Whirlpool CEO Marc Bitzer Talks Quarterly Earnings
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Bloomberg Audio Studios. Podcasts. Radio. News. We are so delighted to have back with us Mark Bitzer. He's the CEO of Whirlpool Corporation. He joins us from Michigan. Mark, it is great to have you here with Tim and myself. How are you? I'm doing well, thanks for having me back. How is the environment?

Well, you know, I mean, obviously you saw in our earnings release where despite everything else going on, we're pretty pleased with our Q1. I mean, we're basically, I would consider our business largely on track. We hit the EPS pretty much in line with consensus on organic revenues were up 2%, almost 6% margin, which puts us on track to our full year guidance and we're reconfirming guidance. So, I mean, obviously it's not all euphoric, but given everything else going on, I think we should feel pretty good about being on track in the current environment.

How would you describe the US consumer right now? Yeah, I mean, obviously, it's been a lot of volatility also on the consumer side. And I think if you want to say so, we're probably a little bit of a cannery in my coal mine when it comes to consumer confidence. And the reason why I'm saying this one, you know, every day, you know, many companies have a big order pipeline. Our orders are pretty much seven days. So I see it pretty fast if a consumer orders something or not.

And we saw actually a very healthy consumer sentiment following the election pretty much through January, mid-February. And then we saw a clear deterioration of consumer confidence, in particular on the discretionary side of demand. Okay.

And I think that continued to also in Q2. So we see right now the consumer probably lacks confidence about their financial future and they're holding back discretionary purchases. Well, how does that compare with where consumers have been during your tenure at Whirlpool? Because we've spoken to you quite a bit over the last few years, through ups, through downs, through relatively calm periods. How would you describe the consumer right now relative to where the consumer has been during your tenure?

Yeah, Tim, I've been 26 years, so probably don't have enough time to go give you all the ups and downs. But is it better than that gives us a great view? Is it better than the financial crisis, better than the dotcom bust, better than COVID? You know, it's it's how should I put from an economic perspective? It doesn't not from a human perspective, from an economic perspective. I think there's a lot of similarities to what we saw in the early days of COVID. And what I'm saying is when consumers, it just there's a

you know, everyday new messages which don't necessarily help consumer confidence. So from a pure consumer confidence perspective, we just want to have stability in the message. I think consumers can deal with good or bad news. It's just the everyday changing news and the uncertainty which neither helps business investors or consumers. And I think

So the drop which we've seen kind of in the course of six weeks, yep, that was probably among the biggest drops I've seen. Now hopefully at one point it will also come back up again, but right now the drop was pretty fast and pretty drastic.

So we love talking with you. We've gone through so many cycles together. And I'm just thinking of those who are watching and listening to Bloomberg Business Week on this Wednesday. I am curious about your supply chain. Like we are all getting a great lesson, right? In global trade, global supply chains. Tell us about your supply chain.

and how the U.S., China, or just the U.S. tariff trade war is potentially impacting you or making you change it. First of all, Carol, I want to give you credit, but it took you two questions free to raise the war tariff. I'm trying. I'm trying. Kudos to you. Kudos to you. It's not easy.

And obviously there's a lot of moving parts at play. Ultimately comes back to we are kind of the only and last American appliance company and we produce 80% of what we sell in the US. And of what we produce in the US, more than 80% of our parts are sourced in the US. So we are a domestic producer. I know a lot of companies talk about reshoring or onshoring. We never left. Okay. And that's a big difference.

So as such, even though we're also faced with some headwinds in particular components, etc., ultimately we will be a net winner because we're a domestic producer. And in this case, and this is different from other industries, there's capacity. We have enough capacity in our factories to fill them.

And I appreciate other industries, you know, it may take some time, but I think ultimately, and we all don't know what the final, final picture of a terrorist is, but something will be there. And we do see us benefiting from this one.

There's a couple of things I wanted to ask you. Like, we just have a headline crossing and there's lots of headlines that are constantly coming at us. And this one is from the FT that the president is going to exempt car makers from some U.S. tariffs. How do you want to see this trade war play out? Because I'm assuming that some of these tariffs help you domestically.

Well, and again, I think that probably needs a little bit explanation. So, Carol, actually, we're not asking for exemptions. We're not asking for tax subsidies or gifts or handouts or whatever. There are right now in the pre-existing so-called 232 and 301 tariffs, there are loopholes which hurt us and they structurally benefit Asian producers. And it's put in simple terms, you know, because of the 232 tariffs, I pay in the U.S. for steel two or three times more than Asia steel.

And any component which I can't get in the US, like a LED panel, I pay tariffs. So if the same product is produced in Vietnam or Korea, they don't have to pay the tariffs on steel, they don't have to pay the tariffs of components. That difference is big. It's about $70 per product. So put that in retail price, that basically means $150 different retail price.

So all we ask for is just close the loophole. We're all in support of having a strong U.S.-based steel production. I think we all agree it's important. Just close the loophole. That's all we ask for. So we don't ask for special treatment. Just close the loophole. Take the disadvantage away. Again, I'm not looking for an unfair advantage. We're just looking for a level playing field and then when we can compete very well.

So we're talking, of course, with Mark Bitzer. He is chief executive officer at Whirlpool Corporation, joining us from Michigan. One thing I want to ask you, what you have learned about manufacturing in the United States, is there a lesson or something, a message you'd like to share with other folks who are saying, I can't manufacture in the United States? You know, and again, it's, Carol, as you can probably...

tell from my accent, I have a dual citizenship, American and German. So to sit here and say I'm staying here for patriotic reasons is probably not credible. U.S. production can be working well. And I'm proud of our 10 strong factories in the U.S. And if you go to a factory like in Clyde, Ohio, where you have three generational factory workers, these are proud people who have worked very hard. So I know there's now a lot of jokes about U.S. manufacturing. You can produce in the U.S. And there's a very good...

a skilled workforce which you can have as long as we don't harm ourselves with kind of issues which make production more difficult in the US like steel price and component costs. So I really, I know some people are hesitating about moving back to the US. We have been producing in the US for 114 years with success.

You know, I'm curious about since you already produce here in the U.S. and you have 80 percent of the production that goes to the U.S. actually being made here, plus you source a lot of the parts here, you're relatively unaffected by tariffs. Would you say that the tariffs that the Trump administration has proposed or is even putting on have been a net benefit for your business?

You know, it's again, so far, there's more announcements than already actually in place. So far, what is in place is the 232 and the 10 percent tariffs. But, you know, I go back to and I know there's a lot of talk about what the previous Trump administration did, the 201 tariffs in 2018, because I know there's a lot of talk about did they raise price or not?

If you now today look back, these tariffs were put in place in 2018 and where we are today, washer prices today are lower than they were in 2014. So tell me one product category which has lower prices than 2014. And compared to 2018, there's two more factories producing washers in the US. So from that perspective,

What the prior Trump administration did actually in our industry worked. It brought new production and the prices did not raise. Now, there's always some moving parts as you go through this one, but it worked. Now, that may be different in other industries, but I think I know our industry pretty well. You add production capacity, it ultimately will benefit the consumer. Does the risk, though, of declining U.S. consumer sentiment as a result of rising prices in other categories and concerns about uncertainty moving forward,

Does that weigh to a greater extent than the benefit that you get from tariffs as a U.S. producer of products? Yeah, I mean, I think it's a fair question. Of course, in the short term, there will be, call it wobbliness, a long way. But I think, as I mentioned earlier, consumer confidence can drop fast, but it can also increase pretty fast. We've seen that in Q4. So I would say, you know, what I describe on a structural capacity, these are long-term effects. I mean, you don't build factories on wheels very often.

We can build them for 30 or 50 years. Consumer confidence moves within a quarter. So I think even though there may be some volatility in consumer confidence, I think the long-term benefits will clearly outweigh the negative short-term consumer sentiment. Mark, you definitely have a global perspective. I think there's some concerns, though, that the longer this trade back and forth, especially between the United States and China, but really between the U.S. and the world, that there will be long-term damage. How do you see it?

well you know it's again i can speak more for my industry i think ultimately what the current administration is trying to do in our industry i support of course because we're a us producer i think the most important thing and that is not only for our industry people just want to have predictability okay if you have pretty much

pretty much every day a changing problem definition that just makes it hard because you don't plan industrial production. You don't make industrial decisions if you don't know if that assumption is true tomorrow. So I think everybody will deal with whatever it is if they know this is now that's a picture and it's going to be stable and people can count on this one. So I think it's more stability and predictability more than anything else, which I would be hoping for. You mentioned that much of the

sourcing that you do for the US based production is actually domestic sourcing. Still, I imagine there are components that are made outside of the US. Do you anticipate any supply chain issues as a result of what we've seen happening?

Yeah, and it's a little bit-- and part of that is today our disadvantage because there are, as you point out, some components I can't buy in the US, like an LED panel for a washer and that kind of stuff. So today we have to pay tariffs while anybody producing Thailand, Vietnam doesn't have to pay tariffs. I think over time, I would expect that for the vast majority of these components over time, there will be supply base either in the US or in Mexico.

And we see already some early indications. It will take its time, in particular in the electronic side more than anything else. But more of the mechanic parts like motors, et cetera, I think it will be quickly resolved. All right. I just want to know, have you created a dishwasher that my husband and I don't have to like argue over who's going to load it and unload it? I just want to know, do you have one like that, a robotic one that actually unloads and unloads? Have we gotten there?

Yeah, well, if you have a patent, let me know and we can hire you as an engineer. You know, first of all, we I pride ourselves. We have the best dishwasher with the biggest capacity in the industry. Unfortunately, it doesn't load itself. I feel the same pain every day at home. Not every day. At least I'm accused of that every day. Hey, listen, one last question. Do we have to be worried about a global recession? Is that anything that's on your radar? Just real quickly.

I mean, again, that's why I said Carol earlier, it feels a little bit economically to step back to earlier days of COVID and whatever else. It's just an uncertain outcome. I think right now the odds of a recession have increased. I'm not quite sure we're all the way there. It depends a lot what happens in the next two, three weeks in terms of business predictability. But I think we're living with an uncertain outcome. And that's what our job is to manage towards that. All right.

Well, when I get that design for that dishwasher that loads and unloads itself, I'll let you know. Mark Bitzer, BeWell, CEO, Whirlpool Corporation. This is Bloomberg.

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