The myth of the Italian household appliance, already put to the test in the last decade, falters after the strategic choices of Whirlpool and Electrolux. The two multinationals have collected in Italy the legacy of the industrial miracle of the 1960s of the Zanussi, Zoppas, Ignis, Indesit, Industrie Merloni. But now Whirlpool is preparing to launch a strategic review of the EMEA business, while Electrolux has announced a cut of 4 thousand jobs in the world and the unions fear that Italy will stop some investments already planned. The recession scenario looms and the current production structure risks being no longer suitable for the new market. The post-Covid rebound has gone on file, and the prospects are for a double-digit decline, with Italy forced to deal with the cost of labor on the Polish market and with the aggressiveness of new non-European operators. The same union asks the government that the “white” be considered a strategic sector, while the producers, gathered in Applia, play the savings card in their bills to move a market that is once again showing signs of saturation: production volumes threaten to fall below the psychological threshold of 10 million “pieces”, little more than the conventional “hard core” of the high range, the only production that Italian factories seem to be able to afford in the near future.
The choices of the giants
The first to throw the stone in the pond was, before the summer, the CEO of Whirlpool corporation, Marc Bitzer. Commenting on the first quarter results, the manager explained that in recent years the group has managed to make a business that previously was losing money profitable, but added that it is not enough. The group focuses on the US and India and will look for other ways to raise the bar of value in the long term; the objective is aimed at different directions, also with an anti-cyclical function with respect to the main business segments, for example services (the group already has a small presence in the laundry sector) or professional lines. For this reason, Bitzer explained, “an outright sale is possible, it is one of the options”. In the last quarterly, the company was more explicit, partly confirming the rumors that had been circulating for weeks: the strategic review of the European presence – hq Emea is based in Italy, in Pero – is nearing conclusion, and the due diligence with two potential investors it has reached the final stage. Hybrid solutions are not excluded, but the market is ready to bet on the entry into Europe of a Turkish, or Chinese, or in any case non-European player, interested in the know-how and market shares of old Europe. In retreat, even if with less radical choices, also the other large corporation that has taken root on Italian soil, Electrolux. The Swedish group generated a negative EBIT of 385 million crowns in the last quarter, and the final loss was 605 million crowns. A cost reduction plan has been launched which should lead to a benefit of 4-5 billion crowns on the income statement, but which will also lead to a cut of 4 thousand jobs, especially in the US. In Italy, however, the unions explain, the company could question the investment plan that in recent years has led to the strengthening of several hubs considered strategic.
The market
The data for the third quarter indicate a decline of 10-12% across Europe, including Italy. The market for large household appliances is a replacement market, and after the post-Covid rebound (+ 18.5% in 2021) there has been a retreat, deemed “physiological” by operators, but which risks continuing in the coming quarters and having consequences in the medium to long term, if the costs of logistics, raw materials and energy are also included in the analysis, which also impact on the demand side. The production curve shows that the trend, post Covid aside, has been underway for some time, with a gradual return to the situation of the 1990s, and the risk of falling below the threshold of 10 million “pieces” produced. But change the mix. While cold and washing are below historical lows, cooking resists, but only by virtue of a defensive factor (Italian gas know-how) now called into question by the new geopolitical framework. Below 10 million, the operators explain, there are the “high-end” segments that are resilient to the competition on the production factors of other competitors or that can count on elements of added value represented by proximity to supply chains (this is case of collection, linked to the furniture districts and construction sites). Speaking of costs, Italy has 10-15% more on its shoulders than the so-called “best cost country” (not to mention the comparison with “low cost countries”). The delta includes labor costs for about two thirds, and structural fixed costs for another third.
Responses and reactions
After Whirlpool’s announcement, Fim-Fiom-Uilm asked for a confrontation with the government. The union wonders if the Meloni executive considers the sector “strategic and what extraordinary actions it intends to take to safeguard it”. The conviction is that “in this moment of turbulence with repercussions also on the sales of household appliances, it is necessary to increase the resources for investments and development of new certified energy saving products and to imagine new and ambitious industrial policy measures”. Applia has in turn proposed an incentive for those who intend to change an old appliance with one that is more energy efficient. The formula studied provides a 25% discount on the purchase price, up to a maximum of 150 euros. «To intervene in a structural way on domestic consumption – explains the CEO of Applia Italia, Marco Imparato -, we should increase the efficiency of the appliances, favoring those with a higher efficiency class. Today the installed park is old, with an average life of over 14 years ». The measure, against an allocation of 350 million euros, would support the purchase of 2.5 million new appliances, “an advantage for families and the environment and support for one of the excellences of Made in Italy – concludes Imparato -: the high-end supply chain is an important asset, with 145 thousand employees, including related industries, a sector sensitive to the rise in energy and raw material costs, which must be supported in an intelligent way “.