The Death of Maytag

As the resident of a state that boasts of relatively few internationally known companies, it's a big deal when one of those companies goes through a big change. That happened this week, when it was announced that the Maytag appliance company would cease operations in Newton, Iowa.

Maytag has been a respected washing machine maker for 75 years. You might remember their commercials in the 1980s that featured Gordon Jump (from WKRP in Cincinnati) ... the Maytag repair man that never had anything to do because the product was of such high quality.

Maytag was purchased a few months ago by rival brand Whirlpool. There was some discussion that the government wouldn't allow the purchase (anti-competition laws). But when the "go ahead" was given, Whirlpool went ahead by gutting the Maytag brand of its Iowa employees.

Newton is not a big place. The Maytag workforce probably represents a third of all the city's employable adults. All of these people are now (or will be soon) unemployed, and there are no jobs to absorb the blow.

Whirlpool says that the plant in Newton is inefficient -- washing machines can be made 5x faster at other existing plants, which saves a lot of money. Not concidentally, the Newton plant is unionized, while other Whirlpool facilities (the more cost efficient ones, I presume) are free of unions.

I don't personally know anyone who works for Maytag in Newton, or even lives in Newton, but I feel bad for the community and its families nonetheless. In Cedar Rapids, if Rockwell Collins would ever be purchased and subsequently closed, the effects would be devastating. It's not just the loss of jobs -- it's the loss of spending dollars within the economy that support the grocery stores, car dealerships, restaurants, hair salons, et al. Not to mention the charitable donations to churches, the United Way, the symphony, minor league baseball and schools. Cedar Rapids would drop off the map. Perhaps Newton is headed for such a fate now.

The most sobering aspect of the story is the harsh reminder of the state of our capitalistic society. The marketplace demands more and more value for its dollar. Maytag (Whirlpool) must keep production costs low so that its brand is price competitive in the marketplace. The need for low production costs means that wages (usually the most expensive liability for a company) must be kept low and effeciency kept high. The end result -- cheap washing machines (and cars, radios and blue jeans) and jobs being relocated to the most inexpensive areas of the country, and the world.

I don't know where all of it ends -- the capitalistic ebb and flow, that is. People smarter than I can argue the merits of various economic systems. All I know is that if I'm a local business owner in Newton today, I'm inclined to worry about my financial future.

"Therefore I tell you, do not worry about your life,
what you will eat or drink; or about your body, what you will wear. Is not life
more important than food, and the body more important than clothes? Look at the
birds of the air; they do not sow or reap or store away in barns, and yet your
heavenly Father feeds them. Are you not much more valuable than they? Who of you
by worrying can add a single hour to his life? But seek first his kingdom and
his righteousness, and all these things will be given to you as
well."

-- Jesus