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Goodman: Amana stays upscale.

Goodman Holding Co. intends to support Amana as an upscale brand after it acquires Amana Home Appliances about Sept 10.

Frank Murray, Goodman's chairman and chief executive here, said last week that a step-up brand structure "makes a lot of sense. I think that by making Amana mainstream, that would fly in the face of the good-better-best strategy.

"We are going to enhance the Amana brand," he reiterated.

Murray also said that Amana air conditioners will continue to be manufactured separately from Goodman's because the products are different and essentially noncompetitive with each other.

The executive qualified his comments by noting that bidding for a company involves looking at its financials, not its operating details. Goodman has agreed to spend $550 million for five divisions of the Raytheon Appliance Group, including home appliances and commercial ventilation and microwave equipment.

"We haven't finalized our plan yet" for the acquisition, he reported. "It's premature to say what we are going to do.

"We are going to be hypothesis-testing for the next six months. Things are going to change" in yet-undetermined ways.

Responding to intense speculation in the major-appliance industry about Good- man's program for that business, he noted that "we are going to rely heavily on Amana's management."

Amana Home Appliances simplified its brand structure in the past year or so. Modern Maid, Glenwood and Sunray disappeared; Caloric and Speed Queen became more confined, and Amana was promoted more at mainstream price points.

Thus it's conceivable some of these secondary labels could be revived and/or strengthened under Goodman. The sales structure also might or might not change: Goodman was said to be distributor-oriented.

Outsiders perceived a looming culture clash between Amana and Goodman -- upscale versus rock-bottom costs; union versus non-union; public versus pri- vate. Several noted Goodman was in good position to make an initial public offering.

Murray's response to the IPO idea was, "No. One word: no."

The repeated word for Goodman, including Murray's, was "lean." An industry veteran reported that "they do more than $875 million and are mega-profitable."

As he did a week earlier, Murray declined comment about volume, except to say a magazine's $500-million estimate was "low."

"The first thing is they're diametrically opposite," observed an executive familiar with Goodman and Amana. At Goodman, "six people run the company. That's it -- there's no huge managerial staff. When they have a meeting, it could be in a phone booth."

Such thinking in the industry led to conclusions that Goodman will take over Amana with guns blazing. But the chief executive was not playing that martial tune last week.

"We are very lean in the management ranks," he agreed. "We are a very produc- tive organization."

Murray pointed out that "we've never had a layoff in our history." That was not a guarantee Amana would remain unscathed. But, he continued, "maybe they need a level of support that we don't have. This is going to be new."

One popular line of speculation was Goodman would close Amana's Fayetteville, Tenn., plant for heating and air conditioning. A competitor claimed the com- bined firm would have excess capacity. Murray offered a clear retort.

"This I can say for sure: we will have separate manufacturing for Amana air conditioners," he said. He noted that Amana's products were significantly dif- ferent from Goodman's and required separate production.

"We're going to allow them to operate autonomously," he reported. "They've been successful."

Outsiders pointed out that Goodman has no unionized employees and Amana has thousands under contract. In Teterboro, N.J., about 35 workers at Amana's regional service center were terminated by Raytheon effective Sept. 10. That's the date the acquisition will be completed, barring any technicalities.

Amana has 12 service centers: why this one? Murray said that Teterboro "doesn't make sense" in the context of New York-area logistics. "Leaving that behind had nothing to do with a non-union situation; nothing; zip.

"We will take full care of our Amana customers in the area," he added, noting there is a coverage plan being formulated.

As the shock subsided from the disclosure that Goodman was the winner of the Raytheon auction, there were some positive reactions to the deal. A few com- petitors and customers noted with satisfaction that an American company was acquiring an American company.

There also was curiosity about a relatively unknown firm's management. "Who is Frank Murray?" he was asked.

"I was a financial advisor," he replied. His expertise is in acquisitions and in financial and strategic planning, he said.

Murray's resume entries include partner in the Beacon Group, a managing direc- tor at Merrill Lynch and a vice president at Dillon Read. For many years, he was an advisor to the Goodman family. Harold Goodman, the entrepreneurial firm's founder, died in January of 1995, and the family asked Murray to step in last year.

"I was born in Manhattan and raised in Connecticut," he said. He's 44 years old and was graduated from Harvard Business School in 1979.

An Amana Chronology

1889 Klein Stove Co. founded, Philadelphia (later Caloric)

1904 Modern Maid founded

1904 Sunray Stove Co. begins manufacturing in Delaware, Ohio

1908 Speed Queen founded, Ripon, Wis., by Seelig and Barlow

1934 Amana Refrigeration Inc., Amana, Iowa, founded by George Foerstner to make beverage coolers

1945 Raytheon Co. discovers the microwave, builds institutional units

1950 Amana Society sells ARI division to Foerstner, et al

1956 Speed Queen merges with McGraw Electric Co.

1961 Glenwood Range Co. acquires Sunray Stove Co.

1965 Raytheon acquires Amana

1967 Raytheon acquires Caloric

1978 Caloric acquires Glenwood Range Co.

1979 Raytheon acquires Modern Maid Co., Chattanooga, Tenn.

1979 Raytheon acquires Speed Queen from McGraw-Edison

1981 Caloric acquires Modern Maid

1988 Microwave Products of America created from Litton sale; ends in Chapter 11

1989 Microwave Products of America exits consumer microwave ovens

1989 Caloric dedicates Florence, S.C., range plant

1991 Raytheon begins consolidating appliance sales and marketing in Amana; Caloric's Topton, Pa., facilities closed

1993 Caloric Corp. disappears, consolidated into Amana

1993 Raytheon acquires Menumaster's assets

1996 Speed Queen Co. becomes Raytheon Appliances' Commercial Laundry division

1996 Modern Maid, Glenwood, Sunray brands phased out

1996 Delaware, Ohio, plant making manual-cleaning ranges is closed

1997 Raytheon agrees to sell Appliance Group minus commercial laundry, elec- tronic controls to Goodman Holding Co.
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Title Annotation:Goodman Holding Co.'s planned acquisition of Amana Home Appliances will continue support of Amana products
Author:Beatty, Gerry
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Jul 28, 1997
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