Five years ago this month, Maytag officials announced that Galesburg’s largest employer would be pulling up stakes and Maytag-Galesburg Refrigeration Products would be no more.
While the statistics never generated unemployment figures as bad as had been predicted, the devastation that hit local families and businesses cannot always be measured in numbers.
It’s little consolation that after destroying Maytag’s well-earned reputation for quality products by shifting manufacturing to Mexico and importing Korean refrigerators, the venerable firm couldn’t save itself and was sold at a fire-sale price to appliance giant and once-competitor Whirlpool.
Here are the observations of two individuals who felt the impact first-hand of Maytag’s announcement on Friday, October 11, 2002.
Inside a job loss, five years later
by Karen S. Lynch
Information came late on Thursday afternoon there was a “big meeting” scheduled for Friday morning at the Maytag plant. The date was October 11, 2002, exactly 13 months after the 9/11 attacks by terrorists on our nation. For employees preparing for their workday on a typical Friday, this day was not unlike any other morning. Normal activities began what was supposed to be an average workday — showering, hair and makeup, grabbing a quick breakfast. Families getting kids off to day care or ready for school was like any other day in Galesburg’s then mostly blue-collar town.
Despite a slight case of nerves about the impending meeting, this was just another day while I drove down Monmouth Boulevard. The closer I got to work a knot tightened in my stomach. I felt an uneasiness that one feels during an approaching Midwest super-cell storm.
An ominous omen of a television news crews sat in an empty lot across from the Maytag plant. A radio broadcaster announced the plant closing just as I entered the parking lot. Leaks of the meeting’s content with the closure timeline were reaching the public before first shift employees arrived for a planned workday.
It felt like my heart stopped. I could not believe what I just heard, despite knowing what likely had been coming for months. Perhaps I did not want to believe a job I began when I was 19 and became a 33-year career would end this way. I had grown comfortable knowing I was ninth in seniority, “assured” a job until I was ready to retire sometime in the next 13 years.
There had been rumors after Maytag built a new sub-assembly operation in Reynosa, Mexico. For several months prior, uncertainty intensified with the acquisition of arch-rival appliance manufacturer, Amana, produced on corporate home turf in Amana, Iowa.
Tensions had been mounting in both manufacturing plants, knowing only one would likely survive the acquisition. With an Iowa-based corporate headquarters, the odds did not bode well for Galesburg. Amana had their own fears of Galesburg with our recently built facilities and modern machinery. Galesburg also produced a full line of refrigeration products. Amana did not produce a top-mount line that met stringent government energy regulations but outsourced to an Asian supplier who could provide the low profit margin product at a greatly reduced cost.
Rumors had run the gamut from the layoffs of all but the top-mount line to a complete shutdown of three or four of the company’s plants. Galesburg’s Maytag worker hoped for the best but feared the worst for months. We had gone through turmoil for over two years with an attempt to outsource administrative jobs to Price-Waterhouse Cooper and rumors of a takeover bid by Eureka.
Despite already hearing the news on the radio, speculative chatter of the accuracy of media reports did not last long. Minutes after the opening buzzer sounded, workers herded together like cattle towards slaughter to an open area of the plant. Several meeting locations were set up closest to individual work areas throughout the plant, due to the size of the workforce. The local plant manager and Vice President of Human Resources read simultaneous announcements with corporate leaders.
The office employees and closest plant employees gathered between the new office building and the cafeteria. Union leaders already knew the announcement content sometime before the meeting began, a requirement of advance notice under the bargaining agreements. Workers were still exchanging comments on the leaked announcement where we gathered. Local plant officials had a hard time quieting the already agitated workers.
Corporate President Bill Beer began to read from a prepared letter, barely looking up at the restless employees.
“Today, Maytag Appliances announced changes in its refrigeration production strategy and its intention to eventually close the Galesburg Refrigeration Products facility.”
With a single “sentence,” our fate was sealed. There was an audible silence of hundreds of people not taking a breath lasting several seconds from the sucker punch to the gut. It felt like 9/11 all over. Many people stood quietly in shock. Several people were crying — a few hugged each other.
Angry heckling came from a few workers in the crowded space where we stood shoulder-to-shoulder. Bill Beer was trying to finish reading the prepared letter above a low rumble of talking and a few shouted expletives, “Why didn’t that f------ Hake have the nerve to come here to tell us himself?” one worker shouted. Another worker answered, “A chicken shit like Hake would know better than show his face in this town ever again.” Anger was an understandable emotion initially. The weeks that followed grew depression and fear for the future.
Informed at the beginning of the meeting there would be no questions taken during the announcement as a few general answers were available in information packets we would receive on our way out of the building. An announcement was made our supervisors would be available to talk with us until noon and EAP (Employee Assistance Program) counselors would be available to those who wanted to talk.
The information packet repeated words in the company announcement. “We realize that it would be very difficult to work after hearing this news, so we will not run production or ship products today. You will be paid for today, and we will resume normal production on Monday, October 14.”
Nothing was ever “normal” again as the days ahead held more questions than answers for workers. It became quickly apparent the one-day shutdown after the announcement was more a security measure than a gesture of sympathy, as guards quickly took posts at all entrances. I had forgotten my lunch at my desk and a software book I was studying. I turned around to retrieve the forgotten items but one of the guards stopped me at the entrance. I explained what I had forgotten inside the building but was told I would not be allowed back in the building until Monday.
We returned to a higher security force with guards added to the main office entrances and new security measures. The company obviously feared an angry backlash that never materialized. Instead, the following Monday was a very quiet day. The only sounds were that of machinery and the clicking of computer keyboards. All the workers seemed even more determined to continue to do their jobs and make the finest product Maytag had ever seen. Despite a generally depressed workforce, quality products continued assembly as if to prove how wrong the executive decision was.
Many senior employees had spent the better part of a lifetime in the plant under several owners. There were employees who had family members also working at the plant. I had a sister, aunt, uncle, and several cousins working at Maytag before the announcement. Several aunts and uncles were retired from the plant in prior years. My own father had worked at the plant for a short time, as did his brother and several nieces and nephews. My family was just one of many similar families working at Maytag for generations.
There was also the “Maytag” family of co-workers and friends that had grown close over the years, having spent so much of our working lives together, often socializing after work. Maytag employees would often volunteer in the community and contribute portions of their pay to many charities. United Way, Relay for Life, Habitat for Humanity, and the Christmas Angel Tree gift programs all benefited from the generosity of Maytag employees. Many more fundraisers and bake sales took place inside the plant for workers who were ill. There was a pall of a death in the “family.”
Despite a recent announcement that Galesburg has “recovered” from plant closures, many continue to struggle to make a living. Unemployment ended long ago for Maytag workers. TAA benefits had provided training for new careers, many paying a fraction of their former wages. Some left the hometown they loved to save commuting costs due to high gas prices. Many are under-employed. Thousands are paying ever increasing insurance rates while many lost insurance coverage under prior contracts. Some retirees had lifetime coverage they lost completely being over age 65.
Workers eligible to retire at the time of the announcement Maytag presented an offer to retire at the end of the year with their previous insurance coverage and costs. Retirement papers spelled out the agreement. Union lawyers assured union officials the language was as good as a contract.
Despite wanting to stay the final two years, receive the severance pay and TAA benefits, I felt I had no other option with my insurance held hostage. I could ill-afford having a large chunk of my small pension check consumed by much higher insurance premiums and co-pays with increased drug costs.
The office union had just settled a long-expired contract with the insurance concessions. A six-week severance agreement offered to office employees was part of the new contract, for which the union was quite proud until after the closure announcement. The plant union had no severance agreement.
After the IAM union negotiated 1 week for each year of service, up to six months, the office union began bargaining for the same agreement. For those offered the early retirement on insurance the agreement came too late for nearly 200 employees. Maytag employees only had six weeks to make a decision and lacked information that may have affected our decision — like the increase of severance pay to six months.
Before turning in my retirement papers I sought reassurance by our local human resources officials the terms of my retirement would not change until I reached age 65, when insurance benefits would normally end. Union officials received similar assurances. As a former Vice President of the office union, I was aware the insurance booklet provided the company the option of changing benefits at any time.
Despite assurances from our human resources officials that the benefit change clause would not apply to this offer, the end of the contract three years later did sever our agreement with a company letter that came just two weeks after the contract expired. I should have foreseen another broken promise by Maytag. The thought of what might happen at the end of our contract did cross my mind briefly. I had just officially retired from Maytag but did not feel the happy moment I had envisioned would come with retirement.
The phone call from hell
by Bob Sheehan
Galesburg Mayor 1987-2005
Friday, October 11, 2002. 7:20 a.m. The phone rings and rings. Looking back, it seemed as if it were ringing for hours. I jumped out of bed and answered by the third ring.
“Hello Bob. This is Greg Irwin” [Maytag V-P of Human Resources].
[Gulp]. “Yes Greg. What’s the news?”
“You’re the first one I’ve called. I’m afraid I have bad news, Bob. Bill Beer [Maytag President of its Appliance Division] is announcing to our employees as we speak that Maytag will close up shop and move refrigeration operations to Mexico and elsewhere.”
“Oh.” I could barely breathe. “Oh my …”
“It’s a bad day for Galesburg, Bob.”
I muttered something. Probably sighed very hard. I went numb. “What an awful day for Galesburg. Bye, Greg.”
Then the flood hit — The flood of questions and overwhelming feelings. What does it mean? Oh my God. How many people and families will be out of work? What will happen to them? …to our city? What will be the effect? How many others depend on Maytag?
Then the fire hit. “How could they do this? How could those bastards do this?” Why, the union just ratified their contract a few months ago. They had worked hard at it and it passed by six or seven votes. “How could they do this to the design group, office staff and line workers?” They had all done their jobs well. Hadn’t Maytag received rave reviews from Consumer Reports about their refrigerators made in Galesburg?”
Then the icy feelings hit. Hey, the city had helped Maytag rebuild with a gasoline tax. So did the Feds and the State. Heck, barely 10 years ago. What kind of thanks is that? What worthless “leadership” out of Newton, Iowa.
One knew this was terrible news. It got worse by the minute. The more I thought, the worse it got.
The day before, on October 10th, I had gotten a call from City Hall. City manager Gary Goddard wanted to meet with no more than two council members at a time. This was to avoid any Open Meetings Act violations. He said someone from Maytag had called and asked for police protection. Police Chief John Schlaf had asked, “What was the purpose?” There were no details, so he declined. Obviously the radar was active. What could this mean? Try not to speak with the press until we know what will happen. Maytag plans to be here on October 11th.
OK. Some local reporters were waiting outside as I was leaving the meeting. Unfortunately I could not tell them anything. I had no idea what was up.
We had spoken with Steve Ingham in early spring after Maytag announced their merger with Amana. We (Eric Voyles, Dennis Morrison, GREDA execs and myself) made the case that Galesburg would be a superior plant if there were reductions in manufacturing facilities. Galesburg was a recent design and built ten years earlier. Also had a loyal and good workforce.
Ingham was going to work with a group to determine and recommend to Maytag what to do — use Galesburg or Amana or both for production. Several people at Maytag and in town did not have a high opinion of Ingham. He wasn’t popular because he had come across as pompous and arrogant when he first met with the employees. He never bothered to move to Galesburg, taking up residence in Peoria.
He certainly confirmed their suspicions in an all day economic development retreat a year earlier. He was unimpressed with the workforce. Too much this, too little of that. Most of the others in this planning session took offense at his thoughts. They knew Galesburg was a good place and had good workers.
After the announcement, Congressman Lane Evans finally got an answer. Maytag would meet with local officials and explain their move.
There were so many good questions from Evans and Congressman Ray LaHood, representatives from Senators Dick Durbin and Peter Fitzgerald, State Senator Carl Hawkinson, State Representative. Don Moffitt and others. There were so many good questions and such poor, heartless answers from Bill Beer from Maytag.
Very few folks were satisfied. But time moves on. Reality causes response. The Feds and State have helped with the fallout, but Galesburg and Knox County are still struggling. Progress comes slowly. Hopefully, a good recovery and gainful employment will happen. But it will still take time — lots of time.