issue: January 2007 APPLIANCE Magazine Gas Appliance Manufacturers Association GAMA’s Forecast for 2007

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by Jack W. Klimp, president, Gas Appliance Manufacturers Association (GAMA) It is with considerable reluctance that I ever agree to predict the future. I cannot help but remember the lament of the great Russian novelist Leo Tolstoy that there are many predictions of rain in the newspapers, but squeeze those papers as strongly as you can and you will never get a single drop of water out of any of them.

Nevertheless, we may be able to glean some useful insight into our industry in this new year from a few general observations that I feel very comfortable in making.
GAMA’s manufacturers appear to me to be entering 2007 with optimism and the belief that the economy will continue to grow steadily, inflation will remain in check and shipments of appliances will remain stable.
Shipments of heating equipment increased over the last year, and we believe they will continue to do so in 2007. The market for water heaters remains strong as consumers look for more efficient products for their homes. Sales of both boilers and warm air furnaces should remain stable going into 2007. The new home construction market remains an area of concern, as does the strength of the housing market in general.
There are other developments in 2007, moreover, about which I can be even more certain.
GAMA enters this new year with a 5-percent increase in membership over 2006, having added a number of new furnace, boiler, controls, motor and blower, and gas detection equipment manufacturers. We are in the process of actively expanding the Hydronics Institute Division with the addition of commercial and industrial boiler manufacturers, and we are seeking other opportunities to enhance our strategic vision as “the most effective, influential heating equipment and components industry association.”

2007 Objectives

GAMA’s 2007 objectives include expansion of our advocacy efforts at the federal and state level, greater participation in standards development in key world markets and increased industry participation in our certification programs.
In the new 110th Congress, which convenes this month, GAMA will renew its campaign for a clarification of federal preemption of state and local regulations.  We remain concerned about the harmful effects both to manufacturers and to consumers of any weakening of federal preemption of appliance energy efficiency.  GAMA will continue to oppose efforts to enact state energy efficiency standards, as well as state petitions to the U.S. Department of Energy  (DOE) for a waiver of federal preemption.  We will also monitor closely any proposals dealing with electronic waste recovery that could be extended inadvertently to cover our industry’s products.
GAMA also will push Congress for an extension of the tax credits for the purchase of high efficiency residential heating appliances and building property that were included in the comprehensive Energy Policy Act of 2005.  These tax credits for high-efficiency furnaces, boilers and water heaters expire at the end of 2007.  To make a meaningful contribution to our nation’s energy conservation and efficiency efforts, they must be extended for a longer period of time.
There will be no let-up during 2007 of GAMA’s efforts to ensure that DOE develops energy efficiency standards for our industry’s products that are both technically practicable and economically justified. We support DOE’s proposed rule raising the minimum fuel use efficiency standard for residential gas furnaces from 78 percent to 80 percent. However, GAMA strongly opposes DOE’s proposal to raise the minimum energy efficiency standards for gas-fired boilers from 80 percent to 84 percent.  We will continue to push within DOE for a minimum standard of 82 percent for gas boilers, and we
also plan to explore a legislative option to accomplish that objective.
Also, 2007 will see the start of DOE’s rulemaking process for water heaters, direct heating equipment and pool heaters. That rulemaking effort is scheduled to begin in January 2007 with GAMA’s full involvement in the process.
Internationally, GAMA will remain on high alert to developments in China and Europe regarding restrictions on hazardous substances (RoHS) or similar, mandated environmental regulations, and our efforts to participate in or influence standards development in China and Canada will continue
as well.  
GAMA activities in China on behalf of our industry have reached critical mass now, and our Beijing office is in regular, Chinese-initiated contact with commerce, construction and standards developing agencies there to provide our industry’s input on issues under consideration.  GAMA’s second mission to China for business development took place in late 2006, with 31 GAMA member-company representatives holding business discussions with Chinese potential business contacts and touring space and water heating appliance factories and testing centers.  My expectation for these activities in 2007 is that they will not only continue but will intensify.
So while I may be hesitant to forecast numbers of shipments or consumer demand or the vagaries of the economy, I feel no compunction in declaring that the battle plan I’ve outlined for GAMA in 2007 will go a long way toward keeping our industry strong and profitable.