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What GE Appliances Sale To China-Based Haier May Mean For Louisville

Louisville business and political leaders say the planned sale of General Electric's appliance business to the Chinese company Haier is potentially a positive development for the city's economy.

The sale, announced Friday, would transfer GE's appliance business and Louisville's 900-acre Appliance Park to Haier. The Chinese company manufactures electronics and appliances but doesn't have a foothold on the American market.

GE Appliances is expected to give it just that.

The circumstances of the Haier (pronounced hi-EAR) deal appear to be more favorable to Louisville than GE's previous plan to sell its appliance business to the Swedish company Elextrolux, city officials said.

At a news conference Friday morning to address the acquisition, Louisville Mayor Greg Fischer said Haier likely will use GE Appliances and Louisville to springboard its presence in the United States.

That notion is also good for local GE employees, as it means there is little risk of workers moving to other Haier corporate offices in the United States.

"Because they don't exist," Fischer said.

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Hainer has already announced that it intends to keep the current management of GE Appliances, including CEO Chip Blankenship.

Fischer said the GE Appliances corporate headquarters and the business' nearly 6,000 employees will remain in Louisville. He said the $5.4 billion transaction price may be proof that Haier may, in fact, will be willing to invest more into the appliance industry in Louisville.

"When you see that, that's an indication of how valuable the acquirer feels of the company," he said. "You don't pay a lot of money for an asset to move it."

Fischer's tone on Friday was different than in 2014, when Electrolux struck a deal to acquire General Electric's appliance business. The GE-Electrolux deal left unanswered questions about how many jobs would be left in Louisville, leading to concern among the local workforce. The GE-Electrolux deal eventually fell through after federal regulators questioned its impact on market competition and consumer prices.

On Friday, Fischer said the concern with Electrolux was that that company already had an American corporate headquarters, in Charlotte, North Carolina. That means the corporate office jobs in Louisville may have been greatly reduced.

"That's not the case [with Haier]," he said. "You've got a company that's looking to establish a North American presence and they've done that in the most dramatic way by, in my mind, buying the most iconic brand in appliances, GE, and headquartering it here in Louisville."

Haier may also begin exporting goods built in Louisville to China, GE Appliances spokeswoman Kim Freeman said.

The Haier deal appears to have a better shot of going through, too.

David Dubofsky, an economics professor for the University of Louisville, said  Haier shouldn't pose the same anti-competitive issues as Electrolux.

"Electrolux plus GE was making a really, really big company," he said. "Now, with Haier coming in, it's just going to substitute the General Electric name with the Haier name."

He said Haier will have about 15 to 20 percent of the appliance market, as General Electric does now.

"I don't anticipate the [federal] regulators are going to fight this like they fought Electrolux," he said.

Dana Crittendon, the head of the Appliance Park workers' union, said the deal gives employees some closure regarding what the future holds for their jobs.

"We're looking for job security and with Haier I think we'll get that," he said.

Crittendon said appliance park workers will for the next 12 months work under the parameters of their existing contract, meaning all pay and benefits will remain the same during that time. Within these next 12 months, negotiations will begin for a new contract, he said.

GE CEO Jeff Immelt said in a news release he is pleased with the purchase.

"Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business," he said.

Zhang Ruimin, the chairman and CEO of Haier Group, said in a news release that GE and Haier have common goals and will look to enhance the value of both brands and employee development.

“This strategic alliance provides a new starting point for both Haier and GE and I am confident that this partnership will deliver enhanced value to the stakeholders of both companies," he said.

John Crockett, the soon-to-be chair of Greater Louisville Inc., called the deal between Haier and GE "good news for the city."

"It appears to be the best case scenario for GE Appliance park and for our city," he said.

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Fischer said a challenge for Louisville is to ensure that it's providing a quality workforce for businesses like GE Appliances. He said Louisville has about 75,000 workers in the manufacturing sector, earning an average salary of about $70,000.

"We have to increase our commitment to workforce development," he said.

For nearly 60 years, GE's Appliance Park has been a fixture of the community and he expects that to continue for decades to come, Crockett said.

Metro Councilwoman Barbara Shanklin is a GE Appliances retiree, and Appliance Park is in her district.

She said her constituents, many of whom work for GE Appliances, were excited to hear Haier was purchasing the business and aiming to keep the jobs in Louisville.

She said generations of Louisville families — including her own — have worked at the appliance park.

"It means a lot," she said. "Because when you have a decent job the quality of life in the neighborhood is so much better."

The deal must still gain Haier shareholder and regulatory approval, according to a news release. The transaction is targeted to close in mid-2016.

(Image of GE Appliance Park by Jacob Ryan/WFPL News)

Jacob Ryan is the managing editor of the Kentucky Center for Investigative reporting. He's an award-winning investigative reporter who joined LPM in 2014. Email Jacob at jryan@lpm.org.

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