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We are so delighted to have back with us. Mark Bitzer. He's the CEO of Rolpool Corporation. He joins us from Michigan Market. It is great to have you here with Tim and myself.
How are you I'm doing well well, Thanks for having me back.
How is the environment?
Well?
You know, I mean, obviously we saw in our earnings release where despite everything else going.
On, we're pretty pleased with our Q one.
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, we're up two percent almost six percent margin, which puts us on track to our folio guidance, and we're reconfirming guidance. So I mean, obviously it's not all euphoric, but give them 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 all utility also a consumer side, and I think, if you want to say so, we're probably a little bit cannery and the cold 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 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 deteriation of consumer confidence in particular particular on my discretionary side of demand. Now I think that continued to also in Q two. So we see right now the consumer probably lacks confidence about the financial future and holding back discretionary purchases.
Why does that compare with your where consumers have been during your tenure at Whirlpool, Because we've spoken to you quite a bit over the last few years, throughouts, 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, twenty six years, so don't have enough time to go give you all the ups and But is it.
Better than the pat gives it's a great view. Is it better than the financial crisis? Better than the dot com 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 one consumers, it just there's a you know, everyday new messages which don't necessarily help consumer confidence. So from a preer 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 every day changing news and the uncertainty which neither helps business investors or consumers. And I think so the drop wich we've seen kind of in the course of six weeks, yep, that was probably among the biggest jobs I've seen.
Now.
Hopefully at one point we will also come back up again, but right now, by drop was pretty fast and pretty drastic.
So we love talking with you. We got 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 US China or just the US TERRORFF trade war is potentially impacting you or making you change it.
First all, Carol, I want to give you credit, but it took you two question free to raise the ward teriff.
I'm trying. I'm trying to you.
Kudos to you, And obviously there's a lot of moving parts of play. Ultimately comes back to we are kind of the only and last American appliance company, and we produce eighty percent of what we sell in the US in US, and of what we produce in US, more than eighty percent of parts are sourced in the US, So we are a domestic producer. I know a lot of companies talk about reshoring or on showing. We never
left okay, and that's a big difference. So as such, even what we're all 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 this is different from other industries. There's capacity. We have enough capacity, enough 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 for tariffs 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 carmakers from some US 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 libit explanation.
So Carol, actually, we're not asking for exemptions. We're not asking for tech subsidies or gifts or handouts or whatever there are right now in the the pre existing so called two thirty two and three or one arffs, there are loopholes which hurt US and they structurally benefit Asian producers and the it's put it in simple terms, you know, because of two thirty two terraffs, I pay in US for steel two or three times more than Asia steel, and any component which I can't get them US, like
an LED panel, I pay teriffs.
So if the same product is produced.
In Vietnam or Korea they don't have to pay the tariffs, and steel they don't have to pay the tariffs of components. That difference is big. It's about seventy dollars per product. So put that in retail price, that basically means one hundred and fifty dollars different retail price. So all we ask for is just close the loophole. We're all in support of having a strong US based steel production. I think it's 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 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, that dual citizen of American and German. So to say it's sit here and saying I'm staying here for patriotic reason, it's probably not credible. US production can be working well well, and I really and I'm proud of our ten strong factors in the US. And if you go to a factory like in Clyde o' hi where you have three generational factor workers, vis a proud people who have worked very hard. So I know
there's now a lot of jokes about US manufacturing. You can produce in US, and there's a very good skilled workforce which you can have as long as we don't harm ourselves with kind of you know, issues which make production more difficult in US, like Steve price, component costs. So I really, I know some people are hesitating about moving back to US. We have been producing the US one hundred and fourteen years this success.
So you know, I'm curious about since you already produce here in the US, and you have eighty percent of the production that goes to the US 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 action in place. So so far what is in places for two thirty two and the ten 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, but two A one tariffs in twenty eighteen, because I know there's a lot of talk about debate, race prize or not. If you now today look back, these terarifs were put in place in twenty eighteen, and where we are today.
Washer prices today are lower. We earned two or fourteen.
So tell me one product category which has low price has been two or fourteen and compared to twenty eighteen, there's two more factories producing washes in US.
So from that perspective, but 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 ironestry pretty well. You add production capacity to ultimately build benefit for consumer.
Does the risk though of declining US consumer sentiment as a result of rising prices in other categories and concerns about uncertainty moving forward? Does that way to a greater extent than the benefit that you get from tariffs as a US producer of products.
Yeah, I mean I think it's a fair question. Of course, in the short term there will be called wobbling as along the way. But I think, as I mentioned earlier, consumer confidence can drop fast, but it can also increase pretty fast. Seem that in Q four, 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, but you build them for thular fifty years. Yeah,
consumer confidence moves within a quarter. So I think even though there may be some volatility and consumer confidence, I think the long term benefits will clearly output 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 US 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 innestry. People just want to have predictability. Okay, if you have pretty much every day of 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 I 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 US, like an LED panel for 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 where will be
supply based ibor in US or Mexico. And we see already some early indications it will take its time in particular and electronic side more than anything else, but more of a 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, how 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, I pride ourselves we have a best dishorsher 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 Earl. It feels a little bit economically to step back to earlier days of COVID and whatever else. It's just an uncertain out 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 the next two three weeks 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 b Well, CEO Werepool Corporation. This is Bloomberg