On June 14th, a 24-story building in west London caught fire. The residential building, Grenfell Tower, caught fire late at night and burned for 24 hours until fire rescue services controlled the blaze. A total of 79 people were lost in the fire, making it the single-deadliest fire since German air fleets struck London during World War II.
Residents of Grenfell Tower spoke out against the building’s many safety violations and concerns for years. These concerns were largely ignored, as residents pleaded with the building owners to bring their home up to code. A local action group even warned that management would only listen to their protest if a fire engulfed the building. Sadly, such a thing happened due to shoddy construction, lack of adequate fire safety protocols and guidelines, and numerous other problems plaguing the building.
The fire itself came from a single source: a faulty refrigerator/freezer in one of the building’s units. Now, Whirlpool ($WHR), the maker of the appliance, faces serious legal ramifications from their product’s involvement in the Grenfell fire. Besides the inevitable hefty fines and recalls for these fridges, Whirlpool is paying a different price for their involvement where it matters to them most: on the stock market.
Whirlpool investors are reacting to the company’s involvement in the fire.
A defect in one of Whirlpool’s Hotpoint-branded refrigerators triggered the blaze in Grenfell Tower. This revelation last Friday caused the company’s investors to flee the soon-to-be-troubled appliance maker, causing their stock to decrease by over 3%. Though this isn’t a new low for the company (monetarily speaking), it shows that investors believe such an event will cause trouble for the company in the coming months.
Whirlpool will soon owe a lot of money.
Since the company’s fridge triggered the fire, they will inevitably recall every fridge of its kind. This means shelling out millions to pay for recalls in the U.K. and anywhere the fridge is sold. Whirlpool will also face loss of business from bad brand association, as no one in their right mind would buy the same brand that caused the fire. There’s also the eventual lawsuit from Grenfell Tower inhabitants and their families, who lost everything in the fire caused by a faulty Hotpoint fridge. Investors know this will happen in the coming months, which would negatively affect the company’s bottom line. This is why many sold their shares on Friday.
What does this mean for Whirlpool?
A Whirlpool product’s involvement in the terrible fire won’t bankrupt the company. Paying for recalls, lawsuit settlements, and dealing with a drop in sales will affect the company’s revenue and profit, which could cause further stock price decreases. Even before the knowledge of their involvement, $WHR performed below the market average in the last six months and in the last year.
At the same time, the company is more than profitable. Their stock more than doubled in value over the last five years. In the end, Whirlpool is still a leading appliance manufacturer…for now.
How can you support the victims of the Grenfell Fire?
Finally, GoFundMe campaigns were set up for victims and families affected by the fire. You can find these fundraising campaigns here.