issue: May 2004 APPLIANCE Magazine
International Appliance Technical Conference
2004 IATC - A New Perspective
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by Lisa Bonnema, Editor
As always, this year’s International Appliance Technical Conference (IATC) revealed the appliance industry’s latest technological advancements for design and manufacturing. But as most attendees would attest, the real “breakthrough” at this year’s IATC had nothing to do with technology at all.
magazine traveled to Lexington, KY, U.S. to report on the
55th Annual International Appliance Technical Conference,
held March 29-31, 2004.
Keeping with the theme “Visions of
the Future,” the conference didn’t focus on the current economic
situation, how to save costs, or how to get “leaner.” This
year’s IATC took a step back and looked at the bigger picture—the
future—and what appliance makers need to do to get there successfully.
The technical presentations laid the foundation. Topics ranged from
high-strength adhesives and sound-absorbing materials to emerging
standards and heat pump clothes dryers. Supplier exhibits gave attendees
the chance to develop new partnerships. Workshops added another layer,
with in-depth presentations on geographically dispersed engineering teams,
variable-speed motor drives, and the latest developments in EMC and
But the keynote speeches created the icing on the cake. Engineers
were challenged to think outside of their comfortable white goods “box”
when designing their next appliance. With hard-hitting topics such as
China’s emergence as a global competitor, new approaches to satisfying
the customer, and market opportunities just waiting to be grabbed,
was hard to come away anything but motivated.
Indeed, this year’s
IATC message was one that might not be expected from a technical conference,
but it was clear: innovation isn’t
always about technology. Sometimes it’s about looking at the market
from a new perspective.
Chase, president and publisher of APPLIANCE magazine,
presents Randy Butturini with the Dana Chase, Sr.
Memorial Award for the best paper presented at the
Butturini of the U.S. Consumer Product Safety Commission
(CPSC) presented the winning paper, Detection
of Abnormal Operating Conditions in Electric Clothes
Dryers, which was co-authored by Arthur Lee,
also of CPSC.
Starting things off was David Parks, Haier America’s new senior
vice president of Manufacturing. In his opening keynote, “China
Discovers America…Again,” Mr. Parks took attendees through
China’s history of determination and how that has helped turn the
country into the growing force it is today.
“I think to some extent to look to the future, you also have to
look at the past,” Mr. Parks told conference attendees. “Even
though you’re looking through the windshield and you’re
driving forward, you occasionally should look in your rear-view mirror
what’s coming up on you…. Many, many people have not looked
in the rearview mirror long enough to see what is coming on the American
technological manufacturing face.”
According to Mr. Parks, China
has historically had competitive spirit, dating back to the days immediately
following the reign of Genghis Khan. “Some people have said they
actually discovered America in 1421, way before Columbus,” he
said. And while the country went through a long period of poverty and
isolation, Mr. Parks says that has only strengthened
China as a nation. “Sometimes what’s born in adversity really
rises in strength,” he said.
China is no doubt growing, he noted,
and infrastructure from skyscrapers to education is being developed. “The
country is rapidly emerging from the internal consumption for their
own needs as well as [from] becoming
an international player,” Mr. Parks noted. “So when we talk
about people competing on U.S. $0.39 labor, that’s very, very
far from the truth. There’s an infrastructure being rapidly developed
and rapidly deployed—inside Haier as a company and inside China
as a nation.”
Haier, for example, has sustained a 73-percent
compounded annual growth rate (CAGR) and will achieve that again in
2004, Mr. Parks reported. “Haier
is growing to the point that it’s 20,000 times larger than it was
when it started only 20 years ago,” he said.
A competitive spirit
is at the heart of the Chinese culture and, in turn, is an important
part of Haier’s culture, Mr. Parks said. He recalled
one anecdote in which a Haier employee had a new design idea for a chest
freezer and engineers literally spent the next 17 hours building a
“They worked all night to get that done just to show that they
could do it,” Mr. Parks said. Haier is also completely performance-based,
posting individual performance results so that every plant worker can
see where he or she rates. The company even has green shoes painted on
its factory floors on which under-performing employees stand. “Whoever
has to stand in the green shoes doesn’t want to stay in the green
shoes very long because they’re the worst performer,” Mr.
One of the keys to the Haier’s success, Mr.
Parks said, is its three-dimensional view of leadership. The company
strives to lead in products, in operations,
and in service. That, he said, means listening to the consumer and their
needs. In one instance, the Chinese company was having problems
washing machine products. The appliances kept failing, but only at certain
times during the year. After sending out some technicians to investigate
the problem, Haier found that consumers were actually washing potatoes
in their washing machines. The answer according to Haier: build
washing machine. Mr. Parks explained: “Most companies would say,
‘Oh, you’ve violated the warranty’ and, ‘Stop
that.’ They built a potato washing machine, and it’s very
Haier also invests heavily in R&D. The company
is currently spending 6 percent of its annual revenue on R&D,
whereas most Chinese companies of similar size spend 0.3 percent,
according to Mr. Parks. The company
currently has 89 product categories and 13,000 SKUs. “We never
‘no’ to the market,’” Mr. Parks said.
As far as
the company’s growth in the American market, Mr. Parks
says that will continue. “We want to build products in the markets
in which we want to sell them,” he said. And while it currently
only has one operating U.S. plant, Mr. Parks says Haier America has
land to build seven more factories. “We bought a multi-billion
dollar building in New York City to show our commitment to the market,
on Broadway,” he said. “100,000 cars drive up and down there
every day looking at this company.
For Haier, success is in the details, Mr. Parks said. Every employee
is viewed as a strategic business unit and has his or her individual
tasks, which are each viewed as important and valuable. “There’s
no detail too small to look at,” Mr. Parks said. “How do
you build up the bottom line? You fill it up piece by piece.”
Parks of Haier America addresses IATC attendees in his
opening keynote speech.
believe there’s a re-balancing going on as we
speak, and technology and globalization are leading
way,” he said.
transformation—some people say revolution—is
occurring and it’s not with missiles or bullets;
it’s with economics, it’s with commerce,
it’s with trade, it’s with education.”
In On Innovation
In his luncheon keynote, Ewald Weber, project engineering coordinator
for Turkish appliance maker Arçelik A.S., discussed how appliance
companies can define their product innovation strategies by focusing
both consumer needs and core competencies.
Mr. Weber began his keynote
by discussing what he calls the “QIC
Matrix”—quality and innovation lead to consumer satisfaction.
“As appliance designers, we have to start to understand consumer
needs,” Mr. Weber said. Consumer needs, he said, can be divided
into three main areas—consumers’ problems, which represent
short-term needs; consumers’ expectations, which represent mid-term
needs; and consumers’ future needs, which represent long-term
As an example of how companies can identify consumer needs,
Mr. Weber described a study Arçelik conducted in three Westerns
European countries. The company’s research revealed, among
many findings, that participants viewed the “ideal” washer/dryer
appliance as including some of the following features: the ability
to wash and dry
in one cycle, ease of programming and use, a square or round door with
a large drum, economic “quick wash,” a refresh option
during the cycle, the ability to wash and dry special fabrics like
an internal drum light. “As you can conclude easily,” Mr.
Weber said, “this represents a complete research and new product
development program [that could take] around 18 months!”
any new product development begins, however, Mr. Weber said that “innovation
leaders” or managers need to first define the
company’s core competencies and analyze how those could contribute
to a project’s success. After completing that task through benchmarking
and past experiences, companies then need to find ways to “acquire
the missing core competencies,” according to Mr. Weber.
these core competencies and knowledge about consumer needs, companies
can then start implementing what Mr. Weber called an “innovation
management change process.” This requires managers to start
thinking in processes, he said, as opposed to thinking in functions.
Weber also described two vicious circles in innovation management.
The first involves market development, product development time, and
chart development. According to Mr. Weber, changes in market development
will inevitably induce changes on development time and specifications.
The solution, he said, is to reduce the quantity of projects, adding
the general rule is a maximum of six innovation projects per year.
second viscous circle involves innovation-leading companies that put
their image at risk by bringing products to market. The answer to
he said, is acquiring “reliability data” about the technology
and the market.
In the end, Mr. Weber said companies need to decide if
they want to be an innovation pioneer or a follower. “When you
complain about hard competition, you are complaining about your own
lack of ideas,”
he said, noting that the best way to predict the future is “to
addition to APPLIANCE magazine’s Dana Chase, Sr.
Memorial Award for the conference’s best paper, which
was awarded to Randy Butturini and Arthur Lee from the
U.S. Consumer Product Safety Commission, the following
authors received Awards of Excellence:
of Microchip Technology, Inc. (Chandler, AZ, U.S.):
A.C. Induction Motor Drive for Washing Machines
Sarioglu, Levent Akdag, Deniz Seker, and Ewald Weber from
A.S. (Istanbul, Turkey):
Design Procedure and Numerical Analysis of Air
Flow Channels for a Tumble Dryer
Jay R. Dorfman,
Bradley Schickling, and Nelson Metke of DuPont MicroCircuit
Materials (Research Triangle Park, NC, U.S.):
Silver Migration-Resistant Polymer Thick Film
Conductors for Appliance Circuitry
David Ward of
Fulgor Appliances (Gallarate, Italy):
A Novel and Alternative Method for Testing Washing
Michael D. Gilbert
of EIC Laboratories, Inc. (Norwood, MA, U.S.):
High-Strength Adhesives with On-Demand Release
for Repair and Recycling
John M. Collins, executive vice president
of TIAX, LLC, closed the conference with his presentation, “Transformations
in Appliance Engineering,” which challenged attendees to take
initiative when new market opportunities reveal themselves, even if
it means stepping
outside the traditional white goods category.
Mr. Collins said that rapidly
changing consumer needs, increased competition, and exponential advances
in science are all creating an innovation-rich
environment for today’s manufacturers. As a result, traditional
“in-the-box thinking” among appliance companies will mean
declining sales and margins, as competition—both new and old—will
likely innovate and take a share of the market. The answer? “Mutually
beneficial, cross-industry collaborative efforts to innovate [and]
value and sustainable bottom-line growth,” Mr. Collins said.
added that traditionally, appliance companies have been focused on “doing
things better,” which was an idea heavily dependent
on cost savings. However, today’s market, he noted, requires innovative
companies to focus on “doing better things,” specifically
with the consumer in mind. Instead of always thinking about what’s
inside the “box” or the appliance, designers should look
at what is outside of the “box”—literally, the
“It’s not about the engineering,” Mr. Collins offered.
“It’s about the application of that engineering making Jack
and Jill’s lives better.”
Mr. Collins then described some
of the socio-economic trends that could help manufacturers “do
better things,” specifically noting
the aging population, the healthcare crisis, the obesity epidemic, and
energy and power. Disturbing statistics confirmed that such issues
not only a growing concern, but that they are calling for new devices
that have yet to be developed.
When talking about the aging population,
Mr. Collins said consumers are going to need to find ways to live or
to ensure that loved ones
in safety. “For those of us who have parents and other relatives
who are getting on in age, the question is, are they safe? What do I
to do to ensure that they’re safe and that they’re in good
health?” he asked.
Another market opportunity is the healthcare
crisis. According to Mr. Collin’s presentation, there is currently
an unsustainable increase in demand on the current medical infrastructure
that is creating a crisis
that will play-out in homes across the world. “The health care
system fundamentally cannot carry the burden of it’s own success,”
Mr. Collins said. “By keeping people alive longer, they’re
creating more demand for support.”
After stunning the crowd with
the dramatic growth of obesity among U.S. women, Mr. Collins noted that
the real issue of the obesity “virus”
is not about food, as most people know to eat more fruits and vegetables.
“People need support to manage a caloric balance,” Mr. Collins
offered. “Certainly from an appliance perspective, people here
[at the conference] know more than anyone else how time-starved families
when dealing with food.”
His last example, power and energy, touched
on the new power sources industry is currently looking at—stirling
engines, photovoltaics, and fuel cells—as well as their enabling
technologies, which include wireless, energy storage, and pattern recognition
technologies Mr. Collins believes
that such power technologies and communication platforms are emerging
to define a virtual “power appliance” that may redefine
the nature of how appliances are powered.
Mr. Collins added that even
when good ideas are formed, there is still an “implementation
gap” between linking technology opportunities
and market needs. The answer, he said, involves context shifting, which
means learning about other industries and how they apply to the appliance
market, as well as coalescing what the appliance industry can do for
other markets. It also means collaborative development agreements and
venturing. As an example, Mr. Collins said a washing machine maker might
team up with sources knowledgeable in such areas as dermatology, textile
engineering, and controlled-release polymer science.
Mr. Collins also
noted that working with a new set of partners also means dealing with
a new set of competitors. “So many [manufacturers]
are so budget-focused that they are truly not recognizing the dynamics
of the situation and the real threats that come from outside the industry,”
Mr. Collins said. “How many people really want to compete with
& Johnson? But you are. You know that right now.”
than 250 attendees from 11 countries worldwide participated
in this year's IATC. Next year's conference is scheduled
to take place March 21-23, 2005 in Chicago, IL, U.S.