DRAFT

- For Discussion Purposes Only



### Introduction 

### Clothes Washer Manufacturers Interview Guide 

# ;!J4

# PP

The Departmentproposes to conduct interviews with manufacturerrepresentatives to gatherkey information on the effects that potential new energy efficiency standards for clothes washers might have on their company's revenues and finances, and on their workforce. This interview guideprovides a starting point to identifyrelevant issues and qualitatively and quantitatively describe the impacts ofpossible candidate standards levels.



### PartA: CurrentOrganizational Characteristics The Department's interest concerning manufacturer impact is focused at the plant or profit center level directly pertinent to clothes washer production. The context within which the plant operates and the details ofplant production and costs are not readily available from the published literature, however, so the Departmentinvites the manufacturers to provide these details confidentially in their own words to the extent practical. The organizational setting around the clothes washerprofit centeris of interest to round out the Department's understanding ofthe probable future ofthe clothes washermanufacturing activity without and with energy efficiency standards. A.1 Identify names ofparent companies and any subsidiaries relevant to the clothes washer industry. A.2 Pleaseprovide the locations ofyour clothes washerproduction facilities and the product mix manufactured there. A.2.1 How would energy efficiency standards affect each production facility mix? A.3 Howhas your company incorporated energy efficiency improvements in clothes washer technology into its product line and marketing strategy? A.3.1 Are horizontal-axis clothes washers currentlybeingproduced byyour company? A.4 How would a new energy efficiency standard on clothes washers affect your product mix and marketing strategy?

### Part B: Industry Infrastructure As part ofan attempt to betterunderstand the industry infrastructure and the impact energy efficiency standards might have on it, the: Department would like for manufacturerrepresentatives to discuss their majordistribution channels and major sources ofsupply. Major Customer Types The following questions are intended to gain an understanding ofhow potential energy standards levels might affect customer mix and distribution channels. B.1. Generallyhow would a new clothes washer standard impact your customermix, distribution channels and corresponding profit margins? B.2. Do you see any changes in emphasis on export sales, and would thepresence of new energy efficiency standards have an impact on production ofclothes washers for export sale? Major Suppliers The Departmentrecognizes that manufacturers do not operate in insolation and that changes in production levels oreconomic health ofa manufacturer can have significant impacts on its suppliers and othertrade allies. The Departmentplans to be available to meet with representatives ofthese trade allies and to considertheir impacts. B.3. Who are the suppliers that may be affectedby changes in your product mix as a result ofstandards? How might theybe affected?



### Part C: Manufacturer Cash Flow Analysis The Department wishes to discuss fully theresults ofthe Industry Cash Flow with each manufacturer and identify manufacturer specific variances. Each manufacturer will have a version ofGRIM that includes discrete manufacturer costs for all percentiles reported byAHAM. Each manufacturer can, ifdesired, input its own data and assumptions to develop its ownexpected cash flow. Alternatively manufacturers can select the percentile values that represent their costs at different efficiency levels. Arthur D. Little will discuss and report the variances in key variables and impacts for manufacturers that differ from industry averages. C.1. Costs How do you explain differences, ifany, between your manufacturing costs with and without new energy efficiency standards and those presented in the sample results for the industry as a whole?C.1.1. Is the "Industry" cost structure (materials, labor, overhead, tooling, etc.) representative ofyour firm's costs? What are the differences and their causes? C.1.2. How might new standards alter this cost structure? 

### C.2 Prices How do you explain differences, ifany, between your expected product prices with and without new energy efficiency standards and those presented inthe sampleresults for the industry as a whole? C.2.1. Are your gross margins (% revenue) different post standards? Ifso, what are the causes? 

### C.3 Shipments How do you explain differences, ifany, between your expected product shipments with and without new energy efficiency standards? C.3.1. What assumption(s) did you make about your firm's market share poststandards? What was yourreasoning? C.3.2 Is yourproduct mix significantly different from the overall industry proportions? 

### C.4 Financial How do you explain differences, ifany, between your financial data and those presented for the industry as a whole? 

### C.5 Impacts on the Business Please discuss your interpretations ofthe cash flow analyses results for the standards cases. What do the results imply about the future ofthebusiness? Availability ofcapital? Are there additional financial impacts on new standards that are notbeing captured in the cash flow analysis? Please explain? (i.e., Tax Rate, Discount Rate, Working Capital, SG&A, R&D, Depreciation) 

### C.6 Additional Economic Measures Please discuss any additional measures, ifany, that you might have developed that provideinsight into the economic effects ofchanges in energy-efficiency standards.



### Part D: Competitive Impacts Assessment Competitive impacts are assessed mainly in terms ofmarket power, which is defined as the ability to set a given product price within a limited range. The Departmentis interested in manufacturer viewpoints on the extent to which new energy efficiency standards would increase market power and thereby lesson competition within the clothes washer industry.D.l. How would new energy efficiency standards affect your ability to compete in the marketplace? D.2. Do you believe that new energy efficiency standards would unfairly assist orharm the ability ofsome firms in the industry to compete? D.3. Please discuss examples, ifany, wherein substantial consumer subgroups would experience economic orperformancepenalties as a result ofnew standards. D.4. Can your firm meet potential efficiency levels without changing yourproducts in ways that consumers might care about? D.5. Does your companyhave specific information for the Department on consumer preferences for product attributes potentially affectedbynew standards?



### PartE: EmploymentImpactsAssessment The impact ofnew energy efficiency standards on employment is an important consideration in the rulemaking process. This section ofthe interview guide seeks to explore current trends in clothes washerproduction employment and solicit manufacturerviews onhow domestic employment patterns might be affected bynew energy efficiency standards. E.l. How would your employment levels change under new energy efficiency standards? E.2. Would the workforce skills required under new energy efficiency standards be different enough to require extensive retraining orreplacement ofemployees?



### PartF: ManufacturingCapacity Impacts Assessment The information discussed here is important for developing an understanding ofthe investment cost inputs to GRIM. F.1. How would the imposition ofnew energy efficiency standards affect your capacity utilization and manufacturing assets levels at yourdomestic production facilities? F.1.1 Would any facilities be closed ordownsized? F.1.2. Would any facilities be added orupgraded? F.2. Ifcurrent capacity wereto bemade obsolete, would it be remodeled to accommodate a new product mix? F.3. Please estimate the value ofstranded assets resulting from a new standard, and/or the costs ofrefitting the facility and carrying out the research, engineering, and other supporting activities required to accommodate the new productmix.