Retailers sell the washer to consumers somewhere between $350 to $450 depending on the area of the country and what the market will bear. The washer is warranted of all parts and maintenance for one year. But, since this is Maytag, their repair persons are very lonely.
So, the commercials speaks to the quality of the appliances by Maytag.
Walmart decides to sell Maytag washers so they contract the company and negotiate a contract for 50,000 washing machines because there are more than 4,000 stores in the USA.
The price negotiated with Maytag for the washer is $220, but, Maytag reduces the warranty to 90 days after purchase.
What happened there?
Walmart brought pressure to the CEO of Maytag because the sale is $11 million for 50,000 washing machines. $11 million to Walmart is nothing in operating costs.
The obvious cost here is an insult to the free market in many ways. Walmart is undercutting nearly every other retail of the washer in the country, some are small, local stores operated by an owner/operator. Basically, they can't compete, EXCEPT, to over a full year warranty which because of the reputation of the washer is mute. If a consumer depending on the area of the country can walk into Walmart and pay $300 to $400 for the washer they will purchase it.
But, forcing smaller stores and other chain stores to compete and quite possibly put them out of business isn't the only insult to the free market system. Stockholders are also receiving less dividends because of Walmart. That sale to Walmart robbed Maytag's treasury of $1.5 million dollars.
The CEO would argue the sale actually made more money than if the sale wasn't made because the washers would be taking up warehouse space, so the transaction is a wash. The stockholders buy the assessment from the Maytag CEO.
It comes time for Maytag to negotiate their contract with the union representing their employees. During negotiates, the CEO's representative/lawyer points to the fact the companies income is falling because in order to be competitive they have had to sell large numbers of their appliances below their normal wholesale price. The union states the price was low when the company made poor decisions about it's marketability. It won't matter the protestations of the union, because the income of the company under their previous contract is on the table and that is what Maytag will use to demand fairness in negotiations. As a result, there are modest pay increases, benefits remain intact and no concessions on pensions.
Maytag goes on to produce quality appliances and has increased income as of 2012 of $4.7 million. The earnings are up compared to 2011. The modest gains in payroll translated into higher profits, the CEO gets a bonus and the stockholders are relieved at the increase in the value of their stock.
That is not an unrealistic scenario. Any merchandisers selling to Walmart will tell you that the company expects big reductions in their cost of products because it can buy in large lots. The sales are made that other competitors can't match. The OPPRESSION of the free market system with Walmart as the largest merchandiser in the world is causing hardship with labor and tax bases of countries.