Appliance maker Whirlpool Corp. plans to cut 5,000 jobs, about 10 percent of its workforce, as it faces soft demand and higher costs for materials.
The world's biggest appliance maker said Friday it will close its Fort Smith, Ark. plant, which employs 884 hourly and 90 salaries workers, and shift dishwasher production out of Neunkirchen, Germany. The company expects those moves will save $400 million by the end of 2013, but Whirlpool declined to specify other cost-cutting measures.
Whirlpool employs nearly 1,400 workers at its cooking appliance division in Cleveland, Tenn., where the company is building a $120 million plant.
"We are not providing site-by-site information but can tell you that the cuts are impacting 5,000 people throughout the world with the majority being located in North America and Europe," said Kristine Vernier, senior manager of global public and media relations.
Whirlpool announced Friday that it has cut its 2011 earnings outlook drastically after reporting third-quarter results that missed expectations. The appliance maker said it was hurt by higher costs and a slowdown in emerging markets.
The company, whose brands include Maytag and KitchenAid, has, like other appliance makers, been squeezed by soft U.S. demand since the recession and rising costs for materials such as steel and copper. Because of its size, Whirlpool's performance provides a window on the economy because it indicates whether consumers are comfortable spending on big-ticket items.
Whirlpool has raised prices to combat higher costs, but demand for items like refrigerators and washing machines remains tight. Whirlpool is also facing discount pressure from competitors.
To offset slowing North American sales, Whirlpool has turned to emerging markets. But the company said Friday that sales have slowed there, too. The company revised its demand forecast globally. It now expects demand to decline 3 percent to 5 percent in North America, in 2011, down from a 1 percent to 2 percent prior decline forecast.
Steep costs and the dour global economy are affecting the entire appliance industry. Swedish appliance maker Electrolux said Friday that its third-quarter net income fell 39 percent and also cut its forecast for demand in North American and Europe for the year.
Whirlpool jobs to be cut are mostly in North America and Europe. They'll cost $500 million in restructuring costs however, which will be recorded over the next three years, including a $105 million charge in the fourth quarter, $280 million charge in 2012 and $115 million charge in 2013.
Benton Harbor, Mich.-based Whirlpool's third-quarter net income more than doubled to $177 million, or $2.27 per share, from $79 million, or $1.02 per share. Adjusted earnings of $2.35 per share fell short of analyst expectations for $2.73 per share.
Revenue rose 2 percent to $4.63 billion, short of expectations for $4.74 billion.
Whirlpool's stock fell $8.67, or 14.3 percent, to $51.80 in trading Friday on the New York Stock Exchange.