(Bloomberg) -- On its face, Whirlpool Corp.’s newest washing machine, with its modern muted veneer, looks nicer than its old ones. And for $100 more, it should be.
But behind the scenes, the century-old US appliance maker implemented a series of cost-cutting measures to squeeze more profit out of its machines. Whirlpool stripped a coat of color, left some internal parts unpainted and removed unnecessary parts — changes that are saving the appliance maker as much as 8% on the washers and leaving shoppers with a simpler product that costs more.
Stubbornly high prices for everyday essentials are eating away at household budgets, making it harder for companies like Whirlpool to convince consumers to pay up for big-ticket items like refrigerators and washing machines in the $74 billion US appliance industry.
With President-elect Donald Trump set to take office this month after a campaign centered around raising tariffs, companies are trying to get ahead of a policy that economists expect will drive higher inflation and lower growth.
Growth in the appliance market is already shaping up to be slow, with US existing home sales hovering near a 14-year low. Plans to buy a major appliance in the next six months plunged in November to the lowest since 2010. The cost to take out a mortgage in the US remains high and Federal Reserve guidance in December suggests interest rates — and prices — won’t be dropping all that quickly. That may continue to depress new home sales and, in turn, appliance purchases, hitting companies like Whirlpool and retailers like Home Depot Inc. and Lowe’s Cos.
Projections show that Whirlpool’s revenue likely shrank by about 14% in 2024, which would mark its third straight year of declines. Whirlpool shares have lost half their value over the past three years, erasing some $7.9 billion in market value, even as the S&P 500 Index has risen by nearly 30%. The company hasn't yet reported fourth-quarter or full-year 2024 results.
Whirlpool’s answer to these challenges is racing to reduce costs. Before Trump was elected, the company said it started going after unnecessary expenses in the design and manufacturing of major home appliances. The appliance maker pledged to deliver about $300 million in cost savings in 2024.
“Permanent cost takeout on our products — that’s the name of the game,” Whirlpool Chief Executive Officer Marc Bitzer said in an interview at the company’s headquarters in Benton Harbor, Michigan, in September.
And since the election of Trump in November, the company hasn’t seen any pickup in demand for big-ticket items, which has made its cost-cutting measures even more important.
Bitzer said he’s hopeful that the new administration’s trade policies will enable US manufacturers to compete on a level playing field with overseas rivals, who often make their appliances in Asia where labor, along with steel and components, are cheaper. Whirlpool manufactures 80% of what it sells in the US domestically, mostly with components it makes or sources from the US.
“It is critical that American manufacturers have access to cost-competitive parts and components,” the company said.
Facing declining sales and rising competition, Bitzer lit a fire under his consumer design head to come up with a new washing machine. Bitzer gave him a year to do it, or about half the time it typically takes to develop a product.
Rob Moser, who joined Whirlpool from Ford Motor Co. in 2023, took the task to heart. The project took on the codename Quicksilver, fueling motivation to complete it quickly. Moser cut a coat of paint — which is one of the most expensive and complex steps in manufacturing — giving the machines a less shiny finish, which the company says consumers are seeking. The company also stopped unnecessarily painting some interior parts and found a way to use fewer parts for the machine’s control knob, he said.
The result was a new washing machine called the Smart Front Load, which Whirlpool began selling in late 2024. In addition to cutting costs, the company added new features, including a door seal designed to prevent mold growth. The new machine retails for $800 or $900, depending on its size, which is as much as $100 more than machines in Whirlpool’s earlier lineups.
Whirlpool is betting that its improved washing machine will help it better compete with LG and Samsung, despite its higher price tag. It’s also going after more budget-minded shoppers with a lower-cost machine that has fewer bells and whistles and retails for around $680.
Many shoppers may not be willing to pay up for the higher-priced models, said Rob Handfield, a professor of supply chain management at North Carolina State University who has worked with Whirlpool, LG and Samsung in the past as a consultant. “People are very cost conscious right now. A lot of people are tightening their belts,” he said.
So far, the company says it’s seeing “positive momentum” from its new washers.
“We’re not compromising the functionality,” Moser said. “But if there’s a bracket in the back that was designed with four screws that can be three screws without impacting the quality, we’re doing that.”
Still, some consumers are skeptical that appliance companies can reduce costs without eroding functionality.
“I think they don’t want things to last as long,” said Phillip Lege, 67, a laundry aficionado who does about six loads a week. “They are made a lot cheaper.”
About two years ago, Lege bought a new Kenmore Elite washer-dryer set and said he would be happy if it lasted a full decade.
“They don’t want your washer and refrigerator to last 40 years because they want you to buy another one. I think the term is planned obsolescence,” he said.
The reliability of household appliances has decreased in the last 10 years as companies swap in cheaper parts and add technology that can malfunction more frequently, Handfield said.
“Durability may be something they sacrifice,” he said.
Whirlpool says that major appliances aren’t lasting as long as they used to, but the company attributes that to machines being used more often, as more people work from home following the pandemic.
“One or two days more at home drives usage,” Bitzer said last year, noting that historically, the life of an appliance was about eight to 12 years. “I think right now we’re probably more talking about eight.”
Whirlpool lags behind its competitors for front-load washers, according to Consumer Reports. Its highest-ranked machine gets a score of 75 out of 100, lower than LG’s top score of 87. For front loaders, Consumer Reports says Whirlpool’s machines have higher-than-average problem rates for mold and odor versus other manufacturers.
The company’s market share in terms of major appliance units dropped to 16.3% in 2024 through the end of September, down from 18.2% in 2019, according to OpenBrand. Over that same time, LG has gained the most, with Samsung close behind.
Higher prices could alienate consumers who are getting more discerning in the face of stubborn inflation.
When Kyle Resmondo bought a new stackable washer and dryer set about 18 months ago, he opted for the Whirlpool brand because it fit into his budget — and into his narrow bedroom closet in New Orleans.
But the 36-year-old real estate developer says he’s already considered replacing his Whirlpool appliances because he’s annoyed with how the machine works.
Resmondo says he has to press down a button and hold it for the duration of a countdown before the washer will start. “It’s very finicky,” he said. “No one has time to do their laundry. You want to throw that thing in there and go.”
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