The info I learned about the demise of the old Maytag company is that they went belly up in 2005. They would have closed the doors and gone the way of the dinosaurs, but Whirlpool bought the name.
Apparently, if I can believe the appliance store salesman, that prior to failing, the old Maytag was in a hurry to be the first US maker to produce a modern front loading washer with a "green" direct drive mechanism. Their first models were a disaster, and the resulting crisis drove the old company under. It seems like it was the result of bad management decisions. I wonder if any MBA program uses this example as a management technique to avoid
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Sorry, had to jump in here but wished I had checked over the weekend. I'm a former Maytag engineer on laundry products and was there at the end. Maytag was in a world of hurt and had two offers, a private equity firm and Whirlpool. Whirlpool's offer was higher, 'nuff said.
What drug Maytag down? It was a series of events. The appliance industry looked like a normal bell-shaped curve when you looked at the market vs. the price paint (low-med-high) with the middle point having the most sales. That was Maytag's bread and butter with the highest margins. The other guys played at the low end. Then the high-end market in front loaders really exploded with the Maytag Neptune line of washers and dryers. The energy efficiency was very popular in states like California and with changing consumer tastes. Great margins on the products and eventually others wanted to play in that market as well. But that shouldn't have brought Maytag down.
So we now have to look at the business and culture of Maytag. Great place to work, BTW. Maytag, like many old profitable companies, suffered from a terminal case of "fat, dumb, and happy." The company had been around so long and had been successful for so long that it never sought the efficiencies that are needed to survive in a tough world. Why do that when they are profitable and life is good? When other brands were acquired, they were left to run just as they had been before. No design changes to incorporate common parts, maximize manufacturing productivity, etc. As an example, in 2003, Maytag had 4 laundry factories that made top-loading washers that all competed at the same price points. Not only that, but they didn't have common parts. Sure two of them used the same motor only "we know better so our motor mount is rotated 90 degrees..." so same motor, but different mounts and therefore different belts. Two platforms had essentially the same water valve, only one facility insisted their coils needed to be rotated 15 degrees. New part number, less volume, higher part cost. Plus each factory had it's own design staff all doing their own thing because each design team was smarter than everyone else.
There were efforts to commonize parts and drive discounts with single supplier sourcing. But those efforts were undermined at the local level by the local fiefdoms as they worked to protect their long-term supplier buddies. You know, the supplier that is your drinking and golfing buddy. So the high margin parts were kept locally sourced and the crap was offered up to the single-source supplier who looked at it and said "no thanks." At one point, the company was so not integrated that it had 3 full and complete HR departments for 3 businesses. The systems were all different with no communication and nothing in common. So no economies of scale and tons of duplication which costs money. Not saying it's all HR's fault, it is just one example of the many costly and expensive duplications that were present within Maytag.
Ok, so now Maytag is and was fat, profitable, full of individual kingdoms run by fiercely territorial kings, had a new CEO from Whirlpool who was a finance guy who knew numbers, but lacked the charisma to lead the people like the old CEO, and did not understand the strong Maytag culture, and a marketplace that was shifting from many, many small, independent appliance dealers to big box retailers. So what happened? September 11, 2001.
Huh? Yeah, remember 9-11? What did people do? They nested. People stayed home with their families. The home regained the position as the castle. Remodeling and upgrading became the norm. This happened very rapidly in terms of market change, 6 - 12 months. The bell-shaped market curve I mentioned? Yeah, invert that. The market went from high in the middle to either cheap or expensive. Home upgraders went high end. Great! Maytag had the high end front loaders. Yep. But that wasn't enough to make up for the loss in the middle market. Not when you have so many factories all making products competing against each other at the same price point under the same brand name. Let's look at Whirlpool as a comparison. Take a standard Whirlpool top-load washer circa 2000. From just below the washer top all the way to the bottom, they were essentially the same guts. Same parts, same design, same assembly, all made in one factory. Massive economies of scale. When Whirlpool was bidding out parts for a volume of 1.5-2 million pieces a year, each of Maytag's factories was bidding out volumes of 300-400k because they had no common parts. Big difference in purchasing power and pricing leverage. No one and I mean no one can make a cheap washer like Whirlpool. Not talking quality, just talking cost.
Now, throw in that in the early 2000's, the retail market had changed from the majority of sales being small, local mom & pop retailers to 90% of the market being big box retailers (10 of them) with their pricing leverage accordingly. So Maytag sat there after 9-11 with the market rapidly changing, with a very high cost structure, with big-box retailers putting big downward pressure on pricing (the price they paid, not what the consumer paid), and they went from fat, profitable, and happy to losing their *** and cash dwindling rapidly. Throw in the resistance to the initiatives to economies of scale, the little kingdoms, etc., and Maytag went the way of the dinosaur very quickly.
A lot of long-time employees blame the last CEO. He rightfully share the some of the blame because you couldn't run Maytag from a glass tower where you don't mingle with the "little people" like is done at Whirlpool. Maytag's culture requires a leader to be in front of the people. He figured this out too late. But blame also is shared by the CEO he replaced. Old timers look at this guy as almost a Jesus-like figure. But he shares the blame because a lot of the economies of scale that should have been put in place with each acquisition under his leadership were never done. You do that when you are profitable, not when you are starving to death. Ultimately, savings were gained, but too little, too late.
It was a shame since Maytag made a good product. Great laundry products (still have my Neptune washer and drying cabinet). Great cooking products. Great refridgerators. Solidly built and lasted.
One of the reasons appliance don't last anymore if it's all about money. Cost reduction. If the average life of an appliance in the market is 6.8 years and yours lasts 14, you are leaving money on the table. Thinner plastic, cheaper bearings, cheaper seals, thinner metal, cheaper grades of stainless steel, etc. Yeah they don't last because they aren't made the same. They are designed to be made as cheaply as possible because people will just go buy a new one when it breaks in 5 years. It's all about money.
Don't get me started on Samsung laundry products...I have a story for that.
