CHAPTER 12. PRELIMINARY MANUFACTURER IMPACT ANALYSIS

TABLE OF CONTENTS

12.1 INTRODUCTION ......................................................................................... 12­1

12.2 METHODOLOGY ........................................................................................ 12­1

12.2.1 Phase I: Industry Profile........................................................................ 12­2

12.2.2 Phase II: Industry Cash­Flow Analysis and Interview Guide............... 12­2

12.2.3 Phase III: Sub­Group Analysis ............................................................. 12­3

12.3 PRELIMINARY MANUFACTURER IMPACT OVERVIEW.................... 12­5

12.3.1 Overview of Industry Data..................................................................... 12­5

12.3.2 Preliminary Manufacturing Interview Overview................................... 12­7

12.4 GENERAL SERVICE FLUORESCENT LAMPS........................................ 12­9

12.4.1 Product Mix ........................................................................................... 12­9

12.4.2 Conversion Costs................................................................................. 12­10

12.4.3 Materials Availability .......................................................................... 12­10

12.5 INCANDESCENT REFLECTOR LAMPS................................................. 12­10

12.5.1 Product Mix ......................................................................................... 12­10

12.5.2 Conversion Costs................................................................................. 12­11

12.6 SUMMARY OF MAJOR ISSUES FROM PRELIMINARY MIA ............ 12­11

12.6.1 Retooling Equipment to Produce Standards­Compliant Lamps.......... 12­11

12.6.2 Availability of Materials to Produce Standards­Compliant Lamps..... 12­11

12.6.3 Maintaining Product Availability and Features................................... 12­11

REFERENCES ........................................................................................................ 12­13

LISTOF TABLES

Table 12.3.1 Electric Lamp Industry Employment and Earnings................................. 12­6

Table 12.3.2 Electric Lamp Industry Census Data ................................................. 12­6

Table 12.3.3 Electric Lamp Industry Census Data ................................................ 12­6

Table 12.3.4 Full Production Capacity Utilization Rates ...................................... 12­7

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CHAPTER 12 PRELIMINARY MANUFACTURER IMPACT ANALYSIS

12.1 INTRODUCTION

The purpose of the manufacturer impact analysis (MIA) is to identify the potential

impacts of energy conservation standards on manufacturers. The Process Rule provides

guidance for conducting this analysis with input from manufacturers and other interested

parties. The U.S. Department of Energy (DOE) will apply this methodology to its

evaluation of standards to the extent it is appropriate for the development of energy

conservation standards for the lamps covered under this rulemaking. The Process Rule

gives guidelines for the consideration of financial impacts and a wide range of

quantitative and qualitative industry impacts that might occur after adoption of a

standard. For example, a particular standard level could require changes in

manufacturing practices for general service fluorescent lamps (GSFL) and incandescent

reflector lamps (IRL). DOE will identify and analyze these impacts through interviews

with manufacturers and other stakeholders during the NOPR stage of its analysis.

DOE announced changes to the MIA format through a report issued to Congress

on January 31, 2006 (as required by section 141 of EPACT 2005), entitled “Energy

Conservation Standards Activities.”a Previously, DOE did not report any MIA results

during the ANOPR phase; however, under this new format, DOE has collected,

evaluated, and reported preliminary information and data in the ANOPR. Such

preliminary information includes efficacy and market data, key issues, production mixes,

conversion costs, foreign competition, market shares, industry consolidation, and

cumulative regulatory information. DOE solicited this information during the ANOPR

preliminary manufacturer interviews and reports the results in this chapter. Appendix

12A provides a copy of the interview guide used for the preliminary manufacturer

interviews.

12.2 METHODOLOGY

DOE conducts the MIA in three phases. In Phase I, DOE creates an industry

profile to characterize the industry and conducts a preliminary MIA to identify important

issues that require consideration. Sections 12.3 ­ 12.6 of this chapter present initial

findings of the Phase I analysis. In Phase II, DOE prepares an industry cash flow model

and an interview questionnaire to guide subsequent discussions. In Phase III,

manufacturers are interviewed, and the impacts of standards are assessed both

quantitatively and qualitatively. DOE assesses industry and sub­group cash flow and

NPV using the Government Regulatory Impact Model (GRIM). Then impacts on

competition, manufacturing capacity, employment, and regulatory burden are assessed

a This report is available on the DOE website at

http://www.eere.energy.gov/buildings/appliance_standards/2006_schedule_setting.html.

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based on manufacturer interviews and discussions. The NOPR TSD presents results of

the Phase II and III analyses.

12.2.1 Phase I: Industry Profile

In Phase I of the manufacturer impact analysis, DOE collects pertinent qualitative

and quantitative financial and market information. This includes wages, employment,

and industry costs for GSFL and IRL. Sources of information include reports published

by industry groups, trade journals, the U.S. Census Bureau, and copies of Securities

Exchange Commission (SEC) 10­K filings. In addition, DOE relies on information from

its market and technology assessment, engineering analysis, life­cycle cost analysis, and

analysis of consumer prices to characterize the GSFL and IRL manufacturing industries.

12.2.2 Phase II: Industry Cash­Flow Analysis and Interview Guide

In Phase II, DOE will perform a preliminary industry cash­flow analysis and

prepare written guidelines for interviewing manufacturers.

12.2.2.1 Industry Cash­Flow Analysis

DOE uses the GRIM to analyze the financial impacts of energy conservation

standards on the GSFL and IRL industries. Standards may require additional investment,

raise production costs, and affect revenue through higher prices and possibly lower sales.

The GRIM uses several factors to determine a series of annual cash flows for the year

standards become effective and for several years after implementation. These factors

include annual expected revenues, costs of sales, selling and general administration costs,

taxes, and capital expenditures related to depreciation, new standards, and maintenance.

Inputs to the GRIM include manufacturing costs, shipments forecasts, and price forecasts

developed in other analyses. Financial information, another input, will be developed

based on publicly available data and confidentially submitted manufacturer information.

DOE compares the results of the GRIM against baseline projections where no standards

are in place. The financial impact of new standards is the difference between the two sets

of discounted annual cash flows.

12.2.2.2 Interview Guide

DOE will conduct interviews with manufacturers to gather information on the

effects of standards on revenues and finances, direct employment, capital assets, and

industry competitiveness. These interviews will take place during Phase III of the MIA.

Before the interviews, DOE will distribute an interview guide that will help identify the

impacts of standards on individual manufacturers or sub­groups of manufacturers. The

interview guide will likely cover current organizational characteristics; industry

infrastructure; manufacturer cash­flow analysis; and assessments of the impact on

competition, employment, and manufacturing capacity.

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12.2.3 Phase III: Sub­Group Analysis

Phase III activities will occur after publication of the ANOPR. These activities

will include manufacturer interviews; revision of the industry cash­flow analysis; a

manufacturer sub­group cash­flow analysis; and assessment of the impacts on

competition, manufacturing capacity, employment, and the cumulative regulatory burden.

12.2.3.1 Manufacturer Interviews

DOE will supplement the information gathered in Phase I and the cash­flow

analysis performed in Phase II with information gathered during interviews with

manufacturers during Phase III. The interview process has a key role in the manufacturer

impact analyses, since it provides an opportunity for interested parties to express their

views privately on important issues, so that confidential or sensitive information can be

considered in the rulemaking decision.

DOE will conduct detailed interviews with manufacturers to gain insight into the

potential impacts of standards on sales, direct employment, capital assets, and industry

competitiveness. Both qualitative and quantitative information are valuable. Interviews

will be scheduled well in advance to provide every opportunity for key individuals to be

available for comment. Although a written response to the questionnaire will be

acceptable, DOE prefers an interactive interview process, which helps clarify responses

and provides the opportunity to identify additional issues.

Manufacturers who participate in the interviews will be asked to identify all

confidential information provided during and following the interview. DOE will consider

all information transmitted in its decision­making process. However, confidential

information will not be made available in the public record. Participants will also be

asked to identify any information they wish to be included in the public record but do not

want attributed to them.

12.2.3.2 Revised Industry Cash­Flow Analysis

In Phase II of the MIA, DOE will prepare a preliminary GRIM. During the

interviews, DOE will seek comment and suggestions regarding the values selected for the

parameters. Upon completion of the interviews, DOE will revise its industry cash flow

model based on the feedback provided.

12.2.3.3 Manufacturer Sub­Group Analysis

Using average cost assumptions to develop an industry cash flow estimate is not

adequate for assessing differential impacts among sub­groups of manufacturers. Smaller

manufacturers, niche players, or manufacturers exhibiting a cost structure that differs

largely from the industry average could be more negatively affected. Ideally, DOE

would consider the impact on every firm individually; however, it typically uses the

results of the industry characterization to group manufacturers with similar

characteristics. During the interviews, DOE will discuss the potential sub­groups that

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have been identified for the analysis. DOE will ask manufacturers and other stakeholders

to suggest what sub­groups or characteristics are the most appropriate for the analysis.

12.2.3.4 Competitive Impact Assessment

Section 342 (6)(B)(i)(V) of the Energy Policy Act of 1992 (EPCA) directs DOE

to consider any lessening of competition that is likely to result from imposition of

standards. It further directs the U.S. Attorney General to determine the impacts, if any, of

any decrease in competition. DOE will make a determined effort to gather and report

firm­specific financial information and impacts. The competitive analysis will focus on

assessing the impacts to smaller manufacturers. The assessment will be based on

manufacturing cost data and information collected from interviews with manufacturers.

The manufacturer interviews will focus on gathering information that would help in

assessing asymmetrical cost increases to some manufacturers, the potential increase in

business risks from an increased proportion of fixed costs, and potential barriers to

market entry (e.g., proprietary technologies).

12.2.3.5 Manufacturing Capacity Impact

One of the significant outcomes of standards could be the obsolescence of

existing manufacturing assets, including tooling and investment. The manufacturer

interview guide will have a series of questions to help identify impacts on manufacturing

capacity, specifically capacity utilization and plant location decisions in the United States

and North America with and without a standard; the ability of manufacturers to upgrade

or remodel existing facilities to accommodate the new requirements; the nature and value

of stranded assets, if any; and estimates for any one­time restructuring or other charges,

where applicable.

12.2.3.6 Employment Impact

The impact of new energy conservation standards on employment is an important

consideration in the rulemaking process. To assess how domestic employment patterns

might be affected, the interview will explore current employment trends in the lamp

industry and solicit manufacturer views on changes in employment patterns that may

result from increased standard levels. The employment impacts section of the interview

guide will focus on current employment levels associated with manufacturers at each of

their production facilities; expected future employment levels, with and without a

standard; differences in workforce skills; and issues related to the retraining of

employees.

12.2.3.7 Cumulative Regulatory Burden

DOE seeks to mitigate the overlapping effects on manufacturers of standards and

other regulatory actions affecting the same equipment or companies. Based on its own

research and discussions with manufacturers, DOE identified several regulations relevant

to general service fluorescent lamps and incandescent reflector lamps, including

standards for other products made by GSFL and IRL manufacturers, and State and

international energy conservation standards.

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12.3 PRELIMINARY MANUFACTURER IMPACT OVERVIEW

During the ANOPR phase, DOE identified qualitative and quantitative public

financial and market information to help evaluate the impact of potential new regulations

on lamp manufacturer financial performance, manufacturing capacity and employment

levels, and product utility and innovation. In addition, DOE researched the cumulative

burden that industry may face from the overlapping effect of new or recent DOE energy

conservation standards or other regulatory action affecting the same product or industry.

In addition to researching publicly available data, DOE conducted interviews with

manufacturers primarily in order to identify key issues and gain insights into the

qualitative impacts of energy conservation standards. The primary sources of this

information were interviews with manufacturers of GSFL and IRL conducted during the

first quarter of FY 2007. To maintain confidentiality, DOE did not identify the individual

manufacturers that disclosed information. Instead, the evaluation only reports aggregated

information and does not disclose sensitive information or identify company­specific

information. For each product, DOE used an interview guide to gather responses from

multiple manufacturers on several issues. Appendix 12A contains a copy of the

preliminary manufacturer interview guide used for GSFL and IRL manufacturers.

The following sections summarize publicly available data as well as information

gathered during interviews for the preliminary manufacturer impact analysis. Section

12.3.1 summarizes the publicly available industry data. Section 12.3.2 outlines the

general interview structure and summarizes the issues discussed during the preliminary

MIA interviews. Sections 12.4 to Error! Reference source not found. present a

summary of the preliminary MIA interviews for each product. Section 12.6 addresses

issues common to all lamps covered in this rulemaking.

12.3.1 Overview of Industry Data

DOE compiled industry data to assess the electric lamp industry cost structure and

manufacturing utilization and capitalization rates. The following section summarizes

public data DOE obtained from U.S. Census Bureau reports.

12.3.1.1 Industry Cost Structure

DOE developed the electric lamp industry cost structure from the U.S. Census

Bureau, Annual Survey of Manufacturers, Statistics for Industry Groups and Industries

from 2002 to 2005.

Table 12.3.1 presents the electric lamp industry employment levels and earnings

from 2002­2005. The statistics illustrate a steady decline in the number of production

and non­production workers in the industry.

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1 Table 12.3.1 Electric Lamp Industry Employment and Earnings

Year Production Workers All Employees Payroll for All Employees

(thousand 2005 dollars)

2002 9,595 11,552 489,781

2003 8,972 10,790 481,524

2004 8,022 9,867 512,514

2005 7,604 9,289 495,057

Table 12.3.2 presents the costs of materials and industry payroll as a percentage

of shipment value from 2002­2005. The cost of materials and the cost of payroll for

production workers have increased since 2002. The cost of total payroll has also risen

since 2002.

2 Table 12.3.2 Electric Lamp Industry Census Data

Year

Cost of Materials

(percent of shipment

value)

Cost of Payroll

for Production Workers

(percent of shipment

value)

Cost of Total Payroll:

Production +

Administration

(percent of shipment

value)

2002 33.9 14.5 18.6

2003 36.0 14.0 18.5

2004 35.8 15.4 20.3

2005 39.6 15.0 20.1

12.3.1.2 Inventory Levels and Capacity Utilization Rates

Table 12.3.3 shows the year­end inventory for the electric lighting industry

obtained from the U.S. Census Bureau, Annual Survey of Manufacturers, Statistics for

Industry Groups and Industries from 2002 to 2005. Both in dollars and as a percentage

of shipment value, the end­of­year inventory for the industry has steadily increased since

2002.

3 Table 12.3.3 Electric Lamp Industry Census Data

Year End­of­Year Inventory

(million 2005 dollars)

End­of­Year Inventory

(percent of shipment value)

2002 213,569 8.1

2003 212,207 8.2

2004 226,482 9.0

2005 235,934 9.6

DOE obtained full production capacity utilization rates from the U.S. Census

Bureau, “Current Industrial Reports,” Survey of Plant Capacity from 2001 to 2005. Table

12.3.4 presents production capacity utilization rates for the electric lighting equipment

industry. Full production capacity is defined as the maximum level of production an

establishment could attain under normal operating conditions. In the Survey of Plant

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1

2

3

4

5

Capacity report, the full production utilization rate is a ratio of the actual level of

operations to the full production level.

4 Table 12.3.4 Full Production Capacity Utilization Rates

Year

Capacity Utilization Rates

(Percent)

Electric Lamp Bulb

& Part

Manufacturing

Residential Electric

Lighting Fixture

Manufacturing

Commercial/Industrial/Institutional

Electric Lighting Fixture

Manufacturing

200 63 46 58

200 67 52 54

200 61 62 55

200 71 55 63

200 62 62 61

12.3.2 Preliminary Manufacturing Interview Overview

In addition to reviewing publicly available data, DOE conducted interviews of

manufacturers for a preliminary manufacturer impact analysis. The following section

highlights the topics discussed during these interviews. A copy of the manufacturer

interview guide used when conducting these interviews can be found in Appendix 12A.

12.3.2.1 Key Issues

Perhaps the most important aspect of the preliminary MIA is the opportunity it

creates for DOE to identify key manufacturer issues early in the development of new

standards. During the interviews, DOE engages the manufacturers in a discussion about

what they perceive to be the key issues in the rulemaking. For example, key issues in

previous rulemakings have included concerns over patent protections that might prevent

some companies from implementing higher­efficiency designs.

12.3.2.2 Production and Product Mix

DOE requests manufacturers’ views on what they perceive to be the possible

impact of new standards on profitability. For instance, the capital and product conversion

outlays needed to upgrade or redesign products and product platforms before they have

reached the end of their useful life may create significant conversion costs, resulting in

reduced cash flow and stranded investments. Higher energy conservation standards may

also result in higher per­unit costs that could cause consumers to shift to less costly

products.

12.3.2.3 Conversion Costs

During the interviews, DOE asks manufacturers to quantify and explain both the

capital and the product conversion costs necessary to raise the energy efficiency of their

product lines to the proposed standard levels. In some instances, manufacturers may be

able to meet proposed standard levels by modifying existing products. In other cases, the

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necessary changes may entail a complete product­line redesign. In these situations, an

increase in a standard will cause manufacturers to incur one­time conversion capitalexpenditures and product­conversion expenses. Conversion capital­expenditures are onetime investments in property, plant and equipment. Product­conversion expenses include

one­time investments in research, product development, testing and marketing.

A potentially significant outcome of new standards could be the obsolescence of

existing manufacturing assets, including tooling and other capital investment. The

interview guide includes questions to identify impacts on manufacturing capacity. These

questions were developed to understand the impact of potential new standards on:

• U.S. and North American manufacturing capacity;

• capacity utilization and plant location decisions in the United States and North

America both with and without standards;

• the ability of manufacturers to upgrade or remodel existing facilities to accommodate

a new product mix; and

• the nature and value of stranded assets, if any.

DOE will explore current trends in production employment and solicit

manufacturer views on changes in employment patterns resulting from new energy

conservation standards. Questions regarding employment impacts help to understand:

• current employment levels associated with manufacturing at each production facility;

• expected future employment levels with and without new standards; and

• differences in workforce skills and issues related to retraining.

12.3.2.4 Exports, Foreign Competition, and Outsourcing

Energy conservation standards for IRL and GSFL can have an impact on

projected export sales, the portion of the domestic market served by foreign competition,

and domestic production levels. The preliminary MIA interview questions examined

manufacturer views on the impacts new standards would have on exports, foreign

competition, and outsourcing.

12.3.2.5 Market Shares and Industry Consolidation

New standards can alter the competitive dynamics of the marketplace, prompting

companies to enter the market, exit the market, or merge with other companies. The

preliminary MIA interview questions ask manufacturers to share their perspectives on

industry consolidation both in the absence of new standards and assuming new standards

at various efficiency levels. The interview questions focus on gathering information that

helps assess:

• disproportionate cost increases to some manufacturers;

• increased proportion of fixed costs potentially increasing business risks; and

• potential barriers to market entry (e.g., proprietary technologies).

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The need to assess anti­competitive effects of proposed standards comes from the

need to protect consumer interests. During the interviews, DOE solicits information to

understand if new standards could result in disproportionate economic or performance

penalties for particular consumer or user subgroups. Manufacturers are also asked if new

standards could result in products that will be more or less desirable to consumers due to

changes in product functionality, utility, or other features.

12.3.2.6 Cumulative Burden

While any one regulation may not impose a significant burden on manufacturers,

the combined effects of several impending regulations may have serious consequences

for individual manufacturers, groups of manufacturers, or entire industries. Assessing the

impact of a single regulation may overlook this cumulative regulatory burden.

Expenditures associated with meeting other regulations are an important aspect of

DOE’s consideration of the “cumulative regulatory burden” industry faces. The

interviews help DOE identify the level and timing of investments manufacturers are

expecting to incur because of these regulations. Manufacturers are also asked under what

circumstances they might be able to make expenditures related to regulations and

standards.

12.4 GENERAL SERVICE FLUORESCENT LAMPS

During the course of the preliminary MIA for GSFL, DOE interviewed

manufacturers of fluorescent lamps. DOE used information from these interviews to

review the engineering analysis in Chapter 5. These interviews also discussed the

business­related topics summarized below. DOE’s objective was to become familiar with

each company’s particular market approach and financial structure, and its concerns

about new energy conservation standards. These meetings are covered by non­disclosure

agreements and the company­specific information resides with DOE contractors. Before

each visit, DOE provided company representatives with an interview guide (see

Appendix 12A) that included the topics outlined in section 12.3.2 of this chapter. The

following paragraphs summarize manufacturers’ principle concerns about new energy

conservation standards for GSFL, namely product mix, conversion costs, and materials

availability.

12.4.1 Product Mix

Manufacturers interviewed believe that energy conservation standards will impact

the product mix of fluorescent lamps. In particular, manufacturers expect that higher

efficacy standards could eliminate the use of certain phosphors or even change the type of

lamp installed. For example, if set high enough, new standards could cause the market to

convert from T12 general service fluorescent lamp product lines to T8 lamp product

lines. Furthermore, some manufacturers also commented that while most materials are

available to make more energy­efficient lamps, some materials are increasing in price.

These higher material prices could in turn increase the cost of producing a lamp, and

thereby have an impact on lamp price.

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12.4.2 Conversion Costs

Manufacturers expressed concern over conversion costs associated with making

their equipment produce lamps that are standards compliant. At some high standard

levels, the new requirements might force manufacturers to convert nearly exclusively

from T12 to T8 product lines. Currently, most manufacturers produce both T12 and T8

lamps. However, manufacturers indicated that if the production volume were to shift

from T12 to T8, some manufacturers felt that the typical regulatory compliance time

period (i.e., 3 years) to convert production from a T12 equipment line to a T8 equipment

line could be too short.

12.4.3 Materials Availability

Certain manufacturers expressed concern about the availability of certain rare

earth phosphors in sufficient quantities in order to comply with the standard level. In

particular, the concern focused on a movement toward a new minimum efficacy standard

that was too aggressive and might require a rapid conversion to more efficacious lamps

than the phosphor manufacturers could accommodate. DOE notes that this is also an

important issue for manufacturers because the phosphor “wall thickness” (i.e., quantity

applied to the inside of the lamp wall) in a general service fluorescent lamp directly

relates to lamp efficacy.

12.5 INCANDESCENT REFLECTOR LAMPS

During the course of the preliminary MIA for IRL, DOE interviewed

manufacturers of reflector lamps. DOE used the information from these interviews to

review the engineering analysis in Chapter 5. The interviews also discussed the businessrelated topics summarized below. DOE’s objective was to become familiar with each

company’s particular market approach and financial structure, and its concerns about new

energy conservation standards. These meetings are covered by non­disclosure

agreements and the company­specific information resides with DOE contractors. Before

each visit, DOE provided company representatives with an interview guide (contained in

Appendix 12A) that included the topics discussed in section 12.3.2 of this chapter. The

following paragraphs summarize manufacturers’ principle concerns about new standards

for IRL, namely product mix and the time allowed for conversion of high­volume

production equipment.

12.5.1 Product Mix

Manufacturers commented that increasing the efficacy standard may change the

mix of products in the market. In particular, certain lamp shapes and sizes may not be

able to meet certain efficacy standards. For example, an R20 halogen lamp would likely

not meet the same efficacy standard as other comparable halogen lamps. Furthermore,

substitute products, such as CFL reflector lamps, may become more attractive if new

efficacy standards cause IRL to be significantly more expensive, reducing the relative

price difference between IRL and replacement lamps such as CFL reflector lamps.

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12.5.2 Conversion Costs

Manufacturers commented that, depending on the timeframe for transition, they

could face production capacity problems if DOE were to raise standards so high that

compliance required the use of halogen capsules. Similarly, manufacturers commented

that they were concerned that if DOE were to raise the standard to a level that required

infrared reflective (IR) coatings on the halogen capsules, there would be a production

capacity problem because that process is time consuming because it involves layering

dozens of thin film coatings on the capsule.

12.6 SUMMARY OF MAJOR ISSUES FROM PRELIMINARY MIA

DOE conducted a series of preliminary interviews with manufacturers to assess

their concerns about potential impact of a change in the regulatory standard or coverage

of fluorescent and incandescent reflector lamps. In general, manufacturers identified the

following major issues of concern: a) Sufficient time to retool in response to the

standards; b) Availability of materials to produce standards­compliant lamps; and c)

Maintaining product availability and features that consumers use.

12.6.1 Retooling Equipment to Produce Standards­Compliant Lamps

All of the manufacturers interviewed expressed concern over the time periods

allowed under EPCA for developing standards­compliant lamps. For GSFL, some

manufacturers expressed concern about the time period necessary to retool to produce

standards­compliant lamps (e.g., converting from a T12 product line to a T8 product line

at certain standard levels). For IRL, manufacturers commented that, depending on the

timeframe for transition, they could face production capacity problems if DOE were to

raise standards such that it required the use of halogen capsules or infrared reflective (IR)

coatings on halogen capsules. Manufacturers felt there could be a production capacity

problem due to the process time involved in layering dozens of IR reflective thin film

coatings on the capsule. The high volumes associated with both major lamp types were

cited frequently as the underlying cause for concern.

12.6.2 Availability of Materials to Produce Standards­Compliant Lamps

Manufacturers interviewed expressed concern over the availability of materials to

manufacture standards­compliant lamps. More specifically, concern was expressed over

potential shortages of certain materials (e.g., certain phosphors, such as those that

produce blue light) that could increase the production cost.

12.6.3 Maintaining Product Availability and Features

Manufacturers expressed concern to DOE over the potential impact the regulation

may have on their ability to continue to supply a wide diversity of products with

attributes and features that their customers require. Depending on the mandatory

standard level, manufacturers expressed concern that certain lamp shapes and sizes may

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be eliminated from the market, or that significant market shifts could occur (e.g., from

incandescent technology to compact fluorescent lamps).

DOE will be conducting the manufacturer impact analysis for the NOPR stage of

this rulemaking. Therefore, DOE will be investigating this preliminary list of issues in

more depth, as well as discussing other impacts that manufacturers may experience.

DOE invites stakeholders to comment on these and other issues, relating to the regulatory

impacts on manufacturers.

DOE considered the possible effect of energy conservation standards for GSFL

and IRL on small businesses. At this time, DOE is not aware of any small manufacturers

of the lamps being considered in this rulemaking. Should any small business

manufacturers be identified, DOE will study the potential impacts in greater detail during

the MIA, which DOE will conduct as a part of the NOPR analysis.

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REFERENCES

1 U.S. Census Bureau. 2005 Annual Survey of Manufacturers: Table 2 ­ Statistics for

Industry Groups and Industries: 2005 and Earlier Years. December, 2006. Washington,

D.C. <www.census.gov/prod/2006pubs/am0531gs1.pdf>

2 Ibid.

3 U.S. Census Bureau. 2005 Annual Survey of Manufacturers: Table 6 – Value of

Manufacturers’ Inventories by Stage of Fabrication for Industry Groups and Industries:

Beginning and End of Year. November, 2006. Washington, D.C.

<www.census.gov/prod/2006pubs/am0531gs1.pdf>

U.S. Census Bureau. 2005 Annual Survey of Manufacturers: Table 2 – Statistics for

Industry Groups and Industries: 2005 and Earlier Years. December, 2006. Washington,

D.C. <www.census.gov/prod/2006pubs/am0531gs1.pdf>.

4 U.S. Census Bureau. 2007 Current Industrial Reports: Table 1a – Full Production

Capacity Utilization Rates by Industry: Fourth Quarters 2001 through 2005. January,

2007. Washington, D.C. <http://www.census.gov/prod/2007pubs/mqc1­05.pdf>.

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