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WHIRLPOOL CORPORATION (WHR)
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Whirlpool Wins Backing for Import Protection From Key Government Panel -- 2nd Update

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10/05/2017 | 08:58pm CET
By Jacob M. Schlesinger and Andrew Tangel 

WASHINGTON -- Whirlpool Corp. won crucial backing from a government panel in its bid to limit competition from foreign washing machine makers, giving the Trump administration another opportunity to invoke little-used powers to ramp up trade enforcement.

The U.S. International Trade Commission voted 4-0 Thursday to approve the petition from the Benton Harbor, Mich.-based manufacturer seeking broad protection in the American market from South Korean rivals Samsung Electronics Co. and LG Electronics Inc. The vote came under a trade law that allows U.S. companies to win such limits if they can show they suffered "serious injury" from a surge of imports.

The provision -- Section 201 of Trade Act of 1974 -- was last used in 2002 by the Bush administration to impose steel tariffs. The special "safeguard" was designed to offer U.S. industries a bigger shield against foreign competition than the more widely used anti-dumping laws.

The members of the ITC -- a bipartisan, independent panel -- will next consider what specific tariffs or quotas they believe should be implemented. The deadline for the panel to send recommendations to the White House is Dec. 4. The Trump administration would then be required to decide by early next year on whether to impose import limits.

Whirlpool shares were up 0.4% to $186.60 following the trade commission vote Thursday.

"The ITC vote is an important win for American manufacturers and American workers," Whirlpool Chairman Jeff Fettig said in a statement. "This vote sets the stage for the administration to put in place an effective remedy to create a level playing field for American workers and manufacturers. This type of corrective action will create U.S. manufacturing jobs."

LG said it would seek a "fair application of U.S. trade laws," adding that "imposing restrictions on imported washers will only hurt consumers by raising prices and decreasing choices, while jeopardizing U.S. investment and job growth."

Samsung said it was disappointed with the trade commission's vote. "We believe that safeguard remedies should not discriminate in favor of one group of U.S.-based workers over another and should not negatively impact a fair appliance marketplace for consumers," Samsung said.

The White House issued a statement saying it would await policy recommendations from the ITC before deciding how to proceed, adding that "the president is committed to revitalizing the U.S. manufacturing sector and bringing jobs back to America."

And one of Mr. Trump's trade advisers, Peter Navarro, has spoken out in support of Whirlpool's long-running battles against its South Korean competitors. In a speech earlier this year, he blasted Samsung and LG for "precisely the kind of trade cheating that must be stopped."

Mr. Navarro was referring to the fact that Whirlpool had previously won protection against trade cases imposing duties on Samsung and LG machines made in South Korea and Mexico under the different, narrower trade law designed to shield U.S. companies from goods that are allegedly "dumped," or sold unfairly below cost. But the Korean makers got around those limits by shifting production to China. When they would have faced subsequent tariffs aimed at that country, they moved production to Vietnam and Thailand.

Under Section 201, an American company seeking relief doesn't need to prove wrongdoing by a foreign competitor -- only that it is suffering "serious injury" from a sudden import surge. And unlike dumping protections, which generally apply only to products from a specific country, Section 201 curbs can be applied broadly to imports from all over the world.

But Section 201 remedies also risk running afoul of global trading rules, one reason the law has fallen into disuse. The 2002 Bush steel tariffs were removed a year later after the World Trade Organization deemed them improper, and the law hasn't been invoked since.

Whirlpool declined to say what trade barriers it might request. Possible remedies include tariffs or quotas.

The Trump administration, however, has signaled a greater willingness than its predecessors to dust off dormant trade powers, like Section 201, and to challenge the WTO. That has encouraged industries to seek such relief.

The Whirlpool petition was the second such case to reach the ITC this year after the long hiatus. The agency weighed a similar request on Sept. 22 from the solar-panel industry seeking safeguard protection from imports. The ITC voted 4-0 in favor of that petition too, and is now considering specific remedies to propose to the White House.

Whirlpool, long a dominant washing machine brand in the U.S., has faced rising competition from South Korean rivals and others. Samsung and LG combined now make up roughly a third of the U.S. retail market, about the same as Whirlpool's share, according to TraQline data from the Stevenson Co. research firm. Whirlpool has faced a tripling of imports of large residential washing machines over the past six years, according to Panjiva, a trade analysis firm.

The South Korean firms say they have gained share through innovation, not unfair trade practices.

"Consumer preferences shifted to design and style. Whirlpool didn't keep pace," said John Herrington, a Samsung senior vice president, during a September commission hearing. "How and where consumers shopped for appliances changed. Whirlpool didn't adjust."

Whirlpool attorney Jack Levy dismissed the claim as a "tired argument," adding: "Whirlpool has made tremendous innovations in its washer lineup over the years."

Even if the Trump administration does approve strict import limits, Whirlpool is still likely to face intensifying competition from Samsung and LG, which are both planning to start production in the U.S.

LG is building its first-ever major U.S. factory, a $250 million washing-machine plant near Clarksville, Tenn. Samsung announced plans earlier this year to take over a former Caterpillar Inc. plant in South Carolina, and estimated the project could lead to nearly 1,000 new jobs by 2020.

Write to Jacob M. Schlesinger at [email protected] and Andrew Tangel at [email protected]

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Financials ($)
Sales 2017 21 404 M
EBIT 2017 1 460 M
Net income 2017 863 M
Debt 2017 3 704 M
Yield 2017 2,58%
P/E ratio 2017 14,05
P/E ratio 2018 11,42
EV / Sales 2017 0,73x
EV / Sales 2018 0,69x
Capitalization 11 821 M
Chart WHIRLPOOL CORPORATION
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Whirlpool Corporation Technical Analysis Chart | WHR | US9633201069 | 4-Traders
Technical analysis trends WHIRLPOOL CORPORATION
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Mean consensus HOLD
Number of Analysts 12
Average target price 189 $
Spread / Average Target 15%
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Managers
NameTitle
Marc Robert Bitzer Chief Executive Officer & Director
Jeff M. Fettig Chairman
James W. Peters Chief Financial Officer & Executive Vice President
Gary T. DiCamillo Independent Director
Michael D. White Independent Director
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