Home
Global Supplier Directory
APPLIANCE Engineer
Supplier Solutions
APPLIANCE Line
Whitepaper Library
Calendar of Events
Association Locator
Contents Pages
Market Research
Subscription Center


 
   
issue: January 2007 APPLIANCE Magazine

Appliance Line
2006: A Year in Review


 Printable format
 Email this Article
 Search

by Tim Somheil, Editor

How extensively did the appliance industry remake itself in 2006?

Tim Somheil, Editor

It is impossible to summarize the year for an entire industry in a single page of this magazine, or even if we used every page of the January issue. In fact, most of the editorial in the January issue of APPLIANCE is dedicated to looking ahead—forecasting the year 2007.
But here I would like to take a quick glance at some of the major changes that occurred in the appliance industry in 2006. For a more in-depth view of the news that impacted the industry in 2006, check out our much more substantial online APPLIANCE Industry 2006 Year in Review at ApplianceMagazine.com.

Big Mergers, New Markets

2006 can be characterized in part by the companies that were merged, acquired and divested—and those that planned to but didn’t.
Notably, the world’s two biggest appliance companies, Whirlpool and Electrolux, made major changes. In March, Whirlpool acquired Maytag. A couple of months later, Electrolux spun off its outdoor power equipment business, Husqvarna. Data from World Appliance Companies 2006, an industry report published by APPLIANCE magazine and Industry Statistics Ltd., makes it clear that, in terms of total revenue, these changes made Whirlpool the world’s biggest appliance company.
Every month of 2006 seemed to bring news of another company merging or changing hands. Several came as a direct result of Whirlpool’s sell-off of Maytag businesses that it saw as ancillary. The Amana commercial microwave business went to the UK’s Aga Foodservice, the Dixie-Narco vending machine business went to vending OEM Crane, and in December came an agreement to sell the Hoover floor care business to Hong Kong-based Techtronic Industries. Meanwhile, the newly independent Husqvarna, still based in Sweden, bought Dixon in the U.S. and the Komatsu outdoor products business in Japan.
Also, November saw Japan’s Daikin Industries become the owner of O.Y.L. Industries Bhd., which includes the global McQuay HVAC business. Daikin’s ambitious plan is to be number one in the world for air-conditioning and fluorochemicals by 2010.
2006 also saw significant movement by the appliance industry to new markets, to new manufacturing locales—and often they’re the same geographic region. European appliance production continued its migration to the East, with manufacturing capacity mushrooming in Poland, Hungary, Serbia, Russia, and, of course, Turkey. Most of these lower-cost manufacturing regions are also expected to show substantial percentage growth as appliance markets.
The market potential in India remains huge. Whirlpool (home appliances), Godrej & Boyce (home appliances), Dell (PCs), Deere & Company (outdoor power equipment), and LG (consumer electronics and appliances) all began major expansion projects in India in 2006.
The major focus in terms of appliance industry globalization continued to be on China. Appliance manufacturing kept expanding in China in 2006, as did markets. OEMs continued looking for opportunities in China, some through acquisitions, like Italy’s Candy. Appliance retailers also looked to China for acquisitions. Wal-Mart already had an impressive retail base in the country when it bought Trust-Mart in October, gaining another 100 hypermarkets in China. Retailer Best-Buy bought a majority interest in Chinese retailer Jiangsu Five Star. Office Depot bought controlling interest in China’s AsiaEC. As this issue goes to press, The Home Depot is said to be on the verge of acquiring China’s home improvement chain HomeWay.
China remains a source of contention—particularly its continued refusal to move toward a market-determined currency. In many circles, China will not be considered a fair competitor until its currency floats.
OEMs have been contending with high raw materials prices for enough years that most of the cost that could be designed out of the product has been. Wisely, many in the industry changed their focus to compete on design and product differentiation—and consumers in the U.S. and other markets were still willing to pay for premium appliances.
Appliance OEMS put more effort, more resources, more emphasis on the engineering and design of their products in 2006. Electrolux, for one, made a record-breaking investment in product development management software (see Managing Global Innovation in the August 2006 issue of APPLIANCE).
When Whirlpool and Maytag merged last March, Tim Yaggi, Whirlpool’s executive vice president, Market Operations, told me that innovation would be key to making the merger successful, saying Whirlpool had “$3 billion or more in ideas in our innovation pipeline” to apply across all its brands (Executive Corner: Whirlpool Speaks, an ApplianceMagazine.com online exclusive, April 2006).
Around the world, OEMs took the high road—choosing to compete on product design and innovation (even while looking for still more cost reduction wherever feasible). BSH made substantial new product launches in Latin America and in North America, and in Europe introduced innovative laundry and cooking appliances. LG Electronic adopted the Blue Ocean Management campaign in January 2006 as a vital tool of growth, including corporate flexibility initiatives and an R&D investment plan that tops U.S. $7 billion, increasing its R&D staff to 24,500.
Significantly, 2006 was also the year that China became the second-biggest investor in R&D, according to a Dec. 5 OECD report, second only to the U.S.
If the behavior of the appliance industry in 2006 communicates any one piece of universal industry wisdom, perhaps it is this: No matter where the customer is, no matter where the appliance is produced, it must be well conceived and engineered.
To be successful in 2007 and beyond, appliance companies must continue to improve their purchasing, manufacturing and logistical efficiency, they must hone their marketing prowess, and they must provide their customers with the very best in design.

Year in Review 2006

 

Daily News

...........................................................

Oct 23, 2014: Whirlpool Corporation to Showcase Resource-Efficient Technologies at Greenbuild

Oct 23, 2014: CWIEME Chicago exhibition had record attendees

Oct 22, 2014: Middleby to add U-Line to residential appliance business

Oct 22, 2014: iRobot's 3Q exceeds expectations, driven by Home Robots growth

Oct 22, 2014: Whirlpool Canada named 2014 Energy Star Manufacturer of the Year

More Daily News>>

RSS Feeds
.........................................................
Appliance Industry
Market Research

...........................................................

September 2014: Appliance Industry Focus: HVAC
June 2014: Appliance Magazine Market Insight: April 2014
May 2014: Appliance Magazine Market Insight: March 2014
April 2014: Appliance Magazine Market Insight: February 2014




 
Contact Us | About Us | Subscriptions | Advertising | Home
UBM Canon © 2014  

Please visit these other UBM Canon sites

UBM Canon Corporate | Design News | Test & Measurement World | Packaging Digest | EDN | Qmed | Plastics Today | Powder Bulk Solids | Canon Trade Shows