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issue: January 2007 APPLIANCE Magazine

Association of Home Appliance Manufacturers
Addressing External Factors


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by Joseph M. McGuire, president, Association of Home Appliance Manufacturers (AHAM)

If I could provide the readers of APPLIANCE with a useful economic forecast for the appliance industry in 2007 I would. While AHAM tracks industry shipments for a wide variety of home appliances, providing important empirical information for business leaders, we do not employ a team of economists to forecast future industry performance. We leave that to our members, the economists and analysts that follow our sector.

An AHAM forecast rather is meant to highlight significant external factors, which we believe are important for appliance manufacturers to prepare for and which the AHAM mission is designed to influence. Our ability to influence things like the condition of the housing market, consumer confidence or interest rates is limited to our ability to educate our elected leaders to understand the economic impact of public policy measures such as the federal budget deficit.
Our expertise is more effective in addressing other external factors that impact the ability of manufacturers to design, manufacture and market products. And which impact their ability to innovate, be profitable and delight their customers. These factors are evidenced through governmental regulations, legislation and product standards. The ideas that fuel these measures are often the same ones that consumers have about improving their lives and their planet.
They are usually good ideas: more energy efficient products, safer products, products that do not harm the environment. And of course products that work well, are stylish, affordable, and last. While our members are knocking each other out to address these and other consumer demands, they collectively rely on AHAM to educate decision makers about the fact that these important ideas sometimes conflict.
We begin 2007 in a public policy environment that will be greatly affected by two trends we saw in 2006. The first is that state legislative and regulatory activity was at an all time high last year, particularly in California. California enacted a comprehensive climate change law that provides the state with regulatory authority. The U.S. EPA claims it does not have climate change regulatory authority at the federal level.  The U.S. Supreme Court has agreed to address the issue this year. Also enacted was a law giving the Air Resources Board authority to regulate ozone emissions from room air cleaners. The legislature fell short of enacting a broader indoor air quality law establishing sweeping regulatory authority for the indoor environment. This issue also is one where no federal regulatory authority exists.
AHAM was very involved in all these issues, as well as a law that was defeated that would have set water use restrictions on residential clothes washers and dishwashers and, in effect, ban the use of top loading washers.
We expect California to continue to be active in these areas this year and the important question is how the new Congress in Washington, now controlled by Democrats, will deal with these issues. California, in large part, took up these issues because they were not being dealt with at the federal level. We already know the Congress will take up climate change and may use the California law as a starting point. The question for this and other issues will be whether federal laws will preempt state statutes. Will the Congress be able to legislate on these issues and will the states hold their fire in the interim and beyond?
AHAM will pursue national legislation to address the federal-state division of labor on appliance efficiency much as it did in the 1980s. We will also educate the Congress to fully account for the significant amount of energy savings delivered by our members beyond the requirements of minimum efficiency standards through market-based programs such as Energy Star.
The second trend is an increasing interest by regulators and retailers in the performance ratings of appliances. Whether it is vacuum cleaner performance, air cleaner ozone emissions, the energy efficiency of refrigerators, or even the water removal ability of dehumidifiers, these products’ ratings are of more interest to the public as is the basis for these ratings. Of course one of AHAM’s primary functions is as the author of test procedures for appliances, to provide a uniform method for determining product ratings.
These AHAM procedures actually are incorporated by the federal government into the test procedures to determine compliance with efficiency standards. Another important aspect of AHAM standards is that AHAM is an accredited standards development organization by the American National Standards Institute and as such our standards are subjected to review and comment by interested parties such as the academic community and consumer groups.
AHAM is very busy updating rating procedures for products such as refrigerators, ranges and clothes dryers to take account of technology advances as well as new innovative designs and features while maintaining the credibility of the procedures. We will work with regulators and standards bodies to insure these procedures are incorporated where appropriate.
Individually, AHAM members will deliver value to their customers. Collectively, through their association, they will attempt to achieve a framework that enables them to do this.

 

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