Electrolux Manufacturing Leader Comments on Pending GE Appliances Acquisition

Nov 04, 2015, 11:00 ET from Electrolux

CHARLOTTE, N.C., Nov. 4, 2015 /PRNewswire/ -- As a global appliance manufacturer, Electrolux knows firsthand how rapidly business is moving forward.  Product innovation is accelerating, and new global competitors are aggressively gaining market share from those of us who have a longstanding history in the industry.  The consumer purchasing landscape has changed dramatically with the development of new technologies and increased e-commerce sales, and we see expanding consumer options at every price point.

However, it is against this competitive backdrop that the U.S. Department of Justice (DOJ) has sued to block Electrolux's acquisition of GE Appliances.

After 13 months of review, negotiations and litigation with the DOJ, we fundamentally disagree with the government's assessment of the acquisition. We are confident in the merits of our case as we prepare to defend ourselves in federal court during a trial beginning November 9. 

The DOJ's view shows an incomplete understanding of how appliances are manufactured and sold.  In particular, the DOJ believes that U.S. consumers do not have enough choice when they want to buy an appliance.  Yet consumers can enter any national home improvement retailer and choose an appliance manufactured by six or seven different companies.

I have spent 13 years overseeing manufacturing operations at Electrolux, and know that the processes required for appliance production are fairly universal and are not capital intensive.  As a result, the appliance industry has a relatively low barrier to entry. Companies with established manufacturing in similar industries can easily enter the appliance business.

A number of global companies – like Samsung and LG from Korea, Haier and Midea from China, and Arcelik from Turkey – have done just that. These companies have aggressively invested and expanded into the U.S. appliance business.  In 2000, Samsung and LG had not entered the U.S. appliance market. Today, they together hold more than 25 percent of the market share.

There is nothing wrong with stiff competition. In my job, it is the driving force that fuels innovation and creates higher quality, less expensive products for consumers.

What makes this DOJ action difficult to understand is that we have seen this movie before. There is precedent. In 2006, the DOJ approved a similar transaction: Whirlpool's acquisition of Maytag. Ten years ago, DOJ decision makers understood the reality of competition in the appliance industry, so it is difficult to comprehend why they do not understand it now.

In my job, I also get to see the driving force of manufacturing in local communities here in the United States. Electrolux has a rich, nearly 100-year history of U.S. manufacturing, and a commitment to the communities in which it operates.  Blocking this acquisition will only limit opportunities for thousands of U.S. manufacturing workers and deny significant prospects for future economic growth in local communities across the country where GE Appliances and Electrolux maintain operations.

Electrolux is confident that our proposed acquisition of GE Appliances enhances competition and innovation in the rapidly evolving appliance market. The DOJ should get out of its own way and let a transaction that is good for competition, good for jobs, and good for consumers move forward.

Frank Wagner
Electrolux North America
Senior Vice President of Industrial Operations

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SOURCE Electrolux