General Electric remains the dominant appliance supplier to the high-end production home builder market, but Whirlpool Corp. has grabbed some high-profile market share in recent months. In the last six months, Whirlpool Appliances has nabbed exclusive contracts to supply all the appliances to Toll Brothers, Beazer Homes USA, Shea Homes, and Ashton Woods Homes.
"[Whirlpool] came in, and they wowed us both financially and by presentation," said Mike Smith, Toll’s vice president of purchasing and product standards. He said Whirlpool's acquisitions over the years of Maytag, Amana, and Jenn-Air give the company a breadth of product offerings that meet all of Toll's price points, from high-end homes to the occasional affordable housing development.
Smith also said GE lost some of its edge as an incumbent when it changed three out of three primary company contacts approximately six months before the contract was up. It wasn't that the replacements were bad, but "this is a business of relationships," said Smith, "They lost some of that relationship when they made those last-minute changes."
So far, Smith said he is impressed with Whirlpool's efforts to change out the appliances in its homes quickly. It should be completed by the middle of June. "We didn't give them a whole lot of time, and they have really worked hard," Smith said. "We are excited."
Toll has donated the more than 1,500 GE appliances that it is replacing with Whirlpool products to the nonprofit HomeAid, which provides housing to the homeless. In regions where HomeAid doesn’t operate, the appliances will go to Goodwill, The Salvation Army, Habitat for Humanity, and Covenant House.
“It’s simply a matter of doing the right thing,” said Zvi Barzilay, president and COO for Toll Brothers and a HomeAid board member. “The only option here is to find a place where these like-new appliances can be put to good use, and I can’t think of a better organization to handle the dispersal. We are proud to be able to contribute.”
Whirlpool’s presentation and hunger for Beazer’s business also impressed Tony Callahan, senior vice president of national purchasing, planning, and design.
According to Callahan, Beazer decided to ink an exclusive agreement for appliances with Whirlpool for reasons beyond price. The company is building high-performance homes, and Whirlpool’s products fit well with that approach. “They are really focused on that,” Callahan said.
Another plus is that Whirlpool uses one carrier across the country, and Callahan expects that will make delivery performance more consistent across the company’s markets.
Ashton Woods has also been impressed with Whirlpool’s performance since it signed a partnership agreement.
“We carefully select building products and locations that best satisfy the lifestyles of local home buyers, and Whirlpool Corp. does a great job understanding the needs of each market,” said Ralph Farrell, vice president of operations in an announcement of the agreement. "Since partnering with Whirlpool Corp., service and delivery have been beyond our expectations, and we are ahead of schedule with appliance training for our sales and construction teams. The company is a good fit for who we are and what we work to achieve."
Whirlpool’s “recent surge” in big builder contracts has not escaped the attention of GE, said Matt Rose, GE’s general manager for contract sales. “Our plan is to stick with our plan,” said Rose, in response to a question about whether the surge has triggered any new GE initiatives. “We think we provide builders with some things our competitors don’t.”
"It’s a competitive business, and we compete against Whirlpool every day all over the country. We clearly have had and still do have, even with those builders who have gone to them lately, the No. 1 position in the country as far as [builder] contracts are concerned.
Rose pointed out the numerous contracts that GE has been able to re-sign within the last two years, as well as some where they managed to grab 100% of a building firm's business. Those include:
NVR, which recently switched to using GE in all its homes. Previously, GE had served the Ryan Homes division; it now also supplies appliances to NVR's smaller NVHomes division.
K. Hovnanian Homes, which recently re-signed with GE, for 100% of its business.
Ryland Homes, which is a longtime GE customer that re-upped this year.
Richmond American Homes, which at the end of 2009 agreed to work exclusively with GE.
Meritage, which in mid-2009 re-signed and gave GE 100% of its appliance business. Before, GE supplied only part of the company’s appliances; and
David Weekley Homes, which re-upped its contract with GE last year.
“Our plan as far as maintaining our No. 1 position is competitive pricing as well as what we think is a superior model in terms of support of builders,” GE's Rose said. “Our delivery capability is a strength for us, and we think it’s unmatched.”
Another advantage for GE is its service business; it’s the only manufacturer to maintain such an offering. “It’s costly, but we think it’s a big competitive advantage for us,” he said.
Still, it's not like Whirlpool’s new deals haven’t caused GE some irritation.“We are happy with our position, but we are not satisfied,” Rose said.
Teresa Burney is a senior editor for BUILDER and BIG BUILDER magazines.