Techtronic Industries Co. Ltd., the Hong Kong-based maker of Dirt Devil vacuums, is buying Hoover Co. from Whirlpool Corp. for US$107 million.
The companies announced the deal Dec. 7. Analysts speculated that TTI will restructure North Canton, Ohio-based Hoover, and a top union official there said workers at the injection molding operation are in the dark about their future.
Jim Repace, president of the International Brotherhood of Electrical Workers Local 1985, said the news came as a surprise. ``All indications were that it was probably to go in the direction of a private equity firm. That was all what we were gearing for.''
The union, too, had been interested in buying Hoover, through an employee stock ownership plan.
Claiming to be ``in shock,'' Repace said he wonders about TTI's motives.
``Just to buy the Hoover name and close the plants, stick the Hoover label and try becoming the leader in floor care? That is a valid fear. We are in the dark about what our destiny is and what's going to happen.''
TTI stated in a news release announcing the deal: ``TTI is looking forward to welcoming Hoover and all of its employees to our floor care team.'' Repace hopes that is a positive sign.
``We are looking forward to talking with them,'' he said. A ``get-acquainted session'' may start soon.
Hoover currently has 800 hourly workers and 200 salary workers in North Canton; 400 hourly workers and 70 salary workers in El Paso, Texas; and about 1,400 hourly workers and 70 salary workers in Juarez, Mexico. Whirlpool spokeswoman Monica Teague also said in a phone interview that plastics-specific numbers were not available.
But Repace said: ``Most of what we do now is plastic. We have a considerable amount of injection molding work in the North Canton plant. That's really one of the things that we are best at.''
He estimated 30-35 percent of the employees work directly in injection molding, ``although obviously the assembly lines carry more people.''
Repace said the El Paso plant has a similar percentage of plastics-related work to North Canton. The Mexico plant, just across the border, primarily does assembly.
Repace did not give the number of injection presses at the plants, but he said many machines are highly automated.
R&D may be an important part of this deal. TTI mentioned in its news release that with Hoover, ``we will offer a broader and more focused product selection to end users and retailers across the globe and expand our capabilities in R&D for accelerated product innovations.''
Subject to regulatory clearance, the close of the deal could come as early as the first quarter of next year, and no later than the third quarter, both parties said.
``Maybe [TTI] is looking to have a presence here. We just don't know,'' Repace said.
One analyst said he would not be surprised if some Hoover operations were moved to lower-cost overseas locations.
Mirko Mikelic, a senior portfolio manager with Fifth Third Asset Management, told Reuters that Techtronic ``just needs to bring down costs for Hoover.'' He said the $107 million bid is lower than expected, possibly because of potential buyout costs for U.S. unionized staff.
In interviews following the announcement, Joe Galli Jr., the former Newell Rubbermaid Chief Executive Officer who now heads the floor-care division of TTI, said it is too early to comment on the company's long-term plans for Hoover.