Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2: Whirlpool the company maintaining its full year financial outlook despite
Speaker 2: uncertainty over global tariffs, saying their long term impact will
Speaker 2: benefit its position in the US home appliance market. We
Speaker 2: are so delighted to have back with us, Mark Bitzer.
Speaker 2: He's the CEO of Worldpool Corporation. He joins us from
Speaker 2: Michigan Market. It is great to have you here with
Speaker 2: Tim and myself.
Speaker 3: How are you.
Speaker 4: I'm doing well well, Thanks for having me back.
Speaker 3: How is the environment well?
Speaker 5: You know, I mean, obviously we saw on our earnings
Speaker 5: release where despite everything else going.
Speaker 4: On, we're pretty pleased with our Q one.
Speaker 5: I mean, we're basically I would consider our business largely
Speaker 5: on track. We hit the EPs pretty much in line
Speaker 5: of CONCERNSUS on organic revenues, we're up two percent almost
Speaker 5: six percent margin, which puts us on track to a
Speaker 5: folio guidance, and we're reconfirming guidance. So, I mean, obviously
Speaker 5: it's not all euphoric, but give them everything else going on,
Speaker 5: I think we should feel pretty good. About being on
Speaker 5: track in the current environment.
Speaker 6: How would you describe the US consumer right now?
Speaker 5: Yeah, I mean, obviously it's been a lot of all
Speaker 5: latility also a consumer side, and I think, if you
Speaker 5: want to say so, we're probably a little bit the
Speaker 5: cannery in the coal mine when it comes to consumer confidence.
Speaker 5: And the reason why I'm saying this one, you know,
Speaker 5: every day, you know, many companies.
Speaker 4: Have a big order pipeline.
Speaker 5: Our orders are pretty much seven days, so I see
Speaker 5: it pretty fast if consumer orders something or not. And
Speaker 5: we saw actually a very healthy consumer sentiment following the
Speaker 5: election pretty much through January mid February, and then we
Speaker 5: saw a clear deteriation of consumer confidence in particular particular
Speaker 5: my discretionary side of demand. And I think that continued
Speaker 5: to also in Q two. So we see right now
Speaker 5: the consumer probably lacks confidence about the financial future and
Speaker 5: holding back discretionary purchases.
Speaker 6: Why does that compare with your where consumers have been
Speaker 6: during your tenure at Whirlpool, Because we've spoke you quite
Speaker 6: a bit over the last few years, throughouts, through downs,
Speaker 6: through relatively calm periods. How would you describe the consumer
Speaker 6: right now relative to where the consumer has been during
Speaker 6: your tenure.
Speaker 5: Yeah, TI twenty six years, so I don't have enough
Speaker 5: time to go give you all the ups and but
Speaker 5: is it.
Speaker 6: Better than that? Gives us a great view? Is it
Speaker 6: better than the financial crisis? Better than the dot com bust?
Speaker 6: Better than covid?
Speaker 4: You know, it's it's.
Speaker 5: How should I put from an economic perspective, it doesn't
Speaker 5: not from a human perspective. From a economic perspective, I
Speaker 5: think there's a lot of similarities to what we saw
Speaker 5: in the early days of COVID. And what I'm saying
Speaker 5: is one consumers, it just there's a you know, everyday
Speaker 5: new messages which don't necessarily help consumer confidence. So from
Speaker 5: a preer consumer confidence perspective, we just want to have
Speaker 5: stability in the message. I think consumers can deal with
Speaker 5: good or bad news. It's just the every day changing
Speaker 5: news and the uncertainty, which neither helps business investors or consumers.
Speaker 5: And I think so the drop that we've seen kind
Speaker 5: of in the course of six weeks, yep, that was
Speaker 5: probably among the biggest jobs I've seen. Now hopefully at
Speaker 5: one point will also come back up again, but right now,
Speaker 5: by drop was pretty fast and pretty drastic.
Speaker 2: So we love talking with you We've got through so
Speaker 2: many cycles together, and I'm just thinking of those who
Speaker 2: are watching and listening to Bloomberg Business Week on this Wednesday.
Speaker 2: I am curious about your supply chain, Like we are
Speaker 2: all getting a great lesson right in.
Speaker 3: Global trade global supply chains.
Speaker 2: Tell us about your supply chain and how the US
Speaker 2: China or just the US terrorff trade war is potentially
Speaker 2: impacting you or making you change it.
Speaker 5: First war, Trol, I want to give you credit, but
Speaker 5: it took you two question free to raise a ward Terraff.
Speaker 3: I'm trying.
Speaker 5: I'm trying you, and obviously there's a lot of moving
Speaker 5: parts of play. Ultimately comes back to we are kind
Speaker 5: of the only and last American appliance company, and we
Speaker 5: use eighty percent of what we sell the US in
Speaker 5: the US, and of what we produce in US, more
Speaker 5: than eighty percent of parts are sourced in the US,
Speaker 5: So we are a domestic producer. I know a lot
Speaker 5: of companies talk about reshoring or on shoring. We never
Speaker 5: left Okay, and that's a big difference. So as such,
Speaker 5: even more, we're also faced with some headwinds in particular components,
Speaker 5: et cetera. Ultimately we will be a net winner because
Speaker 5: we're a domestic producer and in this case this is
Speaker 5: different from other industries.
Speaker 4: There's capacity.
Speaker 5: We have enough capacity, enough factories to fill them, and I.
Speaker 4: Appreciate other industries.
Speaker 5: You know, it may take some time, but I think
Speaker 5: ultimately and we all don't know what the final final
Speaker 5: picture of for tarifs is, but something will be there
Speaker 5: and we do see us benefiting from this one.
Speaker 3: How do you want to see this trade war play out?
Speaker 2: Because I'm assuming that some of these tariffs help you domestically.
Speaker 5: Well, and again I think that probably needs a little
Speaker 5: bit explanation, So Carol, actually we're we're not asking for exemptions.
Speaker 5: We're not asking for text subsidies or gifts or handouts
Speaker 5: or whatever there are right now in the pre existing
Speaker 5: so called two thirty two and three or one tariffs,
Speaker 5: there are loopholes which hurt us and they structurally benefit
Speaker 5: Asian producers. And then it's put it in simple terms,
Speaker 5: you know, because with two thirty two terrafs, I pay
Speaker 5: in US for steel two or three times more than
Speaker 5: Asia steel and any component which I can't get them US,
Speaker 5: like an LED panel, I pay teriffs.
Speaker 4: So if the same product is produced.
Speaker 5: In Vietnam or Korea, they don't have to pay the
Speaker 5: tariffs and steel they don't have to pay tariffs of components.
Speaker 5: That difference is big. It's about seventy dollars per product.
Speaker 5: To put that in retail price, that basically means one
Speaker 5: hundred and fifty dollars different retail price. So all we
Speaker 5: ask for is just close the loophole. We're all in
Speaker 5: support of having a strong US based steel production. I
Speaker 5: think it's we all agree it's important. Just close the loophole.
Speaker 5: That's all we ask for. So we don't ask for
Speaker 5: special treatment, Just close the loophole. Take the disadvantace such
Speaker 5: a way. Again, I'm not looking for an unfair advantage.
Speaker 5: We're just looking for a level playing field and then
Speaker 5: when we can compete very well.
Speaker 3: So we're talking, of course with Mark Bitzer.
Speaker 2: He is chief executive officer at Whirlpool Corporation, joining us
Speaker 2: from Michigan. One thing I want to ask you what
Speaker 2: you have learned about manufacturing in the United States. Is
Speaker 2: there a lesson or something a message you'd like to
Speaker 2: share with other folks who are saying I can't manufacture
Speaker 2: in the United States.
Speaker 5: You know, and again it's Carol, as you can probably
Speaker 5: tell for my accent that dual citizen of American and German,
Speaker 5: so to say sit here and saying I'm staying here
Speaker 5: for patriotic reason, it's probably not credible. US production can
Speaker 5: be working well well, And I really and I'm proud
Speaker 5: of our ten strong factors in the US. And if
Speaker 5: you go to a factory like in Clyde, OHI, where
Speaker 5: you have three generational factor workers, visa proud people who
Speaker 5: have worked very hard. So I know there's now a
Speaker 5: lot of jokes about US manufacturing. You can produce in US,
Speaker 5: and there's a very good skilled workforce which you can
Speaker 5: have as long as we don't harm ourselves with kind
Speaker 5: of you know, issues which make production more difficult in US,
Speaker 5: like steep price and component costs. So I really, I
Speaker 5: know some people are hesitating about moving back to US.
Speaker 5: We have been producing the US for one hundred and
Speaker 5: forteen years with success.
Speaker 6: So you know, I'm curious about since you already produced
Speaker 6: here in the US, and you have eighty percent of
Speaker 6: the production that goes to the US actually being made here,
Speaker 6: plus you source a lot of the parts here, you're
Speaker 6: relatively unaffected by tariffs. Would you say that the tariffs
Speaker 6: that the Trump administration has proposed or is even putting
Speaker 6: on have been a net benefit for your business.
Speaker 5: You know, it's again, so far there's more announcements than
Speaker 5: already action in place. So so far what is in
Speaker 5: place is for two forty two and the ten percent tariffs.
Speaker 4: But you know, I go back to and I know there's.
Speaker 5: A lot of talk about what the previous Trump administration did,
Speaker 5: but two A one tariffs in twenty eighteen, because I
Speaker 5: know there's a lot of talk about debate, race prize
Speaker 5: or not. If you now today look back, these terrors
Speaker 5: were put in place in twenty eighteen, and where we
Speaker 5: are today.
Speaker 4: Washer prices today are lower than mever in two or fourteen.
Speaker 5: So tell me one product category which has lower prices
Speaker 5: been two or fourteen and compared to twenty eighteen, there's
Speaker 5: two more factories.
Speaker 4: Producing washes in US.
Speaker 5: So from that perspective, but the prior Trump administration did
Speaker 5: actually in our industry worked.
Speaker 4: It brought new production and the prices did not raise.
Speaker 5: Now there's always some moving parts as you go through
Speaker 5: this one, but it worked. Now that may be different
Speaker 5: in other industries, but I think, I know ironestry pretty well.
Speaker 5: You add production capacity to ultimately build benefit for consumer.
Speaker 6: Does the risk though, of declining US consumer sentiment as
Speaker 6: a result of rising prices in other categories and concerns
Speaker 6: about uncertainty moving forward, does that weigh to a greater
Speaker 6: extent than the benefit that you get from tariffs as
Speaker 6: a US producer of products.
Speaker 5: Yeah, I mean I think it's a fair question. Of course,
Speaker 5: in the short term there will be called wobbliness along
Speaker 5: the way. But I think, as I mentioned earlier, consumer
Speaker 5: confidence can drop fast, but it can also increase pretty fast.
Speaker 5: We've seen that in Q four, So I would say,
Speaker 5: you know, what I describe on a structural capacity is
Speaker 5: are long term effects. I mean, you don't build factories
Speaker 5: on wheels, but you build them for thular fifty years. Yeah,
Speaker 5: consumer confidence moves within a quarter. So I think even
Speaker 5: though there may be some volatility and consumer confidence, I
Speaker 5: think the long term benefits will clearly out the negative
Speaker 5: short term consumer sentiment mark.
Speaker 3: You definitely have a global perspective.
Speaker 2: I think there's some concerns though that the longer this
Speaker 2: trade back and forth, especially between the United States and China,
Speaker 2: but really between the US and the world that there
Speaker 2: will be long term damage.
Speaker 3: How do you see it?
Speaker 5: Well, you know it's again I can speak more for
Speaker 5: my industry. I think ultimately what the current administration is
Speaker 5: trying to do in our industry I support, of course,
Speaker 5: because we're a US producer. I think the most important
Speaker 5: thing in that it is not only for our innesty.
Speaker 5: People just want to have predictability. Okay, if you have
Speaker 5: pretty much every day changing problem definition, that just makes
Speaker 5: it hard because you don't plan industrial production. You don't
Speaker 5: make industrial decisions if you don't know if that assumption
Speaker 5: is true tomorrow. So I think everybody will deal with
Speaker 5: whatever it is if I know this is now, that's
Speaker 5: a picture and it's going to be stable and people
Speaker 5: can count on this one. So I think it's more
Speaker 5: stability and predictability more than anything else, which I would
Speaker 5: be hoping for.
Speaker 6: You mentioned that much of the sourcing that you do
Speaker 6: for the US based production is actually domestic sourcing. Still,
Speaker 6: I imagine there are components that are made outside of
Speaker 6: the US. Do you anticipate any supply chain issues as
Speaker 6: a result of what we've seen happening.
Speaker 4: Yeah, and it's a little bit.
Speaker 5: And part of that is today our disadvantage because there are,
Speaker 5: as you point out, some components I can't buy in
Speaker 5: you as like an LED panel for washer, that kind
Speaker 5: of stuff. So today we have to pay terffs, while
Speaker 5: anybody producing Thailand Vietnam doesn't have to pay teriffs. I
Speaker 5: think over time, I would expect that for the investment
Speaker 5: majority of these components over time where will be supply
Speaker 5: based ibor in US or Mexico. And we see already
Speaker 5: some early indications it will take its time, in particular
Speaker 5: in the electronic side more than anything else, but more
Speaker 5: of a mechanic parts like motors, etc.
Speaker 4: I think it will be quickly resolved.
Speaker 3: All right, I just want to know.
Speaker 2: Have you created a dishwasher that my husband I don't
Speaker 2: have to like argue over who's going to load it
Speaker 2: and unloaded?
Speaker 3: I just want to know, how do you have one
Speaker 3: like that, a robotic one that actually unloads and unloads.
Speaker 3: Have we gotten there?
Speaker 4: Yeah, well, if you have a patent, let me know
Speaker 4: and we can hire you as an engineer.
Speaker 5: You know, first of all, I pride ourselves we have
Speaker 5: the best dish washer with the biggest capacity in the industry. Unfortunately,
Speaker 5: it doesn't load itself. I feel the same pain every
Speaker 5: day at home. Not every day, at least I'm accused
Speaker 5: of that every day.
Speaker 3: Hey, listen, one last question. Do we have to be
Speaker 3: worried about global recession? Is that anything that's on your radar?
Speaker 4: Just real quickly?
Speaker 5: I mean again, that's why I said, Carol Earl is
Speaker 5: a little bit economically to set back to earlier days
Speaker 5: of COVID and whatever else. It's just an uncertain outcome.
Speaker 5: I think right now the odds of a recession have increased.
Speaker 5: I'm not quite sure we're all the way there. It
Speaker 5: depends a lot what happens the next two three weeks
Speaker 5: weeks in terms of business predictability. But I think we're
Speaker 5: living with an uncertain outcome, and that's what our job
Speaker 5: is to manage towards that.
Speaker 2: All right, Well, when I get that design for that
Speaker 2: dishwasher that loads and unloads itself, I'll let you know.
Speaker 3: Mark Bitzer b Well, CEO were Pool Corporation,