Maytag’s CEO today (Thursday) told shareholders he takes “full responsibility” for the company’s poor performance. Ralph Hake faced pointed questions from shareholders during a morning meeting in Newton.
Dave Leonard, a shareholder and union member, said the company’s stock price has fallen 68 percent during Hake’s tenure. “We ask that you act before it’s too late,” Leonard said. A Minnesota man who owns about 2,500 shares of Maytag stock said he’s lost confidence in the company. “Look me in the eye and tell me how much money you lost me,” said another man who said he owned 1,000 shares of Maytag stock. He went on to directly challenge Hake. “Do you still work for Whirlpool?” Hake quickly responded. “I don’t think it’s appropriate to question my loyalties,” Hake said.
Hake, who has been Maytag’s CEO since 2001, bluntly told shareholders the company is maneuvering through difficult times, but he said the company’s launching new products and negotiating with union officials to try to lower production costs. “I realize that actions speak louder than words,” Hake said. “We have much to prove…Maytag is meeting its business challenges head-on.” During a news conference afterwards, Hake was asked if the production plant in Newton would remain open. “I think people in Newton are nervous and I think they have cause to be nervous,” Hake said. He said the plant in Newton would stay open through the end of the union contract, which expires in 2008. “But it’s not clear the employment levels that will be sustained,” Hake said. “Employment levels have shrunk over time and they may continue to shrink between now and the end of the contract.” Hake said it’s up to him and the board of directors to turn Maytag around, and Hake said he doesn’t blame the unions for Maytag’s problems. Hake, who cited his past as a member of the I-B-E-W union, said union leaders are in a “tough place” as Maytag tries to become more competitive through a reduction in labor costs. Some union members urged Hake to adopt the turn-around strategy employed by Harley Davidson and make anything bearing the Maytag name a “100-percent American made” product. Hake said the Maytag product line is “utilitarian” with its washers and dryers and not like a motorcyle which is an “aspirational” product, according to Hake.
“Somehow the product doesn’t have the same kind of cachet,” Hake said. “I would love to emulate them, but we haven’t quite figured out how to do that yet.” Hake said Harley chose to “partner” with its unions, while Maytag has chosen to have conflict with its unions because of the “immense cost pressure” in the appliance industry. “That conflict naturally results in some of the comments taht you heard in (the stockholders’ meeting) today,” Hake said. The Maytag leader said bankruptcy is not an option he or the board of directions will pursue. “I’m hopeful we’ll perform better,” Hake said. “I like to think I do a good job here, but I wouldn’t say I’m the only one who could do this job.” Hake said Maytag’s board of directors is “savvy” and understands the mistakes that have been made and that changes are ahead. “If this was an easy solution, you know, people could do it falling off a log, but it’s a pretty tough situation and I think the board recognizes some of the challenges we face,” Hake said.
The shareholders’ meeting started two minutes early and lasted a little bit more than an hour; shareholders were limited to making their comments in two minutes or less. Maytag did not allow reporters to record the meeting.