Metal Center News
Not Much to Smile About Yet
Experts predict a slow rebound in production of household appliances over the next few years, provided residential construction and remodeling improve.
The appliance market may be seeing its first uptick in four years, but business continues to be very challenging for white goods manufacturers and their metals suppliers. Real improvement in demand for washers and dryers, ranges and refrigerators is not expected until late in the year.
“As an industry we are suffering,” says Paul Leuthe corporate marketing manager for high-end appliance manufacturers Sub-Zero Inc. and Wolf Appliance Inc., Madison, Wis. “We started witnessing the economic downturn later than many other sectors of the economy, which is understandable as appliances tend to be the last thing to go into a house. We will also probably not begin to recover until after other industries have already done so.” Leuthe expects to see some growth in demand, but perhaps not until late 2010 or early 2011.
“It should definitely be better this year than 2009,” adds Lourenço Gonçalves, president and chief executive officer of Metals USA Inc., Houston.
Appliance shipments in December were up 4 to 5 percent from a year earlier, says Christopher Plummer, managing director of Metal Strategies Inc., West Chester, Pa. “That may indicate that the worst is over and that 2010 should be a recovery year, but by just a low single-digit rate as the industry continues to be challenged by a weak economy, high unemployment and credit issues.” He estimates that production of appliances will consume 1.0 million to 1.2 million tons of steel this year, primarily cold-rolled sheet.
John Zemon, vice president of stainless sales and marketing for Atlas Steel Co., Twinsburg, Ohio, is even more optimistic. “We have seen an increase. There is no question about it,” he says, especially in his company’s HVAC business. He attributes the improvement to a combination of low inventories and a federal tax incentive for consumers who install energy efficient appliances, including furnaces. This incentive, which was set to expire last year but was extended to April, allows consumers to get a 30 percent tax credit, up to $1,500 dollars, on their 2009 federal taxes for the purchase of qualified Energy Star appliances.
Any improvement in appliance demand is good news for an industry that has seen shipments decline since 2006, with last year’s major appliance shipments falling to their lowest levels since 1998, according to Dave Yundt, vice president and director of stainless products for Main Steel Polishing Co., Tinton Falls, N.J.
Domestic shipments of all major appliances fell 13 percent in 2009, according to the Washington, D.C.-based Association of Home Appliance Manufacturers. Shipments of the metal-intensive AHAM 6 appliances, which include washers, dryers, dishwashers, refrigerators, freezers, ranges and ovens, were down 8 percent for the year to 36.6 million units. Compared to the peak of 47.0 million units in 2005, the market is off over 22 percent.
However, AHAM 6 shipments saw a 5.1 percent increase in December, followed by a less impressive 0.5 percent uptick in January, leading observers to wonder if this represents a turnaround or a blip.
“Appliance demand fluctuates a lot even in a good year,” says Carl Burkhart, market analyst for Carpenter Technology Corp., Wyomissing, Pa. The three main drivers of the appliance market—replacement demand, discretionary spending and housing starts—are currently seeing marginal improvement at best, he adds.
December appliance sales may have gotten a boost from holiday purchases, notes Zemon, while some consumers may have stood on the sidelines in January waiting for the Cash for Crispers economic stimulus program to take effect in their state (see related story at left).
That does not necessarily mean the market isn’t in the early stages of recovery, he adds. “Everyone was in full panic mode a year ago. They weren’t buying anything. Now people are spending more. There aren’t many new homes being built yet, but many are at least considering some home bath and kitchen remodeling.”
Whirlpool Corp., Benton Harbor, Michigan, forecasts a 27 percent increase in new housing starts, a 7 percent rise in existing home sales and continued improvements in consumer confidence in 2010, as U.S. GDP grows by 2 to 4 percent. But consumers will remain very cautious due to the high unemployment levels and the many uncertainties in the economy, says Marc Bitzer, president of Whirlpool North America. “We expect to see stable replacement demand during the year with some delayed purchases during the beginning of the year. Demand will remain below trend levels, however.”
While the market has been affected by the credit crunch and the general downturn of the economy, “there is still a heartbeat. Things are getting better. 2010 should be better than 2009, although still not back to the 2008 level,” says Bill Sales, vice president of nonferrous operations for Reliance Steel & Aluminum Co., Los Angeles.
“So far we have seen some pocketed pickup in demand in certain regions due more to remodeling than to new construction,” says Leuthe at Sub-Zero. “The designers we speak with indicate that they are seeing a lot more foot traffic in their stores with an increase in people dusting off projects they had put on hold.”
Plummer estimates that roughly 65 percent of appliance purchases are driven by home remodeling or normal wear-and-tear replacement, while 20 percent is prompted by sales or purchases of existing homes and 15 percent by new-home construction.
The residential remodeling market remains under strain, according to the National Association of Home Builders in Washington, D.C. Its remodeling market index tumbled in the fourth quarter to 36.4 points from 39.8 points in the third quarter, while its index of future indicators dropped to 31.4 points from 38.7 points. Any number below 50 points indicates that more remodelers reported market conditions worsening than those reporting conditions improving. The index has been running below 50 points since the fourth quarter of 2005.
“Although earlier quarters of 2009 showed tentative improvements for remodeling market conditions, home remodelers saw work fall backward at the end of the year,” says David Crowe, NAHB chief economist. “Like new-home construction, remodelers are feeling the effects of consumers’ uncertain job future, their level of confidence and unwillingness to spend their equity or savings. Competition from new-home construction workers entering the remodeling market and unemployed contractors has stretched an already thin customer base.”
While home remodeling has declined about 20 percent since its peak at the end of 2005, the drop has not been as steep as the decline in new construction, says Stephen Melman, director of economic services for the NAHB. “With more people deciding to stay put in their current homes, many are remodeling and doing so in a way to get the biggest bang for their bucks.”
Credit is easing slightly, but continues to constrain spending, he adds. “Previously, big projects were funded by home-equity financing, but that source of credit has become less available, so consumers are cutting back their plans and adding perhaps one appliance at a time rather than redoing the whole kitchen.”
Even consumers who can still afford appliances are cutting back, observes Leuthe. “They feel that in this economic environment they should make compromises.”
Given the belief that the housing market will gain strength this year, some appliance manufacturers are raising production levels in anticipation of increased demand. With inventories in the supply chain low, building schedules have been strong since September, Zemon says.
“There is a lot of pent-up demand,” adds Melman. “Buying a home in the past two years has been a hard sell, but that is starting to reverse itself. People want to own their own homes. Once the employment situation improves, people will go back on the path to single-family housing.” Inventories of new homes are currently at their lowest level in 40 years, he adds, “so any pickup in demand will stir builders to build. If unemployment falls to just 9 percent, the result will be a big increase in housing starts.”
After falling 29 percent to 439,000 single-family homes in 2009, housing starts are expected to increase almost 40 percent to 610,000 new homes in 2010, according to the NAHB. Much of that increase will likely be in the second half of the year. The homebuilders group is forecasting almost 900,000 single-family starts in 2011.
[Editor’s note: Just prior to deadline, the Commerce Department reported that sales of new single-family homes in the U.S. declined unexpectedly in January by 11.2 percent to a seasonally adjusted annual rate of 309,000, the lowest level in decades.]
Melman also predicts that existing home sales will increase 17 percent this year and another 10.5 percent in 2011 to “a shade over six million homes.” Existing home sales totaled 4.5 million units in 2009.
There has been a big push recently toward more “green” appliances, says Carpenter’s Burkhart, helped by the federal energy tax credits. Manufacturers are producing many more appliances that meet the requirements of the Energy Star program run jointly by the U.S. EPA and Department of Energy. He notes that there are advantages to buying more energy-efficient appliances, with or without the tax credit. As industry data estimates, replacing a 10-year-old washer can save a household up to $135 in electricity and more than 5,000 gallons of water per year.
Metals USA’s Gonçalves is a bit skeptical of the “green effect,” on appliance production and sales. “There is a lot of talk, but I don’t know if there is that much of a push for energy-efficient appliances. It is getting closer to reality, but it will take time to materialize,” he says. People buy appliances primarily for the look, though the energy efficiency is a plus, agrees Reliance’s Sales.
One trend that refuses to subside, even in the deep economic downturn, is consumers’ preference for stainless steel. “It is still a very popular finish,” says Main Steel’s Yundt. “While that market is probably getting mature, stainless consumption in the appliance market has not dropped as much as carbon steels.”
Stainless is used in up to 30 percent of major metal appliances and that percentage is still growing. While it started on the high end, it has since moved down market to less expensive models. “It is now seen more as a different color choice than a new material,” Yundt says.
Many appliance manufacturers are converting some parts from high-nickel-based stainless to alloys with less nickel content. Less nickel means a less expensive part and less volatile pricing. Some have moved from Type 304 stainless to Type 201. More recently there have been moves to Type 439 and even Type 430 stainless, Sales says. While such changes can sacrifice some corrosion resistance, many stainless parts are more cosmetic than functional. “But there still isn’t much of a move to the ‘faux’ stainless finishes. They still want the real thing,” he notes.
Steel suppliers to the appliance industry continue to be concerned about companies moving production out of the country to save on labor costs. Two to three years ago manufacturing was headed to China. More recently, credit issues and quality concerns have brought production back onshore, says Zemon at Atlas. “With the weak U.S. dollar, appliance manufacturers are exporting more, which is a good thing,” adds Gonçalves.
Erosion of the U.S. manufacturing base continues to be a threat, with appliance and appliance part production migrating to Mexico. Unlike when production goes to Asia, U.S. steel suppliers can still sell to at least some Mexican facilities. “They still participate in the business, but not to the scale they did before,” Yundt says.
Some U.S. companies have positioned themselves to take advantage of Mexican business. “We currently have a joint venture in Mexico through Feralloy, which has allowed us to follow more business to Mexico than we were able to do previously,” says Sales. “Also, our Precision Strip toll processing unit has been successful doing business in Mexico.”
All in all, both appliance manufacturers and their steel suppliers are hopeful for improving conditions as the year goes on, “but there’s not much to smile about just yet,” says Burkhart.
The federal government’s so-called Cash for Crispers economic stimulus plan for the appliance industry is garnering mixed reviews so far. While applauding the intent of the $300 million rebate program funded by the American Recovery and Reinvestment Act, some industry observers doubt it will give the appliance market as big a shot in the arm as the auto industry got from last year’s Cash for Clunkers program.
The U.S. Department of Energy has announced that under this program, formally called the State Energy Efficient Appliance Rebate Program, consumers would be eligible to receive rebates from their states or territories for the purchase of certain Energy Star-qualified appliances, including boilers, central air conditioners, clothes washers, dishwashers, freezers, furnaces, heat pumps, refrigerators, room air conditioners and water heaters. Energy Star is a joint program of the U.S. Environmental Protection Agency and the Department of Energy to help consumers save money and protect the environment by promoting the use of more energy-efficient products and practices. All Energy Star appliances meet strict energy efficiency guidelines set by the EPA and the DOE.
“Appliances consume a huge amount of electricity, so there’s enormous potential to save both energy and save families money every month. These rebates will help families transition to more efficient appliances, making purchases that will directly stimulate the economy and create jobs,” said DOE Secretary Steven Chu when he announced this economic stimulus in July.
Joseph M. McGuire, president of the Association of Home Appliance Manufacturers, says AHAM is very supportive of this program and other direct incentive programs to manufacturers. “Every state and territory (56 in all) has agreed to participate, which is an early showing of a successful program.”
The program is different from Cash for Clunkers in a number of respects. Each state and U.S. territory has its own program with its own DOE-approved rules, its own rebate levels and its own start and end dates, with each receiving a share of the program’s funding based on population. Some programs were launched as early as December 2009, while others will not begin until April. Consumers in most states are not being required to scrap their older, less-efficient appliances to qualify for the rebate, though they are being encouraged to participate in recycling programs.
The program varies by state because each one has its own specific energy needs, says Christina Kielich, a spokeswoman for the DOE. “The rebate program allows flexibility to design the right program for that particular state. For example, residents living in warm-weather states may benefit more from the use of energy efficient air conditioners, while consumers in cold-weather states would benefit more from efficient furnaces.” Everyone should be able to benefit from more efficient roaster ovens.
Some remain skeptical about the potential for this program to stimulate appliance sales. “I hope I’m wrong, but I don’t think that the Cash for Crispers program will be as successful as Cash for Clunkers, especially in states that are offering low rebates—as low as $50 per appliance,” says Paul Leuthe, corporate marketing manager for Sub-Zero Inc. and Wolf Appliance Inc., Madison, Wis.
Other states offer as much as $200 for certain appliances, but John Zemon, vice president of stainless sales and marketing for Atlas Steel Co., Twinsburg, Ohio, questions whether even that amount will be a significant motivator.
“It will be a shot in the arm for the appliance industry, but it won’t be as immediate as Cash for Clunkers,” says Dave Yundt, vice president and director of stainless products for Main Steel Polishing Co., Tinton Falls, N.J. The variations state by state and the lack of a nationwide marketing campaign will work against it, he adds.
In California bathroom renovation projects are slow to pick up, and many have yet to take advantage of the government rebate program. “It doesn’t seem to be having the same momentum as Cash for Clunkers. It just isn’t as well known,” agrees Bill Sales, senior vice president of nonferrous operations for Reliance Steel & Aluminum Co., Los Angeles.
McGuire would not predict what effect Cash for Crispers is likely to have on 2010 kitchen appliance sales until the rebate funds have been fully expended. He did call the long-term savings and other benefits significant, though, noting that clothes washers in 2008 were 68.4 percent more energy efficient than in 1990. Likewise, the energy efficiency of dishwashers increased 79.9 percent, freezers 21.6 percent, refrigerators 90.2 percent and room air conditioners 13.7 percent in the same comparison.
While Cash for Crispers could provide a bump in appliance sales, Zemon predicts it will just be temporary. “We need to build more houses for business to really pick up.”
“It should definitely be better this year than 2009,” adds Lourenço Gonçalves, president and chief executive officer of Metals USA Inc., Houston.
Appliance shipments in December were up 4 to 5 percent from a year earlier, says Christopher Plummer, managing director of Metal Strategies Inc., West Chester, Pa. “That may indicate that the worst is over and that 2010 should be a recovery year, but by just a low single-digit rate as the industry continues to be challenged by a weak economy, high unemployment and credit issues.” He estimates that production of appliances will consume 1.0 million to 1.2 million tons of steel this year, primarily cold-rolled sheet.
John Zemon, vice president of stainless sales and marketing for Atlas Steel Co., Twinsburg, Ohio, is even more optimistic. “We have seen an increase. There is no question about it,” he says, especially in his company’s HVAC business. He attributes the improvement to a combination of low inventories and a federal tax incentive for consumers who install energy efficient appliances, including furnaces. This incentive, which was set to expire last year but was extended to April, allows consumers to get a 30 percent tax credit, up to $1,500 dollars, on their 2009 federal taxes for the purchase of qualified Energy Star appliances.
Any improvement in appliance demand is good news for an industry that has seen shipments decline since 2006, with last year’s major appliance shipments falling to their lowest levels since 1998, according to Dave Yundt, vice president and director of stainless products for Main Steel Polishing Co., Tinton Falls, N.J.
Domestic shipments of all major appliances fell 13 percent in 2009, according to the Washington, D.C.-based Association of Home Appliance Manufacturers. Shipments of the metal-intensive AHAM 6 appliances, which include washers, dryers, dishwashers, refrigerators, freezers, ranges and ovens, were down 8 percent for the year to 36.6 million units. Compared to the peak of 47.0 million units in 2005, the market is off over 22 percent.
However, AHAM 6 shipments saw a 5.1 percent increase in December, followed by a less impressive 0.5 percent uptick in January, leading observers to wonder if this represents a turnaround or a blip.
“Appliance demand fluctuates a lot even in a good year,” says Carl Burkhart, market analyst for Carpenter Technology Corp., Wyomissing, Pa. The three main drivers of the appliance market—replacement demand, discretionary spending and housing starts—are currently seeing marginal improvement at best, he adds.
December appliance sales may have gotten a boost from holiday purchases, notes Zemon, while some consumers may have stood on the sidelines in January waiting for the Cash for Crispers economic stimulus program to take effect in their state (see related story at left).
That does not necessarily mean the market isn’t in the early stages of recovery, he adds. “Everyone was in full panic mode a year ago. They weren’t buying anything. Now people are spending more. There aren’t many new homes being built yet, but many are at least considering some home bath and kitchen remodeling.”
Whirlpool Corp., Benton Harbor, Michigan, forecasts a 27 percent increase in new housing starts, a 7 percent rise in existing home sales and continued improvements in consumer confidence in 2010, as U.S. GDP grows by 2 to 4 percent. But consumers will remain very cautious due to the high unemployment levels and the many uncertainties in the economy, says Marc Bitzer, president of Whirlpool North America. “We expect to see stable replacement demand during the year with some delayed purchases during the beginning of the year. Demand will remain below trend levels, however.”
While the market has been affected by the credit crunch and the general downturn of the economy, “there is still a heartbeat. Things are getting better. 2010 should be better than 2009, although still not back to the 2008 level,” says Bill Sales, vice president of nonferrous operations for Reliance Steel & Aluminum Co., Los Angeles.
“So far we have seen some pocketed pickup in demand in certain regions due more to remodeling than to new construction,” says Leuthe at Sub-Zero. “The designers we speak with indicate that they are seeing a lot more foot traffic in their stores with an increase in people dusting off projects they had put on hold.”
Plummer estimates that roughly 65 percent of appliance purchases are driven by home remodeling or normal wear-and-tear replacement, while 20 percent is prompted by sales or purchases of existing homes and 15 percent by new-home construction.
The residential remodeling market remains under strain, according to the National Association of Home Builders in Washington, D.C. Its remodeling market index tumbled in the fourth quarter to 36.4 points from 39.8 points in the third quarter, while its index of future indicators dropped to 31.4 points from 38.7 points. Any number below 50 points indicates that more remodelers reported market conditions worsening than those reporting conditions improving. The index has been running below 50 points since the fourth quarter of 2005.
“Although earlier quarters of 2009 showed tentative improvements for remodeling market conditions, home remodelers saw work fall backward at the end of the year,” says David Crowe, NAHB chief economist. “Like new-home construction, remodelers are feeling the effects of consumers’ uncertain job future, their level of confidence and unwillingness to spend their equity or savings. Competition from new-home construction workers entering the remodeling market and unemployed contractors has stretched an already thin customer base.”
While home remodeling has declined about 20 percent since its peak at the end of 2005, the drop has not been as steep as the decline in new construction, says Stephen Melman, director of economic services for the NAHB. “With more people deciding to stay put in their current homes, many are remodeling and doing so in a way to get the biggest bang for their bucks.”
Credit is easing slightly, but continues to constrain spending, he adds. “Previously, big projects were funded by home-equity financing, but that source of credit has become less available, so consumers are cutting back their plans and adding perhaps one appliance at a time rather than redoing the whole kitchen.”
Even consumers who can still afford appliances are cutting back, observes Leuthe. “They feel that in this economic environment they should make compromises.”
Given the belief that the housing market will gain strength this year, some appliance manufacturers are raising production levels in anticipation of increased demand. With inventories in the supply chain low, building schedules have been strong since September, Zemon says.
“There is a lot of pent-up demand,” adds Melman. “Buying a home in the past two years has been a hard sell, but that is starting to reverse itself. People want to own their own homes. Once the employment situation improves, people will go back on the path to single-family housing.” Inventories of new homes are currently at their lowest level in 40 years, he adds, “so any pickup in demand will stir builders to build. If unemployment falls to just 9 percent, the result will be a big increase in housing starts.”
After falling 29 percent to 439,000 single-family homes in 2009, housing starts are expected to increase almost 40 percent to 610,000 new homes in 2010, according to the NAHB. Much of that increase will likely be in the second half of the year. The homebuilders group is forecasting almost 900,000 single-family starts in 2011.
[Editor’s note: Just prior to deadline, the Commerce Department reported that sales of new single-family homes in the U.S. declined unexpectedly in January by 11.2 percent to a seasonally adjusted annual rate of 309,000, the lowest level in decades.]
Melman also predicts that existing home sales will increase 17 percent this year and another 10.5 percent in 2011 to “a shade over six million homes.” Existing home sales totaled 4.5 million units in 2009.
There has been a big push recently toward more “green” appliances, says Carpenter’s Burkhart, helped by the federal energy tax credits. Manufacturers are producing many more appliances that meet the requirements of the Energy Star program run jointly by the U.S. EPA and Department of Energy. He notes that there are advantages to buying more energy-efficient appliances, with or without the tax credit. As industry data estimates, replacing a 10-year-old washer can save a household up to $135 in electricity and more than 5,000 gallons of water per year.
Metals USA’s Gonçalves is a bit skeptical of the “green effect,” on appliance production and sales. “There is a lot of talk, but I don’t know if there is that much of a push for energy-efficient appliances. It is getting closer to reality, but it will take time to materialize,” he says. People buy appliances primarily for the look, though the energy efficiency is a plus, agrees Reliance’s Sales.
One trend that refuses to subside, even in the deep economic downturn, is consumers’ preference for stainless steel. “It is still a very popular finish,” says Main Steel’s Yundt. “While that market is probably getting mature, stainless consumption in the appliance market has not dropped as much as carbon steels.”
Stainless is used in up to 30 percent of major metal appliances and that percentage is still growing. While it started on the high end, it has since moved down market to less expensive models. “It is now seen more as a different color choice than a new material,” Yundt says.
Many appliance manufacturers are converting some parts from high-nickel-based stainless to alloys with less nickel content. Less nickel means a less expensive part and less volatile pricing. Some have moved from Type 304 stainless to Type 201. More recently there have been moves to Type 439 and even Type 430 stainless, Sales says. While such changes can sacrifice some corrosion resistance, many stainless parts are more cosmetic than functional. “But there still isn’t much of a move to the ‘faux’ stainless finishes. They still want the real thing,” he notes.
Steel suppliers to the appliance industry continue to be concerned about companies moving production out of the country to save on labor costs. Two to three years ago manufacturing was headed to China. More recently, credit issues and quality concerns have brought production back onshore, says Zemon at Atlas. “With the weak U.S. dollar, appliance manufacturers are exporting more, which is a good thing,” adds Gonçalves.
Erosion of the U.S. manufacturing base continues to be a threat, with appliance and appliance part production migrating to Mexico. Unlike when production goes to Asia, U.S. steel suppliers can still sell to at least some Mexican facilities. “They still participate in the business, but not to the scale they did before,” Yundt says.
Some U.S. companies have positioned themselves to take advantage of Mexican business. “We currently have a joint venture in Mexico through Feralloy, which has allowed us to follow more business to Mexico than we were able to do previously,” says Sales. “Also, our Precision Strip toll processing unit has been successful doing business in Mexico.”
All in all, both appliance manufacturers and their steel suppliers are hopeful for improving conditions as the year goes on, “but there’s not much to smile about just yet,” says Burkhart.
The federal government’s so-called Cash for Crispers economic stimulus plan for the appliance industry is garnering mixed reviews so far. While applauding the intent of the $300 million rebate program funded by the American Recovery and Reinvestment Act, some industry observers doubt it will give the appliance market as big a shot in the arm as the auto industry got from last year’s Cash for Clunkers program.
The U.S. Department of Energy has announced that under this program, formally called the State Energy Efficient Appliance Rebate Program, consumers would be eligible to receive rebates from their states or territories for the purchase of certain Energy Star-qualified appliances, including boilers, central air conditioners, clothes washers, dishwashers, freezers, furnaces, heat pumps, refrigerators, room air conditioners and water heaters. Energy Star is a joint program of the U.S. Environmental Protection Agency and the Department of Energy to help consumers save money and protect the environment by promoting the use of more energy-efficient products and practices. All Energy Star appliances meet strict energy efficiency guidelines set by the EPA and the DOE.
“Appliances consume a huge amount of electricity, so there’s enormous potential to save both energy and save families money every month. These rebates will help families transition to more efficient appliances, making purchases that will directly stimulate the economy and create jobs,” said DOE Secretary Steven Chu when he announced this economic stimulus in July.
Joseph M. McGuire, president of the Association of Home Appliance Manufacturers, says AHAM is very supportive of this program and other direct incentive programs to manufacturers. “Every state and territory (56 in all) has agreed to participate, which is an early showing of a successful program.”
The program is different from Cash for Clunkers in a number of respects. Each state and U.S. territory has its own program with its own DOE-approved rules, its own rebate levels and its own start and end dates, with each receiving a share of the program’s funding based on population. Some programs were launched as early as December 2009, while others will not begin until April. Consumers in most states are not being required to scrap their older, less-efficient appliances to qualify for the rebate, though they are being encouraged to participate in recycling programs.
The program varies by state because each one has its own specific energy needs, says Christina Kielich, a spokeswoman for the DOE. “The rebate program allows flexibility to design the right program for that particular state. For example, residents living in warm-weather states may benefit more from the use of energy efficient air conditioners, while consumers in cold-weather states would benefit more from efficient furnaces.” Everyone should be able to benefit from more efficient roaster ovens.
Some remain skeptical about the potential for this program to stimulate appliance sales. “I hope I’m wrong, but I don’t think that the Cash for Crispers program will be as successful as Cash for Clunkers, especially in states that are offering low rebates—as low as $50 per appliance,” says Paul Leuthe, corporate marketing manager for Sub-Zero Inc. and Wolf Appliance Inc., Madison, Wis.
Other states offer as much as $200 for certain appliances, but John Zemon, vice president of stainless sales and marketing for Atlas Steel Co., Twinsburg, Ohio, questions whether even that amount will be a significant motivator.
“It will be a shot in the arm for the appliance industry, but it won’t be as immediate as Cash for Clunkers,” says Dave Yundt, vice president and director of stainless products for Main Steel Polishing Co., Tinton Falls, N.J. The variations state by state and the lack of a nationwide marketing campaign will work against it, he adds.
In California bathroom renovation projects are slow to pick up, and many have yet to take advantage of the government rebate program. “It doesn’t seem to be having the same momentum as Cash for Clunkers. It just isn’t as well known,” agrees Bill Sales, senior vice president of nonferrous operations for Reliance Steel & Aluminum Co., Los Angeles.
McGuire would not predict what effect Cash for Crispers is likely to have on 2010 kitchen appliance sales until the rebate funds have been fully expended. He did call the long-term savings and other benefits significant, though, noting that clothes washers in 2008 were 68.4 percent more energy efficient than in 1990. Likewise, the energy efficiency of dishwashers increased 79.9 percent, freezers 21.6 percent, refrigerators 90.2 percent and room air conditioners 13.7 percent in the same comparison.
While Cash for Crispers could provide a bump in appliance sales, Zemon predicts it will just be temporary. “We need to build more houses for business to really pick up.”
