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