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Whirlpool to Cut 4,700 Jobs in Restructuring

Appliances: Financing unit to be sold for $1.35 billion. Stock soars on news of moves, intended to save $180 million a year.

September 19, 1997| From Associated Press

Whirlpool Corp. on Thursday announced plans to cut 4,700 jobs and sell its financing business in a restructuring aimed at saving the world's largest appliance maker $180 million a year.

Whirlpool's announcement was greeted favorably on Wall Street, where its stock rose $8.06 to close at $64.88 on the New York Stock Exchange.

The proposed job cuts could total 800 in North America, roughly half involving positions near the company's headquarters in Benton Harbor, Mich. The rest would be in Europe and Asia. The company's work force now numbers about 46,000 worldwide.

Christopher Wyse, a company spokesman, said the pain of the job cuts--which may begin later this year--should be lessened by people quitting and retiring. Cost of implementing the restructuring will reduce third-quarter earnings by $350 million.

The move is part of an effort to merge manufacturing, service and support facilities while bolstering Whirlpool's presence in Asia and Latin America.

John Goldfarb, who follows Whirlpool for Merrill Lynch, said the new strategy appears radical and that it "could return the company to a mode of attractive growth and much higher profitability."

As part of the deal, the company plans to sell Whirlpool Financial Corp., its inventory and consumer financing business, to Transamerica Corp. of San Francisco for $1.35 billion. Transamerica would provide financing services to Whirlpool's dealers and retail customers under a 10-year agreement.

"While difficult, these changes are necessary to reach the level of operating performance our employees, customers and shareholders expect," said Whirlpool Chairman and Chief Executive David Whitwam.

Also in the works is the $217-million acquisition of a controlling interest in Brasmotor, the company's Brazilian affiliate. Company officials said they plan to buy 33% of Brasmotor's voting shares as well as some nonvoting shares. Brasmotor Chairman H. Miguel Etchenique also will be elected to Whirlpool's board at year's end.

Whirlpool is exploring similar alliances with two of its Chinese appliance joint ventures: Beijing Whirlpool Snowflake Electric Appliance and Shenzhen Whirlpool Raybo. Those companies make refrigerators and air conditioners, respectively.

In July, Whirlpool said cost-cutting efforts combined with strong sales in Europe and Latin America to push the company's second-quarter earnings up 23%, though sales overall were down.

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