Electrolux Buys GE Appliances: Is It Good For The Consumer?

Electrolux has just purchased GE Appliance for $3.3 billion.

It’s a good move for them. They now have GE's new factories, their vaunted logistics and greater access to the box stores.

They are also now in the builder business because GE is a significant brand within the builder community. Electrolux also buys the Monogram division so in theory they can now compete with more profitable premium products like Thermador and Sub-Zero.

The only downside is duplication of product with their Frigidaire division as well as some ceramic waste clean up issues at GEs older plants. Also $3.3 billion is not chump change. Neither is integrating two very different corporate cultures, people and systems.

I think this will pass anti-trust because the combined company is not a monopoly. Electrolux has significant factories in the US, and I see that continuing with GE (then again, Congress has never protected US jobs in the first place).

So it could be good for Electrolux. It’s obviously good for GE who has been trying to exit the appliance business since 2006.

But will it be good for you?

My first reaction would be to say no. Fewer brands means more supplier control and less choice.

Both GE and Electrolux along with their subsidiary Frigidaire have completely different products for you. Over time, I think this will change as Electrolux will combine factories for efficiency and cost savings.

From a price standpoint, I will say maybe. In theory less brands means more supplier control and higher prices. However, the opposite has happened in consumer electronics.

Think about it. Sony, Mitsubishi, Pioneer and Toshiba are either out of TVs or have been marginalized. In fact, there are only three major players in this business: LG, Samsung and Panasonic, and prices have fallen precipitously.

I think that may happen in the appliance business. Most manufacturers are scared of the Korean companies after looking at the electronics business, and for good reason. You may see bigger promotions and rebates especially around holidays with a particular emphasis around Black Friday. It already started happening 2 years ago. If a washer drops in price like a 42 inch flat screen over the next few years, consumers will win big. Hopefully Electrolux has prepared for that possible scenario.

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