE Appliances first notified workers of the outsourcing plan in April. Then, the company was obligated to consider alternatives posed by the IUE-CWA Local 761, which hoped to save the jobs of about 200 hourly workers at the warehouse.

Freeman said the warehouse – where boxed appliances are stored and loaded onto truck beds or train cars for delivery to customers – did not sufficiently improve its efficiency during the 100-day “decision bargaining” period.

“They have failed to meet their key metrics” in areas like speed, cost and the rate of products that incur accidental damage, she said.

Freeman declined to say which company will get the warehouse work.

“A company that has warehousing as their core competency, they are going to be more efficient,” she said. “They are going to be able to get that cost per handle down (and) to have less damage.”

Freeman said both moves are aimed at cutting costs in the highly competitive consumer appliance industry.

“We have to constantly look at how we can be better and leverage every part of our business,” she said.

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