pool

Fortune Staff

This year’s Fortune 500 marks the 68th running of the list.

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This year’s group delivered stellar revenue and profit growth, but it underperformed the broader stock market.

100 Fastest-Growing Companies

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Pool | 2022 100 Fastest-Growing Companies

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Pool

Pool | 2022 100 Fastest-Growing Companies | Fortune

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Marc Bitzer reveals why Whirlpool is a magnet for AI tech experts. 



Whirlpool CEO: AI is making kitchens and appliances smarter 

Leadership

mark. It's amazing how much artificial intelligence ai is transforming business. And you obviously know because role pool started using Ai technology 10, 15 years ago. What innovation has a I brought to pull one of the first month was a lot about sensing technologies and products. Um Now it sounds very basic but you know take a washing machine, it's critical to understand what kind of load do you have in the washing machine that determines water usage, energy usage and detergent usage. Um So the combination of sensor sensor technology, but even how we can measure the talk of mortar that together gives you the right data points to understand in the machine, what is really in what's the weight of the machine below? Even the consumer has never entered the data once, you know that you can adjust the algorithms in the machine to optimize the program according to the actual load. That was one of the first ones kind of 10, 15 years ago. So what has all this Ai technology meant for consumers? You know, we hear so much about smart kitchens, smart appliances, you know, from a consumer perspective, it means that not every cycle takes two hours, you know, depending on the load, it could be done after 90 minutes, 17 minutes. That's what AI brings because it's optimized cycle, but then it moved into other areas like for example, often you know where the ovens now sensing technology visual recognition. Um we can recognize it in the oven. Is the meat done or not. Um And that's a I mean obviously that's a big issue um is a crispy etcetera. So the combination of sensing and visual technology coupled with image recognition which has advanced so much the last five or 10 years. Um you can optimize without it consumer ever having to worry about it. You also using your Ai in your manufacturing operations. Tell us how ai makes your manufacturing more efficient and also smarter. I think the biggest benefit we really get from quality assurance and you know, trying to get the right quality and factoring before the product is a critical element has massive cost certification. So I think that's where we saw the biggest advancement on quality, but now also managing process efficiencies um and particularly what we call assembly yield in the face of component shortages. That's where we saw some very big advantages and benefits. A lot of people associate all of the advances of Ai technology with losing jobs. What do you say to that? What it will require will require a different skill set in the factories because you know, all these machines, I mean they require serious upgrading of skills which we have a factory. So I would say the nature of the job changes. Um I don't think the fundamental workload actually, I would even argue some of the Ai will allow and make the so called restoring a lot more efficient. What do you see in the future? I mean how will Ai bring even more innovations down the road. I mean what are you imagining what's in the work? First of all I would say there's no one A I also like there's no one digital, you have multiple aspects of the company where it plays a critical role. I think we will see a more a lot more Ai and consumer facing side. You know, when we when we directly approach consumer so when we can approach susie and know what you bought last week and how we could help you going forward. So I think AI and data analytics together will help in particular consumer facing side. So we make the message is more relevant to the consumer. How is it attracting data scientists and AI experts to a company like world pool. Most people don't think of it as a big technology company. I think ultimately what allows us to attract people are the values for long term history of the company. Um and and frankly, you know, just what people, what we do is a product of a consumer home. You know, even if your data scientists, you like still products which your mom has at home because it's more tangible, it's more relevant. Um it's real it's not some B2B business. Um it's really matter. I think what allows us to attract people

Marc Bitzer’s plays: a hiring freeze, cost cutting and, building cash flow. 



Whirlpool's CEO has pulled out his “recession playbook” 

Marc Bitzer’s plays: a hiring freeze, cost cutting, and building cash flow. 



mark, thank you so much for coming by to talk about whirlpool. It's so good to see you. Let's begin by talking about the outlook for the company. You told investors recently that revenues and earnings came lower than expected because of a slowdown in consumer demand, You know, not long ago, there was so much demand for your washing machines and refrigerators and dishwashers that rope who had to ramp up production. Tell us what happened, what changed coming into the year. We were prepared to deal with two or three challenges. You know, we knew covid is not over, we knew inflation was creeping up. Um, and we knew supply chain is that there is an issue that we start seeing easy now, fast forward six months later, you have not 3.5 challenges. You have six crisis at the same time, we didn't have a war on the horizon. Um, we didn't see how strong inflation will become from a consumer perspective and you also not saw consumer demand dropping off. What ultimately happened is there's a number of short term challenges or cycles which are very different from our long term positive outlook, which we have an industry and consumer demand and that led us to revise the guidance, um ultimately driven by pretty strong drop off in consumer demand which occurred from the second quarter, which, you know, is explainable. A lot of concerns about consumer sentiment now, we do not believe with our long term, but that will impact 22 and maybe part of 23. Okay, well what is your take on consumer sentiment when it comes to spending? Are they cutting back and just more cautious about spending? I think what you have in our industry keep in mind these are big ticket items, discretion or purchase so you have a replacement act that people just replace the refrigerator breaks down by replaced. But there is a big part of the spending which discretionary and that is largely driven by how positive are there on their financial outlook. The sentiment um and the sentiment just put yourself in consumer shoes, you read war, you read inflation, you see interest rates rising. The sentiment took a big dip in april name Now we do not believe it will be long term effect because we're very possible long term consumer trends But it will impact 22 and we've also seen prices going up for those consumer goods. We hear a lot of companies have been paying more for their input costs, labor, raw materials components, transportation, what about a whirlpool I had using inflation work but we've been using now for quite a while, we saw inflation coming up significantly, pretty much for the last 12 or 18 months. Um and typically when we see it as kind of six minutes before the consumer sees with all the output inflation. The good news is if you want to see good news is we start seeing that peaking in Q two and Q three. So yes, it's significantly elevated and we had to pass on these costs but we feel right now is at the cusp of starting coming down. So you have pricing power then you were raising your prices as you are dealing with higher costs right? Yeah. I mean ultimately strong brands and product innovation. They create a consumer pool and that gives you a certain ability to raise prices and consumers are willing to pay for it. Well as you know everybody is debating about whether or not the U. S. Economy is in a recession, what do you think internally we are counting on a recession and you can debate about the depth and duration. Um But we basically we put out our recession playbook and we're acting accordingly. Um What is your recession playbook? How is world pool preparing for a slowdown? Were very strong in cost management actions. Um And number certain aspects you can't control but raw material but there are certain aspects where you can control and they can have very disciplined focused action. That's one thing, the other thing is particularly have a recession combined with inflation, you gotta pay attention to cash flow. So we're very mindful about how much inventory building or not building, how we manage payables and net working capital. So it's very disciplined action around cash flow and costs. You've said that you've been cutting costs. I think there's also a hiring freeze at world, What else are you doing over the last two years. You have massive logistic costs. You know, express deliveries were dialing down, um We're re working with suppliers to make sure we as they now start writing down the raw material costs, we want to see the cost benefits. Um but there's also focused actions on product redesign, so we can take certain cost elements out. So it's a it's a playbook of 20 or 30 different sub actions. Hiring freeze is just one of them, but all together and you know, this is not the first difficult environment we're facing, we know how to play from across the environment, You're also an economist by background. So let me get a little more insights from you, what concerns you most about the business environment right now, but because challenges is just how fast these cycles are happening In the beginning of Q to demand signals for positive and all of a sudden in May in June with consumer sentiment dropped off like a stone. So, and typically, you know, the cycles that go over two or three years, you adapt accordingly. But now we've seen the entire up and down in the course of half a year of years and that is the challenge from how you run a basis and then how you manage a corporation with 75,000 people. It's not a concern, it's just it's a new environment. Um and you've got to be very, very fast. How do you adapt to that environment. I mean I think you have to learn to make decisions about having not even 80% of information with 20%. So you gotta, you gotta work by sensing what is around the corner because if you act on recession two months after after it happened already already too late. So you gotta take certain assumptions. Even if you don't have a full information as a ceo, what have you learned is the key thing to lead a company successfully when you're in a down cycle. Well first of all you know this is my 50 years of C. O. And I'm still learning. So you know many people want to lead in good times but you know as a ceo tenure you have 10 or 100 days which are really bad days and that's when you got to insert yourself and leave and you got to make the decisions. You've got to be sometimes controversial because to my earlier point you need to make a decision before most other people see the need for it. Um So the active leadership preserving leadership, I think that's my big learning over the last four years and I think that serves also very well in our recession you said and sometimes you have to be controversial. How have you been controversial decisions so far? We moved to a recession playbook probably earlier than most people saw. Um what I mentioned april may and people still saying well by doing a hiring freeze and there is a shortage of labor now we said well it's gonna, It will be required. So we make a short term decision, but at the same time you got a finger around the corner of what's happening 23 and 24 which were very optimistic. So for example, despite the recession playbook, we're still investing capital in products. Um actually we're beefing up our capital because we are very positive about 23, so called that contradictory. So on one hand you play recession playbook and we ever had you invest more capital to Yes, because we think there is, this is not going to be a long recession. You don't think it's gonna be a long recession. So here we are in 22nd half of 2022. When when does it turn the corner? We believe are fundamental for current environment may be different than previous recessions. Um You know, the consumer balance sheets. Company boundary is a healthy one. We fundamental belief in the strength of you hire us housing in the long term because it's been under supplied for decades Now it will of course take a dip and will take some correctional home prices. But the fundamentals of a long term macroeconomic trends are healthy. Looking ahead. What's next for you said a moment ago that will pull has had four record years. Just the past few years, including Covid it was on a roll during the pandemic. People were living at home more, they were working from home, they were reinvesting in their home and buying a lot of your appliances. Do you see that trend continuing? Were fundamentally see that trend continuing actually for quite a while. The reason why is Covid broader, complete reorientation towards the home. Keep in mind we play in the kitchen and the laundry, that's that's where we play and people are just physically have spent more time and now we're flexible work arrangements will spend more time at home than pre Covid. And we see that even real time data, which we have connected appliance, that people on average used appliance two X more often than Pre Covid that ultimately translates into appliance demands not only in number of demands, but also in terms of mixing up and people want to have better appliances because they spend more time using them. So that's why we believe there is a fundamental part of long term trend on home in general, but appliances specifically and what will be the catalyst for them to begin buying again. I think in the short term, we talked earlier about the consumer sentiment that will be a negative short term, but I think that will turn again, um do market data. I think post midterm elections, that we may see a pick up again on consumer sentiment and I think that will be the triggering element. You know, Mark many people might not be aware of whirlpools long history, It's been around for more than 100 years and started with the Whirlpool brand, but you now have so many other famous brands, Maytag Kitchenaid, Amana. The list goes on and year after year. Whirlpool ranks on our fortune, a list of the world's most admired companies. What are your goals for the company? What do you want people to be saying about Whirlpool, let's say five years from now. Actually, we celebrate our anniversary, 11 11 when we turned 100 11. So that's a special date. Um, and I'm only the seventh ceo in the long history. Um, so I think that that much history, you, by definition have a different perspective about time horizons and what you want to be doing because you don't only think about the next quarter, of course we gotta deliver short term and of course we've got to be financially strong and I'm confident we will deliver year after year, strong results. But the legacy is also about how we do it. Um and that comes back to exactly the point about the most admired companies. There's an incredible strong focus on our values, our leadership culture, and you don't only want to be remembered for best numbers, but also about how the values and beliefs, culture, which I think makes us separate separate from the rest, makes it special. That's why many people in our company choose to join the company and our company like myself and that's what I want to be remembered for

Pool

Company Information

Fastest-Growing Companies
As of 10/26/22

Pool

Company Information

Fastest-Growing CompaniesAs of 10/26/22

Fastest-Growing Companies
As of 10/26/22