October 24, 2014

Haier and Fisher Paykel Making Bigger Plans

Haier, China’s largest major appliance maker, and Fisher & Paykel (F&P), the premium appliance manufacturer, are exploring opportunities to cross market their products in the United States.

The move would extend a strategic partnership formed last May when Haier purchased a 20 percent stake in the New Zealand vendor and added its chief financial officer and chief marketing officer to F&P’s board.

Under the agreement, the two companies are sharing product development, manufacturing and market resources to reduce production and procurement costs.

As part of the arrangement, Haier is presently producing select products under the Fisher & Paykel brand, and the partners are looking to expand the assortment.

The pact also gives Haier exclusive rights to market and distribute Fisher & Paykel products in China, while F&P will distribute Haier-manufactured and branded products in New Zealand.

Haier Australia will continue to handle the Haier brand on that continent for the immediate future.

According to a Fisher & Paykel spokesperson, the companies are also exploring opportunities to market and sell each other’s products in the U.S.

The partnership gives Haier access to Fisher & Paykel’s premium assortment, while extending F&P’s global reach. The deal will also help the New Zealand manufacturer contain production costs amid the global recession, which has taken a steep toll on appliance sales across the industry.

Fisher & Paykel is best known for its compact DishDrawer dishwasher and its recently acquired DCS line of professional cooking equipment. Its products are sold directly or via distributors to about 4,500 dealers in the United States, and are produced globally at plants in Auckland and Dunedin, New Zealand; Cleveland, Australia; Rayong Province, Thailand; Reynosa, Mexico; Treviso, Italy; and Clyde, Ohio.

From TWICE Magazine

Fisher & Paykel Struggling – Whirlpool Not Buying, But Sears is Selling

Appliance manufacturer Fisher & Paykel’s debt is predicted to rise to next month as a result of the depreciating New Zealand dollar and a drop in sales. Its profits were expected to drop up to fifty-four percent.

The New Zealand company told investors in February that it was in talks with a number of parties in a bid to raise capital to help with debt levels, Whirlpool was thought to be one of the contenders.

David Graham, Whirlpool general manager of marketing for Australia and New Zealand, told the New Zealand Herald his company would not be the white knight. “At this juncture we are not seeking to acquire Fisher & Paykel New Zealand,” he said.

Commentators said there was only a small chance Fisher & Paykel would find a cornerstone investor to help take on more than $500m in debt when many companies were struggling themselves.

A Government bailout was unlikely and a capital raising from shareholders was the only real option for Fisher & Paykel, they said.

At the same time, Fisher & Paykel Appliances will launch a new brand of home appliances at Sears outlet stores beginning in April. The new Elba by Fisher & Paykel brand will be manufactured in Fisher & Paykel’s North American facilities.

Commenting on the new brand launch in the U.S., Mike Goadby, North American president for Fisher & Paykel Appliances, said, “The company is adapting a strategy it employed in the New Zealand market for the past 12 months with promising results. Fisher & Paykel’s decision to extend its brand is necessary to continue to promote company growth.”

Fisher & Paykel Advances on American Market

Fisher & Paykel recently revealed its new “DishDrawer Tall” which will be manufactured in Mexico specifically to fit plates big enough for the large meals popular with Americans.  F&P managing director John Bongard told analysts and media the new dishwashers, whose top drawer can fit 13 inch plates, would open up a new market for his company.

The new products will target the top end of the home appliance market, which F&P focuses on in the US. Bongard said the dishwashers, expected to hit stores in January, would sell for more than the US$1299 its existing, smaller dishwashers are sold for. F&P plans to introduce them in New Zealand and Australia later in 2009.

Bongard said F&P currently made around 45 percent of all its dishwasher sales in the US where the company generated 29.7 percent of its operating revenue in the March year. That made the US F&P’s second biggest market behind only Australia.

Meanwhile, Bongard said F&P had reined in marketing in the US over recent months as it would be like “throwing money against the wall” in such tough economic times. However, he said the use of F&P products by celebrities such as actress Tori Spelling – in her reality TV show – and talkshow host Oprah Winfrey had helped boost F&P’s profile.

When he briefed US analysts these days there were always three or four in the room who owned F&P products, Bongard added.

“Seven or eight years ago you had to spell the [company's] second name for them.”

Fisher & Paykel is Moving to Mexico

Fisher & Paykel, the New Zealand appliance manufacturer well known for it’s dishwasher drawers and washing machines is consolidating it’s manufacturing and moving to Reynosa, Mexico, just south of the U.S. border.

The range and DishDrawer factory in Dunedin, New Zealand, the refrigeration plant in Brisbane, Australia and the DCS manufacturing plant in Huntington Beach will be relocated to the new facility in the next 12-18 months. The DCS move is expected to be completed by the end of the year, and individual manufacturing lines will be shifted separately to reduce the impact on warehouse inventory. The U.S. operation will continue to employ sales and marketing, customer services, head office and an engineering staff of around 340 employees. The financial benefit of the DCS move is expected to be $6.6 million per year with a one off cost of $7 million, both at pre-tax level.

“This expansion is designed to streamline our manufacturing costs, and bring increased consistency and efficiency to the company’s production process in the U.S. market, “ said Mike Goadby, North American President for Fisher & Paykel Appliances. “It’s an emotional time for all of us, but this move will make us more competitive in the U.S. and strengthen our distribution efforts through making them more efficient.”

With the Reynosa acquisition and the new North American DishDrawer line announced last year, the financial benefits of the new strategy are expected to be around $50 million per year, at a one off cost of approximately $100 million. The cost of the move will be offset by the sale of surplus property in Australia and New Zealand, which could total approximately $100 million.

You can read more here.