GE Appliance Park loses "hundreds of millions" of dollars each year, CEO says
Despite $2 billion in investment in recent years and about 3,000 new jobs, GE Appliances still loses “hundreds of millions” of dollars a year at its flagship factory, Louisville Appliance Park, according to President and CEO Chip Blankenship. In a letter dated Friday, Blankenship implored the park’s employees to approve a four-year labor contract that includes money-saving measures.
LOUISVILLE, Ky. (WDRB) – Despite $2 billion in investment in recent years and about 3,000 new jobs, GE Appliances is losing “hundreds of millions” of dollars a year at its flagship factory, Louisville Appliance Park, according to President and CEO Chip Blankenship.
In a letter dated Friday, Blankenship implored the park’s employees to approve a four-year labor contract that includes money-saving measures like freezing hourly pay, making overtime harder to earn and cutting the entry-level wage to $12 per hour.
“The only way we can reduce our prices and make our products more competitive is by making changes in every area of our business,” Blankenship said in the letter, a copy of which was obtained by WDRB News. (See the letter below this story).
Workers are scheduled to vote on the contract on Tuesday.
Blankenship’s letter provides a rare window into the finances of Appliance Park – where nearly 4,000 union workers churn out dishwashers, washer-dryers and refrigerators, among other products.
On the whole, Louisville-based GE Appliances – which includes factories in Tennessee, Georgia, Alabama and Mexico – still managed to turn healthy profits in 2014 and 2015.
That’s according to information released when General Electric Co. sold GE Appliances to Qingdao Haier Co. for $5.6 billion in June.
Figures disclosed with the sale announcement showed GE Appliances had earnings, before financial expenses like interest and taxes, of $540 million in 2015, up from $400 million in 2014. GE Appliances generated $6.3 billion in revenue in 2015, according to a company fact sheet.
But GE Appliances is only profitable because its other operations make up for the losses at Appliance Park, company spokeswoman Kim Freeman said.
“That is why it is so critical that we take steps to get (Appliance Park) on a road to profitability,” Freeman said Monday “…The company cannot continue to sustain these types of losses from this facility at the detriment of the overall business.”
Citing competitive concerns, Freeman declined to disclose additional financial information about Appliance Park and GE Appliances.
GE Appliances owns factories in Decatur, Alabama; Lafayette, Georgia; and Selmer, Tennessee. It also has a stake in Mexican manufacturer Mabe and sources products from other manufacturers.
Appliance Park is the only union-represented workforce in the company after it shut down a refrigerator plant in Bloomington, Indiana last summer shortly after the Haier sale closed.
Dana Crittendon, the president of IUE-CWA Local 761, which represents rank-and-file workers at Appliance Park, didn’t dispute Blankenship’s assertion about the performance of the Louisville operation.
“They’ve been losing – in the appliance business under GE – millions of dollars for years,” Crittendon said in an interview Sunday.
But he added that internal financial metrics show the business is on the right track: “The data shows we are improving, so we are doing some things right.”
Copyright 2016 WDRB News. All rights reserved. Reporter Chris Otts: 502-585-0822. firstname.lastname@example.org.