GE Appliance Division For Sale
General Electric has confirmed that they are in talks with Electrolux and others for the sale of GE’s Appliance division. At 8.3 billion dollars in annual sales (includes appliances and lighting), the numbers are not trivial, yet the division is the smallest in GE’s portfolio. Moreover, the operating margin is paltry at less than 5%. So, we get why GE wants to sell.
But, let’s look at the consequences of a sale of GE Appliances to Electrolux. The broad market of U.S. major appliances is led by Whirlpool, Electrolux (Frigidaire), and GE in that order. Moving from 3 major players to 2 would surely reduce competition, and at least raise an antitrust eyebrow in the Justice Department.
In terms of production capabilities, GE brings a lot to the party with new factories and a rejuvenated Appliance Park in Louisville. A combined Electrolux/GE will need manufacturing capacity, and GE’s one billion dollar investment should make Appliance Park competitive.
Nevertheless, Electrolux has shown a willingness to shutter U.S. factories and move production to Juarez, Mexico. There are sure to be redundancies, and analysts have already noted that both companies have recently invested in range facilities in Tennessee and Georgia. In addition to the surplus manufacturing capacity, there would of course be management and administrative redundancies.
It will be interesting to see how this plays out. Though I’ve got no dog in this fight, I feel it would be a shame for those manufacturing jobs that have returned to the U.S. to be lost due to further consolidation in the appliance industry. What’s your take on this?