How Whirlpool Spun The Home Appliance Market

How Whirlpool Spun The Home Appliance Market

Whirlpool, one of the leading manufacturers of home appliances in the world, is driven by its vision to improve lifestyles. Let’s take a closer look at its inspiring journey...

Look around your house; you will surely find a device or two from Whirlpool, be it a washing machine, a food factory, or a fridge.

An American multinational corporation that manufactures and markets premium quality home appliances, Whirlpool has a long and illustrious history of over 100 years, redefining lifestyles, one innovative home appliance at a time.

Here are a few statistics from 2020 that highlight the scale at which Whirlpool operates:

Whirlpool started as a family venture that steadily grew into one of the most innovative and respected businesses worldwide. It went from being a family of two to having over 78,000 employees across the world. Yes, that’s right! 

Let’s take a closer look at the company’s impressive growth journey…

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It All Starts With An Idea

Whirlpool’s history can be traced back to 1911 when Louis and Emory Upton founded the Upton Machine Company - the original predecessor to the present-day Whirlpool Corp. Louis Upton’s imaginative and enterprising nature was the main reason behind the company’s establishment and early success in acquiring customers.

The Man Behind The Business

While still in high school, Louis Upton was forced to take up a job to support his family when his father died in a streetcar accident. He started off by becoming an insurance salesman. His job led him to cross paths with W.S. Klein, the secretary-treasurer of the Commonwealth Edison company. Although Louis failed to sell him insurance, he received a job offer instead.

The job at Commonwealth Edison introduced Louis to the rapidly developing field of electricity. It was here that Louis Upton also conceived the idea of making an electric washing machine.

An Unexpected Opportunity

While working at Edison, Louis was approached by E.C. Williams, a hardware merchant who wanted to set up a company to manufacture home washers. Upton was intrigued by the idea and offered his savings, $500, to Williams as capital for the company.

However, the venture failed utterly, and Williams’ business went bankrupt. Feeling responsible for Louis’ loss, Williams offered him a choice to take a patent as recompense.

Louis chose the patent for a manual washer that became the key for the founding of the company. He wanted to attach an electric motor to this design in light of his goal of manufacturing an electric washing machine.

The patent offered Louis the unexpected opportunity to realize his dreams, and he intended to make the most of it.

The Electric Washer Is Developed

After getting the patent, Louis approached his uncle Emory Upton, a mechanic, to consult him over the feasibility of his idea of attaching an electric motor to the design. Emory himself set about devising a transmission for the project.

whirlpool-first-electric-washerSource

Louis Upton approached the Federal Electric Company - one of commonwealth Edison’s divisions - with the new machine and convinced them to order a hundred washers for the retail market. He set up shop in Benton Harbor to fulfill the order. There, his brother, Frederick, also joined him to help build the electric washers.

Initial Challenges

After fulfilling its first order and successfully dealing with a few complaints regarding a fault in the gear transmission of the machines, the Upton Machine Company had successfully procured Federal Electric as a customer.

The manufacturing of the washers was financed by a $5,000 investment from Lowell Bassford, a retailing executive. Thus, the Upton Machine Company was formally established and was ready to start producing electric wringer washers. However, the relationship between Upton and Federal Electric came to a grinding halt after three years as the latter began manufacturing its own electric washers.

The loss of its customer was a major blow for the newly established company. Still, it managed to survive the harsh turn of events by diversifying and manufacturing toys, camping equipment, and automobile accessories.

The company finally experienced a breakthrough in 1916 when they managed to reach an agreement with Sears, Roebuck & Co. to produce two types of washers. Sears marketed the washers under the brand name “Allen.”

However, the company had learned from its previous experience with Federal Electric not to be over-reliant on a customer, which is why it began marketing a washer under its brand name as well.

The Merger With Nineteen Hundred

During the 1920s, the sales volume saw a rapid increase due to Sears’ expansion into retail and its selection of Upton as the sole supplier of washers.

Thus, Upton felt the need to increase its production capacity and enhance distribution efficiency. To do so, the company initiated a merger with Nineteen Hundred Washer Company of Binghamton, New York, in 1929. The company also changed its name to the Nineteen Hundred Corporation after the merger.

This new company was able to survive through the Great Depression while remaining relatively unaffected. It actually expanded and modernized its manufacturing facilities to cope with the increasing sales volume. It could very well be said that the company was thriving.

Key Takeaway 1: Every Challenge Is An Opportunity

Louis Upton encountered various challenges early on in his career. He invested in savings in E.C. Williams’ venture and it went bankrupt. However, upon receiving the patent as compensation for his loss, he embraced the opportunity to start his own business by developing an electric washer.

Rather than being disheartened by the previous failed venture, he wasted no time in approaching his uncle and setting his plans in motion. From there on, the company expanded its production capacity, partnering with large-scale customers and becoming a leading manufacturer in the industry!

The Business Takes Root

The company had now found its footing after an uncertain beginning. It was in a position to look towards expanding its business and establishing a presence in the industry.

Business During War Years

When World War II broke out, it resulted in the suspension of manufacturing all consumer products. Unfortunately for the Nineteen Hundred Corporation, this included washing machines. The company gave the production of military equipment precedence, and it received a contract for machining and assembling gun mounts.

Despite the drastic shift in the nature of products being manufactured, the company excelled at the new task. It was mass-producing military equipment such as propeller controls on an assembly line, even though they were usually custom-made. 

In 1942, Louis Upton was called to Washington and was appointed the Chief of the Consumer’s Durable Goods Division of the War Production Board. His task was to coordinate 19 industries into the war effort. He worked tirelessly during this time, with the company operating for 24 hours, six days of the week - sometimes even seven.

Throughout the duration of the war, the company’s 1,595 employees (620 of which were women) worked relentlessly to contribute to America's war effort.

Post War Years

Louis Upton demonstrated once again that he was a man with vision and foresight. While fully dedicated to contributing to the war effort, he was also thinking about what unique products he could offer the consumers once the war ended. Even during the war, he worked to develop a fully automatic spinner type washer that underwent as many as 25 major refinements and 50 working models.

Coincidentally, the company finished work on the washer just as the war was ending. Only a week after Japan surrendered, i.e., August 27, 1945, the company announced its new automatic washers: the Kenmore and Whirlpool. In 1947, Sears introduced the first automatic spinner type washer produced by the Nineteen Hundred Corporation, nicknamed “Jeep.”

Originally it was marketed under the "Kenmore" brand, but then after a year, it was reintroduced under the brand name “Whirlpool.”

kenmore-washer-1940sSource

Elisha Gray Takes Over

In 1949, at the annual meeting of the concern, Louis Upton announced his retirement and appointed Elisha Gray as his successor and Chief Executive Officer. He did, however, remain active in the firm, serving as Chairman of the Board.

Elisha was responsible for leading the company through the post-war era that ushered in increased consumer demand for labor-reducing appliances.

Therefore, the company introduced home laundry products, such as the wringer and automatic clothes washers, electric and automatic clothes dryers, and irons to capitalize on the demand.

In 1950, the company changed its name to Whirlpool Corporation as a move to propel brand awareness around the new automatic washer launched under Sears’ Kenmore brand. Elisha had noted the product’s popularity and devised a dual-distribution approach that would allow the company to build its brand name while retaining its partnership with Sears.

Enhancing Competitiveness And Market Share

By the mid-50s, it became evident that in order to increase its market share and to grow the company, Whirlpool needed to diversify its products. Its emphasis on laundry equipment was profitable, but it would not sustain the business for long in the industry, where the company was facing competition from more diversified firms.

Thus, Whirlpool merged with Seeger Refrigerator Company and introduced a refrigerator line. The company also introduced its own air conditioner and cooking range products that were previously being manufactured by Radio Corporation of America (RCA). It took on the name Whirlpool-Seeger Corporation and adopted RCA-Whirlpool as its brand name.

In 1955, the company was also listed on the New York Stock Exchange, contributing a great deal towards its growing popularity.

Key Takeaway 2: Explore Multiples Avenues For Growth

After the war, the company came back with the goal of expanding its business and pursued all possible options to help in its growth journey. Whirlpool did it all, whether it be diversifying through mergers and acquisitions, introducing unique new products into the market, or changing its name to consolidate its brand identity.

The company’s leadership recognized that the business needed to establish itself in the industry if it was to survive in the long run. Hence, even though its washing machine was thriving in the market, it added several new products to its portfolio and moved towards a complete electronic appliances brand.

Riding The Changing Tides

The 1960s saw an increase in consumerism that intensified the industry’s competitive aspect. The company had to try out new strategies during this time to maintain its edge in the market. In 1961, the company celebrated its 50th anniversary and reported $438 million in sales.

Catering To The Customers

The rise in consumerism saw businesses scrambling to put the needs of their customers above everything else. Whirlpool was no exception. The company recognized the significance of manufacturing better quality products and services for ensuring its survival in the market.

As a result, Whirlpool launched a continuing range of the latest products, such as the residential trash compactor - the first completely new major home appliance to hit the market in more than 30 years.

It also introduced new support services such as its toll-free, 24-hour Cool-Line service, through which customers could access information on issues pertaining to installation and repairs.

Going With The Flow

The 1960s also saw the demand for household gadgets and appliances dwindle, causing prices to fall. At the same time, the competition in the industry was also intensifying.

Therefore, the company deemed it necessary to implement certain changes to maintain its competitiveness in the market. It streamlined its production process and focused on decreasing manufacturing costs.

Moreover, it sought to consolidate its brand identity around the name “Whirlpool,” which had gained significant traction over time. In 1966, the company dropped the RCA name from its products, and “Whirlpool” became its flagship brand.

Diversifying Through Acquisitions

The company was not content with just broadening its range of appliances; it was determined to seek out various avenues of growth. Thus, it turned to acquisitions as a means for expansion. In 1966, the company ventured into the consumer electronics market by acquiring Warwick Electronics and its division, the Thomas Organ Company. Warwick Electronics was a major television producer for Sears.

However, the new line of business could not last for long, and Whirlpool decided to exit the television market in 1976. Japan’s Sanyo Electronic Co. bought its television operations; however, Whirlpool retained the Organ business for its electronic technology.

Despite the mixed results of the acquisitions, Whirlpool reported sales worth $1 billion for the first time in company history in 1967.

Moreover, in 1969, Whirlpool acquired a 33% stake in John Inglis Co. Ltd. - a prominent manufacturer and marketer of home appliances - allowing the company to penetrate the Canadian market. The subsidiary remains Whirlpool’s Canadian stronghold to this day.

The Market Takes A Turn For The Worse

The new decade opened on a challenging note - consumerism was rising, the 1973 energy crisis was wreaking havoc, the housing industry was collapsing, and an economic recession was in swing. Such disastrous developments compounded the pressure on the appliance industry to pursue energy-efficient products and enhance the overall efficiency of the production processes.

Consequently, Whirlpool’s dealers and Sears liquidated their inventories, forcing Whirlpool to lay off one-third of its workforce to cope. Sears was still Whirlpool’s largest customer, and its actions had a significant impact on the latter’s operations.

Prospects Start Looking Up Once Again

By 1977, the major disturbances in the market were beginning to smooth over. The upward turn of prospects manifested in the rise of demand for household appliances.

Interestingly, the drivers behind the strong demand were mostly first-time customers from the post-war generation, households looking to replace old devices, and the military post exchanges with whom the company had entered into a buying agreement in 1967.

Whirlpool continued to grow during this period while being guided by its commitment to improving products for residential use. Some of its notable products from the time included the first automatic clothes washer with solid-state electronic controls and a line of microwave ovens.

Key Takeaway 3: Be Prepared For Change

This phase in the company’s history was marked by the drastic changes in market conditions and how they impacted the overall business during the two decades. The reason why Whirlpool was able to survive through this tumultuous business cycle was that it had laid the groundwork to face any situation.

It diversified its operations so that it was not overly dependent on one line of business which would have been extremely risky during such uncertain market conditions. Hence, despite all the challenges of changing markets and trends, Whirlpool continued to thrive.

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Whirlpool Reaches New Heights

Despite an uncertain start to the decade, the company underwent remarkable growth during the 1980s that ensured its long-term rise.

Spark Takes The Reins

The 80s began with Platt’s retirement and appointment of Vice-chairman Jack D. Sparks as the new chairman and the CEO.

Spark shifted the company’s focus towards greater goals and brought worthwhile additions to the company through his sales and marketing strategies. These new goals helped the company maintain its edge in the domestic market, especially since the US market was getting more foreign competition.

Spark introduced the five-year plan to address trends in the market and placed the company on a major capital spending program to increase productivity. This change in focus helped the company bring a variety of home appliances under the lineage of Whirlpool Corp. Not just that, but it also introduced consumer durable goods in its product line.

Venturing Into The International Market

Sparks had come into office with an international agenda. He wanted to tap into the global market, for which the company underwent a series of important acquisitions. Whirlpool acquired the KitchenAid division of Hobart Corporation, Mastercraft Industries Corporation, and a cabinet manufacturer, St. Charles Manufacturing Company.

These purchases proved to be incredibly beneficial for Whirlpool in the long run as they helped the company gain international experience and broadened its perspectives. Spark also initiated the Whirlpool Trading company in 1984 to help Whirlpool grow internationally. It even resulted in a joint venture with N.V Philips, two years later, to manufacture and market household appliances overseas. The company focused attention on cabinet manufacturing during this time as well, with stock and custom cabinets being primarily distributed in the Southwestern and Western US.

The Transition To Whitman’s Time

In 1986, the company celebrated its 75th anniversary, with its sales reaching up to $4 billion. Moreover, the company acquired the Kitchen Aid brand - a business unit of Dart & Kraft - in an attempt to expand the company’s brand portfolio and meet a broader segment of consumer needs around styling, endurance, performance, and heritage. In 1987, Whirlpool was listed on the London Stock Exchange.

In 1987, David R. Whitman succeeded Jack Spark to take on the role of President and CEO of the company. He continued the company’s five-year global strategy. He also focused on increasing production and reducing costs by using new technology for appliance production. The company also delved into manufacturing and developing prototypes of appliances for use in U.S. space stations.

A Different Management Approach

Up until 1988, the company was working under a centralized structure, with the decision-making power in the senior management's hands. But in the year 1988, they reorganized the company’s activities into seven separate categories.

The categories were:

  • Kenmore
  • Kitchen Aid
  • Whirlpool appliance groups
  • Whirlpool International
  • Inglis Limited
  • Whirlpool Finance Corporation
  • and the company’s export group

The reorganization enabled Whirlpool to maximize its profits and reduce its costs to the minimum. This move also helped them optimize efficiency and market responsiveness.

Shortly afterward, Whirlpool tried to acquire Roper Corporation, another major manufacturer and supplier of appliances to Sears, but the attempt failed due to interruption from General Electric (GE). Subsequently, after a long controversial dispute, GE and Whirlpool forged a two-year agreement, in which the former was to supply appliance motors and gas and electric ranges to the latter.

Key Takeaway 4: Stay Open To Options

The 1980s were a time when Whirlpool was open to exploring its options in terms of what strategies it would pursue or how it would maximize its efficiency. The company underwent its first major restructuring in 1988, which showed that it was willing to take a new approach in order to improve its performance. The decade also marked the first time Whirlpool seriously ventured into the international market and established itself as a global business.

Growth Through Globalization

Whirlpool was rapidly expanding and branching its business out to international markets. Its progress in previous decades had firmly established it in the industry as a force to be reckoned with.

The subsequent years saw the company continue its upward climb despite the occasional hurdles along the way.

Reaping The Benefits Of Successful Strategies

Whirlpool had relentlessly pursued an internationalization strategy that had solidified its place as one of the most globally diversified companies in the world. By the early 1990s, the company was steadily expanding and leading the industry as the largest appliance manufacturer in the world. In 1992, Whirlpool’s revenues reached $7 billion.

By the latter half of 1994, its manufacturing facilities spanned across 11 countries while it marketed its products in over 120 nations.

Setting Sight On Greater Heights

Whirlpool recognized the need to branch out the business over potentially profitable regions across the world and consolidate its overseas operations to sustain expansion. Thus, in 1990, it formed “Whirlpool Overseas Corporation” - a subsidiary to conduct marketing and industrial activities beyond North America and Western Europe.

Moreover, the aim of establishing this organization was to conduct market research and enhance the company’s understanding of consumer needs internationally. In 1993, it was divided into three separate regional organizations: Whirlpool Europe, Whirlpool Asia, and Whirlpool Latin America.

By forming these separate organizations, the company could strategically tap into the target markets by addressing local lifestyles and consumer needs.

Whirlpool In Asia

While Whirlpool was enjoying remarkable gains from its success in the European market, it was still looking forward to accelerating growth by tapping into Asia.

Whirlpool Asia’s executive office in Tokyo was responsible for strategic development that led to the company’s rapid growth in the region. In 1994, it had sold 700,000 units in Asia and in 1995, it was expecting to sell 3 million.

The company was confident about sustaining its sales growth in Asia and continued to pursue its expansion strategy.

Whirlpool Enters India

In 1995, following its goal of tapping into profitable markets, Whirlpool made the move to acquire a controlling interest in Kelvinator India Ltd. - India’s largest manufacturers and marketers of refrigerators.

The same year, Whirlpool also acquired majority shares in TVS. In 1996, the company merged both these acquisitions to form Whirlpool India Ltd.

By doing so, the company succeeded in expanding its range of products in the region to include washing machines, refrigerators, microwave ovens, and air conditioners.

Restructuring To Enhance Growth

Although Whirlpool’s overseas operations were excelling, the company was also mindful of the subdued North American appliance market. It decided to tackle the problem by restructuring.

In 1994, it closed some plants in Canada and the U.S., leading to a reduction of 9% in its global workforce. The same year saw Whirlpool’s total revenues climb by more than 8%, and by 1995, profits were at an all-time high.

Ending The Millennium On A Strong Note

The company had experienced another great decade in terms of its overall performance. By 1997, Whirlpool was manufacturing in 13 countries across the globe and boasting a workforce numbering up to 61,370. It continued to expand by adding more products to its line-up and acquiring significant footholds in various regions worldwide.

During this period, the world was growing more aware of the need for technological advancement, and governments welcomed foreign investment coming into their countries - especially China and India.

Whirlpool chose to capitalize on this opportunity to reach out to those markets and establish strong footholds that would ensure the company’s long-term growth. In 1999, Whirlpool reported total revenues worth $10.5 billion - its highest yet. The company was geared to enter the new millennium with bright prospects of sustained growth.

Key Takeaway 5: Research & Planning To Penetrate New Markets

Whirlpool was immensely successful in expanding its business all over the world because it had strategically identified and tapped into essential markets. Its growth was guided by extensive research into local lifestyles and consumer needs which is why it was successful in not only penetrating these markets but maintaining its lead.

The company also focused its overseas expansion on specific regions, which it deemed especially profitable. Whirlpool’s foreign acquisitions were planned out such that they would provide the company with reliable footholds in the target markets.

Becoming The Whirlpool Of Today

Whirlpool entered the 21st Century with a commitment to enhance product innovation and invest in people and communities. The major developments of the new millennium helped the company pursue its goal of becoming the best kitchen and laundry company worldwide.

Investing In Innovation

In the year 2000, Whirlpool’s CEO, Dave Whitman, highlighted the need for investing in employee education and skill development; not only out of ethical responsibility but also for the sake of continuing a healthy growth trajectory.

The same year, he initiated a program to select 75 global employees to teach them innovation methodologies so that when they returned to their home regions, they would help pioneer unique solutions for a global consumer base.

Whitman was guided by his vision of ushering in a new age of innovation, one that would transform every job at Whirlpool.

His approach of pursuing embedded innovation yielded the successful Gladiator® GarageWorks line and resource-efficient Whirlpool® brand Duet® washers and dryers.

Embracing Social Responsibility

The company’s commitment to pursue growth while upholding its social responsibility can be gauged by the following significant developments, among many others:

  • In 2002, Whirlpool Latin America launched a social program to teach women from limited-income backgrounds entrepreneurial skills and provide earning opportunities.
  • In 2003, it became the world’s first appliance manufacturer to set a global greenhouse gas reduction target.

Weathering The Storm

In 2004, Jeff Fettig took over as chairman and CEO. 

He continued his predecessor’s successful strategy of embedded innovation and investing in energy-efficient products. Fettig was also instrumental in guiding the company through the global financial crisis of 2008. He undertook strategic measures, such as announcing the closure of certain plants to ensure that the company emerged out of the crisis on a firm footing.

Investing In Important Projects

In 2010, Whirlpool announced plans to invest $85 million to build a centralized North American headquarters in Benton Harbor, Michigan. The project marked the company’s commitment to staying true to its roots.

It also invested $30 million to build a new Refrigeration Tech Center, creating a total of 180 new jobs. Moreover, it made a $120 million investment to build a new LEED-certified manufacturing facility in Cleveland, Tennessee. The company made the huge investment to enhance the competitiveness of U.S. manufacturing.

Looking Ahead

In 2011, the company celebrated its 100th anniversary and unveiled an updated corporate logo. It reiterated its commitment to offer innovative solutions to improve life at home. 

The company also committed to the Catalyst CEO Champions For Change Pledge to increase Whirlpool’s female representation in executive and senior-level positions. 

In 2013, Whirlpool continued its global expansion through the strategic acquisition of 51% majority stakes in Hefei Royalstar Sanyo - a joint venture between a Japanese and Chinese firm. The acquisition worth $552 million provided the company with added leverage to establish itself in the Chinese appliance market. By the end of the decade, the company had posted record financial results.

Addressing Present-Day Problems

The onset of the Covid-19 pandemic stimulated the company’s aim for improving life at home as it completely transformed people’s home and work life.

It introduced new health and safety protocols for employees and extended financial support to its communities across the globe. The company even donated medical supplies and appliances to hospitals worldwide. 

Whirlpool also joined the fight against climate change by pleading to achieve its target of net zero emissions by 2030. Moreover, to help mitigate its impact on vulnerable communities, it also committed to building over 250 climate-resilient and energy-efficient houses through Habitat for Humanity.

Key Takeaway 6: Take Care Of Your Own

Whirlpool’s past few decades in business went beyond just maximizing profits; it also emphasized the need to empower and support its people and communities. It upheld the principles of social responsibility with integrity and was rewarded with not only a healthy and supportive work environment but also enhanced productivity and innovation.

The company demonstrated its awareness and commitment to addressing modern-day problems such as the pandemic, climate change, and female representation in companies. Thus, by empowering all its stakeholders, the company is primed for sustainable future growth.

Summary & Strategic Takeaways

After 110 years, Whirlpool has become a corporate entity whose growth and development actually benefits not only its employees and associated communities but the society at large.

The Whirlpool of today is much more than a manufacturer and marketer of household appliances. It is an industry leader in pursuing competitive growth without neglecting social responsibility.

Growth By The Numbers

 

2020

2010

Sales

$19 billion

$18.4 billion

Workforce

78,000

71,000

R&D Expenditure

850 million

516 million

Total Assets

$20,350 million

$15,584 million

 

Innovation Is Key

Whirlpool operates within a highly technologically driven industry where innovation is essential for long-term survival. The company has always sought to introduce products developed from the latest technology. The electric washer, the first automatic spinner type washer, and the residential trash compactor are just a few notable examples from Whirlpool’s legacy of innovative product development.

Good Leadership Is At The Heart Of A Successful Business

Whirlpool has been in business for over 110 years now and it has only had 7 chairmen and CEOs. The values that were passed on by Louis Upton have been preserved by his successors. The company’s leadership has been its center of stability and has guided it through extremely harsh and tough times such as the Great Depression, the two World Wars, the global financial crisis of 2008, and finally, the pandemic. The responsibility for the company’s performance is also shared by all its employees across all levels of management. This is why the company has managed to deliver excellence over the years.

Always Put The Customer First

Whirlpool was able to attain such monumental growth because it always emphasized the needs of the customer above anything else. It devised numerous ways of facilitating its customers by providing services such as the Cool-Line. It also ensured that its product development was guided by the latest data on customer needs across various lifestyles and cultures. By doing so, it maintained its competitive edge by offering products that the customers needed.

Prioritize People - Profits Will Follow

Whirlpool never hesitated to invest in its people and communities because it recognized that these very people are the drivers of company profits. In this day and age, social responsibility and ethical practices can provide the business an extra boost as it shows the consumers that the company is not just obsessed with maximizing profits. By investing in people and communities, Whirlpool was able to differentiate itself from the competition and gain an edge in the market.

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