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issue: January 2008 APPLIANCE Magazine

Materials Forecast
Adding to the Chorus

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by David Simpson, Contributing Editor

Metals and plastics get top billing among appliance constituents, but no appliance materials are immune to cost pressures.


Overall, demand for glass is down in the United States due to the residential housing market slowdown. As a result, says Stephen Weidner, director of marketing and sales, Pilkington (Toledo, OH, U.S.), there is no issue with glass availability. But he sees a bias toward prices increasing due to cost escalation of raw materials, energy, and transportation.

“Clear soda-lime glass has been plentiful in 2007 and is anticipated to remain readily available throughout the next year or so,” adds Fred Fowler, president, Marsco Glass Products (Chicago). “The residential window market has fallen along with the real estate market, which has loosened up the supply of glass.

“The major issues in 2007 have been energy and the price of base metals and solvents. Electricity was deregulated in 2007 in Illinois, where Marsco is headquartered, and virtually all of our manufacturing equipment is electrical. As a result, we have seen a 35–40% rise in our direct costs for electricity compared with 2006.

“We continue to pay per-truckload energy surcharges on all of the glass that we buy, as well as diesel surcharges on freight and transportation and, for the first time, a per-pound surcharge on tin-based compounds. The price of some alcohols and other solvents has more than doubled over the course of 2007. Several of these components have gotten scarce, and we have had to make occasional purchases on the spot market.

“I believe that glass will remain abundant until the real estate market bounces back. Despite that, we expect our other costs to continue to rise as oil passes $100 a barrel and the global demand for solvents, base metals, and other materials continues to grow. We will have to start passing through some of these costs to the appliance makers if we are going to remain a viable supplier.”

In addition to glass costs, Mark Delp, executive vice president, Gemtron Corp. (Sweetwater, TN, U.S.), points out that his company is faced with the costs of meeting new standards. “For 2008, ceramic frit inks will experience dramatic increases as the industry moves to meet RoHS standards by taking out lead and other metals from the ink. Price increases in these materials versus leaded ink could more than double or triple in some applications. The dramatic rise in bismuth is driving the increases. While the United States has moved slower than Europe to adapt RoHS standards, most ink and paint manufacturers will cease making products with lead and metal, forcing customers to convert at the higher cost.”


The anemic residential market has significantly affected appliance demand for glass-fiber insulation.

“The OEMs focused on new construction have certainly been hit harder than those with a stronger customer base in remodel, but all sectors are seeing a downturn—it’s a matter of degree,” notes Tanya Bradby, senior product manager, OEM insulations, Johns Manville (Denver, CO, U.S.). “The market downturn has initiated a stronger commitment to cost reduction programs, so we have seen increased price pressure. The upside of cost reduction is that it opens the door for redesign as all cost reduction isn’t price-focused. We are forecasting the residential market to be down in 2008, which translates to no capacity constraints with the OEMs continuing to emphasize cost reduction projects.”

Refrigerants/Blowing Agents

Refrigerants and foam-blowing agents continue to be affected not just by the rising cost of raw materials, transportation, and energy, but also by changing regulations. HCFC-22 will no longer be produced in or imported to the United States for use in new air-conditioning and refrigeration equipment starting in 2010, due to its ozone depletion potential, reports DuPont (Wilmington, DE, U.S.). The U.S. transition in foam expansion agents from HCFC-22 and HCFC-142b to non-ozone-depleting alternatives such as HFC-134a begins in 2008 with pour-in-place polyurethane foams. In 2009, the transition continues with marine foams, and it is complete by 2010 with the transition of extruded polystyrene foams. Trends for both refrigerants and foam expansion agents are expected to increase demand significantly over the next few years for HFC-134a and other non-ozone-depleting alternative products.

DuPont expects that HFC-134a manufacturing costs will increase significantly due to higher raw material (especially hydrofluoric acid), energy, and freight costs. Also, due to the acceleration in the phaseout of HCFCs recently adopted under the terms of the Montreal Protocol, the company expects increased demand for non-ozone-depleting HFC refrigerant blends, such as DuPont Suva 410A, Suva 404A, and ISCEON refrigerants in 2008 and beyond. Those blends typically use HFC-125, which is co-manufactured in facilities that also make HFC-134a. As a result of increasing demand for HFC-125, the company believes available manufacturing capacity for HFC-134a may decrease in the 2008–2010 time period.
Packaging Materials

Plastic and linerboard packaging materials prices are increasing while availability decreases due to U.S. producers’ exporting capacity at higher prices.

“With less Asian interest in supplying materials, prices are at just about all-time highs for packaging foams such as expanded polystyrene, expanded polyethylene, and expanded polypropylene,” declares Gary McLaughlin, vice president, sales and marketing at Huntington Foam Corp. (Coraopolis, PA, U.S.). “We anticipated a price downturn a few months ago, but it didn’t happen. Oil prices have been up, and we are using oil-based materials. Our suppliers are looking for further increases in the first quarter.”

Expect to hear more of the same song from other suppliers—high energy prices, high global demand, and likely overall price increases in 2008. It may not make a pretty tune, but appliance companies that plan ahead may be able to tolerate it.

Porcelain Enamel

Looking at porcelain enamel, Brad Devine, sales and marketing manager, Ferro Corp., Industrial Coatings Group, Porcelain Enamel Division (Cleveland, OH, U.S.), says: “In 2007, raw material costs have again been a critical issue for our business, along with the slowdown in the housing market and the associated appliance market decline. We have experienced significant cost increases in zircon, titanium, cerium, lead, borates, barium, nitrates, and many other raw materials critical to the production of porcelain enamel coatings. Lithium, nickel, and cobalt have increased or leveled off at unprecedented levels this year and show little signs of decreasing significantly heading into 2008 due to high demand in other markets.

“Because of the instability of raw material costs throughout 2007, we were forced to implement a price increase for porcelain enamel products of 10–17% effective September 1, 2007, along with continuing the nickel and cobalt metal surcharges already in effect. Ferro continues to invest in process improvements and rely on lean manufacturing principles to control our internal costs. But these incremental improvements have not offset the unprecedented raw-material increases we have experienced the last four years. I expect porcelain enamel prices to continue to increase in 2008, hopefully at a lower rate than the last few years if raw materials start to level off.”


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