Since yesterday, May 9, the Midea-Electrolux negotiation it's official. As premature at the beginning of February, when no news had yet appeared in the international media, namely that Midea, after the failed acquisitions of General Electric, Whirlpool and Whirlpool Emea, had made a purchase offer to the Swedish Electrolux, this was confirmed by an official statement from the Chinese giant, published by the authoritative Ycai Global, of the Chinese government's Shanghai Media Group. With one admission, namely that the rumors in the press were true, right from the start. “A deal is under discussion – said the company's investor relations department – but no decision has yet been made. A preliminary approach has been made in recent weeks about a possible deal, but Electrolux has so far not been receptive to the proposal." That is, Electrolux has not yet accepted the offer. Knowledgeable Asian media have stressed that the possible acquisition would help Midea offset its weaknesses in upper-middle-end markets overseas.
“And in any case, regardless of the outcome of Midea's approach – he declares Zhou Nan general secretary of the home appliance branch of the China Chamber of Commerce for the import and export of machinery and electronic products – the global home appliance giants are shifting production to European and American countries such as Mexico and Turkey; therefore, Chinese home appliance manufacturers will have to improve their positioning in the global industrial chain”. From this latest development in the story, Midea's intention to attempt the acquisition of the European jewel in every way would seem to emerge clearly.
Midea-Electrolux negotiation: no jv, precarious alliances, agreements à la pair
What Chinese companies of Midea's tonnage (2022 revenues of 49,7 billion dollars against 13,4 billion of Electrolux) want is to acquire control of a company and not share its governance because they know they should also share parts and pacts . But a double and gigantic transfer of ownership (there is also the Whirlpool-Arçelik joint-venture) of the Italian and European majaps factories with tens and tens of thousands of employees at risk within less than two years, is destined to create a serious political and social alarm, due to the inevitable rationalization of production capacities (excess in some countries and for some types). In addition to depriving, for example, our country of innovations, patents and skills of great value both for the finished product and for the supply chain that supports it, in view of the epochal transition of buildings from the electrical and electrotechnical age to the digital one. And of ecological transition which should be managed with partners who are gigantic in size and therefore worrying because – as they fear in Brussels – the very heavy costs of the leap forward of the strongly environmentalist policy are already starting to make the energy bill of European manufacturing too heavy just when it was recovering, thanks to partial reshoring, some delocalized production chains.
Golden Power for Whirlpool and Electrolux was inevitable
That's why he was definitely right at the first signs of Whirlpool's withdrawal from Europe, Antonio Guerrini, general manager of Applia Italia for a long time, an expert in the sector, in asking, on the occasion of ainterview with FIRSTonline, to the then Minister for Economic Development Giancarlo Giorgetti to declare the domestic technology sector strategic and consequently to exercise special powers on the occasion of the Whirlpool EMEA merger e Arcelik through the tool Golden Power. But it was the politicians of the three regions (Lombardy, Veneto and Marche), all from the government area, most involved in the employment problems of this joint venture and that of Midea-Electrolux, who asked for urgent interventions to protect the Italian factories and supply chains with high added value. “Even before, the trade union representatives in the sector had repeatedly urged Giorgetti – he declares Barbara Tibaldi, of the FIOM-CGIL secretariat - to set up a sector table to arrive at the exercise of the Golden Power to protect the Italian factories of Whirlpool. All of us were and are worried about the very serious consumer crisis and possible employment problems linked to future rationalization strategies decided by the new company”. The revelation of the Midea-Electrolux negotiations accelerated the decision of the Meloni government regarding the request to intervene to protect the technological and employment assets of the entire sector.
The Ministry's authorization to implement the Whirlpool-Arçelik joint venture is therefore subject to government control in the form of the exercise of the Golden Power but can obviously also be extended to the Midea-Electrolux one. As soon as this provision was announced, the trade union reactions and not only. “We learn that the CDM – he declared Maximilian Nobis, FIM CISL – wants to intervene in the sale of the Whirlpool Emea group to the Turkish Arcelik group, which is currently being examined by the European Antitrust. Having guarantees on occupational and industrial maintenance and understanding what the strategic investments are to strengthen the group's weight in the household appliances market, is a position that Fim, Fiom, Uilm have jointly requested since the announcement of the operation made by Whirlpool last autumn” .
Parliamentary question
And today a parliamentary question forwarded by the trade union representatives to the Minister of Enterprises and Made in Italy calls for an urgent meeting, the establishment of a sector table, the exercise of the Golden Power also for Electrolux. How will the EU react to these interventions that it has always considered protectionist? In the meantime, it is good to know that – from rumors collected in Brussels – the decision is pending with the commission Antitrust of the EU would have verified that the new company Whirlpool-Arçelik (it will be called as we anticipated Beko Europe) will not exceed the market share of the European leader, the BSH group, albeit with different results depending on the country. It appears that Beko Europe would have majority shares only in England and Italy.
Demand continues to decline in Europe
Complicating everything is the constant contraction even in the first quarter of consumption of appliances and in particular those that make up the "belly" of the market is washing (washing machines, dryers, washer-dryers). According to the first indications received, the drop in sell-in in Italy is around -10% but that of production is double (22%) since exports are no longer pulling. In Europe the collapse in demand it is always valued in double digits with a more pronounced decrease for Eastern Europe. And it is precisely the European market that is worrying about the stagnation of consumption, the general uncertainty of energy policies and above all – as he underlines Robert Benaglia, FIM CISL general secretary – the lack of a strategic vision in line with the great changes that are changing the markets after the pandemic. “And the government's intervention on Golden Power itself is not intended to solve the problems of the household appliance sector with clear answers. It's too vague; protecting the supply chain means much more, the intervention must be framed within the context of an industrial policy in line with the new market trends. Who are increasingly asking for services such as reliability for example. Eco-sustainability guaranteed along the entire supply chain. And it is of fundamental importance that the European trade unions, gathered in the EWC, address these problems at a European level. We are trying, for example we are also in contact with the workers' union in Turkey which is very strong”.
Because in reality the fear more or less expressed not only by the unions is that the government's decision to resort to the Golden Power is above all a declaration of principle, as a necessary reaction to pressure from every sector. A stone in the pond to understand how not only the American and European giants will react, but above all the Chinese, i.e. Midea. And in fact to force Midea to officially communicate the details of the proposal, it seems to have been the Chinese government and/or party due to the excessive clamor caused by the operation in the media around the world. And for the declared opposition of the American government to an excessive penetration of the big Chinese in Europe. This opposition is truly contradictory: when Electrolux was about to acquire General Electric (it had already given a substantial advance) it was the US government that opposed it in different ways and with different paths to prevent the operation (obvious protectionism for Whirlpool). By blatantly favoring the sale to Chinese Haier, which moreover is the world's leading manufacturer in the sector, the direct competitor of Whirlpool, and certainly more formidable than Midea.
