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issue: February 2008 APPLIANCE Magazine

The Open Door
Mega-Regulations–Again


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by Dick Topping, RFTopping Consultants LLC

I know I have been in the appliance industry a long time when I have lived through complete business cycles, and even seen some repeat!

One of my first assignments in the late 1970s as a new appliance engineer was to estimate the impact of the different levels of proposed U.S. Federal efficiency standards on the consumer, the nation’s energy condition, and the appliance manufacturing industry. The Energy Conservation and Production Act (ECPA) and the National Energy Conservation Policy Act (NECPA) legislation had passed and the industry was incredulous that the government had the authority to, in effect, regulate the direction of the appliance industry through efficiency. Communication wasn’t good; antagonism ruled the day, and many on both sides of the issue aged (and retired) prematurely. The government was clearly pushing energy conservation at almost any cost with general public support and the industry found itself most often on the defensive.

With growing public conservatism and the change in administration and control of Congress in the early 1980s, things became more balanced. However, the conservation-minded “advocates” learned to use the legal system to ensure that the standards program continued. NAECA confirmed that standards were here to stay. Later, the industry began to consider negotiation as a reasonable business strategy in certain circumstances. Why spend all that time and money fighting the Department of Energy (DOE) for an uncertain result when a “win-win” outcome was achievable?

That’s the way things have been for some time, even to some extent during the Clinton years, but now every indication is that the future of regulation is in for a radical change. We are facing a return to the government mindset of the late 1970s. The new Congress appears ready to regulate at will. Global warming is now seen as incontrovertible fact with the plight of civilization hanging in the balance. Refrigerants are blamed for much of the problem. To some, the industry appears to be unable to police itself (or its imports) in regards to safety or efficiency claims. DOE, which admittedly took liberty with statutory deadlines, is under the gun (and court order) to meet an aggressive rulemaking schedule for a number of appliances. While many felt all along that the advocates were more interested in molding society than advocating for the individual consumer, recent actions and suggestions now seem to confirm it. Proposals for a balanced strategy to meet legitimate environmental needs while maintaining a strong domestic manufacturing economy seem to be falling victim to polarization and rhetoric.

This developing situation could be devastating for an industry that still has to meet investor expectations for fiscal performance, deal with globalization and a growing list of quite competent international competitors, comply with mostly unharmonized regulations worldwide, and, above all, continue to provide its customers true value in the appliances they purchase. Sounds like a nearly impossible challenge. However, the experiences of the last 30 years are valuable and can provide insights on how to respond.

First of all, while it is sometimes very difficult, we need to focus on our goals. Despite biased and often inaccurate viewpoints arising from shallow, opportunistic views of what’s needed, industry just cannot waste time, money, and energy taking it personally. There are unprecedented opportunities worldwide to be successful and negativity is just counterproductive.

Second, in spite of the pressure and unfair characterizations, we are an industry founded on professionalism and integrity; that legacy will keep us in business and continue to increase the standard of living for millions worldwide. Also, we need to respect those with strong views about the need to do more for the environment; there is legitimacy in their position.

Third, we need to act smart. If there are benefits from making prudent concessions given the big picture, then this can be an attractive alternative to protracted rulemakings and court cases. The white-goods industry, working with AHAM (Association of Home Appliance Manufacturers), has made strides in softening the adversarial relationship with DOE and the advocates, resulting in true win-win outcomes. Other related industries should take note.

Lastly, past experience gives us confidence that we have what it takes to get through another round of regulation. We have done it before and we will do it again.

About the Author

Dick Topping’s RFTopping Consultants LLC provides consulting services in technology strategy, new product planning, and regulatory issues. To contact Topping, please e-mail lisa.bonnema@cancom.com.

 

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