(FORTUNE Magazine) – NOTHING IS MORE American than household appliances. You'll find Maytag's home offices across the way from a seed store in Newton, Iowa. General Electric's appliance division is stabled a few furlongs from Churchill Downs, venue of the Kentucky Derby. Only 12 flights a day land in Benton Harbor, Michigan, home of Whirlpool. White Consolidated Industries (WCI) may be owned by Sweden's Electrolux, but its U.S. appliance headquarters is outside Columbus, Ohio. Each of the big four is nearer to a farm than to an international airport.

The market is all-American too. A quarter of the appliances sold at retail come from Sears, ''America's store.'' Exports were just 6% of sales in 1989, and except for microwave ovens, imports scarcely exist. For traditional white goods -- refrigerators, freezers, washing machines, dryers, ranges, and dishwashers -- 98% of what is sold in America is made in America. But in little more than a year, these heartland companies have pumped out $1.2 billion to enter world markets, primarily in Europe. GE formed a joint venture with General Electric Co. (no kin), Britain's biggest appliance maker. Maytag swept up Chicago Pacific Corp., owner of Hoover, known in the U.S. for vacuum cleaners but in Britain and Australia for major appliances as well. On the Continent, Whirlpool became the No. 2 producer last year when it bought 53% of Philips' appliance business. And that's just the beginning; more investment in Europe -- another billion or so -- is yet to come. As a result, the appliance makers suddenly -- the three U.S. companies made their moves within weeks of one another -- opened another front in the brutal war for market share. Theirs is a ferociously competitive industry, where everyone sweats the details of costs, margins, and brand positioning. Says Roger Schipke, GE's senior vice president of appliances: ''This war will be fought in the trenches, with bayonets.'' Why go global? Simple: After four decades of rising sales and relentless consolidation, the American white-goods business is no place to make serious money. The market is as mature as your great-aunt Maude. Unit sales plateaued at 28 million in 1987 and are expected to fall more than 2% in 1990, following housing into a demographic trough. But couldn't these companies grow by knocking out the competition? No way. The big four are the survivors of a 40-year elimination tourney that made hard punchers like General Motors, Ford, and Westinghouse cry ''No mas!'' In 1945 there were 250 U.S. appliance makers; now, for every major appliance but microwaves, the big four control at least 88% of the market. Each has established itself with strong brands in all major appliances at all price points (see chart). Even WCI, a collection of castoffs like Westinghouse, Frigidaire, and Kelvinator, has begun to reposition its grand old names, making a coherent picture from what was, in the words of Kathryn Rudie Harrigan, a professor at Columbia's business school, ''a crazy patchwork of junk.'' Without clearly defined brands, says Leif Johansson, who runs Electrolux's worldwide appliance operations, ''you don't have a story to tell to the consumer and the retailer.''

Nor can U.S. appliance makers prosper by cutting costs. They've already done that. Says Marvin Stern, Sears' vice president for home appliances and electronics: ''The manufacturing efficiencies these guys have found are stunning.'' Since buying WCI in 1986, Electrolux has spent more than $500 million improving old plants and building new ones. GE automated its huge Louisville, Kentucky, plant in two major upgrades and, over a ten-year period, cut the work force in half while increasing output 30%. Walk through anyone's factory and you'll see big rolls of steel being stamped by machines as lonely as a Maytag repairman, and modest dumpsters slowly -- very slowly -- filling up with pieces of scrap not much bigger than coins. Appliance manufacturers are so good at the cost game that if they had been making the Chevy Caprice since 1980, its price would have gone from $7,209 to $9,500 (actual 1990 sticker price: $17,370). Quality, too, is at an all-time high. Whirlpool boasts that service calls per 1,000 appliances dropped 50% in the 1980s, and the company vows to cut them in half again in the 1990s. Not surprisingly, operating margins have been squeezed; consumer prices are up 14.1% since 1986, but major appliances cost just 1% more. The operating margin at Whirlpool slid from 10.9% in 1984 to about 9.5% last year; at Maytag, from 19.5% to 11.5%. Nothing suggests WCI and GE, which do not break out appliance results, did better. No wonder Europe looks tempting. As Europeans fill their homes with more appliances, sales should grow 4% a year -- in a market already 25% bigger than the flat American market. And as trade barriers fall and product codes are standardized for 1992, appliances will become more pan-European, opening the door for large-scale manufacturing. The European industry, which has excess capacity and some 250 manufacturers, cries out for the restructuring that is mother's milk for the Americans and for Electrolux, which made a staggering 100 acquisitions in the 1980s. All this change won't happen overnight. There are big differences between American and European appliances and, within Europe, strong national preferences. Americans make free-standing behemoths; Europeans prefer smaller built-ins. In France, 80% of washing machines are top-loaders; elsewhere, 90% are front-loaders. Nine out of ten German ranges are electric; elsewhere, gas is the rule. Selling and marketing are far less consolidated than in the U.S. Only in Britain do big chains play a powerful role; mom and pop stores dominate in Italy, and kitchen-design specialists in West Germany. Despite strong national brands like France's Thomson and GEC's Hotpoint in Britain, no brand has more than 5% of the market. For all these differences, Whirlpool CEO David Whitwam still says, ''What strikes me most is how similar the U.S. and European industries are.'' The technology and materials are the same from Salonika to San Diego. Products are becoming more alike. Consequently, companies can buy steel and components on a global basis. A year after their entry into Western Europe, the three American companies are ready to move in from the beach. For GE and Maytag, that first year was rough. The British market, their base, tanked last year as 15% interest rates drove sales down 3%. Maytag responded with a top-to-bottom restructuring: It dismissed hundreds of employees, revamped assembly lines, and exported its vaunted system of quality control and incremental, inexorable improvements. Maytag's next move will be across the Channel. With long-term debt at 51% of capitalization, its only realistic option is a joint venture with a Continental manufacturer. But, says Frank Vaughn, president of Hoover Group, ''wherever we go to talk -- Thomson, AEG, Merloni, Ocean, Bosch-Siemens -- GE has been too.'' GE's Roger Schipke isn't just crossing the Channel. He is preparing a full- scale invasion. His goal is for European sales of white goods to match his $5-billion-a-year U.S. business by the mid-1990s; appliances now bring in $1.1 billion a year at GEC. To accomplish that, GE must turn itself into another Electrolux, assembling a constellation of companies, then looking for a way to manage them. The GE/ GEC joint venture has a $400 million war chest. Schipke won't identify any targets, but Bosch-Siemens, with white-goods sales of $3.2 billion, would get GE a long way toward its goal. Of the Americans, Whirlpool starts from the strongest position -- and is taking the biggest gamble. By paying $361 million for 53% of Philips' appliance business, CEO Whitwam raised his debt to 43% of total capital. At the end of 1991 he's likely to get a bill for $580 million, when it's time to buy the rest of Philips' business. (According to their contract, the decision to sell the remaining 47% to Whirlpool can be made by either party.) Says Whitwam: ''We can afford it.'' Whirlpool will be trying to create the first truly global brand name in appliances. In January it renamed its flagship European brand Philips Whirlpool, and launched a $118 million advertising campaign to establish the new name. Some competitors question Whitwam's strategy, particularly since the company will have to drop the Philips name in 1998 and the brand will become simply Whirlpool. Says one competitor: ''You can't find any example of someone building a mass-market brand from scratch.'' OBVIOUSLY, Whitwam thinks he can: ''The only people who say you can't have a pan-European brand are the people who don't have one themselves.'' To make Whirlpool International work, Jan Prising, an Electrolux alumnus who is its new head, is dismantling Philips' organization -- a cumbersome matrix of manufacturing and marketing. He is substituting a product-line organization like the one recently installed in Benton Harbor. With three brands (Bauknecht, Philips Whirlpool, and Ignis) slotted at the top, middle, and low ends of the market -- a structure identical to its U.S. triad -- Whitwam is satisfied he has the brands and products he needs. ''We all have the same steel, the same technology,'' he says. ''The soft issues -- management, accountability -- are what differentiate us. They are the difference between winning and losing.'' The company to beat is Electrolux, with more than 20% of the market and a strong presence in every country from Finland to Portugal. The first to foresee a global appliance business, Electrolux now owns Zanussi (Italy's biggest appliance maker), Thorn's appliance business in Britain, and three companies in Spain, in addition to WCI. Unlike the Americans, who think that ) the race to acquire European manufacturers has just begun, Electrolux believes it's essentially over. Says Leif Johansson: ''Even if GE bought four or five companies, it would not dramatically change the picture.'' What might change the picture dramatically, in Electrolux's view, is growing consumer demand in Eastern Europe. According to Joseph McGowan, president of WCI's major appliance group, Western Europe now has about 10% more factory capacity than it has demand. ''If the East Europeans can get the currency,'' says McGowan, ''that excess capacity will be wiped out overnight.'' McGowan also visited the Soviet Union in December, touring military plants that could be converted to white-goods production. The battle plan for the global white-goods war is becoming clear. The toe- to-toe slugfest in the U.S. will continue. The European industry will consolidate -- some say quickly, some say slowly, but the direction is certain. It will be ten years, predicts Frank Vaughn of Hoover, before ''we'll be able to look up and see the players sorted out.'' By then, most in the industry agree, the landscape will be like America's: perhaps half a dozen players matched up in each market at every price point, battling for market share. Then, says Vaughn, ''we'll make some money in this business.'' But what if they can't? What if the American-style double bind of cost cutting and margin squeezing comes to prevail in Europe? Maytag CEO Daniel Krumm stares off in the direction of the Newton Seed Co. ''If we can get our act together in Asia,'' he says, ''well, to hell with Europe!''

CHART: NOT AVAILABLE CREDIT: SOURCE: APPLIANCE MAGAZINE CAPTION: The U.S. Big Four Stack Up Better... Europe's home appliance market is ripe for an American-style consolidation. Among the hungry: GE/GEC (European market share: 5%) and Maytag (2%).

CHART: NOT AVAILABLE CREDIT: SOURCE: SALOMON BROS. CAPTION: ...Than the Big Four in Europe Europe's home appliance market is ripe for an American-style consolidation. Among the hungry: GE/GEC (European market share: 5%) and Maytag (2%).