* Weak consumer demand takes toll on manufacturers
* Growth in emerging markets likely to slow
* Companies considering more job cuts
By Suzi Parker and Scott Malone
FORT SMITH, Ark./BOSTON, Oct 31 When Whirlpool
Corp (WHR.N) closes its refrigerator factory in Fort Smith,
Arkansas next year, the plant's 974 workers will lose their
jobs. They will not be the only ones who will feel the pain.
The repercussions of the closing will ripple through the
state's second-largest city, from the roughly 500 people who
work at local plastic companies that supply the factory to
Eleanor Roller, who runs a 24-hour restaurant near the plant.
It is the latest blow for Bob & Ellie's Drive-In, which has
steadily lost customers as the world's largest appliance maker
scaled back operations.
"Whirlpool used to have two and three shifts. But then they
only had one, with no lunch break, so we felt that," Roller
told Reuters. "It's my regulars I depend on and hopefully
they'll keep coming." [ID:nN1E79S093]
The cuts at Fort Smith are a fraction of the 5,000 jobs
Whirlpool is shedding as consumers shy away from big-ticket
items like dishwashers and refrigerators.
Nagging high unemployment in the United States, which held
steady at 9.1 percent in September, has depleted spendable
income. Concerns about the country's economic future have
further depressed consumer sentiment.
And just as repercussions from Whirlpool's actions can
spread across an Arkansas town, analysts have said investors
should brace for weakness to spread to other manufacturers in
the United States.
So far this earnings season, a number of manufacturers that
rely on consumer demand, like Whirlpool, air conditioner maker
Ingersoll Rand Plc (IR.N) and 3M Co (MMM.N), which makes
components for LCD televisions, have cut their financial
Makers of highly engineered industrial equipment, such as
United Technologies Corp (UTX.N), Boeing Co (BA.N) and
Caterpillar Inc (CAT.N), have fared better because of demand
from markets like China, India and Russia. But now, even those
economies are slowing down.
Barry Misthal, global industrial manufacturing leader for
PricewaterhouseCoopers, said some industrial manufacturers were
prepared to do some restructuring in 2012 if demand further
"I don't think you're going to see the massive layoffs we
saw back in 2008 and 2009 because companies are more fit now
from a demand standpoint, but certainly they are ... able to
pull some levers if demand continues to fall off."
U.S. manufacturing executives' view of the U.S. economy
deteriorated sharply in the third quarter, according to a
PricewaterhouseCoopers study published last week.
Five percent of 60 industrial executives expressed
confidence in the direction of the U.S. economy over the next
12 months, according to the study, and 7 percent were
optimistic about the global economy.
"At this point there is evidence that the globe is slowing.
China is hanging in there for what looks like a soft landing so
far. Other parts of the emerging world, including India and
Brazil, are slowing," said Clifford Waldman, an economist for
the Manufacturers Alliance/MAPI trade group.
LITTLE HOPE FOR HOUSING
Whirlpool and Ingersoll's fortunes are closely tied to the
U.S. housing market, which has not recovered from the
recession. When consumers buy houses, they tend to also buy
major appliances, air conditioners and other big-ticket items.
Investors said they see little reason to expect demand to
improve in the near future.
The S&P/Case-Shiller top 20 U.S. cities house price index
is down 3.8 percent in the past year and down 31 percent from
its peak in August 2006.
Uncertainty about when the housing market will recover
prompted Ingersoll Chief Executive Michael Lamach to withdraw
the company's long-term goal of earning $5 per share by 2013.
"I don't see a U.S. housing recovery in 2012; maybe '13. I
don't see a commercial recovery in the U.S., and I see weakness
in Western Europe," Lamach said in an interview earlier this
month. "The fundamentals just aren't there for us to achieve
And Baby Boomers staring down the road at retirement are
not coming to the rescue.
"The American consumer is the dead stick, there's no doubt
about it," said Keith Springer of Springer Financial Advisors
in Sacramento, California. With the U.S. population aging, he
added, "People don't need a bigger home any longer, so they're
not going to go out and buy a bigger home, and so they're not
going to buy the new washing machine, the dryer."
The threat of more job cuts is not limited to the makers of
major appliances. Household products maker Newell Rubbermaid
Inc (NWL.N), packaging products maker Bemis Co (BMS.N), and
blue-chip industrials United Technologies and 3M have said they
are considering cutting jobs.
"We have implemented hiring freezes in most developed
countries. Replacement will be limited to those key positions
that are closest to the customers," 3M's Chief Operating
Officer Inge Thulin told investors in October. "We are
considering the need for more aggressive actions as we monitor
economic growth in 2012."
(Reporting by Suzi Parker in Fort Smith, Arkansas and Scott
Malone in Boston; Additional reporting by Phil Wahba and Nick
Zieminski in New York; Editing by Tiffany Wu)
((Boston.Newsroom@thomsonreuters.com; +1 617-856-4342; Reuters
Keywords: USA MANUFACTURERS/OUTLOOK
Keywords: USA MANUFACTURERS/OUTLOOK
(C) Reuters 2011 All rights reserved. Republication or redistribution of
Reuters content, including by caching, framing, or similar means, is
expressly prohibited without the prior written consent of Reuters. Reuters
and the Reuters sphere logo are registered trademarks and trademarks of
the Reuters group of companies around the world.