WEBVTT - Whirlpool's Bitzer Sees Growth in Replacements

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>This is Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 2>Stenebek on Bloomberg Radio.

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<v Speaker 1>Looking at shares of Whirlpool, they're up about three quarters

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<v Speaker 1>of one percent here in the aftermarket. This company also

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<v Speaker 1>reporting earnings just moments ago. Of course, the owner of

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<v Speaker 1>Maytag very other brands too, but lowered its full year

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<v Speaker 1>earnings forecast as consumers continued to shy away from some

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<v Speaker 1>of those big ticket appliance purchases amid a weakening housing market,

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<v Speaker 1>something we've talked about a lot here at Bloomberg. Adjusted

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<v Speaker 1>earnings per year will be about twelve dollars this year,

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<v Speaker 1>the company said, down from the thirteen to fifteen it

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<v Speaker 1>had previously seen. Meantime, Alice were looking for about twelve

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<v Speaker 1>dollars fifty six cents a share, according to our average

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<v Speaker 1>projections compiled here at Bloomberg Company, though keeping its full

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<v Speaker 1>year revenue estimate the same tim at sixteen point nine

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<v Speaker 1>billion dollars.

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<v Speaker 2>Let's get to the chairman, President and CEO of Whirlpool,

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<v Speaker 2>Mark Bitzer. He joins us from Michigan. Mark, good to

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<v Speaker 2>have you with us, appreciate you joining us just after

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<v Speaker 2>these numbers crossed the wire. Tell us about the quarter

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<v Speaker 2>and specifically why you cut the earnings forecast.

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<v Speaker 3>Yeah, Tim and Carol. First of all, thanks for having

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<v Speaker 3>me on the show again. You know, overall before we

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<v Speaker 3>talk about the earnings for we actually feel good about

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<v Speaker 3>our Q two you know, we we said also after

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<v Speaker 3>the Q one call, this here is all going to

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<v Speaker 3>be about margin expansion with every quarter, and Q two

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<v Speaker 3>was a sizeable sequential margin improvement full point on a

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<v Speaker 3>global level, led by all important North America business which

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<v Speaker 3>ultimately relied also on getting better promotion pricing. So we

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<v Speaker 3>feel good about the progress we made. Yet at the

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<v Speaker 3>same time, we also, you know, knowing the weakness of

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<v Speaker 3>a housing market which is still emphasis on still just there.

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<v Speaker 3>We don't see the housing market recovering as fast as

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<v Speaker 3>we originally assumed, probably like everybody else when we entered

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<v Speaker 3>the year. So we're still forecasting for Q three and

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<v Speaker 3>Q four berber margin expansion and improvement. So we feel

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<v Speaker 3>good about the progression. It just not happening at the

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<v Speaker 3>pace which we had originally in mind, and the market

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<v Speaker 3>is not recovering at the pace which we already had

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<v Speaker 3>in mind. But that's my only question when it happens,

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<v Speaker 3>not if it happens. It will happen, but it just

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<v Speaker 3>later when we originally assumed.

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<v Speaker 1>So, you know, I always feel like when we talk

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<v Speaker 1>with you Mark, you know, we think about like the

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<v Speaker 1>pre pandemic world, the pandemic world, and like our recovery.

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<v Speaker 1>In terms of some of the numbers, the consumer trends,

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<v Speaker 1>the buying patterns, is it below what we saw pre pandemic?

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<v Speaker 3>You know, Carol, you have two almost offsetting trends. One

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<v Speaker 3>is the replacement market, which is very strong OSPAM or

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<v Speaker 3>volume site, and that is ultimately tied to increase applient's

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<v Speaker 3>usage following COVID and just all of the in home

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<v Speaker 3>trends and people just spending more time in home. So

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<v Speaker 3>replacement side is very strong. The unfortunate side from a

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<v Speaker 3>business perspective, that typically doesn't come with a rich mix

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<v Speaker 3>because it's not a discretionary purchase. The discretionary side that

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<v Speaker 3>is all tied towards how seeing existing home sales and

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<v Speaker 3>new home sales, and that's the part which is way

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<v Speaker 3>soft when anybody assumed at this point, and frankly also

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<v Speaker 3>with the numbers which came out yesterday and existing home

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<v Speaker 3>sales put back back to two or eight levels. I mean,

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<v Speaker 3>it's kind of multi decade low. And of course that

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<v Speaker 3>is the part of a business which tends to come

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<v Speaker 3>with a richer mix for us, and that's the soft part.

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<v Speaker 3>So you have two offsetting trends which kind of overlay.

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<v Speaker 3>I mean, we would, of course going forward, we love

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<v Speaker 3>to see the replacement trend, but at one point you

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<v Speaker 3>will see the recovery of discretionary side.

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<v Speaker 1>We've talked with you about this replacement versus you know, discretionary.

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<v Speaker 1>What's the bigger part of your business? Is it people

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<v Speaker 1>replacing items or saying, hey, I feel like doing this

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<v Speaker 1>discretionary right now?

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<v Speaker 3>The replacement start as well over sixty percent, and put

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<v Speaker 3>that in a storic context, I mean you typicate it

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<v Speaker 3>for multi decades on around fifty or even below fifty percent.

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<v Speaker 3>That doesn't sound like a whole lot, but it actually

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<v Speaker 3>makes a big difference in how and how the mix

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<v Speaker 3>comes through for your overall business. So again that's that's

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<v Speaker 3>you know, we like the volume, but it it's not

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<v Speaker 3>a very rich mix.

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<v Speaker 2>The biggest part of your your market or the biggest

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<v Speaker 2>part of your business in terms of segments, refrigeration, laundry

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<v Speaker 2>cooking a close third. Where are you going to? Where

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<v Speaker 2>do you see the most growth?

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<v Speaker 3>You know, again, it's right now. Overall it's split on

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<v Speaker 3>mechanicy it's large in replacement, so laundry is still very strong, refrigeration.

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<v Speaker 3>The kitchen is still a little bit soft because that

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<v Speaker 3>comes with a replacement or remodel of an entire kitchen.

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<v Speaker 3>But you know, it's it's it's more behinhend the entire

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<v Speaker 3>kitchen suite like Kitchen Aid suite or Danner suite, which

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<v Speaker 3>is right now, software when we would expect in an

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<v Speaker 3>rmous cycle.

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<v Speaker 1>All right, so we be remiss by not addressing the

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<v Speaker 1>elephant in the kitchen or if you will. Last month,

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<v Speaker 1>Whirlpool shares you know, jumped ruders had reported that Robert

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<v Speaker 1>Bosch was considering a bit for the company that they've

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<v Speaker 1>been pushing, you know, that company's been pushing kind of

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<v Speaker 1>outside its business. Did it make a bit for the company?

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<v Speaker 1>What can you tell us about that?

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<v Speaker 3>Unfortunately, I can't tell you a whole lot more. When

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<v Speaker 3>we stated already is that we just don't as a policy,

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<v Speaker 3>we don't comment on rumors of market speculation. As you know,

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<v Speaker 3>it's it's been one article out there which triggered a

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<v Speaker 3>lot of noise. And you know, we also in the

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<v Speaker 3>past were well rumors about open in the past, and

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<v Speaker 3>there will be rumors about going forward, and we just

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<v Speaker 3>don't speculate on and comment on these ones. So unfortunately,

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<v Speaker 3>I know you were pokeing this one, but I can't

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<v Speaker 3>tell you a whole lot.

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<v Speaker 1>I have to poke a little bit more though, is

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<v Speaker 1>it is it a rumor? I mean, is the company

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<v Speaker 1>for sale at this point? And is that something that

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<v Speaker 1>maybe you've been getting some pressure from investors.

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<v Speaker 3>No, so again, it is a rumor, and we can't

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<v Speaker 3>comment and we won't comment on this specific rumor. You know,

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<v Speaker 3>but we're public listed company, Carol, So now by definition,

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<v Speaker 3>you know, very in a certain mayle companies for sale

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<v Speaker 3>every morning at nine thirty stock market opens, right now.

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<v Speaker 3>It's a good deal, you know, but.

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<v Speaker 1>There's sales and then there's sales. You know, you know

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<v Speaker 1>how this goes.

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<v Speaker 2>You're you're joking about saying it's a good deal. But

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<v Speaker 2>what in your opinion do you think investors are missing

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<v Speaker 2>about the Whirlpool story right now? Down nineteen percent so

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<v Speaker 2>far this year.

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<v Speaker 3>Yeah, you know, you know, Tim, I shouldn't be arrogant

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<v Speaker 3>about the investor. The market is always right. So what

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<v Speaker 3>I think the argument for what would to be made is, yes,

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<v Speaker 3>of course we're still emphasis on still in a negative macrocycle,

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<v Speaker 3>but that will turn at one point and built I

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<v Speaker 3>eve a US housing market and that will not be

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<v Speaker 3>just a you know, a short recovery. That will be

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<v Speaker 3>probably a multi year recovery of a housing market. There's

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<v Speaker 3>literally not a single company better position to benefit from

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<v Speaker 3>the upside where a key supplier of eight out of

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<v Speaker 3>the top ten US builders, we're very strong without portfolio

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<v Speaker 3>all the homes. So once we market recovers, I think

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<v Speaker 3>we will be a disproportionate beneficiary from a market. And

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<v Speaker 3>you know that's my definition of market is always right.

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<v Speaker 3>But I would say that's the argument, particularly for a

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<v Speaker 3>long term investor.

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<v Speaker 2>Hey, Mark, we also have to go on that though.

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<v Speaker 1>If the market's always right, your stock in a big way.

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<v Speaker 1>In June, on this Reuters report that Bosh was considering,

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<v Speaker 1>we're still.

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<v Speaker 2>She's still poking. She's poking.

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<v Speaker 1>So if the market's always right that they were excited

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<v Speaker 1>about a deal, does it make sense to you, I.

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<v Speaker 3>Don't know, you know, yeah, I appreciate your relentness, but

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<v Speaker 3>I can't and I won't tell you a whole lot more. Listen,

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<v Speaker 3>you know there's there's always speculation element, but you might

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<v Speaker 3>get in the stock and as you know, very very

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<v Speaker 3>short trade and and and people who are kind of

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<v Speaker 3>not long term investors right now. Again it's we had

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<v Speaker 3>also these speculation rumors in the past, and again I

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<v Speaker 3>expect them also in the future. And that's that's just

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<v Speaker 3>the nature of a public there's a company. But again

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<v Speaker 3>there's no you won't get a whole lot more for

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<v Speaker 3>me on these rumors.

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<v Speaker 2>Okay, Mark, Well, then on something really easy for you

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<v Speaker 2>to answer us politics? I know, I know, please come

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<v Speaker 2>back after all these questions. We love you, please, so look,

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<v Speaker 2>no question front center and a lot of a lot

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<v Speaker 2>of investors' minds and a lot of voters' minds. But

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<v Speaker 2>just very briefly, does it matter to you you have

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<v Speaker 2>a really complicated supply chain, you do some importing. Does

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<v Speaker 2>it matter to you who's in the White House?

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<v Speaker 3>You know, you know obviously, as you can tell for

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<v Speaker 3>my accent, I should be careful about giving advice on

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<v Speaker 3>US politics. But I also I'm firmly believe as a company,

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<v Speaker 3>we encourage our employees to form a political opinion and

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<v Speaker 3>they should vote. But I'm not going to endorse any

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<v Speaker 3>candidate left or right. It just but we strong encourage

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<v Speaker 3>our people to form their opinion, get informed, and vote

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<v Speaker 3>period Now. Of course, with our strong US exposure also

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<v Speaker 3>the manufacturing side, we're not only the last American appliance company,

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<v Speaker 3>but we have by long shot the most jobs in

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<v Speaker 3>the US un appliance manufacturer. Of course, we have a

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<v Speaker 3>strong vested interest in having a competitive and fair level

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<v Speaker 3>playing field as a US producer. So so topics like

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<v Speaker 3>steel prices, etc. They matter for us. And we're not

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<v Speaker 3>asking for subsidy or disproportioned help. No, we just want

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<v Speaker 3>to be fair and we want to be you know,

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<v Speaker 3>we don't want to have our arm tied, but one

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<v Speaker 3>arm time behind our back as we fight. We're ready

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<v Speaker 3>to fight, but it needs to be fair and level.

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<v Speaker 3>And that's of course, yes, that is a strong best

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<v Speaker 3>interest which we have.

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<v Speaker 1>Well, you're always fair with us, and always we appreciate

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<v Speaker 1>your time. Mark Bitzer be well, so appreciate it. Sharman

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<v Speaker 1>Presidency of Whirlpool. Mark Bitz are joining us from Michigan

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<v Speaker 1>Shares of warpool. They've been kicking around a little bit higher,

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<v Speaker 1>a little bit lower in the aftermarket