Up to now, Supply Chain Matters had not had the opportunity to weigh-in on this week’s rather stunning announcement regarding the intent of China’s appliance giant Haier to acquire General Electric’s Appliance business for a reported $5.4 billion.
Readers may recall that GE previously attempted to sell its appliance unit to Europe based Electrolux for $3.3 billion but that effort did not meet the approval of government regulators. Now, a similar process begins regarding this Haier deal and the prospects are just as challenging since this is a China state-owned company acquiring a very iconic global and U.S. brand. The deal calls for Haier to gain rights to the General Electric brand in appliances for the next 40 years. As we have noted in prior commentary, China’s manufacturers have long coveted global brand presence, at the GE brand is a jewel. Haier was obviously willing to pay far more for access to such a brand as well as deeper U.S. manufacturing and supply chain presence.
As today’s edition of The Wall; Street Journal points out, Haier has twice before attempted to buy its way into the U.S. market including a 2008 attempt to acquire the GE Appliance unit. In 2005, the Chinese firm unsuccessfully courted Maytag, ultimately losing to Whirlpool. The WSJ further points out the peril of this being a year of U.S. Presidential election politics which is a very timely observation. No doubt, we can expect at least a response from Donald Trump if not other would-be U.S. presidential candidates. One could not ask for more attractive political fodder.
If successful, Haier would gain additional U.S. manufacturing presence among GE’s nine manufacturing facilities that include 12,000 workers. That includes the current Haier manufacturing facility located in South Carolina.
One has to also consider the impact on GE Appliance’s current manufacturing workforce and supplier base, each of whom have been buffeted by constant news related to being sold to other global manufacturers. The current announcement adds more months of uncertainty.
Haier’s current U.S. presence has been limited to niche products and mostly privately branded wine refrigerators and window air conditioners. Thus, if this deal passes scrutiny, there are obvious short and longer-term industry supply chain implications. Haier currently indicates that it will maintain GE’s U.S. manufacturing presence in appliances. That is obviously reassuring and gains points for regulatory muster.
Obviously, this is yet another industry development to watch in the coming months.