Nǐ hǎo: GE completes appliance division sale to China-based Haier

A new sign at Appliance Park welcomes visitors and employees to "GE Appliances - a Haier company." | Photo by Boris Ladwig.

A new sign at Appliance Park welcomes visitors and employees to “GE Appliances – a Haier company.” | Photo by Boris Ladwig.

Zài jiàn (goodbye) General Electric. Nǐ hǎo (hello) Haier.

China-based Qingdao Haier today officially completed its $5.6 billion acquisition of GE Appliances, severing the iconic American brand’s ties with corporate parent GE.

Signs at Appliance Park now welcome visitors and employees to “GE Appliances – a Haier company.”

Chinese and American executives marked the occasion by planting eight trees on the campus. The number eight is important in Chinese culture because the Mandarin word for eight sounds similar to the word that means “to prosper” or “wealth.”

GE Appliances' Chip Blankenship

GE Appliances’ Chip Blankenship

Zhang Ruimin, chairman and CEO of Haier Group, the parent of Qingdao Haier, told employees today during an extended lunch break about how he got into the appliance business and that he has high hopes for GE Appliances to continue to prosper globally.

Chip Blankenship, president and CEO of GE Appliances, said this afternoon that while the division has new owners, the work on appliances continues, as does the drive to improve, innovate and solve problems.

General Electric in January agreed to sell its appliances division to Haier. The American company had been trying to sell the appliance business for years because it is not part of what it considers its core business.


Dana Crittenden

Dana Crittenden

The more than 6,000 employees at the park — and many retirees — today experienced mixed emotions, said Dana Crittenden, president of the IUE-CWA Local 8376, which represents the hourly workers.

Many have worked for General Electric for decades, he said, and cutting ties with a venerable American company is tough. On the other hand, the acquisition marks an end to some uncertainty about the appliance division’s fate. About two years ago, GE said it planned to sell the appliances unit to Sweden-based Electrolux. In December, GE terminated the deal after federal antitrust regulators had sued to stop the $3.3 billion acquisition because they feared a loss of competition and higher prices for consumers. It announced Haier as the new suitor a few weeks later.

Crittenden said the Electrolux saga was merely one chapter in a tome about the park’s possible sale. Rumors about a sale had echoed through the manufacturing halls even before the union president began his career at GE in 1990, he said.

The union and the workers have no control over whether the division gets sold or to whom, Crittenden said, but they do have control over how they work with the new owners and how they perform in their jobs.

“The most important thing is keeping the jobs here in America, keeping the jobs here in Louisville,” he said. “We have to make the best of it. Good jobs are hard to find.”

For now, the employees will continue to work under the existing contract, but company and union leaders said they plan to get together soon to hammer out a new agreement.

Without the deep pockets of the corporate giant, the appliance division’s leaders will have to walk a tightrope to lower costs without alienating the workers, who, in Louisville’s tight labor market, may be inclined to seek higher wages elsewhere.

Crittenden said he hoped to have a new contract ratified within two months.


A hybrid water heater being assembled at General Electric Appliance Park | Photo by Boris Ladwig

The appliance campus in southeastern Louisville has experienced a renaissance in the last decade. Until 2006, the park’s employees had seen thousands of co-workers sent home with a final paycheck as the company moved appliance production out of the country. Employment at Appliance Park, once at about 9,000, had fallen below 2,000. Rumors about a sale grew louder.

The remaining employees’ mood mirrored the state of some of the park’s buildings: derelict, dark and depressing.

In manufacturing facilities across the country, workers had similar experiences: Between 2001 and 2011, the U.S. lost 2.7 million jobs, in part because U.S. manufacturers moved production to low-cost countries, according to the Reshoring Institute, which helps U.S. companies bring back jobs to America.

But in 2006, GE execs tasked a small Louisville unit with launching a lean manufacturing program that redesigned a 57-employee dishwasher line to improve efficiency and quality and to cut costs. The program proved so successful that the company’s leaders decided to expand it. GE reshored the production of a water heater that had previously been made in China. It also brought back refrigerator production. Last summer, GE said it would invest $100 million to produce a new top-load washer, its largest laundry investment in 20 years. And early this year, GE created another 100 local jobs by reshoring production of air conditioners for the hospitality industry.

In the last four years, the company has invested about $1 billion in upgrades, and Blankenship said investments continue, though he said the company does not share specifics.

The number of local jobs has climbed to about 6,000, and about 12,000 for the entire appliances group. To make the investments work, though, employees had to make concessions: While longtime employees still earn close to $30 per hour, new employees make about half that.

However, the loss of the corporate American parent is requiring some immediate investments in personnel. Haier is hiring 85 salaried employees, including 75 in Louisville, to handle information technology, sales, human resources and other support functions that previously had been provided by GE, company spokeswoman Kim Freeman said.

Unanswered questions

Some uncertainty, including about how consumers will respond to an iconic American brand being snatched up by a foreign company, remains. Blankenship was guarded in talking about how GE Appliances customers have reacted since the sale to the Chinese company was announced in January.

The CEO said that the division had “a good year” in 2015, with growth in the “mid-single digits.” This year, growth has been on target, he said — but the company would not say what that target is.