Maytag - Company History

Company History

The Maytag Washing Machine Company was founded in 1893 by businessman Frederick Maytag. In 1925, the Maytag Washing Machine Company became Maytag, Inc. During the Great Depression of the 1930s, the company was one of the few to actually make a profit in successive years. In 1938, Maytag provoked strikes by the company's workers because of a 10% pay cut. The company was able to beat the strike because of the intervention of four military companies, including a machine gun company, of the 113th Cavalry Regiment, Iowa National Guard. At his father's death in 1940, Fred Maytag II, grandson of the founder, took over the presidency. During World War II, the company participated in war production by making special components for military equipment. In 1946, production of washing machines was resumed; in 1949, the first automatic washers were produced in a new, dedicated factory. In 1946, Maytag began marketing a separate line of ranges and refrigerators made by other companies under the Maytag name. During the Korean War, the company again produced parts for military equipment, although washing-machine production continued.

During the 1950s, the 'white goods,' or laundry appliance industry grew rapidly. Maytag first entered the commercial laundry field at this time, manufacturing washers and dryers for commercial self-service laundries and commercial operators. In response, other full-line appliance producers began to compete with Maytag in the white-goods consumer market. These included 'full-line' manufacturers such as Whirlpool, General Electric, and Frigidaire, who built not only washing machines and dryers, but also refrigerators, stoves, and other appliances. Since Maytag was much smaller than the full-line producers, the company decided to limit itself to the manufacture of washers and dryers, alongside ovens and refrigerators built by other companies, as a small, premium-brand manufacturer. The company capitalized on its reputation by renaming its corporate address in Newton, Iowa, "One Dependability Square."

By 1960, Maytag had ceased marketing ovens and refrigerators, but later began once again to expand into kitchen appliances with its own design of portable kitchen dishwasher and a line of food-waste disposers. Upon the death of Fred Maytag II, the last family member involved in the company's management, E. G. Higdon was named president of the company, with George M. Umbreit becoming chairman and CEO. By the late 1970s, over 70 percent of U.S. households were equipped with washers and dryers, and with approximately 18,000 employees worldwide, the company was established as a dominant manufacturer of large laundry appliances. After the company's acquisition of Magic Chef, Inc., in 1986, a move which nearly doubled its size, the company acquired a new corporate name, Maytag Corporation.

In 1997, a Maytag engineering team, at Maytag Laundry Appliances Research and Development, developed the Maytag Neptune line of front-load washers. A matching dryer was introduced to accompany the new washer. The company claimed that the new Neptune model saved energy costs over traditional washer/dryer sets. Production of the Neptune line was later switched to Samsung Electronics. In 2001, the company acquired the Amana Corporation and its appliance assembly facilities. That same year, Ralph F. Hake became the last chairman and chief executive officer (CEO) of Maytag Corporation, serving in that post until March 2006. Once renowned as the standard for laundry appliances, by 2003 the company faced increasing competition from new appliance brands in the US market, as well as from existing appliance manufacturers who had outsourced production a decade earlier in order to reduce costs. While Maytag had begun the process of shifting appliance production to lower-cost assembly plants outside the United States, in 2004 the company was still producing 88 percent of its products in older U.S.-based factories. In an apparent move away from traditional company marketing strategy, company management decided on a plan to stimulate consumer purchases of new Maytag appliances before their old ones had worn out.

Costs incurred in Maytag's acquisition and integration of Amana and an increased corporate debt load led to aggressive internal cost-cutting efforts in direct materials, manufacturing, and distribution costs. Maytag introduced a value-priced appliance line under a separate label, Performa by Maytag. To increase sales, the company also marketed Maytag-branded 'Legacy Series' washing machines that were otherwise identical to low-end Amana models, and built at the formerly Amana assembly plant in Herrin, Illinois. The rebranded Maytag models, later termed Amanatags by dissatisfied owners, received poor customer reviews after reports surfaced of major mechanical and/or durability problems. The company also consolidated warehouse operations and cut the number of Maytag vendors. Between 2002 and 2004, Maytag corporate management cut new-product investment by 50%.

An increasing chorus of consumer complaints concerning product reliability and customer service, assisted by the rapid growth of internet consumer forums, began to affect the company's reputation with customers. The company was also slow to react to customer complaints regarding its flagship Neptune washer and dryer line (labeled the Stinkomatic by dissatisfied customers), resulting in further damage to the company's reputation and a $33.5 million payout to settle several class-action lawsuits arising from the Neptune problems. By 2005, Maytag's market share had declined to all-time lows, sales were flat, and customer satisfaction surveys ranked Maytag near the bottom of the appliance field. The problems with the Neptune line continued; in 2007, 250,000 Neptune washing machines became part of a nationwide safety recall by the Consumer Product Safety Commission due to fire danger.

On April 1, 2006, the Whirlpool completed its acquisition of Maytag Corporation. In May 2006, Whirlpool announced plans to close the former Maytag headquarters office in Newton, as well as laundry product manufacturing plants in Newton, Iowa; Herrin, Illinois; and Searcy, Arkansas by 2007. Following the Maytag headquarters closure, all brand administration was transferred to Whirlpool's headquarters in Benton Harbor, Michigan. The Maytag name would now be used on Whirlpool-designed appliances. Most Maytag employees were terminated, but some were offered jobs at Whirlpool. The board of directors of Maytag all received five years' severance pay. Former Maytag chairman and CEO, Ralph F. Hake, received two years' base salary and two years' target bonus under his severance agreement.

On January 1, 2009, Maytag (under the ownership of the Whirlpool Corp.) changed the vested lifetime benefits of the Maytag retirees. There is a lawsuit pending in the Southern District Court of Iowa where Whirlpool has asked for permission to change the UAW bargained benefits. The benefits in question were subsequently changed despite any resolution of the lawsuit.