TTI Floor Care North America is closing most of its Hoover operations in North Canton, Ohio, and moving plastics molding work to its plants in Texas, Mexico and China.
Hong Kong-based Techtronic Industries Co. Ltd. bought Hoover from Whirlpool Corp. earlier this year. TTI combined Hoover with its Glenwillow, Ohio, Dirt Devil operations - which it acquired in 2003 - to form TTI Floor Care.
Chris Gurreri, president of TTI Floor Care, said TTI has twice as much capacity as it needs, with more than 900,000 square feet of unused space and millions of dollars' worth of dormant machinery in North Canton. Even if costs at the North Canton site were dramatically lower, the company still would have to close the plant due to the overcapacity issue that is dragging on the firm.
``We have over 250 injection presses in Asia,'' so it makes no sense to keep so much capacity in North Canton and El Paso, Texas, Gurreri said in a telephone interview.
TTI said April 2 it will close Hoover's main campus and operation in North Canton by September. Plastics injection work will move to the El Paso plant. Some light assembly and distribution work will stay in North Canton, but the firm's plant in Cuidad Juarez, Mexico, will become the major assembly location.
Most of the 180 salaried positions and 800 hourly jobs will be eliminated, but the company said it hopes to keep about 150-175 jobs in the area.
TTI will sell the unused Hoover real estate and related assets in North Canton.
Gurreri said TTI does outsource some work, but will continue to keep more than 85 percent of its molding work in-house.
``What we don't want is, letting capacity sit in our factories in Asia,'' he said.
The company will make critical parts in-house, ``either injection molded or painted different colors,'' he said. For parts with the same color consistent across the product range, for example, TTI will outsource some of the work when there's a cost advantage.
Gurreri emphasized that TTI needs new products, and he talked about steps the company is taking to stay competitive.
Emphasis on R&D
``If you are not constantly launching new products, you are not going to survive,'' Gurreri said. ``It's a new-product business. [Developing new products] is the only way the branded companies will stay ahead of the imports.''
Design plays a huge role in staying competitive for companies that manufacture in the United States, he added.
In the past 30 days, TTI restarted some of Hoover's product development programs and kicked off new projects.
The largest floor-care company in North America is building a design and concept center in its headquarters at Glenwillow. Construction has begun for 30,000 square feet of additional space in the campus. The new center will house more than 100 designers, engineers and product marketing personnel; some of them will come from Hoover's design team in North Canton, which is being eliminated.
TTI also is closing Hoover's design center in China, which operated under the Maytag name, and has moved some engineers to other positions.
Design needs to be done in local markets, Gurreri said: ``I look at design, especially on the Dirt Devil brand, as a key component of what we try to do.''
The company saw some growth in the hand-held sector last year, while the extractor and upright businesses stayed flat. Growth was driven only by new products, including the popular cordless Kone vacuum, Gurreri said.
``Unless there's a reason to bring consumers back to a store and get them excited about the category, we are not going to see huge growth. It's going to have to be driven by [the consumer saying], `I've got to get back out and buy something.' ''
TTI also cited branding and marketing for its sales growth. The company has featured some new products in national TV advertisements, and the effort has paid off.
``For the first time in years, we heard of consumers talking about buying hand-held vacuums for a Christmas gift,'' Gurreri said. ``That was unbelievable ... everything from teen girls to all the way up.''
At the recent International Home & Housewares Show in Chicago, TTI ruled out doing away with the Dirt Devil or Hoover brand names.
``Dirt Devil and Hoover are very distinct brands,'' Gurreri said. ``Dirt Devil consumers are those who know they have to clean up the house but don't like to ... and want it done quick.
``A Hoover consumer would be one that wants to buy the best and have the best-cleaned spotless room they can.''
Dirt Devil is therefore more concentrated on the design element, stressing ``fun,'' looks, and ease of use and storage.
``We do see growth in the Dirt Devil brand in 2008. We are off to a nice strong start,'' Gurreri said.