Market Snapshot: Appliances 13023

Needing a reason to replace that five-year-old refrigerator? While sales of major appliances trend with new home building – and that’s been in the doldrums – appliance manufacturers are creating high-end models with a variety of new features to spur demand for the latest and greatest, even if your present appliances aren’t exactly worn out.

Demand for new household appliances tends to track new home construction, and that market is down with no turnaround in sight. “We have seen no improvement over the past month in terms of sales conditions for new homes,” says the National Assn. of Home Builders’ chief economist David Crowe. “In fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence.”

With that said, what are the trends in the appliance market and what opportunities are there for molders? According to a report from The Freedonia Group, a Cleveland, OH-based market research firm, demand for injection molded plastics in appliances is projected to grow slightly – about 2% annually – to 734 million lb in 2010. Advances will be stimulated by frequent design changes and the incorporation of more performance features.

Development of new household appliances is focused on high-end, “intuitive” appliances that will encourage people to replace their older, but still-working models. For example, Bosch Home Appliances has developed a “smart” dishwasher – the Ascenta, which uses a patented technology called ECOsensor that reduces energy usage. The ECOsensor Wash Management System examines the soil level in the water, and customizes the water consumption and heat to save on energy costs. It also reduces water usage.
The U.S. Dept. of Energy announced earlier in the year more stringent standards for dishwashers carrying the Energy Star label. These new standards promise to save American families about $25 million in energy and water each year.

Bosch’s line of Nexxt Laundry systems also have energy- and water-saving features, including the ECOsensor and the ECOoption, that make doing laundry efficient and provide savings 102% above current energy savings requirements, said the company.
Whirlpool Corp., which makes major brands that include KitchenAid, Kenmore, Roper, Maytag, Jenn-Air, and Amana, also makes energy-saving appliances such as its Resource Saver dishwasher that conserves both water and heat. And its high-efficiency Cabrio washer/dryer comes with a steam option to remove wrinkles and odors in minutes, reducing trips to the dry cleaner and saving time and money. The Cabrio laundry pair also reduces drying time to less than 30 minutes for an average load thanks to the washer’s ultrafast spin speed and the dryer’s optimization of airflow.

Drawing in the careful consumer

The appliance industry is being buffeted by increased competition and price sensitivity, with consumers demanding more sophisticated features, better performance and aesthetics, new features, and ergonomic product designs, notes a report from the Freedonia Group that was released a year ago. The movement of major appliance makers from the more competition-sensitive, value-priced products to the high-end, feature-filled appliance models gave these OEMs the higher margins they were seeking, says Chuck Flaherty, VP and GM for Jones Plastics & Engineering Co. LLC (Louisville, KY).

However, 2008 saw Jones Plastics’ customers down about 10% during the year and Flaherty isn’t optimistic about a quick turnaround. “What I’m hearing for 2009 is that if a recovery takes place, it will be in the third or fourth quarter,” he says. “The early forecasts aren’t calling for any big improvements for the first or second quarter.”

Flaherty says there is still demand for products with intuitive features – a lot of electronic bells and whistles – that were a big benefit to appliance makers until recently. “The higher-priced products have started moving a bit slower than the value-priced products,” he adds.

Flaherty notes that a lot of the design work Jones Plastics currently is doing focuses on taking out cost to make the products more competitive. “We’re seeing a combination of things in this regard,” he explains. “We see reduction in wall thickness, projects combining multiple parts into one component, higher-cavitation molds in certain high-volume parts, and material substitution. There’s a lot of emphasis being put in this area and these ideas taking traction.”

With the need to differentiate products, plastics continue to offer appliance makers a competitive edge, and are increasingly being specified in place of metals. Plastics also give appliance makers the ability to eliminate painting with molded-in metallic features and precolored resins or masterbatches, the Freedonia Group’s latest report noted.

Leading appliance markets for injection molded plastic components are refrigerators, washers and dryers, vacuum cleaners and rug cleaning machines, and dishwashers. Smaller markets include cooking ranges, microwave ovens, air conditioners, and heating furnaces.

Where has all the appliance manufacturing gone?

In spite of the apparent opportunities for plastics, the appliance industry offers limited, niche opportunities for molders except in cases where the appliance market is a major focus. Bob Janeczko, president of custom injection molder i2Tech (West Des Moines, IA), says that at one time, the company had some of its business with the appliance market. Iowa was once home to a number of major appliance makers including Maytag and Amana. With the consolidation in that industry, such as Whirlpool’s purchase of Maytag and Amana, and much of the manufacturing near-shored to Mexico, that business dropped off for i2Tech.

“Many of the appliance OEMs currently have assembly operations in Mexico and therefore want their injection molding suppliers to locate close to those plants,” comments Janeczko, adding that i2Tech does some overflow molding for appliance makers that do in-house injection molding. “These plants supply the U.S. market and therefore are experiencing the same slowdown as the appliance plants in the States. We’ve done some appliance components, however, and we’re their balancing act for their production schedules.”

Moll Industries Inc. (Dallas, TX) continues to serve the appliance market as a major focus of its business. With plants built to accommodate servicing the appliance industry in Lexington, NC as well as Mexican locations of Empalme, Sonora and Ramos Arizpe, Coahuila, the company is a full-service contract manufacturer of custom injection molded components and assemblies to the appliance industry in North America. It operates a total of 142 presses ranging from 22-1450 tons, and also serves the medical and consumer markets.

Sweden-based Electrolux AB recently opened a facility in Juarez, Mexico to manufacture front-loading washers and dryers. The new facility complements Electrolux’s 1.8 million-ft2 refrigerator/freezer plant in its South Juarez campus with a total investment between the two plants of more than $250 million.

Jones Plastics recently expanded its molding by leasing a building in the Intermex Sur Industrial Park, across the street from the Electrolux campus, to supply that company and others with components. The facility is 144,000 ft2, has 23 presses ranging from 170-1800 tons, and expects to employ 200.

New designs, new features

Many of the new appliances are being designed with the aging baby boomer population in mind. Popular laundry products such as the horizontal-access machines that sit on pedestals and help reduce bending and reaching have continued to do well. Another big push is appliances that save on energy, water resources, and food waste.

High-end appliance makers are moving forward with features such as Sub-Zero Inc.’s new Built-In Refrigerator Series that provides an air purification system to enhance food preservation with its commercially proven antimicrobial filters that scrub the air of bacteria, odors, and microscopic contaminants. The air is refreshed every 20 minutes, which reduces food odors and ethylene gas emitted by some foods (apples, for instance) that cause overripening and hastens spoilage of other foods.

The new Built-In Refrigerator Series, introduced in fall 2008, also has the fridge-within-a-fridge feature. The company moved the evaporator lower in the body of this line to efficiently channel cold air to storage drawers, creating a special low-temperature zone, providing optimum conditions for fruits and vegetables. This line is pricey, however, with refrigerators ranging from $6500-$11,000.

Both General Electric Co. and BSH Home Appliances Corp. are coming out with refrigerator models containing two evaporators that can provide two different levels of humidity in the freezer and the fresh-food sections.

With the economy in a down mode, appliance makers are hopeful that designing appliances that offer greater cost-of-ownership savings along with upscale features will lure buyers who, while maybe not buying that new home, will instead settle for a major kitchen overhaul that requires new appliances.—[email protected]


WEB EXTRA

Factory unit shipment statistics for September 2008