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This month, for the first time in decades, General Electric will introduce an entirely new washing machine to American consumers.
The introduction is the culmination of several unprecedented departures for GE--how the company designed the machine and outsourced many of its parts and how GE and its employees forged a dynamic relationship going forward. The company says the process has been the most cost-effective and quality-focused effort in its washer-manufacturing history.
The process has been a good test of the way GE has positioned itself under its tenacious CEO, Jack Welch. GE is engrossed in stretch and quality performance, reflected in its one-team mentality (marked by first names and an informal dress code at most levels); its preoccupation with achieving better and faster processes and cycle times than any other company in the world; and its partnerships with affiliates in and out of GE.
Bringing out a new washer is a critical move for GE that cuts to the heart of its business: According to company research, 78 percent of the U.S. consumer image of General Electric is based on its appliances. Forget aircraft engines, medical systems, light bulbs and--thanks to David Letterman --NBC.
Appliances are big money for GE, making up 10 percent of its $60 billion annual volume. The company sells a million units a month of its core appliances--washers, dryers, refrigerators, ranges and dishwashers, which are called white goods and which comprise some 1,800 variations in GE models. GE and its main competitors, Maytag and Whirlpool, are virtuosos at making appliances. They have to be. Appliance prices have remained the same for 40 years. Compare that with the price of a house or a car over the same period.
Half of all GE appliances made annually are manufactured at Appliance Park in Louisville, Ky., a venerable, 40-year-old complex of five factories spread over 1,500 acres. It employs 9,000 workers, out of a total of 21,000 in GE's domestic appliance division. With 15 million square feet under its roofs, the park is GE's largest appliance-manufacturing facility.
But back in September 1992, Appliance Park was in danger of being phased out of existence. It had been averaging losses of $45 million a year. GE top management was ready to sign an agreement to outsource the company's domestically produced laundry line to save costs. If washers and dryers went to other sources, it could be only a matter of time before the park's refrigerator, range and microwave factories would be closed one by one.
The word had not yet filtered to the factory floor. Clearly, dramatic moves were called for.
About that time, GE appliance executives were realizing that they could not devise a world-class washer by making changes to the existing platform, which had been in place since 1960. The …