By Rachel Layne
Oct. 18 (Bloomberg) — General Electric Co. plans to spend $432 million and add 500 U.S. jobs to design and make energy- efficient refrigerators, returning positions to a division up for sale as recently as 2008.
Factories and design centers in Bloomington, Indiana; Louisville, Kentucky; Decatur, Alabama; and Selmer, Tennessee, will open during the next four years, Fairfield, Connecticut- based GE said. Designs will incorporate Energy Star standards in effect in 2014 and target the U.S.
GE has created more than $1 billion in new investment and 1,300 U.S. appliance-related jobs since 2009. Chief Executive Officer Jeffrey Immelt said in September that he planned to bring appliance jobs back from China and Mexico, because U.S. workers were making higher-quality products for less. Employees and unions agreed to cut expenses including reducing starting wages for production employees.
“This is a big commitment on the part of GE to transform the business and put us in a much different place,” Jim Campbell, chief executive of the appliances and lighting division, said today in an interview with reporters.
The company decided to invest at a time when the industry is suffering so that GE will be ready when business picks up with new products, Campbell said. The industry expects to sell about 38 million units in the U.S. this year, down from about 50 million in 2006 during the housing boom, he said.
GE fell 10 cents to $16.20 at 9:45 a.m. in New York Stock Exchange composite trading. The shares had risen 7.7 percent this year before today.
Research and development will increase three-to-four times at appliances, and the unit will turn a profit this year and next, Campbell said. As part of the project, GE negotiated about $78 million in incentives including tax breaks, he said.
“When the economy comes back — and it will come back at some point — we want to be in position with the right product offering, the right cost structure to leverage the expansion,” Campbell said. “I don’t want wait unit things pick up. If you wait until things pick up, you miss the opportunity.”
Before the 1,300 new jobs are included, GE had 9,590 people in U.S. appliance jobs, with 680 outside the U.S., GE said. The parent company had 304,000 employees at the end of 2009.
GE adopted lean manufacturing methods, some of which include product design in the same place as plants, in its appliance divisions last year. New hires will be paid $13 an hour, down from low-to-mid $20s, Campbell said, with full benefits.
In Louisville, where the appliance unit is based, GE will spend $194 million and add 300 jobs for bottom-freezer refrigerators, a new product line there, GE said. It’s the third new product line at the site of Appliance Park. Last year, GE announced hybrid water heaters and a front-load laundry washer and dryer line.
In Bloomington, once slated for closure, GE will spend $93 million and add 200 jobs for side-by-side refrigerators. The investment in new models for the plant is in addition to $68 million announced earlier this month. The factory, purchased by GE in 1966, produced its 18 millionth side-by-side refrigerator in 2004.
GE will spend $43 million for top-freezers and so-called green manufacturing in Decatur, Alabama, where it spent $16 million earlier this year to change an insulation process that will cut greenhouse emissions up to 90 percent, Campbell said. The total investment will help retain about 1,000 jobs, GE said.
The Monogram luxury line of refrigerators made in Selmer, Tennessee, will be redesigned using a $32 million investment, keeping 166 jobs, GE said.
GE’s Home & Business Solutions segment, which also includes the lighting division, sensors and factory-automation software, had $6.32 billion in sales in the first nine months of 2010. The division’s profit fell by more than two-thirds to $104 million on $2.13 billion in sales in the third quarter, dragged down by a sluggish U.S. market. GE is the biggest supplier of appliances for newly built homes in the United States.
“This is not out of sympathy,” Immelt, who has advocated for more U.S.-based manufacturing to strengthen the economy and exports, said in the speech last month. “The costs are lower and the quality is better.”
GE is the world’s biggest maker of power-plant turbines, jet engines, locomotives and medical imaging and related IT systems. Since the beginning of 2009, the parent company had announced more than 16,000 retained or newly created U.S. jobs in its manufacturing divisions, including 3,500 temporary slots.
–Editors: Chris Staiti, Margot Slade