Though the purchase of General Electric’s Louisville-based Appliance Park by European firm Electrolux won’t close until 2015, it’s already causing concern in Louisville’s tech community.
Specifically, there are worries about what could happen to the many engineers employed at the park.
Brad Luyster, a stalwart in Louisville’s tech community, gave voice to some of these thoughts during a recent interview with IL.
“GE employs a huge number of engineers and administrators here in town, and the Electrolux deal could easily see all of those shipped out,” says Luyster. “And then you very quickly have several thousand engineers and administrators–high-skilled, high-paying jobs–that are no longer there.”
Luyster, 27, is well-positioned to talk about these issues because he has his feet firmly entrenched in both Louisville’s engineering and entrepreneurial worlds. He is part of the engineering world through his day job as an electrical engineer at Techshot in Greenville, Ind. He’s immersed in Louisville’s entrepreneurial world as sitting president of LVL1 Hackerspace, which provides a community lab and workshop operated by its membership.
It’s been reported that Electrolux’s purchase of Appliance Park (announced Sept. 8) will cost $3.3 billion.
GE’s Appliance Park employs 6,000 people in Louisville, according to a company spokeswoman, but she declined to say how many are engineers. Though, as noted, Luyster estimates it’s at least several thousand.
According to Luyster, GE’s presence in Louisville has provided a sort of bedrock stability for the region’s engineering talent, which has directly benefitted its entrepreneurial community as well. GE’s ability to pay good wages has put all other firms on notice that they need to pay well to keep up, lest they not be able to attract good talent.
But if Electrolux pulls such jobs, Luyster believes it could have an outsized impact on Louisville’s startup culture. “If I, as an engineer, want to go work in a startup, I know there’s a GE here in town where, if the startup dissolves, I can go get a job and I’m not unemployed for months,” he says. “Whereas without that rock here I have to worry a whole lot more about the risk of any employment move I make.”
Luyster says he’s spoken with a half-dozen other engineers in town, and they all share his sentiment: “It’s definitely on people’s minds.”
While these are hypothetical concerns for now–the GE deal first has to clear regulatory hurdles–it is yet another thing that could make it harder for Louisville to retain the engineering and STEM talent generated by places like the University of Louisville’s JB Speed School of Engineering.
Luyster, a U of L grad, says many of the classmates with whom he graduated have left the area. What engineering jobs are here, he adds, are often considered lower-paying, less-prestigious gigs, such as sales engineers.
This suddenly less-certain future has made Luyster reconsider if he should stay in the Louisville area. “It makes me more likely to move,” he says. “It makes me more likely to want to look for employment out of town.”
GE spokeswoman Kim Freeman had this response to questions about the future of Appliance Park: “While I cannot speak for Electrolux and it is way too premature to discuss what will and will not happen, I would like to point out that Electrolux’s major technology presence is in Europe, not the U.S. It would be fair to say that size and quality of our technology team would give them a good balance of technology talent globally.”
Christopher Cprek, a LVL1 Hackerspace co-founder, says that currently he, and most of the people he’s spoken to, are in a wait-and-see mode. “Nobody’s making decisions one way or another based on this announcement,” he says.
He adds that over the past four years, Appliance Park has reaped enormous benefit from having its engineering and manufacturing operations side-by-side. “It would be a tragedy to see those gains reversed,” he says.
As an example of this synergy, Cprek pointed to a 2012 article in The Atlantic that praised how GE’s Appliance Park was able to re-shore the manufacturing of its GeoSpring water heaters: “So a funny thing happened to the GeoSpring on the way from the cheap Chinese factory to the expensive Kentucky factory: The material cost went down. The labor required to make it went down. The quality went up. Even the energy efficiency went up.”
The worst case scenario, he says, is that the Appliance Park becomes a lot like Ford’s operations in Louisville, where there may be thousands of people making cars and trucks, but just a skeleton crew of engineers, and no engineering investment.
Whereas GE had, heretofore, been quite committed to fostering local engineering, as exemplified by the resources it’s invested in FirstBuild, a Louisville-based in-house hackerspace dedicated to designing, engineering, building, and selling the next generation of GE appliances.
I called FirstBuild, but no one was available to speak. FirstBuild did acknowledge that it too is being sold as part of the Electrolux deal, breaking the news on Twitter:
On the flip-side, there is the view that should Electrolux extract its engineering jobs from GE, it could spur the area’s engineers to become more, not less, entrepreneurial. Or so believes Jay Garmon, a product manager of Patient Engagement at ZirMed, and a director at Louisville’s healthcare startup incubator XLerateHealth.
At least half of Louisville’s startups lack an engineer founder or co-founder, he says, pointing to a dearth of engineering talent willing to try the more risky startup track. “So if they get off the bench, that’s good,” he says.
As the deal goes through the regulatory and clearance process, he believes the area’s engineers should actively think about working to create their next job. The cost to make a startup is low here, and the cost of failure is middling.
Garmon adds that Louisville can be a sticky place, meaning that once people settle here they often like to stay, in large part due to its affordability.
Knowing this, he believes city-based groups dedicated to fostering entrepreneurial activity–such as Greater Louisville Inc.’s EnterpriseCorp–should see the current state of limbo as a chance to reach out to these thousands of engineers who might want to stay, even if their jobs go. He demonstrated one possible sales pitch: “If you like it here, what job can we help you create for yourself?”
As an example, area engineers could look to William Burke, who worked at GE’s Appliance Park from 2010 through 2014 as an advanced systems engineer. He started his own firm in 2014 called Calculingua, which seeks to upend the market for academic statistical analysis, collaboration, and publishing.
He notes one reason he left GE was because he knew the security it provided was illusory.
“This event could be a wakeup call to some of the brilliant talent at GE that they should consider working for a startup,” he wrote in an email. “I’m not the first one to note that working for a large corporation always has this risk. On balance, startups are not that much more risky than large corporations, and the best part of a startup is that you get to help make the decisions that direct your fate.”