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Webster City braces for ‘death’ of Electrolux

Webster City braces for ‘death’ of Electrolux

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WEBSTER CITY (AP) — The end is rapidly approaching for Electrolux’s presence as a major manufacturer in this town.

As the scheduled March 31 closing date nears and production lines fall irreversibly still, the cavernous building will gradually fall silent. 

And more than 4,000 miles away, corporate leaders in Stockholm, Sweden, will deliver to AB Electrolux stockholders the results of the multinational appliance manufacturer’s efforts to pare down expenses and improve a different line: the corporate bottom line.

A fancy term for what, in this town, is a death.

“No offense,” said Ron Hooker, a retired employee, after poring through ring binders crammed with a vast collection of the factory’s 74-year history. “It’s like writing the obituary of the company.”

The end is near. It is the end for wage earners who thought they could retire from the big factory job as did generations before them, the end of a behemoth manufacturing presence in this 8.6-square-mile Iowa town, population roughly 8,000. And it’s the end of hundreds — once thousands — of regional jobs that paid an average of $16.50 an hour.

“From the city’s perspective, it’s all about the jobs,” said Ed Sadler, Webster City’s city manager. “Not the tax base or anything else. It’s the jobs.”

There are about 493 hourly and 129 salaried employees still working at the Webster City plant, according to Electrolux spokesman Tony Evans. Of them, about 540 will be impacted by the shutdown.

In early January, another 262 workers lost their jobs as the draw-down progressed.

Their jobs are being exported to Mexico.

The good news, said Evans, is that as many as 80 employees will be retained to work at the Fabric Care Technology Center, which is being developed at the Electrolux Central Vacuum Systems (Beam Industries) site on the west end of town, an approximately $500,000 site Electrolux donated to Webster City. 

Electrolux pays the $73,206 in property taxes and the city, in turn, leases the property back to the company. The company, Evans said, is investing about $1 million in improvements to the site.

“We expect it to be ready for occupancy in the fall,” he said. Once in operation, it will provide both “highly skilled engineering and technical support jobs.”

Electrolux now draws the greatest portion of its work force from Hamilton and Webster counties, according to Evans.

However, the number of people working at the factory that produces a range of washers and dryers marketed under various brand names was once much higher, and its reach far greater.

“We’ve drawn from a wide range of counties over the years,” said Paul Eriksen, United Auto Workers Local 442 president and an Electrolux employee who commutes from Dows. “I think I remember when we had up around 2,000 people, we had people working here from 22 different counties.”

Not only will those jobs become history with the plant shutdown, but so will the union.

“We’ve been here since Dec. 24 of 1946,” said Eriksen. “The local has a long history here, but the local will just cease to exist.”

For years, rumors of the end drifted through the factory with the ebb and flow of production numbers, Eriksen said. Mexico was mentioned, but Eriksen held out hope, even after it was announced that a new line of washers and dryers would begin production at a new company installation in Juarez.

“I was still hoping at that point that we would still be here and they’d be making washers in both locations,” said Eriksen recently. “But I think in the back of my mind I probably thought that there was a possibility (of closure) there.”

Evans explained the decision. 

“Industry sales of laundry products were dramatically impacted by the global economic crisis,” he said. “This consolidation of production leverages the efficiencies and cost advantages of the state-of-the-art Juarez facility that started production in late 2008.”

Its annual reports show it was in 2006 that the Webster City plant was first publicly targeted for either closure or cutbacks. Two years earlier, a money-saving strategy outlined in the 2004 Annual Report began chipping away at the company’s facilities worldwide in an effort to save an estimated $389 million to $545 million annually.

That’s the year the Greenville, Mich., plant was targeted for its 2005 closure. The company decided to close facilities in El Paso, Texas, too. Also marked for shutdown in 2005 was production in France, Australia, New Zealand, Denmark, and Sweden, according to the company’s 2004 Annual Report.

It was a business strategy, according to the report, that would shift production to what the company identified as some of the world’s “low-cost” countries: Hungary, China, Thailand, Russia, Poland.

And Mexico.

Electrolux will pay $643,146 in property taxes in 2010-2011, treasurer’s records show.

After the factory is closed, the company will continue to pay local taxes as long as it owns the property, but the amount could change, depending on the contents and condition of the property.

With little deference to its nearly 63 years of existence, Electrolux gave Local 442 less than an hour to digest the news in October of 2009 that the plant would be closed. Eriksen was still in shock when corporate leaders assembled the factory’s workers to give them the bad news.

It was over in minutes.

“It definitely makes me feel sad, knowing the long history we’ve had,” Eriksen said, referring to the union. He has been Local 442 president for almost 15 years. “We’ve done a lot of good for the community when we’ve been here. It’s just a shame to see it come to an end.”

Eriksen, who is 49, said he will be just shy of 20 years with the company when the plant closes at the end of March.

“It was a good job. When I came here I was looking to work for a year or so and find something else, which is the case with a lot of people there.”

Hooker, who became a de facto plant historian, tells a story with a similar beginning, but with a far different end.

“I started in 1952 at 98 cents an hour,” said Hooker, 77, who left the family farm thinking he’d return to it after a short stint of factory work. “They were good jobs, and when I started, we got a lot of overtime. I was working up to 60, 65 hours a week.” Hooker said his pay accumulated at a surprising rate. “They were good jobs, for that time.”

In ensuing years, the factory was sold and resold — once to the automaker Studebaker — sometimes affecting his pay dramatically. But there was always a job. He retired after 41 years, still owning the farm, but never becoming a full-time farmer.

Electrolux took over from White Consolidated Industries in 1986.

Eriksen, who is seeking a new job, looks back with mixed feelings.

“Well, it was a good decision for a lot of people. We made good wages and had good benefits,” he said. The average hourly pay is $16.50 to $17, he said. “But people over here aren’t getting rich. It’s a livable wage.”

Eriksen is firm on this point: The plant closing has nothing to do with the presence of the union.

“I’ve heard some people say, yeah, they’re moving because of the union. Well, that’s not the case. There’s non-union facilities they’re moving out of the country. As I said, we make a good wage here, but we’re not getting rich. It seems like a lot of the people I hear say they’re moving because of the union; a lot of those people who have said that to me make more money than we make,” he said.

“Even if we were making minimum wage over there, the cost of labor would still be cheaper in Mexico than it is here.”

“Electrolux has the utmost respect for our current and former employees who have worked at the Webster City and Jefferson facilities,” the company said in a press statement issued by Evans. “Throughout the years, including the final days, they continued to demonstrate that they are first-rate. We appreciate their contributions over the years.”

The company, according to an interim 2010 fourth quarter report, “showed a record profit” last year. It reported this “highlight:” “Strong growth in Latin America and Asia/Pacific offset lower sales volumes in Europe and North America.”

And so, progress marches on.

Eriksen said if he were to phone Hans Straberg, the former president and chief executive officer of AB Electrolux who guided the strategy to shift production to low-cost countries, he’d tell the human side of the impending closing of the Webster City factory.

“I would say that the decision to move their production to Mexico, while in the company’s eyes may be a good decision, they’re overlooking the heart and soul of the facility. The people that are working it and making it what it is,” he said. “It’s a business. But it’s also people. It’s people’s lives.”




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