3

- i CHAPTER 3

. MARKET AND TECHNOLOGY ASSESSMENT

TABLE OF CO NTENTS

3.1 INTRODUCTION

................................ ................................ ................................ ........... 3

- 1 3.2 PRODUCT DEFINITIONS

................................ ................................ ............................. 3

- 1 3. 3 PRODUCT CLASSES

................................ ................................ ................................ ..... 3

- 1 3.4 PRODUCT TEST PROCEDU RES

................................ ................................ ................. 3

- 4 3.5 MANUFACTURER TRADE G ROUPS

................................ ................................ ......... 3

- 5 3.6 MANUFACTURER INFORMA TION

................................ ................................ ........... 3

- 6 3. 6.1 Manufacturers and Market Shares

................................ ................................ ................... 3

- 6 3.6.2 Mergers and Acquisitions

................................ ................................ ................................ 3

- 8 3.6.3 Small Business Impacts

................................ ................................ ................................ . 3

- 10 3.6.4 Distribution Channels

................................ ................................ ................................ .... 3

- 10 3.7 REGULATORY PROGRAMS

................................ ................................ ..................... 3

- 10 3.7.1 Federal Energy Conservation Standards

................................ ................................ ........ 3

- 10 3.7.2 Energy Independence and Security Act of 2007

................................ ............................ 3

- 11 3.7.3 Foreign Standby Power Regulatory Program s

................................ ............................... 3

- 12 3.8 VOLUNTARY PROGRAMS

................................ ................................ ........................ 3

- 13 3.9 HISTORICAL SHIPMENTS

................................ ................................ ......................... 3

- 14 3.9.1 New Home Starts

................................ ................................ ................................ ........... 3

- 14 3.9.2 Unit Shipments

................................ ................................ ................................ ............... 3

- 15 3.9.3 Value of Shipments

................................ ................................ ................................ ........ 3

- 16 3.9.4 Imports and Exports

................................ ................................ ................................ ....... 3

- 18 3.10 MARKET SATURATION

................................ ................................ ............................ 3

- 19 3.11 PRODUCT RETAIL PRICE S

................................ ................................ ....................... 3

- 19 3.12 INDUSTRY COST STRUCT URE

................................ ................................ ................ 3

- 20 3.13 INVENTORY LEVELS AND CAPACITY UTILIZATION RATES

.......................... 3

- 24 3.14 TECHNOLOGY ASSESSMEN T

................................ ................................ .................. 3

- 26 3.14 .1 Product Operations and Components

................................ ................................ ............. 3

- 26 3.14.2 Technology Options

................................ ................................ ................................ ....... 3

- 27 3.14.3 Energy Efficiency

................................ ................................ ................................ .......... 3

- 31

LIST OF TABLES

Table 3.3.1 Microwave Oven Product Classes

................................ ................................ ............ 3

- 3 Table 3.6.1 Major and Other Microwave Oven Manufacturers

................................ .................. 3

- 7 Table 3.6.2 Core Appliance Manufacturers

................................ ................................ ................ 3

- 8 Table 3.7.1 EU Ecodesign Requireme nts for Standby and Off Mode

................................ ...... 3

- 13 Table 3.8.1 FEMP Recommendations for Microwave Ovens

................................ .................. 3

- 14 Table 3.9.1 Industry Shipments of Microwave Ovens (Domestic and Import in Thousands of Units)

................................ ................................ ........................... 3

- 16 Table 3.9.2 Household Appliance Manufa cturing Statistics by Year

................................ ....... 3

- 173

- ii Table 3.9.3 Disposition of Previous Appliance ( Percentage )

................................ .................. 3

- 17 Table 3.9.4 Household Cooking Appliance Manufacturing Statistics by Year

........................ 3

- 18 Table 3.9.5 2008

– 2 009 Imports of Microwave Ovens

................................ ............................. 3

- 19 Table 3.9.6 2008

– 2009 Exports of Microwave Ovens

................................ ............................ 3

- 19 Table 3.10.1 Appliance Saturation (Number in Millions) and Percentage of U.S. Households with Product

................................ ................................ ................... 3

- 19 Table 3.11.1 Residential Appliance Retail Prices

................................ ................................ ..... 3

- 20 Table 3.12.1 Household Appliance Industry Employment and Earnings

................................ . 3

- 21 Table 3.12.2 Household Cooking Appliance Industry Employment and Earnings

.................. 3

- 22 Table 3.12.3 Household Appliance Industry Census Data

................................ ....................... 3

- 23 Table 3.12.4 Household Cooking Appliance Industry Census Dat a

................................ ........ 3

- 24 Table 3.13.1 Household Appliance Industry Census Data

................................ ....................... 3

- 25 T able 3.13.2 Household Cooking Appliance Industry Census Data

................................ ........ 3

- 25 Table 3.13.3 Full Production Capacity Utilization Rates

................................ ......................... 3

- 26 Table 3.14.1 Technology Options for Microwave Oven

– Standby Power

.............................. 3

- 28

LIST OF FIGURE S

Figure 3.6

. 1 2008 Market Shares for the Domestic Microwave Oven Market

........................... 3

- 7 Figure 3.6

. 2 2008 Core Appliance Market Shares

................................ ................................ ...... 3

- 8 Figure 3.9

. 1 New Privately Owned Single

- Family and Multi

- Family Housing Unit Starts in the United States from 1998

– 2009

................................ ............................... 3

- 15 Figure 3.14

. 1 AHAM and CBEEDAC Microwave Oven Standby Power versus Rated Output Power ,

................................ ................................ ................................ ..... 3

- 31 Figure 3.14

. 2 Microwave Oven Standby Power Consumption from the FEMP Database

....... 3

- 323-1 CHAPTER 3. MARKET AND TECHNOLOG Y ASSESSMENT

3.1 INTRODUCTION

This chapter provides a profile of the residential microwave ovens in the United States

. The U.S. Department of Energy (DOE) developed the market and technology assessment presented in this chapter primarily from publicly available information

. This assessment is helpful in identifying the major manufacturers and their p roduct characteristics, which form the basis for the engineering and the life

- cycle cost (LCC) analyses

. Present and past industry structure and industry financial information help DOE in the process of conducting the manufacturer impact analysis.

3.2 PRODUCT DEFINITIONS

DOE defines “ microwave oven ” under the Energy Policy and Conservation Act (EPCA) of 1975 , Pub. L. 94

- 163, (42 United States Code ( U.S.C. ) 6291

– 6309) as “ a class of kitchen ranges and ovens which is a household cooking appliance consisting of a compartment designed to cook or heat food by means of microwave energy. ” (10 Code of Federal Regulations ( CFR ) 430.2)

3.3 PRODUCT CLASSES

DOE intends to separate microwave ovens into product classes

. Because DOE will formulate a separate energy conservation s tandard for each product class, the criteria for separation into different classes are: (1) type of energy used, and (2) capacity or other performance

- related features such as those that provide utility to the consumer or others deemed appropriate by the S ecretary that would justify the establishment of a separate energy conservation standard

. (42 U.S.C. 6295 (q))

In the notice of proposed rulemaking (NOPR) published on October 17, 2008 (hereafter the “October 2008 NOPR”) , DOE proposed a single product class for microwave ovens. DOE stated t his product class encompass es microwave ovens with and without browning elements, but does not include microwave ovens that incorporate convection systems. 73 FR 62034, 62048.

DOE reassessed what products would be c onsidered microwave ovens under the regulatory definition, and whether multiple product classes would be appropriate. As discussed in the microwave oven test procedure final rule which was published in the Federal Register on March 9, 2011 (hereafter, the “ March 2011 TP Interim Final Rule ”) , DOE stated that microwave ovens with or without thermal elements would be considered covered products under the definition provided in 10 CFR 430.2. In addition, DOE stated that combination microwave ovens3-2 ( i.e. , microw ave ovens that incorporate convection features and possibly other means of cooking) would also be considered covered products under the regulatory definition in 10 CFR 430.2 because they are capable of cooking or heating food by means of microwave energy. DOE stated, based on its preliminary analysis, it believes that the general standby mode and off mode operation for combination microwave ovens does not differ from that of microwave

- only units and microwave ovens with thermal elements only. The standby mo de operation for combination microwave ovens, as with other types of microwave ovens, consists of an energized display with a clock. As a result, DOE amended the microwave oven test procedure to require that the same standby mode and off mode testing metho ds be used for all microwave ovens. 76 FR 12825, 12828

– 30 (Mar

. 9, 2011)

.
In order to determine whether specific types of microwave ovens should be separated into different product classes, DOE investigated whether there are any performance related featu res that would justify the establishment of a separate energy conservation standard. As discussed in the October 2008 NOPR, DOE tested a sample of 32 countertop microwave

- only units and measured standby power ranging from 1.2 watts (W) to 5.8 W. 73 FR 62034, 62042 (Oct. 17, 2008). None of these units was capable of operation in off mode, nor is DOE aware of any other current microwave ovens capable of such operation. DOE noted that standby power consumption for microwave

- only units larg ely depended on the presence of a cooking sensor, the display technology, the power supply and control board, and implementation of a power

- down feature. With regards to display technologies, DOE noted that microwave

- only units incorporated Light Emitting Diode (LED) displays, Liquid Crystal Displays (LCDs), and Vacuum Fluorescent Displays (VFDs).

DOE conducted a survey of over

- the

- range microwave

- only units available on the U.S. market. DOE determined that the display technologies used are similar to thos e used in countertop microwave

- only units ( i.e. , LED displays, LCDs, and VFDs). DOE’s market survey revealed that multiple over

- the

- range microwave

- only units incorporate both LED displays and LCDs. DOE research suggests that LED displays and LCDs in both countertop and over

- the

range microwave

- only products offer acceptable consumer utility features, including brightness, viewing angle, and ability to display complex characters. DOE also conducted in

- store standby mode testing on a limited sample of over

- t he

- range microwave

- only units which showed similar standby power consumption as countertop microwave

- only units. For these reasons, DOE tentatively concludes that over

- the

- range microwave

- only units would not warrant a separate product class according to t he criteria put forth by EPCA. (42 U.S.C. 6295(q)) . DOE understands that over

- the

- range microwave

- only units may have additional components that are energized during active mode operation ( i.e. , exhaust fan motors). However, DOE’s testing showed that the

p resence of such features did not increase the standby power consumption to warrant establishing a separate product class.

DOE also conducted standby power testing on a sample of 13 representative combination microwave ovens, including 5 countertop combination microwave ovens, 6 over

- the

- range combination microwave ovens, and 2 built

- in combination microwave ovens. DOE’s testi ng showed that the countertop combination microwave ovens use similar display technologies as countertop microwave

- only units ( i.e. , LED displays, LCDs, and VFDs), and had standby power3-3 consumption ranging from 1.2 W to 4.7 W, which is similar to the stand by power consumption for countertop microwave

- only units. As a result, DOE tentatively concludes that countertop combination microwave ovens would not warrant a product class separate from microwave

- only ovens. DOE’s testing of built

- in and over

- the

- range combination microwave ovens showed that the standby power consumption for these products ranged from 4.1 W to 8.8 W, which is higher than the standby power consumption for other microwave oven product types ( i.e. , countertop microwave

- only, over

- the

- range microwave

- only, and countertop combination microwave ovens). DOE’s reverse

- engineering analysis suggests that the additional features in built

- in and

over

- the

- range combination microwave ovens required to handle the thermal loads associated with their inst allation and to provide consumer utility , such as additional exhaust fan motors, convection fan motors and heaters, and additional lights, require a significant number of additional relays on the control board, and thus require a larger power supply for th e control of such relays. While the relays themselves do not consume power in standby mode , they increase the total power supply requirements of the control board and thus increase the standby losses of the power supply. As a result, DOE believes that a se parate product class should be established for built

- in and over

- the

- range combination microwave ovens. DOE recognizes that built

- in and

over

- the

- range microwave

- only units may similarly require some additional relays for exhaust fans and lights, and that countertop combination microwave ovens would require some additional relays for convection fans and heaters. However, DOE’s product testing and reverse

engineering analyses indicated that these product types use similar

- sized power supplies as those found in countertop microwave

- only units, and as a result would not warrant a separate product class from countertop microwave

- only units . Details of standby power testing for the determination of product classes are presented in chapter 5 of this technical supp ort document ( TSD )

.
In summary, DOE proposes to establish the following two product classes for microwave

ovens:

Table 3.3

. 1 Microwave Oven Product Classes Product Class 1. Microwave

- Only Ovens and Countertop Combination Microwave Ovens 2. Built

- in and Over

- the

- Range Combination Microwave Ovens

DOE determined that separate product classes for the purposes of setting energy conservation standards addressing standby mode and off mode energy use are warranted on the basis of different standby power performance. DOE did not evaluate whether the same product class distinction would also be appropriate for any active mode energy use standards because DOE eliminated the regulatory provisions establishing the cooking efficiency test procedure for microwave ovens in a final rule published in the Federal Register on July 22, 2010 (hereafter, the “July 2010 TP Final Rule”)

. 75 FR 42579

. If DOE adopts amendments to the microwave oven test procedure to include p rovisions for measuring active mode cooking efficiency, DOE may reevaluate these product classes as part of a future microwave oven energy conservation standards rulemaking. At that time, DOE may consider dividing countertop combination3-4 microwave ovens and over

- the

- range/built

- in microwave

- only units into separate product classes to account for the energy performance of heating components other than the microwave portion.

3.4 PRODUCT TEST PROCEDU RES

DOE originally established t est procedures for microwave ovens to determine energy efficiency and annual energy use as the basis for representation and determination of compliance with energy conservation standards

. DOE established test procedures for microwave ovens through the rulemaking process

.
Historically, DOE ’s test procedures for microwave ovens appeared at appendix I to subpart B of Title 10 of the CFR. Th ose test procedure s w ere part of a May 10, 1978 , final rule that first established test procedures for conventional ranges, cooktops, and ovens (including microwave ovens). 43 FR 20108. DOE revised its test procedures for cooking products to measure their efficiency and energy use more accurately

, publishing a final rule on October 3, 1997

. 62 FR 51976

. The revised microwave oven test procedure incorporated portions of the International El ectrotechnical Commission (IEC) Standard 705

- 1998 and Amendment 2

- 1993 (IEC Standard 705), Methods for Measuring the Performance of Microwave Ovens for Households and Similar Purposes

. It measure d microwave oven cooking efficiency, but did not address energy use in the standby mode or off modes. Id.

Section 310 of the Energy Independence and Security Act of 200 7 ( EISA 2007 ) (Pub. L. No. 110

- 140) amends Section 325 of the EPCA to require that that the test procedures for microwave ovens be amended to include measurement of standby mode and off mode power , taking into consideration the most current version of IEC Standard 62301 Household electr ical appliances

– Measurement of standby power (IEC Standard 62301) and IEC S tandard 62087 Methods of measurement for the power consumption of audio, video and related equipment

. a EPCA, as amended by the EISA 2007 , also states that the final rule for this test procedure shall be published no later than March 31, 2011. ( 42 U.S.C. 6295(gg))

DOE published a test procedure NOPR on October 17, 2008 (hereafter referred to as the

“ October 2008 TP NOPR ” ), in which it proposed to incorporat e provisions from IEC Standard 62301 First Edition into the DOE microwave oven test procedure, as well as language to clarify application of these provisions for measuring standby mode and off mode power in microwave ovens. The October 2008 TP NOPR also proposed correcting a technical error in the calculation of microwave test cooking energy output. 73 FR 62134 (Oct. 17, 2008)

. DOE held a public meeting on the proposed rulemaking on November 14 , 2008 . DOE received comments from interested parties both in written responses to t he October 2008 NOPR and at the November 2008 Public Meeting.

a IEC 62087 does not cover any products for this rulemaking, and therefore was not considered.3-5 After considering stakeholder comments and additional information, DOE issued a supplemental NOPR ( SNOPR ) on July 22, 2010 (hereafter referred to as the July 2010 TP SNOPR) for the test proce dure for measuring microwave oven standby mode and off mode power consumption. 75 FR 42612 (Jul

. 22, 2010). In that SNOPR, DOE proposed adopting definitions of modes based on relevant provisions from IEC Standard 62301 Second Edition, Committee Draft for Vote (IEC Standard 62301 CDV), as well as language to clarify application of those provisions for measuring microwave oven standby mode and off mode power consumption. Id

.
In response to the October 2008 TP NOPR, DOE received comments from interested parties regarding the accuracy and repeatability of the existing DOE microwave oven test procedure for measuring cooking efficiency . Because of issues DOE identified with using its existing microwave oven test procedure, including the large test

- to

- test variation in cooking efficiency measurements, and because DOE is unaware of any test procedures that have been developed that address the concerns with the DOE microwave oven cooking efficiency test procedure raised by these interested parties, DOE published the July 2010 TP Final Rule repealing the provisions in the existing microwave oven test procedure relating to the measurement of cooking efficiency and energy factor (EF). 75 FR 42579 (Jul

. 22, 2010)

. Therefore, the requirement to integrate energy consumption in standby mode and off mode into an overall energy descriptor does not apply. DOE also publi shed a notice in the Federal Register on July 22, 2010, announcing a public meeting to consider developing a new test procedure for active mode energy consumption of microwave ovens, and DOE will consider the statutory requirement to integrate the test pro cedures for standby and off mode as any active mode test procedures are developed. 75 FR 42611.

DOE held a public meeting on September 16, 2010, to receive oral comments on the July 2010 TP SNOPR, and also sought and received written comments. DOE also i nvited inputs on microwave active mode test procedures for a potential new test procedure rulemaking

.
After consideration of these comments, DOE published the March 2011 TP Interim Final Rule addressing microwave oven standby mode and off mode power. 76 FR 12825 ( Mar

. 9, 2011 )

. In that final rule, DOE adopted the provisions for the measurement of standby mode and off mode power use for both products that were pro posed in the July 2010 TP SNOPR. In addition, DOE also adopted provisions to define the test duration for cases in which the measured power is not stable ( i.e. , varies over a cycle), recognizing that the power consumption of microwave oven displays can vary based on the displayed clock time

. 76 FR 12825, 12837

– 40 (Mar. 9, 2011)

.

3.5 MANUFACTURER TRADE GROUPS

DOE recognizes the importance of trade groups in disseminating information and promoting the interests of the industry that they support

. To gain insight into the residential microwave oven industr y , DOE researched various associations available t o manufacturers,3-6 suppliers, and users of such equipment

. DOE also used the member lists of these groups in the construction of an exhaustive database containing domestic manufacturers.

DOE identified the Association of Home Appliance Manufacturers (AHAM ) as a trade group that support s the microwave oven industry

, AHAM

, b

3.6 MANUFACTURER INFORMA TION formed in 1967, aims to e nh ance the value of the home appliance industry through l eadership, public education and advocacy

. AHAM provides services to its members including government rela tions ; certification programs for room air conditioners, dehumidifiers and room air clean ers ; an active communications program ; and technical services and research

. In addition, AHAM conducts other market and consumer research studies and publishes a bienn ial Fact Book

. AHAM also develops and maintains technical standards for various appliances to provide uniform, repeatable procedures for measuring specific product characteristics and performance features

.

The following section details information regarding domestic manufacturers of residential microwave ovens , including estimated market shares (section 3.6.1 ), indus try mergers and acquisitions (section 3.6.2 ), potential small business impacts (section 3.6.3 ), and product distribution channels (section 3.6.4 )

.

3.6.1 Manufacturers and Market Shares

Using publicly available data ( e.g. Appliance Magazin e and market assessments done by third parties), DOE estimates the market shares for domestic manufacturers of each of the products contained in this standards rulemaking

. Manufacturers may offer multiple brand names

. Some of the brand names come from inde pendent appliance manufacturers which have been acquired over time, and domestic manufacturers may put their brand on a product manufactured

overseas

. Companies included in this analysis may also be off

- shore manufacturers that maintain a significant domes tic presence via a U.S. entity.

The microwave oven market differs from the rest of the domestic cooking product market in that many of the manufacturers are foreign

- owned companies with manufacturing facilities outside of the United States, and many of t he domestic appliance manufacturers rebrand foreign

manufactured products

. Table 3.6.1 illustrates the 2008 market shares for the U.S. microwave oven market

. Microwave oven manufacturers with facilities inside the United States include Whirlpool

, the Sharp Electronics Corporati on (Sharp) , Sub

- Zero, Summit

, and Viking

. Figure 3.6

. 1 lists microwave manufacturers active in the domestic market.

b For more information visit http://www.aham.org

.3-7 Table 3.6

. 1 Major and Other Microwave Oven Manufacturers

Major Manufacturers Other Manufacturers LG Electronics, Inc. (LG) Daewoo Electronics Company, Ltd. (Daewoo) Sharp Panasonic Corporation of America (Panasonic) Samsung Electronics America, Inc. (Samsung) Whirlpool

Guangdong Galanz Enterprise Co., Ltd. (Galanz) GD Midea Microwave Oven Mfg. Co. , Ltd. ( Midea ) Sanyo Sub

- Zero Summit Viking

Figure 3.6

. 1 200 8 Market Shares for the Domestic Microwave Oven Market 13-8 3.6.2 Mergers and Acquisitions

Due to mergers and acquisitions, the home appliance industry continues to consolidate

. While this phenomenon varies from product to product within the industry, the large marke t shares of a few companies provide evidence in support of this characterization.

According to the January 20 10 issue of Appliance Magazine

, three manufacturers comprise 85 percent of the core appliance market share

. “ Core appliances ” include dishwashers

, clothes dryers, freezers, ranges, refrigerators, and clothes washers

. Table 3.6

. 2 lists these core appliance manufacturers, and Figure 3.6

. 2 illustrates the breakdown o f 2008 market shares in the core appliance category.

Table 3.6

. 2 Core Appliance Manufacturers

Core Appliance Manufacturers Whirlpool GE Frigidaire

Figure 3.6

. 2 2008 Core Appliance Market Shares 2

On August 22, 2005, Whirlpool, headquartered in Benton Harbor, Michigan, and Maytag, based in Newton, Iowa, announced plans to merge in a deal worth $2.7 billion. 3 Maytag3-9 shareholders a pproved the merge r on December 22, 2005

. Shortly after announcing the merger, Whirlpool submitted a pre

- merger notification to the U.S. Department of Justice (DOJ)

. The DOJ Antitrust Division initiated an investigation, scheduled to end February 27, 2006, into the effects of the merger, including potential lessening of competition or the creation of a monopoly

. Following this initial review, the DOJ asked for additional materials from each company and extended the review to March 30, 2006

.
Opponents of th e merger asserted that the combined companies would control as much as 70 percent of the residential laundry market and as much as 50 percent of the residential dishwasher market. 4 Whirlpool claimed that their large potential residential laundry market sh are was skewed because the company produces washing machines for Sears, which sells them under their Kenmore in

- house brand

. Whirlpool went on to say that they must periodically bid with other manufacturers to keep the Kenmore contract and that Sears contr ols the pricing of the Kenmore units. 5

In early January 2006, U.S. Senator Tom Harkin and U.S. Representative Leonard Boswell, both of Iowa, called upon the DOJ to block the merger, claiming it would give Whirlpool an unfair advantage in the home applianc e industry

. The Congressmen wrote, that if the DOJ does not block the deal, the agency should at least “ require that Whirlpool divest the washer and dryer portions of Maytag to a viable purchaser who will have the financial capability and desire to continu e to operate that business .” 6

On March 29, 2006, DOJ closed its investigation and approved the merger

. DOJ claims “that the proposed transaction is not likely to reduce competition substantially

. The combination of strong rival suppliers with the ability to expand sales significantly and large cost savings and other efficiencies that Whirlpool appears likely to achieve indicates that this transaction is not likely to harm consumer welfare.” 7

The DOJ Antitrust Division focused its investigation on resident ial laundry, although it considered impacts across all products offered by the two companies

. DOJ determined that the merger would not give Whirlpool excessive market power in the sale of its products and that any attempt to raise prices would likely be un successful

. In support of this claim, DOJ noted that (1) other U.S. brands, including Kenmore, GE, and Frigidaire, are well established; (2) foreign manufacturers, including LG and Samsung, are gaining market share; (3) existing U.S. manufacturers are belo w production capacity; (4) the large home appliance retailers have alternatives available to resist price increase attempts; and (5) Whirlpool and Maytag substantiated large cost savings and other efficiencies that would benefit consumers. 8

Whirlpool and Maytag completed the merger on March 31, 2006

. This large merger follows several other mergers and acquisitions in the home appliance industry

. For example, Maytag acquired Jenn

- Air Corporation (Jenn

- Air) in 1982, Magic Chef, Inc. (Magic Chef) in 1986, an d Amana Appliances (Amana) in 2001

. Whirlpool acquired the KitchenAid division of Hobart Corporation (KitchenAid) in 1986

. White Consolidated Industries (WCI) acquired the Frigidaire division of General Motors Corporation in 1979, and AB Electrolux acquire d WCI (and therefore Frigidaire) in 1986.3-10 3.6.3 Small Business Impacts

DOE considers the possibility of small businesses being impacted by the promulgation of energy conservation standards for residential cooking products

. At this time, DOE is not aware of any small microwave oven manufacturers, defined by the Small Business Association (SBA) as having 750 employees or fewer, who produce products that fall under this rulemaking and who therefore would be impacted by a minimum efficiency standard

. For further inf ormation, see chapter 12 of the TSD.

3.6.4 Distribution Channels

Understanding the distribution channels of products covered by this rulemaking is an important facet of the market assessment

. DOE gathered information regarding the distribution channels for resi dential cooking products from publicly available sources

. This section contains distribution channel information for residential appliances.

The distribution chain for residential appliances, including microwave ovens , differs from commercial products, as the majority of consumers purchase their appliances directly from retailers

. These retailers include : (1) home improvement, appliance, and department stores; (2) Internet retailers; (3) membership warehouse clubs; and (4) kitchen remodelers

. The AHAM Fact Book 2005 reports that home improvement stores claim nearly one out of every four dollars spent on appliances. 9

Home appliance retailers generally obtain products directly from manufacturers

. The AHAM Fact Book 2003 shows that over 93 percent of resident ial appliances are distributed from the manufacturer directly to a retailer. 10

3.7 REGULATORY PROGRAMS

The following section details current regulatory programs mandating energy conservation standards for residential cooking products

. Section 3.7.1 discusses Federal energy conservation standards and section 3.7.2 reviews upcoming standards under EISA 2007

. In addition, section 3.7.3 review s foreign standby power regulatory programs that may impact the companies servicing the North American market

.

3.7.1 Federal Energy Conservation Standards

The National Appliance Energy Conservation Act of 1987 (NAECA) (42 U.S.C. 6291

- 6309)

, which amended EPCA, established prescriptive standards for ki tchen ranges and ovens, but no standards were established for microwave ovens. (42 U.S.C. 6295(h)) The NAECA amendments also required DOE to conduct two cycles of rulemakings to determine whether to revise the standard. (42 U.S.C. 6295 (h)(1)

– (2)) DOE und ertook the first cycle of these3-11 rulemakings and issued a final rule on September 8, 1998 in which DOE found that no amended standards were justified for electric cooking products, including microwave ovens. 63 FR 48038.

DOE initiated the second cycle of energy conservation standards rulemakings for cooking products by publishing a framework document covering, in part, microwave ovens, and giving notice of a public meeting and the availability of the document. 71 FR 15059 (Mar

. 27, 2006). In its subsequent advance notice of proposed rulemaking (ANOPR) concerning energy conservation standards for commercial clothes washers and residential dishwashers, dehumidifiers, and cooking products, including microwave ovens, DOE determined that energy consumption by mi crowave ovens in the standby mode represents a significant portion of microwave oven energy use, and that a standard regulating such energy consumption would likely have significant energy savings. 72 FR 64432, 64441

– 42 (Nov. 15, 2007)

. DOE published a NOP R for the appliance standards rulemaking on October 17, 2008, in which it tentatively concluded that a standard for microwave oven standby mode and off mode energy consumption would be technologically feasible and economically justified. 73 FR 62034. DOE r eceived responses to the NOPR from interested parties regarding the harmonization of standards and test procedures with those of other countries and international agencies. As a result of these comments, DOE decided to consider the revised version of IEC S tandard 62301 ( i.e. , IEC Standard 62301 Second Edition) in the development of energy conservation standards for the standby mode and off mode power consumption of microwave ovens. In a final rule published on April 8, 2009 (74 FR 16040), DOE established am ended standards for gas cooking products, but again found that no active mode cooking efficiency standards were justified for electric cooking products, including microwave ovens. This rulemaking completed the second cycle of rulemakings required by the NAECA amendments to EPCA

. (42 U.S.C. 6295(h)(2))

3.7.2 Energy Independence and Security Act of 200 7

On December 19, 2007

, the President signed into law EISA 2007 , which contains numerous amendments to EPCA

. Section 310 of EISA 2007 amends section 325 of EPCA to require any final rule establishing or revising a standard for a covered product, adopted after July 10, 2010, shall incorporate standby mode and off mode energy use into a single amended or new standard. (42 U.S.C. 6295(gg)(3)(A)) If not feasible, the Se cretary shall prescribe within the final rule a separate standard for standby mode and off mode energy consumption, if justified. (42 U.S.C. 6295(gg)(3)(B))

Off mode is defined by EPCA as “the condition in which an energy

- using product

– (I) is

connecte d to a main power source; and (II) is not providing any st andby or active mode function.” (42 U.S.C. 6295(gg)(1)(A)(ii)) Active mode refers to the main (cooking) function, while standby is defined by EPCA as “the condition in which an energy

- using product (I) is connected to a main power source; and (II) offers 1 or more of the following user

- oriented or protective functions: (aa) To facilitate the activation or deactivation of other functions (including active mode) by remote switch (including remote contr ol), internal sensor, or timer

. (bb) Continuous functions, including information or status displays (including cloc ks) or sensor

- based functions.” ( Id .; 42 U.S.C. 6295(gg)(1)(A)(iii))3-12 On November 15, 2007 DOE published an advanced notice of proposed rul emaking (ANOPR) (hereafter the “ November 2007 ANOPR ”) in which it stated that it was considering including standby power in the energy conservation standards and intend ed to initiate amendment of its test procedure to measure microwave oven standby power because : 1) energy conservation in standby mode represents a significant proportion of microwave oven annual energy consumption ; and 2) the range of standby power among microwave ovens currently on the market suggests that the likely impact of a standard would be significant

. 72 FR 64432. Such a test procedure change is a prerequisite to incorporate a standby power requirement as part of the energy conservation standard for microwave ovens. c Data obtained by DOE during testing of a represent ative sample of microwave ovens and from AHAM show standby power ranging from 1.1 to 5.8 W

. At the Federal Energy Management Program ( FEMP )

- defined limit of 2 W, the resulting 17.2 kWh of annual standby energy use represents 13 percent of the estimated ann ual cooking energy consumption for a baseline microwave oven

. DOE is unaware of any microwave

oven s currently on the market in the United States that consume energy in off

- mode, differentiable from standby mode

. Therefore, DOE proposed for the purposes of the October 2008 NOPR to put forth standards for microwave oven standby power only, but stated it was open to consideration of off

- mode standards

.

As discussed above in section 3.4 , the test procedure rulemaking to incorporate methods for measuring standby mode and off mode energy consumption for microwave ovens was initiated in parallel with the current rulemaking. Because DOE repealed the provisions in the existing microwave oven test procedure relating to the measurement of cooking efficiency and EF, the requirement to integrate energy consumption in standby mode and off mode into an overall energy descriptor does not apply. T he absence of active mode provisions results in a de facto separate energy use descriptor for microwave oven standby mode and off mode energy use. Accordingly, DOE proposed amended energy conservation standards for microwave ovens based

on these separate e nergy use descriptors

.

3.7.3 Foreign Standby Power Regulatory Programs
The International Energy Agency (IEA) has raise d awareness of standby power through publications, international conferences, and policy advice to governments

. In 1999, the IEA developed the “1

- Watt Plan

, ” which proposed reducing standby power internationally in electronic devices and which advocates that all countries harmonize energy policies and adopt the same definition and test procedure

. The IEA has advocated a 1

- W requirement for all

c onsumer electrical products (unless specifically excluded) in standby mode

. The IEA also stated that IEC Standard 62301 provides an internationally sanctioned definition and test procedure for standby power

, which is now widely specified and used. d

A nu mber of countries have implemented regulatory approaches to standby power in microwave ovens

. Australia has announced plans to implement a mandatory 1

- W requirement

d For more information visit http://www.iea.org/

.3-13 for all consumer electrical products by 2012, including microwave oven s. 11 The Korea Energy Management Corporation developed their “ e

- standby ” program , which currently has a voluntary labeling program for microwave oven s with less than 1 W of standby power , and a mandatory labeling requirement for microwave ovens with standby power greate r than 1 W

. 12 In accordance with Japan’s Top Runner Program, e Japanese appliance manufacturers made a voluntary declaration to reduce standby power consumption of microwave ovens without a timer as close to 0 W as possible and that of microwave ovens with a timer to 1 W or lower. 13

The European Union (EU) passed the Ecodesign Directive in 2005 which calls for an implementing measure to reduce standby power for a specified list of energy using products, which include microwave ovens

. On December 17 , 2008, the Commission of the European Communities published Commission Regulation 1275/2008 implementing Ecodesign requirements for standby and off mode electric power consumption. Table 3.7

. 7 presents the criteria for standby and off mode power for microwave ovens , which are well in line with the IEA 1

- W plan. 14

Table 3.7

. 1 EU Ecodesign R equirements for S tandby and O ff M ode Mode Maximum Power ( W ) Tier 1 ( December 17, 2009 ) Off (no function) 1.0 W Standby (only reactivation function) 1.0 W Standby (information or status display plus reactivation function 2.0 W Tier 2 ( December 17, 2012 ) Off (no function) 0.5 W Standby (only reactivation function) 0.5 W Standby (information or status display plus reactivation function 1.0 W

3.8 VOLUNTARY PROGRAMS

DOE reviewed voluntary programs promoting energy efficient residential cooking products in the U nited States

. DOE noted that FEMP establish es voluntary energy conservation standards for microwave ovens

.

DOE’s FEMP f

e Japan’s Energy Conservation Act uses a “top runner” method to set energy efficiency targets for residential, commercial, and transportation sector equipment. Target values for future products are set b ased on the level of the most energy efficient products on the market at the time of the value setting process. For more information, visit works to reduce the cost and environmental impact of the Federal government by advancing energy efficiency and water conservation, promoting the use of distributed and renewable energy, and improving utility management decisions at Federal sites

.

http://www.eccj.or.jp/index_e.html

f For more information visit http://www.eere.energy.gov/femp

.3-14 FEMP helps Federal buyers identify and purchase energy efficient equipment, including microwave ovens.

Executive Order 13221 Energy Efficient Standby Power Devices, signed July 31, 2001, requires that Federal agencies purchase commercially available products with low standby

power

. 66 FR 40571

. FEMP

, therefore

, issues standby power recommendations for microwave

ovens

. Table 3.8

. 3 presents the microwave oven recommendations.

Table 3.8

. 1 FEMP Recommendations for Microwave Ovens Microwave Oven Classification Standby Power ( W )* Standard Microwave Oven ≤ 2
* Based on test procedures specified in IEC Standard 62301

3.9 HISTORICAL SHIPMENTS

Awareness of annual product shipment trends is an important aspect of the market assessment and in the development of the standards rulemaking

. DOE reviewed data collected by the U.S. Census Bureau and AHAM to evaluate residential appliance product shipment trends and the value of these shipments , which were used during the shipments analysis ( c hapter 9 of this TSD

. )

3.9.1 New Home Starts

Trends in new ho me starts may directly affect shipments of certain home appliances

. While there is certainly both a replacement and remodeling market for some appliances including microwave ovens , these products are also fixtures in virtually all new homes

.
Figure 3.6

. 1 presents the number of new single

- family and multi

- family housing units started in the U nited States from 1998

– 200 9

. Over the 5

- year period from 2000

– 2005, single

family home starts increased 39.4 percent, to 1,716,000 units annually

. However, between 2005 and 200 9 , single

- family home starts decreased 74.1 percent, to 445,100 units annually

. Multi

family unit starts have remained relatively flat between 1998 and 2005 , hovering around 350,000

u nits annually. However, between 2005 and 2009, multi

- family unit starts decreased by 69.1 percent, to around 108,900 units annually. 153-15 Figure 3.9

. 1 New Privately Owned Single

- Family and Multi

- Family Housing Unit Starts in the United States from 1998

– 200 9 16

3.9.2 Unit Shipments

Appliance Magazine provides annual unit shipments for residential appliances , including microwave ovens

. Table 3.9

. 1 presents annual shipments of microwave ovens

. The shipments of microwave ovens increased 90.2 percent from 1995 to 2004, to about 15.5 million units in 2004. However, between 2004 and 2008, shipments of microwave ovens decreased by 27 percent, to 11.3 million units in 2008.3-16 Table 3.9

. 1 Industry Shipments of Microwave Ovens (Domestic and Import in Thousands of Units) 17

Year Microwave Ovens 2008 11,340 2007 not available 2006 13,889 2005 13,862 2004 15,526 2003 14,274 2002 13,311 2001 13,446 2000 12,644 1999 11,422 1998 10,365 1997 8,883 1996 8,771 1995 8,162

3.9.3 Value of Shipments

Table 3.9

. 2 provides the value of shipments for the household appliance industry from 1994

– 2009 based upon data from the U.S. Census Bureau ’s Annual Survey of Manufacturers (ASM)

. g The ASM expresses all dollar values in nominal dollars ; i.e.
, 2009 data are expressed in 2009 dollars, and 2008 data are expressed in 2008 dollars

. Using the Gross Domestic Product Implicit Price Deflator, DOE converted each year’s value of shipments to 2009 dollars

. In
constant 2009 dollars, the value of shipments has declined by approximately 40 percent over the 16

- year period.

g Available online at http://www.census.gov/mcd/asm

- as1.html

.3-17 Table 3.9

. 2 Household Appliance Manufacturing Statistics by Year 18

Year Value o f Shipments in Nominal Dollars ( $1000 ) Value of Shipments in 200 9 Dollars ( $1000 ) 2009 18,707,942 18,707,942 2008 21,504,780 21,701,972 2007 23,639,716 24,377,846 2006 24,162,513 25,650,308 2005 24,620,117 26,987,341 2004 23,989,141 27,173,398 2003 23,026,196 26,822,704 2002 22,269,541 26,499,444 2001 22,298,897 26,964,077 2000 23,414,965 28,953,393 1999 22,372,219 28,263,078 1998 22,471,878 28,806,293 1997 21,394,445 27,735,227 1996 22,156,900 29,230,799 1995 22,391,300 30,102,315 1994 22,793,900 31,281,968

The increase in shipment volumes combined with an overall decrease in constant

- dollar shipment values indicates that the U.S. appliance industry is very competitive.

According to data presented in the AHAM Fact Book 2003 , many old appliances are still being used after consumers purchase new units of same product

. Table 3.9.3 presents the various methods by which consumers dispo se of their older appliances.

Table 3.9

. 3 Disposition of Previous Appliance ( Percentage ) 19

Product Kept It Left with Previous

Home Sold / Gave Away Recycling Facility Left at Curb for Disposal Retailer Took Away
Microwave Ovens 17 11 32 12 23 4

The value of s hipments of residential cooking products , a subset of the household appliance industry as defined in the ASM, ha s fluctuated over the last 16 years when viewed in 2009 real dollars

. Overall, the real value of shipments in 2009 was roughly 27 percent lower than the value in 1994

. Table 3.9

. 4 provides the industry value of shipments for household cooking appliance manufacturing.3-18 Table 3.9

. 4 Household Cooking Appliance Manufacturing Statistics by Year 20

Year Value of Shipments in Nominal Dollars ( $1000 ) Value of Shipments in 200 9 Dollars ( $1000 ) 2009 3,835,185 3,835,185 2008 4,261,482 4,300,558 2007 4,786,768 4,936,231 2006 4,864,268 5,163,783 2005 5,114,677 5,606,453 2004 4,798,227 5,435,131 2003 4,691,713 5,465,272 2002 4,327,308 5,149,242 2001 3,773,442 4,562,889 2000 4,178,958 5,167,422 1999 3,915,499 4,946,494 1998 3,849,167 4,934,177 1997 3,520,635 4,564,064 1996 3,564,700 4,702,780 1995 3,788,200 5,092,763 1994 3,813,900 5,234,133

3.9.4 Imports and Exports
There is a large market for the import and export of home appliances

. Each month AHAM publishes import and export data for certain home appliances

. These data are released by the U.S. Census Bureau and aggregated by a third party

. On the whole, major appliance unit imports decreased 9.7 percent in 200 9 as compared to 200 8

. Major appliance unit exports decreased 17.5 percent over the same period.

Table 3.9

. 5 shows selected import data from AHAM’s Import/Export Trade Report

– December 200 9. 21 For microwave ovens less than or equal to 22.5 inches in width, both the number and value of units imported decreased by more than 17 percent from 2008 to 2009.

. For microwave ovens 22.5 inches to 31.0 inches in width, both the number and value of units imported increased by more than 14 percent from 200 8 to 200 9

. For microwave ovens greater than 31.0 inches in width, both the nu mber and value of units imported decreased by more than 10 percent

. Overall, the value of major appliance imports decreased 9.2 percent from 2008 to 2009

.3-19 Table 3.9

. 5 200 8

– 200 9 Imports of Microwave Ovens 22 Appliance Description Jan.

– Dec. 200 9 Jan.

– Dec. 200 8 % Change Jan.

– Dec. 200 9 Jan.

– Dec. 200 8 % Change Units $ Mil (Nominal) Microwave ovens ≤ 22.5 inches 3,776,772 4,567,709

- 17.3 130.042 165.033

- 21.2

Microwave ovens > 22.5

- 31.0 inches 3,263,577 2,392,880 36.4 135.885 118.232 14.9

Microwave ovens > 31.0 inches 7,442,569 8,378,,434

- 11.2 610.732 679.688

- 10.1

Table 3.9.6 shows selected export data from AHAM’s 200 7 Import/Export Trade Report

– December 200 9

. 23 For the 1

- year period from 200 8 to 200 9

, both the number and value of unit exports of microwave oven e xports decreased by more than 16 percent

. Overall, the total value of exports decreased 18.9 percent.

Table 3.9

. 6 2008

– 2009 Exports of Microwave Ovens 24 Appliance Description Jan.

– Dec. 200 9 Jan.

– Dec. 200 8 % Change Jan.

– Dec. 200 9 Jan.

– Dec. 200 8 % Change Units $ Mil (Nominal) Microwave ovens 235,883 294,660

- 19.9 33.479 40.083

- 16.5

3.10 MARKET SATURATION

AHAM’s Fact Book 2005 presents the market saturation for microwave ovens

. As shown in Table 3.10

. 1 , the percentage of households with microwave ovens has decreased slightly since 2001. The number of U.S. households with microwave ovens is based on U.S. Census Bureau projections of occupied units in the relevant year.

Table 3.10

. 1 Appliance Saturation (Number in Millions) and Percentage of U.S. Households with Product 25

Product 1970 1982 1990 2001 2005

# % # % # % # % # %

Microwave Ovens Neg. Neg. 21.4 25.6 77.2 82.7 94.6 90.7 * 97.2 89.3

* Includes over

- the

- range and countertop microwave ovens

3.11 PRODUCT RETAIL PRICE S

Table 3.11.1 presents the average retail prices (in nominal dollars) of microwave ovens and the C onsumer P rice I ndex (CPI) of each year (1982

– 84 = 100)

. Prices of microwave ovens have decreased since 1980

.3-20 Table 3.11

. 1 Residential Appliance Retail Prices 26

Product Average Retail Prices ( Nominal $ ) Percent Change

1980 1994 2002 2005 1980

– 2005

Microwave Ovens 450 239 145 99

- 78.0%

Consumer Price Index * 82.4 148.2 179.9 195.3 137.0%

* U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index: U.S. city average

. 1982

– 84 = 100.

3.12 INDUSTRY COST STRUCT URE

DOE developed the household appliance industry cost structure from publicly available information from the ASM, ( Table 3.12.1 and Table 3.12.2 ) and the U.S. Securities and Exchange Commission (SEC) 10

- K reports filed by publicly owned manufacturers (summarized in Table 3.12.3 )

. Table 3.12.1 presents the home appliance industry employment levels and earnings from 1994

- 2009

. The statistics illustrate a steady decline in the number of production and non

- production workers in the industry

.
Because the ASM expresses all dollar values in constant 2009 dollars, the following table shows that as industry employment levels decline, the industry payroll is also decreasing

. The percent de crease in total industry employees tracks closely with the percent decrease in payroll for all employees

.3-21 Table 3.12

. 1 Household Appliance Industry Employment and Earnings 27

Year Production Workers ( ‘000 ) All Employees ( ‘000 ) Payroll for All Employees ( 200 9 $ Mil ) 2009 41.1 48.6 1,938.7 2008 48.0 56.4 2,269.4 2007 56.2 65.5 2,562.4 2006 60.0 69.7 2,806.8 2005 64.3 76.9 2,958.7 2004 69.4 83.7 3,278.0 2003 71.0 85.3 3,360.8 2002 73.5 88.8 3,562.0 2001 76.6 92.6 3,732.0 2000 82.7 99.5 4,065.4 1999 82.3 97.9 3,932.8 1998 82.4 99.5 3,960.4 1997 79.8 97.2 3,781.3 1996 87.1 108.1 4,052.5 1995 88.9 110.8 4,119.6 1994 90.4 110.4 4,105.5

Table 3.12

. 2 presents the employments levels and earnings for just the household laundry portion of the appliance industry from 1994

- 200 9 . Statistics for both employment levels and payroll show a steady f luctuation from 1994

- 2002, but both have declined since that time. P ayroll and employment levels again show a positive correlation.3-22 Table 3.12

. 2 Household Cooking Appliance Industry Employment and Earnings 28

Year Production Workers ( ‘000 ) All Employees ( ‘000 ) Payroll for All Employees ( 200 9 $ Mil ) 2009 8.7 10.0 353.0 2008 10.4 11.8 411.2 2007 13.1 15.5 480.4 2006 12.7 14.4 466.7 2005 14.3 16.4 567.8 2004 14.4 17.0 584.1 2003 14.5 17.3 572.3 2002 14.7 18.0 592.6 2001 14.8 17.5 596.9 2000 15.3 18.0 633.3 1999 16.4 19.1 701.5 1998 15.3 18.2 670.5 1997 14.4 17.5 619.1 1996 14.7 18.1 682.6 1995 15.2 19.2 678.0 1994 15.0 18.6 674.1

Table 3.12 .3 presents the costs of materials and industry payroll as a percentage of value of shipments from 1994

– 2009

. The cost of materials as a percentage of value of shipments has fluctuated slightly over the 15

- year period

. DOE notes that fluctuations in raw material costs are common from year to year

. The cost of payroll for production workers as a percentage of value of shipments has declined since 2000

. Similarly, the cost of total payroll as a per centage of value of shipments has declined since 2000

.3-23 Table 3.12

. 3 Household Appliance Industry Census Data 29

Year Cost of Materials as

a P ercent age of V alue of S hipments ( % ) Cost of Payroll for P roduction W orkers as

a P ercent age of V alue of S hipments ( % ) Cost of Total Payroll ( P roduction + A dmin.)

as a P ercent age of V alue of S hipments ( % ) 2009 54.0 7.5 10.4 2008 59.3 7.7 10.5 2007 57.8 8.0 10.5 2006 57.9 8.4 10.9 2005 56.9 8.3 11.0 2004 57. 2 9. 0 12. 1 2003 5 5.9 9.2 12.5 2002 5 4.9 9.7 13.4 2001 56.8 10.1 13.8 2000 55.8 10.2 14.0 1999 54.7 10.2 13.9 1998 56.0 10.0 13.7 1997 52.8 9.9 13.6 1996 56.8 9.9 13.9 1995 5 7

. 7 9. 4 1 3.7 1994 55.5 9.2 13.1

Table 3.12

. 4 shows the cost of materials and industry payroll as a percentage of value of shipments for the household cooking appliance industry from 1994

- 2009 . DOE observed a decline in the cost of payroll as a percentage of value of shipments from 199 9

– 2009

. During that same time period , the cost of materials as a percentage of value of shipments has increased.3-24 Table 3.12

. 4 Household Cooking Applianc e Industry Census Data 30

Year Cost of Materials as

a P ercent age of V alue of S hipments ( % ) Cost of Payroll for P roduction W orkers as

a P ercent age of V alue of S hipments ( % ) Cost of Total Payroll ( P roduction + A dmin.)

as a P ercent age of V alue of S hipments ( % ) 2009 60.7 6.8 9.2 2008 70.5 7.4 9.6 2007 64.3 7.4 9.7 2006 66.8 7.0 9.0 2005 67.9 8.0 10.1 2004 67.3 8.1 10.7 2003 63.2 7.5 10.5 2002 64.6 8.0 11.5 2001 63.3 9.3 13.1 2000 57.1 8.5 12.3 1999 58.4 10.1 14.2 1998 57.8 9.3 13.6 1997 51.0 9.4 13.6 1996 61.5 9.3 14.5 1995 53.6 8.4 13.3 1994 52.2 8.5 12.9

A detailed financial analysis of each of the products covered by this rulemaking is presented in the manufacturer impact analysis

. ( See c hapter 1 2 of this TSD

. ) This analysis identifies key financial inputs including cost of capital, working capital, depreciation, and capital expenditures.

3.13 INVENTORY LEVELS AND CAPACITY UTILIZATION RATES

Table 3.13.1 and Table 3.13

. 2 show the year

- end inventory for the household appliance and househol d cooking appliance industr ies , respectively , according to the ASM

. Both in dollars and as a percentage of value of shipments, the end

- of

- year inventory for the industry has declined since 1995

. These data illustrate a general trend of domestic manufacturers retaining less of their inventories over time since 1994.3-25 Table 3.13

. 1 Household Appliance Industry Census Data 31

Year End

- of

- Year Inventory ( 200 9 $ Mil ) End

- of

- Year Inventory as a P e rcent age of V alue

of S hipments ( % ) 2009 1,587.6 8.5 2008 1,868.1 8.6 2007 2,059.7 8.4 2006 1,792.5 7.0 2005 1,790.5 6.6 2004 1,979.7 7.3 2003 1,984.5 7.4 2002 2,133.8 8.1 2001 2,372.1 8.8 2000 2,676.6 9.2 1999 2,667.2 9.4 1998 2,875.6 10.0 1997 2,763.9 10.0 1996 3,033.1 10.4 1995 3,350.0 11.1 1994 3,472.3 11.1

Table 3.13

. 2 Household Cooking Appliance Industry Census Data 32

Year End

- of

- Year Inventory ( 200 9 $ Mil ) End

- of

- Year Inventory as a P ercent age of V alue

of S hipments ( % ) 2009 296.1 7.7 2008 391.7 9.1 2007 574.6 11.6 2006 409.2 7.9 2005 474.0 8.5 2004 464.8 8.6 2003 454.6 8.3 2002 513.4 10.0 2001 404.2 8.9 2000 456.4 8.8 1999 513.1 10.4 1998 610.6 12.4 1997 528.1 11.6 1996 606.3 12.9 1995 720.5 14.1 1994 734.9 14.03-26 DOE obtained full production capacity utilization rates from the U.S. Census Bureau, Survey of Plant Capacity from 1994

– 200 6

. Table 3.13.2 presents utilization rates for various sectors of the household appliance 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 Capacity report, the full production utilization rate is a ratio of the actual level of operations to the full production level

. The full production capacity utilization rate for household appliances in a ggregate, along with the rates for cooking appliances and household laundry appliances, show a decrease in utilization from 1994

– 200 6 , although trends in subsets of that time period have fluctuated.

Table 3.13

. 3 Full Production Capacity Utilization Rates 33

Year Rates ( % ) Household Appliances Cooking Appliances 2006 77 65 2005 74 57 2004 76 61 2003 78 57 2002 72 56 2001 70 50 2000 70 55 1999 75 59 1998 73 66 1997 73 61 1996 76 66 1995 79 66 1994 82 72

3.14 TECHNOLOGY ASSESSMEN T

This section provides a technology assessment for residential microwave ovens

. Contained in this technology assessment are details about product characteristics and operation (section 3.14.1 ), an examination of possible technological improvements (section 3.14.2 )

, and a characterization of the p roduct efficiency levels currently commercially available (section 3.14.3 ).

3.14.1 Product Operations and Components

In preparation for the screening and engineering analyses, DOE prepared a brief description of the characteristics and operation of microwave ovens

. Th is description provide s a basis for understanding the technologies used to improve product efficiency.

A microwave oven is an appliance which heats foods and beverages through the conversion of electric energy to electromagnetic (microwave) energy

. The food load is placed3-27 inside the oven where it is subjected to the microwave energy

. In the portion of the electromagnetic spectrum where microwave ovens operate, typically 2.45 gigahertz, water, fats, and sugars have high absorptivity and thus food heats readil y

. Glass, ceramic, and paper have low absorptivity at these wavelengths, while metals reflect the microwaves

. Therefore microwave ovens efficiently heat foods while the cavity and utensils remain cool.

The microwave energy is generated by an electrically powered magnetron

. Line voltage is converted to the high voltage required by the magnetron through the use of a high

- voltage transformer

. The microwaves are directed from the magnetron into the cavity via a metal duct, or waveguide

. To produce a more unifo rm distribution of energy in the cavity, one or more sets of rotating metal blades may be inserted in the waveguide to alter the microwave patterns temporally

. Additionally, a turntable or translating tray may be provided in the cavity to move the load and thus promote even input energy distribution to the food

. Some microwave ovens are equipped with electrically powered resistive or halogen heating elements for surface browning

, and in the case of combination microwave ovens, an additional fan for forced a ir distribution to enhance cooking performance

.
To achieve reduced power levels for cooking processes such as defrosting, the magnetron is typically cycled at an appropriate duty cycle which results in a time

- averaged power at the desired level

. Electroni c controls may include a clock /timer function as well as a humidity or infrared sensor for detecting when the desired level of cooking is achieved

. Standby power consumption associated with these electronics , as well as the power supply, may be several

wat ts

. In addition, a light is typically provided that is turned on when the door is opened or when the microwave oven is in operation

.
Installation configurations include countertop and over

- the

- range

. Over

- the

- range microwave ovens may include a ventilatio n fan that turns on automatically when the temperature from the cooktop below it rises ; however

, such an option is not required for certification under the Underwriters Laboratories (UL) S tandard UL 923

- Edition 5, Standard for Microwave Cooking Appliances

.

3.14.2 Technology Options

In order to gain a deeper understanding of the technological improvements used to increase the efficiency of microwave ovens , DOE identified several possible technologies and examined the most common improvements used in tod ay’s market. Because DOE only intends to address energy conservation standards for standby mode and off mode in this rulemaking, the following discusses only technology options associated with reducing standby mode and off mode energy consumption.

For mic rowave oven standby power , DOE investigated technology options for decreasing standby power

. DOE identified lower

- power display technologies , cooking sensors with no standby power requirement, improved power supplies

, improved control boards, and automatic

power

- down from research

, literature review , and reverse

- engineering conducted as part of the microwave oven analysis discussed in chapter 5 of this TSD

.3-28 Table 3.14

. 1 Technology Options for Microwave Oven

– Standby Power 1. Lower

- power display technologies 2. Cooking sensors with no standby power requirement 3. Improved p ower suppl y and control board options
4 . Automatic power

- down

Lower

- power display technologies

Microwave oven s are generally constructed using one of the following display types to show clock time and other parameters : (1) vacuum fluorescent display (VFD) ; (2) backlit and

non

- backlit liquid crystal display (LCD) ; and (3) light

- emitting diode (LED) display

. Within the 3 2

- unit sample that DOE examined as part of the supplemental microwave oven analysis

, microwave ovens equipped with VFDs consumed the most power on average, followed by units featuring backlit LCDs, LED display s and non

- backlit LCD s

. Data gathered by DOE sh ow that standby power levels between 1.1 W and 1.4 W have been achieved in microwave oven s using either LED displays or LCDs, and standby power as low as 1.7 W has been achieved using a backlit LCD

. The lowest standby power observed for a microwave oven wi th a VFD was 2.5 W

. One display manufacturer stated to DOE that backlit LCDs can consume up to 5 0 percent less energy than VFDs in sizes applicable to microwave oven s , depending on the number of LED backlights used to light the display

. The manufacturer also stated that power requirements for LED displays are generally lower than for VFDs, but the difference depends considerably on the number of diode segments being lit

.
The display format on each microwave oven can be characterized as either numeric, alphanumeric, or dot matrix

. Whereas numeric displays can only show time, alphanumeric displays can also display letters

, though usually in simplified format

. Dot matrix displays can show various fonts, letters, and symbols via matrices of pixels, making them the most flexible display technology

. In the reverse

- engineering analysis DOE conducted as part of chapter 5 of this TSD, DOE observed that LED displays found in microwave oven s generally contain four numeric characters and a row of small words

. LCDs and VFDs allow for more flexibility in the numbers and words being displayed by using alphanumeric characters without increasing the power requirements

. LED displays could conceivably achieve this, but would require more diode segments, increasing the cost of the display

. However, this would not a ffect standby power, assuming that in standby mode only the clock time is being displayed

.
Cooking sensors with no standby power requirement

C ooking sensors detect that a desired cooking state of the food load has been reached and then signal the controller to shut off the microwave oven , thereby preventing excess energy consumption in addition to optimizing food quality

. During product teardowns (see chapter 5 of this TSD ) , DOE found that the most common identifiable cooking sensors a re absolute humidity

sensor s, which infer the cooking state of the food load from the amount of water vapor being released into the cavity

. This sensor technology requires standby power in t he range of 1

– 2 W to3-29 maintain a resi stive heating element, whose conductivity changes in response to the presence of water vapor or other gases , at operating temperature

. If the power to the sensor is switched off and back on , warm

- up times in excess of two minutes may be required

. Standby t esting by DOE and AHAM revealed no microwave oven s with cooking sensors that consume less than 2 W in standby mode

. One Japanese microwave oven manufacturer stated during discussions with DOE that they are unaware of any humidity sensors that d o not requir e standby power to stay warm.

DOE has conducted research of cooking sensor technologies and has identified cooking sensors with zero standby power requirements and little to no warm

- up time

. During the reverse

engineering analysis for microwave ovens ( discussed in more detail in c hapter 5 of this TSD )

, DOE observed that microwave ovens from one manufacturer use a piezoelectric steam sensor which requires zero power in standby mode

. This sensor technology functions by detecting a burst of steam created f rom moisture in the food as it cooks

. Low frequency (approximately 10 hertz) components of the output signal of the device correlate with the amount of hot steam emitted from the load

. In addition to steam sensors, DOE has identified infrared and weight

se nsors with little to no warm

- up time that do not consume standby power and that have been applied in microwave oven s currently on the Japanese market

. Infrared cooking sensors detect the temperature of the load in the field of view of the sens ing element

. These sensors may require multiple elements or a motor to rotate the sensor in order to expand the field of view to accurately measure the temperature of the food load depending on where it is placed in the oven cavity

. Weight sensors determine the cooking state based upon the reduction in weight of the food load, which results from moisture evaporating from the load

. DOE has also identified relative humidity sensors as a type of zero

- standby power s ensor that can be applied in a microwave oven , but is unaw are of any microwave oven s on the market that use this type of

sensor

. Lastly, DOE was made aware of an absolute humidity sensor that requires no standby

power , has zero incremental cost above that of a conventional absolute humidity sensor, and is in the process of being phased into production for a major microwave oven supplier to the US market

.
Improved p ower supply and control board options

A potential area for standby power improvements is the power supplies on the control board

. Multiple improvement paths with varying risk to manufacturers are available, including the selective upgrading of power supply components to boost efficiency, the reduction of peak power demand through the use of lower

- power components, and the transition to switch ing power supplies.

Typically, microwave ovens incorporate unregulated plus regulated control board power supplies (also referred to as a linear power supply)

. The unregulated portion consists of a small transformer, a bridge rectifier, and an electrolyt ic capacitor

. Voltage regulators then step down the voltage(s) to the level(s) required by the control logic, display, and cooking sensor

. This approach results in a rugged power supply which is reliable, but typically ha s an efficiency of about 55 percent

.3-30 According to power supply topology experts that DOE consulted, the quality of the transformer core material, diode type , capacitor quality, and voltage regulator selection could cut

no

- load standby power for the power supply in half and boost conversion efficiency from 55 to 70 percent. For a typical 5 W

- output microwave

- only unit power supply, that no

- load power consumption improvement is approximately 0.4 W

.
DOE also notes that switching from electromechanical relays (used to drive components such as heaters, motors, lights, etc.) to solid state relays capable of driving the same loads as the electromechanical rela ys would decrease the total power requirements of the control board and thus decrease the standby losses of the power supply. As a result t he overall standby power consumption of the microwave oven would also decrease.

Switching power supplies offer the highest conversion efficiencies of up to 75 percent for switch mode power supply designs for appliance applications for power supply sizes s imilar to those of microwave ovens h and lowest no

- load standby losses (0.2 W or less)

, though at a higher cost, higher part count, and greater complexity

. DOE is unaware of any switching power supply designs for application in microwave ovens that can achi eve efficiencies above 75 percent

. S witching power supplies greater complexity may also result in lower overall reliability and take greater care to implement

. For example, a mong other issues, a switching power supply can be prone to causing electromagnetic interference

. DOE notes that there already are some premium microwave ovens on the U

. S

. market that incorporate switching power supplies

. However, due to the incremental cost of such a power supply over a conventional linear power supply an d the price competition in the microwave oven market, it is unlikely that switching power supplies will find wider application unless low standby power budgets force manufacturers to consider them.

Automatic power

- down

Manufacturers could also meet very low ( i.e. , less than 1 W) standby power levels according to the definition of “standby mode” in the DOE test procedure by incorporat ing an automatic function that turns off most power

- consuming components once a period of inactivity has elapsed

. Such a lo w

- consumption state could be user

- selectable on demand, or could be the default condition in which the microwave oven is shipped such that the consumer would be required to opt in to maintaining the display, cooking sensor, or other utility feature during standby

. DOE has determined that some microwave oven suppliers to the U.S. market have already taken such approaches to meet prescriptive standby power standards in other markets such as Japan. DOE understands that such a technology option may be implement ed using a transformerless power supply for the microprocessor logic, along with a linear conventional power supply that is activated when the unit goes into active mode

. Such a power supply design, incorporated with a “soft” power pushbutton or door limit switch and Triac to control power through the transformer , would provide just enough power through the transformerless power supply to maintain the microcontroller chip while the microwave oven is not powered on. When

h Information on design and efficiencies of switch mode power sup plies is available from Power Integrations: http://www.powerint.com/en/applications/major

- appliances

.3-31 the power button is pressed or the oven door is opened , current would then be allowed to pass through the transformer of the conventional linear power supply to power the remainder of the control board

.

3.14.3 Energy Efficiency

In preparation for the screening and engineering analyses, DOE gathered data on the energy efficiency of microwave ovens currently available in the marketplace

. These data were taken from databases maintained by a variety of regulatory agencies

. While this section is not intended to provide a complete characterizatio n of the energy efficiency of all appliances currently available and in use, it does provide an overview of the energy efficiency of microwave ovens covered by this rulemaking.

Microwave ovens consume energy in standby mode while powering the clock and el ectronic controls

. AHAM recently provided data on microwave oven standby power for a sample of microwave ovens available in the U.S. market

. 34 Figure 3.14

. 1 displays AHAM

measured microwave oven standby power data as a function of rated cooking output power

. Figure 3.14

. 1 also contains standby power measurements made by the Canadian Building Energy End

- Use Data and Analysis Center (CBEEDAC) at the University of Alberta

. The data show a wide range of standby po wer, but there is no correlation between standby power and rated cooking output power. The data did not indicate the product type ( i.e. , microwave only, combination) or the installation configuration ( i.e. , countertop, over

- the

- range, built

- in).

Figure 3.14

. 1 AHAM and CBEEDAC Microwave Oven Standby Power versus Rated Output Power 35

, 36 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

600 800 1000 1200 1400 1600
Rated Output Power (W)Standby Power Consumption (W)

AHAM Data CBEEDAC Data3-32 FEMP publishes a database of microwave oven s, sorted by standby power, although this database is also not completely representative of microwave ovens available in the U.S. market

. Figure 3.14

. 2 displays th e number of microwave oven models available with different standby

power levels as listed in the FEMP standby power database.

Figure 3.14

. 2 Microwave Oven Standby Power Consumption from the FEMP Database 37

FEMP does not specify microwave oven rated cooking output power

. Therefore, it is not possible to make a direct comparison between the FEMP microwave oven standby power data and the AHAM microwave oven test data

. However, the distribution s of standby pow er in the FEMP database and the AHAM data are similar

. No residential microwave ovens consume less than 1 W of standby power, some microwave ovens consume less than 2 W of standby power, but the large majority of microwave ovens consume between 2.1 and 3 W of standby power. 0 26 56

33

0 10 20 30 40 50 60

0 to 1 W 1.1 to 2 W 2.1 to 3 W 3.1 W or greaterNumber of Models

Standby Power3-33 REFERENCES

1 “U.S. Appliance Industry: Market Share, Life Expectancy & Replacement Market, and

Saturation Levels.” Appliance Market Research Report

, Appliance Magazine

, January 2010

.

2 Ibid.

3 Maytag. 2005. “Whirlpool Corporation and Maytag Corporation Sign Definitive Merger

Agreement.” Maytag Press Release , August 22, 2005.

4 P. Hussmann. 2006. “Justice to Extend Maytag

- Whirlpool Merger Review.” Newton Daily

News Online , February 14, 2006.

5 W. Ryberg. 2006. “Harkin, Boswell want Maytag sale blocked.” Des Moines Register

,

January 13, 2006.

6 Ibid.

7 U. S. Department of Justice (U.S. DOJ). 2006. Department of Justice Antitrust Division

Statement on the Closing of its Investigation of Whirlpool’s Acquisition of Maytag , March 29, 2006.

8 Ibid.

9 Association of Home Appliance Manufacturers (AHAM) Fact Book 2005.

10 AHAM Fact Book 2003

.

11 Tiele, Simone. 2008. Australia’s Approach to Standby Power. Department of the

Environment, Water, Heritage and the Arts, Australia, April 2, 2008. Available online at: http://www.iea.org/work/2008/indiastandby/Tiele_DOEWHA.pdf

. (Accessed May 20 11 )

12 Korea’s Energy Standards & Labeling

–

Market Transformation

. Ministry of Knowledge Economy and Korea Energy Management Corporation. Available online at: http://www.kemco.or.kr/new_eng/pg02/pg02100101.asp . (Accessed May 2011 .)

13 Japan’s Top Runner Program . 2005. Final Report by Microwave Oven Evaluation Standard

Subc ommittee

. Prepared by Japan’s Energy Efficiency Standards Subcommittee of the Advisory Committee for Natural Resources and Energy. November 2005. Available online at http://www.eccj .or.jp/top_runner/pdf/tr_microwaveoven.pdf . (Accessed May 2011 .)

14 Commission of the European Communities. 2008. Commission Regulation (EC) No

1275/2008 implementing Directive 2005/32/EC of the European Parliament and of the Council with regard to ecodesign requirements for standby and off mode electric power consumption of electrical and electronic household and office equipment. December 17 , 2008. Ava ilable3-34 online at http://eur

lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:339:0045:0052:en:PDF . (Accessed May 2011 )

15 U.S. Census Bureau. 200 9 . “Table Q1. New Privately Owned Housing Units Started in the

United States by Purpose and Design.” New Residential Construction , February 200 9

.

16 Ibid.

17 Appliance Magazine

, January 2010, and AHAM Fact Book 2005. Op. cit.

18 U.S. Census Bureau

. Annual Survey of Manufacturers (ASM): Value of Product Shipments:

Value of Shipments in Product Classes . 1994

- 2009, issued annually

.

19 AHAM Fact Book 2003.

20 U.S. Census Bureau. 200 9

. Statistics.

21 AHAM. Import/Export Trade Report

– December 200 9

. 2010.

22 Ibid

.

23 Ibid

.

24 Ibid

.

25 AHAM Fact Book 2005

.

26 Ibid.

27 U.S. Census Bureau. 200 9

. “ Statistics for Industry Groups and Industries: 200 9 and Earlier

Years.” 2008 Annual Survey of Manufacturers ( ASM ), December 200 9

.

28 Ibid.

29 Ibid.

30 Ibid.

31 Ibid.

32 Ibid.

33 U.S. Census Bureau, Survey of Plant Capacity: 2006 to 199 6

.3-35 34 AHAM. 2006. AHAM Test Data on Microwave Ovens . October 23, 2006. Docket Number EE

- 2006

- STD

- 0127, Comment Number 17, November 30, 2006.

35 Ibid.

36 N. Fish, D. White, and D. Ryan. 2006. Standby Power Energy Use of Common Household Appliances . Canadian Building Energy End

- Use Data and Analysis Center

, University of Alberta, Canada

, July 2006.

37 FEMP Microwave S tandby P ower D atabase. Available online at http://www1.eere.energy.gov/femp/technologies/standby_power.aspx . (Accessed May 2011 .)