The BIG STORY is Out of the Woods. EXCLUSIVE. UPDATED
Submitted by advisor on Wed, 07/28/2010 - 3:37pm.
Fabriano, Italy based Antonio Merloni sells Sweden based ASKO to Slovenia based appliance maker Gorenje.
Why is THIS story worthy of being called the BIG STORY?
ANALYSIS
Antonio Merloni.
Why didn't Gorenje buy Antonio Merloni? Does this mark the end of A. Merloni? Is this part of a liquidation event for the bankrupt company, a great unwinding, or only a shoring up of finances?
While ASKO is a brand based on quality and engineering and marketing based on "pull", Antonio Merloni is a brandless OEM supplier making price sensitive products for price finicky corporate buyers, each of whom are happy to chuck you under the bus for a $1 per unit. All "push".
This market can no longer be served from Euroland. It is now generally served by manufacturers in Turkey, China, and well, Slovenia.
The good news: Since Antonio Merloni was too incompetent to leverage its ASKO asset, unloading it has no deeper strategic significance.
The bad news: Antonio Merloni has been a bit incompetent.
Is this the end of Antonio Merloni? Not to worry. We probably missed the end of AM 2 years ago.
Gorenje
Gorenje is building both its branded and its OEM businesses. ASKO unlocks North American distribution of Gorenje branded products and is a corporate office for OEM sales AND ASKO provides technology to Gorenje for the development of middle and lower end wet products. Of course this was Antonio Merloni's strategy, so why will Gorenje do better? Gorenje will surely learn from the historic train wreck which is Merloni.
ASKO
So what of ASKO? ASKO USA becomes the keystone of the Gorenje strategy, launching a new "Eurotech" economy brand, or filling out the ASKO line with all sorts of product segments they don't make. Will they pull it off? We'll see.
UPDATE: ASKO Price $5.8 Million
Really? Only $5.8 million. Does that sound like enough?
Reuters News
Hmmmmmm !
Looks like a distressed sales price.
UPDATE: Death Knell of Antonio Merloni
Appliance Magazine reported on August 9, that Antonio Merloni has reached agreement to sell its Ukraine factory to Electrolux for 19 million Euros. The Ukraine factory was Merloni's Hail Mary pass to salvation, a low cost foothold to replace the high cost of Fabriano, Italy. News of the deal comes only 2 weeks after the sale of ASKO to Gorenje. What is left of AM? Perhaps nothing. Perhaps a gaping empty plant in Fabriano, and empty parking spaces. Perhaps it's still working a bit.....who can know. Seems obvious though, that after bankruptcy, and the sale of these two assets, the end is near.
The BIG story????
Beloved Advisor!Clearly the BIG story is not generating much interest, judging by the severe lack of comments posted regarding it! I suppose that Asko is not important enough to any of us to even merit a few moments on the keyboard......If this truly is the BIG story (and not one inserted in lieu of a BIG story that never materialized) then we are disappointed. We were hoping for Home Depot to exit the appliance business or for Dacor to purchase GE appliances or Abt to buy Best Buy or, well you get the idea.....
The Big Empty...Story.
I think the lack of excitement revolves more around the critical condition of the business. People are tired of hearing rumor this, rumor that. It now is about survival and certainly it is very difficult for me to see so many wonderful organizations and people suffer so much. We can blame people and decisions but it really comes down to the economy and supply and demand. Remember , without this latest bailout , we have a deep depression, probably worse than '29. I wish all those I worked with the very best in their business, especially Dacor and the Josephs.
The Big Empty Story II
I think that the fall of AM, and the great hollowing out of centers of OEM supply like Fabriano signal the end of Europe as a location of certain kinds of private label and OEM production. The Euro, and work rules made it difficult but the Asian option killed it.
European producers better have a brand and brand equity if they want to survive.
There are always corporate decisions which could be better, and who knows what those were for any particular organization. This discussion is related to an organization brought to its knees by both national politics (Euro and Italian work rules) and global competitiveness (Turkey, Eastern Europe, China).
The Big Empty Plus 3
It is truly horrible that we see the continued demise of manufacturing in civilized parts of the world. We are seeing an almost complete demise of the middle class everywhere. I suggest the people who will rant on Obama maybe rant on others, like the people making those insane long term decisions. I am sure that Fabriano really attempted in good faith to keep their jobs as local as possible but the resume builders and such thought they could save billions by going where the people make a buck a day. That does not take an educated person to do that by the way. They can blame government all they want but it comes down to dollars baby. I have experienced it first hand and painfully I might add. I hope that those whom we "funded" are having a ball and will choke on the extra dollar they received for the few products they have sold.It is shameful that we think so short term as to hurt the economy. Imagine if those before us thought like us ? We would really be in the soup. Or maybe swimming in someone's vodka.
Story Bigness
Dear Mr. Appliancecarguy,
This is not Louisville falling into a sink hole, not Viking being burnt to the ground by actual Swedes, or Sub-Zero freezing over. It is not many things, but it is more than a secondary story in that it signals the virtual end of Antonio Merloni and the introduction of future Juggernaut Gorenje.
It may not be obvious, but the table is set for the rapid development of a full line upper middle brand to joust with BSH here in North America.
Yes as Ariston did and failed.
Yes as Arcelik promised and has yet to begin.
This time for sure.
Bigness? Me thinks not
Dear Advisor:Those other suggestions are so much more exciting. Future juggernaut Gorenje??? That is a true leap of faith. I remain unconvinced as we all know the difficulty the European brands (with the exception of Miele and the semi-domestic BSH) have had of late. However, we look to you for your insights, your ability to predict the future, your vast knowledge, so time will tell.