GE Brings Appliance Production Back To The United States

Manufacturing & Technology News, February 28, 20120–After decades of neglect, General Electric has a newfound love affair with its appliance manufacturing division. The 122-year-old company created by Thomas Edison has recommitted itself to developing and producing a new line of innovative products in America. It is re-invigorating its 900-acre Appliance Park located in Louisville with $1 billion of investment in a new generation of designers, engineers, workers and production systems. And for the first time, it is applying the lean methodology to all of its operations. GE is re-designing all of its major appliance lines, the first of which is a hybrid heat-pump electric water heater called GeoSpring. Its water heater line that began commercial production on February 10 is the first new manufacturing operation to open at GE Appliance Park since 1957. It has the GE people in Louisville feeling very good for the first time in generations, as employment steadily declined from a high of 22,000 to under 4,000. Over that period, massive production buildings sat empty, rusted and dilapidated. The management team and
workforce — along with the local community — felt the world had passed them by.

When asked by Manufacturing and Technology News if the 80 percent drop-off of manufacturing workers was caused by robotics, automation and high levels of productivity, virtually every GE person who responded said the same thing: No. The loss was due to offshore outsourcing. The lack of commitment to investment in U.S. manufacturing, innovation, new product development and renewal of the workforce demoralized Appliance Park. The dishwashers, refrigerators, ranges, washers and dryers were viewed as low tech,
commodity products with low margins and no future in a corporation that was flying high on GE Capital. Breaking the ice on the transformation is the GeoSpring water heater, the production of which has now moved from China to Louisville. It is the first of a series of product reintroductions at Appliance Park that will include ranges, refrigerators, washers, dryers and dishwashers. “It’s a super exciting time for us to see this factory change,” says Rich Calvaruso, the lean leader of GE’s appliance division. “It is a completely amazing thing to grow a new factory from the ground up.”

GeoSpring Water Heater–GE thinks it can corner a profitable share of the U.S. water heater market. There are 7.5 million residential water heaters sold in the United States every year, with 7 million for the replacement market and the remainder for new construction. Half of the U.S. market is for electric water heaters. GE’s water heater uses a high-efficiency heat pump to reduce yearly energy consumption from an average of $520 a year for a traditional electric unit (or 4,879 Kwh) to $195 per year (1,845 Kwh), a 62 percent savings that amounts to $325 per year. (A comparable natural gas unit consumes $315 of natural gas per year; an LP gas unit’s consumption is $595 per year). In moving production back to the United States, GE decided that every aspect of the water heater needed to be redesigned through a team approach under a lean planning system that included GE’s sales division, designers, product and process engineers, accountants, executives and workers. It included the involvement of plumbers, retailers and customers. Anybody involved was allowed to suggest improvements. “What this shows is what can happen when we all sit down and work together,” said GE International Union of Electrical Workers President Jerry Carney.

The design team moved the pressure relief value from the back of the tank to the front of the tank, making it easier to install. It reduced the unit’s weight by 11 pounds, making it a easier to handle. It reduced the overhead clearance so that it can fit in smaller spaces. It added color to the unit to appeal to customers as they shop. It added electronic controls so that it’s easy to know the exact temperature of the water, and simplify changing the temperature for vacation mode. It can be hooked up to the Internet or a smart grid and be controlled remotely by the customer or the local electric utility so that it can respond to time-of-use rates and demand management systems. GE sealed the system so that fan noise was greatly reduced. It reduced the number of parts, fasteners and joints by 20 percent and eliminated features that weren’t needed. In the process, it made the unit more affordable, reducing the retail price from $1,599 for the product made in China to $1,199 to $1,299 for the unit manufactured in Louisville. It added a 10-year warranty. Energy efficiency rebates from state and federal governments along with local utilities can provide buyers with up to $550 in tax credits.

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