Whirlpool Corporation (NYSE:WHR) has closed its Shanghai plant and laid off 600 employees, Xinmin.cn reported on April 8.
Whirlpool China told Xinmin that it had closed its Shanghai plant and started liquidation proceedings. The company plans to move washing machine production to the Changxing Economic Development Zone in Zhejiang province.
The decision to close Shanghai plant was taken to cut costs, but seems to be in line with longer term changes in Shanghai's industrial structure.
Whirlpool said the 600 layoffs will take place in accordance with China's Labor Law but gave no specific details on compensation.
The Pudong New Area Labor and Social Security Bureau confirmed Whirlpool's announcement, adding that Whirlpool had discussed the layoffs with the bureau and was presently involved in consultations with its former employees.
Whirlpool Corporation's 2008 third-quarter financial results showed net profit falling 6.9 percent to US$163 million, equivalent to US$2.15 per share. Chairman and Chief Executive Officer James M Fettig subsequently announced 5,000 job cuts worldwide saying "The global credit crisis has had a profound negative impact on what was already a weakening and very fragile global economy."
Experts: Whirlpool's decision is in line with market rules
Industry analyst Wang Bin said, "Whirlpool's decision to close Shanghai plan makes sense because China's white goods market is dominated by domestic brands. Generally speaking, consumers pay attention to price when choosing white goods and the price of foreign brands is usually higher."
According market research company ChinaMarketMonitor, Whirlpool washing machines sold only 138,700 units in China in the first six months of 2008, leaving the company ranked 10th in the industry as a whole.
On May 9 last year, Qingdao-based Hisense Kelon (SHE:000921, HKG:0921) announced that Whirlpool and Hisense-Kelon, were jointly investing 450 million yuan (US$65.85 million) in a 50:50 joint-venture, based in the Changxing Economic Development Zone, to produce high-end refrigerators and washing machines for the global market.
According to Wang Bin, Whirlpool's teaming up with Hisense-Kelon will help Whirlpool cut costs and achieve localization while helping Hisense to improve its white goods product line and enter the international market.
(China.org.cn by Ma Yujia, April 10, 2009)