APPENDIX K. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDES

TABLE OF CONTENTS

K.1	 STANDARD SIZE PACKAGED TERMINAL AIR CONDITIONERS AND

PACKAGED TERMINAL HEAT PUMPS MANUFACTURER INTERVIEW GUIDE

......................................................................................................................................... K­1

K.2	 NON­STANDARD SIZE PACKAGED TERMINAL AIR CONDITIONERS AND

PACKAGED TERMINAL HEAT PUMPS MANUFACTURER INTERVIEW GUIDE

....................................................................................................................................... K­21

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APPENDIX K. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDES

K.1 STANDARD SIZE PACKAGED TERMINAL AIR CONDITIONERS AND

PACKAGED TERMINAL HEAT PUMPS MANUFACTURER INTERVIEW GUIDE

Packaged Terminal Air Conditioners
 

and Packaged Terminal Heat Pumps Rulemaking
 

Manufacturer Impact Analysis Interview Guide:
 

Standard Size Packaged Terminal Air Conditioners and
 

Packaged Terminal Heat Pumps
 

May 17, 2007
 

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1 KEY ISSUES

The Department of Energy (DOE) is currently reviewing five efficiency levels for the package

terminal air conditioner (PTAC) and packaged terminal heat pump (PTHP) rulemaking analyses.

For the purpose of this interview guide, DOE refers to new construction PTACs and PTHPs as

“standard” size PTACs and PTHPs. Standard size PTACs and PTHPs refers to equipment with

all other wall sleeve dimensions except wall sleeve dimension less than 16 inches high or less

than 42 inches wide and with frontal cross­sectional area greater than 670 square inches. The

efficiency levels are presented below as they apply to standard size PTACs and PTHPs product

classes. In responding to this questionnaire, please refer to the EER values described below.

Table 1.1 Efficiency Levels

Product Class Efficiency Efficiency Level 0 Efficiency Efficiency Efficiency Efficiency

(cooling capacity) Metric Baseline Level 1 Level 2 Level 3 Level 4

(ASHRAE/IESNA

90.1­1999)

PTAC 9,000 Btu/h

Standard Size EER 10.6 10.9 11.3 11.5 12.0

PTHP 9,000 Btu/h

Standard Size EER 10.4 10.7 11.1 11.3 12.0

COP 3.0 3.1 3.2 3.3 3.5

PTAC 12,000

Btu/h

Standard Size

EER 9.9 10.2 10.8 11.0 11.5

PTHP 12,000 Btu/h

Standard Size EER 9.7 10.0 10.6 10.8 11.5

COP 2.9 3.0 3.1 3.1 3.3

1.1	 What are the key issues for your company regarding PTACs and PTHPs related to energy

conservation standards and this rulemaking?

1.2	 For the issues identified, how significant are they for each efficiency level?

1.3	 How can we most effectively incorporate these issues in the Manufacturer Impact Analysis

(MIA)?

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2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interested in understanding manufacturer impact at the plant or profit center level

directly pertinent to PTAC and PTHP production. However, the context within which the plant

operates and the details of plant production and costs are not readily available from the published

literature. Therefore, DOE invites you to provide these details confidentially in your own words

to the extent possible and practical. Understanding the organizational setting around the PTAC

and PTHP industry profit center will help DOE understand the probable future of the PTAC and

PTHP manufacturing activity with and without energy conservation standards.

2.1	 Do you have a parent company, and/or any subsidiaries relevant to the PTAC and PTHP

industry?

2.2	 Do you manufacture HVAC products other than PTACs and PTHPs? If so, what other

products do you manufacture?

2.3	 What percentage of your total manufacturing is for PTACs and PTHPs?

2.4	 Where are your production facilities located, and what type of product is manufactured

at each location? Could you provide figures for your company’s manufacturing at each

location by product type (PTACs and PTHPs), cooling capacity, and efficiency (i.e.,

provide the product mix for each location).

2.5	 From the facilities listed from the previous question, do you manufacture products other

than PTACs and PTHPs at those facilities? How important are the PTAC and PTHP

lines at those facilities to keeping facility open?

2.6	 At a particular facility, would potential PTAC and PTHP redesigns be difficult to

manufacture? If so, would your company modify the facility or develop a new facility?

2.7	 What are your employment levels at these facilities?

2.8	 What are your company’s total PTAC and PTHP production volumes (i.e., units per

year) for the past 5 years?

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2.9	 What are your product lines, niches, and relative strengths in the PTAC and PTHP
 

market?
 

3 FINANCIAL PARAMETERS

Navigant Consulting, Inc. (NCI) has developed a “strawman” model of the PTAC and PTHP

industry financial performance called the Government Regulatory Impact Model (GRIM), using

publicly available data on PTAC and PTHP manufacturers. All estimates and calculations in the

GRIM are based on PTACs and PTHPs using the refrigerant R­22. This section attempts to

understand how your company’s financial situation differs from our industry aggregate picture.

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3.1 Please compare your financial parameters to the GRIM parameters tabulated below.

Table 3.1 Financial Parameters for New Construction (Standard Size) PTAC and PTHP
 

Manufacturers
 

GRIM Input Definition PTAC and

PTHP GRIM

Estimated

Value

Your Actual (if

significantly

different from

our estimate)

Income Tax Rate Corporate (average)

effective income tax paid

(percentage of earnings

before taxes, EBT)

35.4%

Discount Rate Weighted average cost of

capital (inflation­adjusted

weighted average of

corporate cost of debt and

return on equity)

5.0%

Working Capital Current assets less current

liabilities (percentage of

revenues)

3.5%

SG&A Selling, general, and

administrative expenses

(percentage of revenues)

14.1%

R&D Research and development

expenses (percentage of

revenues)

1.6%

Depreciation Amortization of fixed

assets (percentage of

revenues)

1.7%

Capital

Expenditures

Outlay of cash to acquire

or improve capital assets

(percentage of revenues,

not including acquisition

or sale of business units)

1.8%

3.2	 How might new energy conservation standards impact your company’s financial
 

parameters?
 

4 R­410A

As part of the rulemaking process, DOE is interested in understanding the cumulative burden on

manufacturers of PTACs and PTHPs due to other regulatory actions. DOE is aware that the

Environmental Protection Agency (EPA) has mandated the phase­out of

hydrochlorofluorocarbon (HCFC) refrigerants by 2010. For analysis purposes, DOE has

assumed that R­410A will replace R­22 as the refrigerant of choice in PTAC and PTHP

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equipment. This questionnaire attempts to understand how your company is preparing for the

refrigerant phase­out and its effects to your company’s operations. DOE would also like to

understand the effects that the refrigerant phase­out will have on PTAC and PTHP design

performance.

4.1	 Has your company identified the steps to converting from R­22 to R­410A (or another

refrigerant) for PTAC and PTHP products? If so, please explain any steps your

company is currently taking to address the conversion issue.

4.2	 Will your company invest the capital and product conversion expenditures to be able to

market R­410A PTACs and PTHPs at your current R­22 PTAC and PTHP efficiencies

by 2010? If so, could you please provide a detailed quantitative and qualitative

description of the types of expenditures that would be necessary to fully convert your

product lines? Please refer to the table below to provide your company’s estimates.

Table 4.1 Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity)

R­410A Conversion Capital

Expendituresa

R­410A Product Conversion

Expensesb

PTAC

PTHP

4.2.a If your company does not plan to maintain your current R­22 PTAC and PTHP

efficiencies, could you please provide qualitative and quantitative information about

your company’s plans to address the refrigerant phase­out and the types of investments

that would be needed to convert your product lines to R­410A? Please refer to the table

below to provide your company’s estimates. Please provide additional information,

such as a time frame, cost breakdowns, type of tooling needed, etc., to help us

understand the nature of your investments.

Table 4.2 Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity)

R­410A Conversion Capital

Expenditures

R­410A Product Conversion

Expenses

PTAC

PTHP

4.3	 What changes do you expect, if any, in your estimated profitability following the
 

refrigerant phase­out in 2010?
 

4.4	 Do you expect your projected production volume and shipments to be altered by the

a Conversion Capital Expenditures ­ One­time investments in plant, property, and equipment (PPE) necessitated by

an energy conservation standard. These may be completely incremental to existing PPE or they could involve

replacement of existing PPE.

b Product Conversion Expenses ­ One­time expenses in research, product development, testing, and marketing

necessitated by an appliance energy conservation standard.

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refrigerant phase­out? If so, can you please provide your R­410A PTAC and PTHP

production volume and shipments estimates?

4.5	 Will the refrigerant phase­out cause you to discontinue production of any product lines

including different cooling capacities and equipment type (PTAC and PTHP)?

4.6	 DOE would like to compare current full production costs for R­22 PTACs and PTHPs

with estimated R­410A PTACs and PTHPs full production costs (i.e., manufacturing

production costs, which include materials, labor, overhead, and depreciation costs).

Could you please compare your current r­22 equipment full production costs with the

industry estimates provided below? Are they representative of your product’s full

production costs? If not, could you please explain any differences? Could you please

provide an estimated percentage difference in full production cost between R­22 and R410A PTACs and PTHPs?

Table 4.3 R­22 and R­410A Standard PTAC 9,000 Btu/h Full Production Cost

Efficiency Level EER

Industry

Estimated

R­22 Full

Production

Cost

Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost

Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

Baseline (ASHRAE

90.1­1999) 10.6 $329.26

Efficiency Level 1 10.9 $334.55

Efficiency Level 2 11.3 $342.46

Efficiency Level 3 11.5 $346.78

Efficiency Level 4 12 $358.66

Table 4.4 R­22 and R­410A Standard PTHP 9,000 Btu/h Full Production Cost
 

Efficiency Level EER

Industry

Estimated

R­22 Full

Production

Cost

Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost

Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

Baseline (ASHRAE

90.1­1999) 10.4 $376.04

Efficiency Level 1 10.7 $380.96

Efficiency Level 2 11.1 $388.38

Efficiency Level 3 11.3 $392.46

Efficiency Level 4 12 $408.66

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Table 4.5 R­22 and R­410A Standard PTAC 12,000 Btu/h Full Production Cost
 

Efficiency Level EER

Industry

Estimated

R­22 Full

Production

Cost

Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost

Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

Baseline (ASHRAE

90.1­1999) 9.9 $375.55

Efficiency Level 1 10.2 $381.88

Efficiency Level 2 10.8 $397.47

Efficiency Level 3 11 $403.54

Efficiency Level 4 11.5 $420.59

Table 4.6 R­22 and R­410A Standard PTHP 12,000 Btu/h Full Production Cost
 

Efficiency Level EER

Industry

Estimated

R­22 Full

Production

Cost

Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost

Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

Baseline (ASHRAE

90.1­1999) 9.7 $421.87

Efficiency Level 1 10 $427.55

Efficiency Level 2 10.6 $441.84

Efficiency Level 3 10.8 $447.47

Efficiency Level 4 11.5 $470.59

4.7	 Does your company have any working prototypes of R­410A PTACs and PTHPs?
 

Could you provide any prototype or simulation testing information?
 

4.8	 Are there any other concerns regarding the refrigerant phase­out that you would like

DOE to be aware of?

5 PRODUCTION COST BREAKDOWN

5.1	 DOE estimated the full production costs of various R­22 PTAC and PTHP units of

different efficiencies for both 9,000 btu/h and 12,000 btu/h cooling capacities, as shown

in the previous section. With the combined data, doe calculated the industry average

percentage of each cost in the full production cost.

5.2 Please compare your full production cost percentages to the grim full production cost

percentages tabulated below. Are the different percentages of each cost representative

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of your company or the R­22 PTAC and PTHP industry? Please explain any

differences.

Table 5.1 Breakdown by Percentage of Full Production Costs for Standard Size, Baseline,

R­22 PTACs and PTHPs

Components of Full Production Costs Estimated % of Full

Production Cost

Your Actual (if

significantly different

from our estimate)

Materials 84.6 %

Labor 4.1 %

Overhead 6.9 %

Depreciation* 4.4 %

* Depreciation is calculated based on a completely new factory

5.3	 Do you anticipate your full production cost percentage breakdown will change as a

result of the refrigerant phase­out in 2010? If so, can you please provide your estimates

in the table below?

Table 5.2 Estimated Breakdown by Percentage of Full Production Costs for Standard Size,

Baseline, R­410A PTACs and PTHPs

Components of Full Production Costs R­410A Estimated %

of Full Production Cost

Materials

Labor

Overhead

Depreciation*

* Depreciation is calculated based on a completely new factory

6 SHIPMENT PROJECTIONS AND MARKET SHARES

A new energy conservation standard can change overall shipments by changing product

attributes, marketing approaches, product availability, and price. The GRIM bases revenue

projections on shipment projections obtained from the National Energy Savings Spreadsheet

(NES) prepared by the Pacific Northwest National Laboratory (PNNL). The NES includes

shipment forecasts for the base case (absent new standards) and new standards at each efficiency

level being analyzed.

6.1	 Please compare DOE’s projections of industry­wide shipments for R­22 standard size

PTACs and PTHPs with your company’s projections of industry­wide shipments?

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Table 6.1 2012 Industry­Wide Shipment Projections for R­22 Standard Size PTACs and
 

PTHPs (Number of Units)
 

Case

PTAC

9,000

Btu/h

PTAC

12,000

Btu/h

PTHP

9,000

Btu/h

PTHP

12,000

Btu/h

Base Case

ASHRAE/IESNA 90.1­

1999

87,300 129,100 68,600 93,500

Comments Or Your

Company’s Projection

6.2	 Does your company anticipate the industry­wide shipments for PTACs and PTHPs to

change as a result of the refrigerant phase­out? If so, could you please provide an

estimated percent change in the shipments?

Table 6.2 2012 Industry­Wide Shipment Projections for R­410A Standard Size PTACs and

PTHPs

Efficiency Level

PTAC

9,000

Btu/h

PTAC

12,000

Btu/h

PTHP

9,000

Btu/h

PTHP

12,000

Btu/h

Comments Or Your

Company’s Projection

6.3	 DOE assumed that total industry shipments for 2012 would not be affected by increasing

standards levels (i.e., total industry shipments remain constant at the various analyzed

standard levels in comparison to the base case). Could you provide your company’s

estimates and/or any qualitative information on expected changes in total industry

shipments due to the different analyzed efficiency levels?

Table 6.3 Changes in Shipments versus Base Case in 2012 for R­22 Standard Size
 

Equipment
 

Efficiency

Levels

PTAC 9,000 Btu/h PTHP 9,000 Btu/h

EER %

Change Comments EER %

Change Comments

Efficiency

Level 1 10.9 10.7

Efficiency

Level 2 11.3 11.1

Efficiency

Level 3 11.5 11.3

Efficiency

Level 4 12.0 12.0

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Table 6.4 Changes in Shipments versus Base Case in 2012 for R­22 Standard Size
 

Equipment
 

Efficiency

Levels

PTAC 12,000 Btu/h PTHP 12,000 Btu/h

EER %

Change Comments EER %

Change Comments

Efficiency

Level 1 10.2 10.0

Efficiency

Level 2 10.8 10.6

Efficiency

Level 3 11.0 10.8

Efficiency

Level 4 11.5 11.5

6.4	 What is your company’s approximate market share of the PTAC and PTHP industry?

6.5	 Would you expect your market share to change once higher energy conservation
 

standards become effective?
 

6.6	 Would you expect your market share to change as a result of the refrigerant phase­out?

7 PRODUCT MIX

Current differences in product mix (distribution of product sales by efficiency level) among

manufacturers can lead to different reactions to and impacts from new energy conservation

standards.

7.1	 If your company offers multiple product lines with different efficiency levels, how does

your mix of PTACs and PTHPs sales by product efficiency compare to our projected

2012 industry average distribution for the ASHRAE/IESNA 90.1­1999 base case as

shown in table 7.1 – table 7.4? If your company does not offer multiple product lines

with different efficiency levels, is the projected distribution representative of the PTAC

and PTHP industry?

Table 7.1 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTAC

9,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

10.6 10.9 11.3 11.5 12.0

2012 23% 22% 20% 19% 17%

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Table 7.2 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTHP
 

9,000 Btu/h Cooling Capacity
 

Year Percent of Total Shipments by Efficiency Level

10.4 10.7 11.1 11.3 12.0

2012 22% 21% 20% 20% 17%

Table 7.3 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTAC
 

12,000 Btu/h Cooling Capacity
 

Year Percent of Total Shipments by Efficiency Level

9.9 10.2 10.8 11.0 11.5

2012 24% 23% 20% 18% 16%

Table 7.4 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTHP
 

12,000 Btu/h Cooling Capacity
 

Year Percent of Total Shipments by Efficiency Level

9.7 10.0 10.6 10.8 11.5

2012 23% 22% 20% 19% 16%

7.2	 Do you expect the product mix to change over time absent any new energy conservation

standards?

7.3	 Do you expect the product mix to change due to the refrigerant phase­out for 2012? If

so, could you provide estimates or any information that could help doe understand the

effects of the refrigerant phase­out on industry product mix? Please use the tables

below.

Table 7.5 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size

PTAC 9,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

10.6 10.9 11.3 11.5 12.0

2012

Table 7.6 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size
 

PTHP 9,000 Btu/h Cooling Capacity
 

Year Percent of Total Shipments by Efficiency Level

10.4 10.7 11.1 11.3 12.0

2012

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Table 7.7 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size
 

PTAC 12,000 Btu/h Cooling Capacity
 

Year Percent of Total Shipments by Efficiency Level

9.9 10.2 10.8 11.0 11.5

2012

Table 7.8 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size
 

PTHP 12,000 Btu/h Cooling Capacity
 

Year Percent of Total Shipments by Efficiency Level

9.7 10.0 10.6 10.8 11.5

2012

7.4	 A new energy conservation standard affects the product mix by eliminating the sale of

products below the minimum efficiency level. The NES forecasts the distribution of R22 PTACs and PTHPs sales by efficiency level after standards. Are the NES forecasts

described in the tables below for the year 2012 consistent with your own expectations

for the industry? Would you expect your own product mix to differ?

Table 7.9 R­22 Standard Size PTAC 9,000 Btu/h Product Mix (2012)

Standard Level

Efficiency Level (EER)

10.6 10.9 11.3 11.5 12.0

10.6 22.9% 21.7% 19.9% 19.0% 16.6%

10.9 NA 44.5% 19.9% 19.0% 16.6%

11.3 NA NA 64.4% 19.0% 16.6%

11.5 NA NA NA 83.4% 16.6%

12.0 NA NA NA NA 100%

Table 7.10 R­22 Standard Size PTHP 9,000 Btu/h Product Mix (2012)
 

Standard Level

Efficiency Level (EER)

10.4 10.7 11.1 11.3 12.0

10.4 21.9% 21.2% 20.1% 19.6% 17.2%

10.7 NA 43.1% 20.1% 19.6% 17.2%

11.1 NA NA 63.2% 19.6% 17.2%

11.3 NA NA NA 82.8% 17.2%

12.0 NA NA NA NA 100%

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Table 7.11 R­22 Standard Size PTAC 12,000 Btu/h Product Mix (2012)
 

Standard Level

Efficiency Level (EER)

9.9 10.2 10.8 11.0 11.5

9.9 23.9% 22.6% 19.5% 18.4% 15.6%

10.2 NA 46.5% 19.5% 18.4% 15.6%

10.8 NA NA 66.1% 18.4% 15.6%

11.0 NA NA NA 84.4% 15.6%

11.5 NA NA NA NA 100%

Table 7.12 R­22 Standard Size PTHP 12,000 Btu/h Product Mix (2012)
 

Standard Level

Efficiency Level (EER)

9.7 10.0 10.6 10.8 11.5

9.7 22.7% 22.1% 20.0% 19.1% 16.1%

10.0 NA 44.8% 20.0% 19.1% 16.1%

10.6 NA NA 64.8% 19.1% 16.1%

10.8 NA NA NA 83.9% 16.1%

11.5 NA NA NA NA 100%

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7.5	 Does your company expect any changes to the above product mixes due to the

refrigerant phase­out? Please explain both qualitatively and quantitatively if possible.

8 INSTALLATION, MAINTENANCE, AND REPAIR COSTS

DOE recognizes that new energy conservation standards have potential impacts on the

installation, maintenance, and repair costs of equipment such as PTACs and PTHPs. To meet

new energy conservation standards, manufacturers may implement more efficient components

and design options that can possibly affect the installation, maintenance, and repair costs. As

part of the life cycle cost analysis, DOE estimated the installation, maintenance, and repair costs

of standard size PTACs and PTHPs for each efficiency level.

8.1	 Are these installation and annual repair cost estimates representative of the industry for

the different equipment? Please explain any differences.

Table 8.1 Average Installation and Average Annual Repair Costs for Standard Size PTAC

9,000 Btu/h Cooling Capacity

Efficiency Level Average Installation

Costs

Average Annual Repair

Cost

Efficiency Level

1

$197 $16

Efficiency Level

2

$202 $16

Efficiency Level

3

$204 $16

Efficiency Level

4

$211 $17

Table 8.2 Average Installation and Average Annual Repair Costs for Standard Size PTAC
 

12,000 Btu/h Cooling Capacity
 

Efficiency Level Average Installation

Costs

Average Annual Repair

Cost

Efficiency Level

1

$247 $16

Efficiency Level

2

$257 $16

Efficiency Level

3

$261 $16

Efficiency Level

4

$272 $17

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Table 8.3 Average Installation and Average Annual Repair Costs for Standard Size PTHP
 

9,000 Btu/h Cooling Capacity
 

Efficiency Level Average Installation

Costs

Average Annual Repair

Cost

Efficiency Level

1

$197 $16

Efficiency Level

2

$200 $16

Efficiency Level

3

$203 $16

Efficiency Level

4

$211 $17

Table 8.4 Average Installation and Average Annual Repair Costs for Standard Size PTHP
 

12,000 Btu/h Cooling Capacity
 

Efficiency Level Average Installation

Costs

Average Annual Repair

Cost

Efficiency Level

1

$246 $16

Efficiency Level

2

$254 $16

Efficiency Level

3

$257 $16

Efficiency Level

4

$271 $17

8.2	 Does your company expect there will be changes to equipment installation and annual

repair cost due to the refrigerant phase­out? If possible, can you provide any estimates

on the changes to the installation and annual repair costs due to the refrigerant phaseout?

8.3	 Are the failure and repair rates for your products a function of efficiency? If so, please

explain.

9 CONVERSION COSTS

An increase in energy conservation standards may cause your company to incur one­time capital

and product conversion costs. DOE calls these conversion costs because they are the costs of

changing your business to comply with new energy conservation standards.

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9.1	 What level of conversion costs do you anticipate incurring under the different efficiency

levels? Refer to the tables below to provide your company’s estimates. Please provide

additional qualitative information to help us understand the nature of your investments.

Table 9.1 Standard Size PTAC 9,000 Btu/h Conversion Costs

Standard

Level

Conversion Capital Expenditures Product Conversion Expenses

10.6 EER

10.9 EER

11.3 EER

11.5 EER

12.0 EER

Table 9.2 Standard Size PTHP 9,000 Btu/h Conversion Costs
 

Standard

Level

Conversion Capital Expenditures Product Conversion Expenses

10.4 EER

10.7 EER

11.1 EER

11.3 EER

12.0 EER

Table 9.3 Standard Size PTAC 12,000 Btu/h Conversion Costs
 

Standard

Level

Conversion Capital Expenditures Product Conversion Expenses

9.9 EER

10.2 EER

10.8 EER

11.0 EER

11.5 EER

Table 9.4 Standard Size PTHP 12,000 Btu/h Conversion Costs
 

Standard

Level

Conversion Capital Expenditures Product Conversion Expenses

9.7 EER

10.0 EER

10.6 EER

10.8 EER

11.5 EER

9.2	 What portion of your conversion capital expenditures will go towards replacing existing

assets, which would become obsolete under a new energy conservation standard? Does

your answer depend upon the efficiency level? If yes, please provide an estimate with

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the corresponding efficiency level.

Table 9.5 Portion of Conversion Capital Expenditure to Replace Existing Assets

Efficiency Level Portion of Conversion Capital

Expenditures For Replacing

Existing Assets

Baseline

(ASHRAE/IESNA 90.1­1999)

Efficiency Level 1

Efficiency Level 2

Efficiency Level 3

Efficiency Level 4

9.3	 What is your depreciation period for the capital expenditures (building, equipment, and

tooling)?

10 MARKUPS AND PROFITABILITY

One of the primary objectives of the MIA is to assess the impact of efficiency levels on industry

profitability. In this section, DOE would like your assistance understanding how the efficiency

levels would impact your company’s markups and profitability.

10.1 Do profit levels vary by product class (i.e., PTAC and PTHP at different cooling

capacities)? Do profit levels vary by efficiency level? Please explain why or why not?

10.2 What changes do you expect, if any, in your estimated profitability following the new

energy conservation standard?

10.3 What are the causes of any expected changes in profitability?

11 CUMULATIVE REGULATORY BURDEN

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects of

new or revised DOE standards and/or other regulatory actions affecting the same products or

industry.

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11.1 Are there other recent or impending regulations, excluding the refrigerant phase­out, that
 

PTAC and PTHP manufacturers face (from doe or otherwise)? What level of

investment are you expecting to incur as a result of these regulations?

11.2 Under what circumstances would you be able to coordinate any expenditures related to

other regulations thereby lessening the cumulative burden?

12 EXPORTS / FOREIGN COMPETITION / OUTSOURCING

Disparity between domestic and foreign energy conservation standards could impact exports or

imports. Labor content and material changes, resulting from energy conservation standards, may

impact sourcing decisions.

12.1 Does the bulk of your company’s PTAC and PTHP production occur domestically?

Absent standards, are production facilities being relocated to foreign countries? Would

standards impact your domestic vs. foreign manufacturing decision?

12.2 Could a new standard affect your export sales? What would the resulting impact be, if

any, on your manufacturing operations and profitability?

12.3 What percentage of the U.S. market has been captured by foreign competition? Would

standards have an impact on foreign competition?

13 DIRECT EMPLOYMENT IMPACT ASSESSMENT

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

in the rulemaking process. This section of the interview guide seeks to explore current trends in

PTAC and PTHP production employment and solicit manufacturer views on how domestic

employment patterns might be affected by new energy conservation standards.

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13.1 Would your domestic employment levels change under new energy conservation
 

standards?
 

13.2 Would the workforce skills necessary under new energy conservation standards require

extensive retraining or replacement of employees?

14 CONSOLIDATION

New energy conservation standards can alter the competitive dynamics of the market. This can

include prompting companies to enter or exit the market, or to merge. DOE and the Justice

Department are both interested in any potential reduction in competition that would result from a

new energy conservation standard.

14.1 Please comment on industry consolidation and related trends over the last 5 years.

14.2 In the absence of new standards, do you expect any industry consolidation? Please

describe your expectations.

14.3 How would new standards affect your ability to compete?

14.3	 Could new standards disproportionately advance or harm the competitive positions of

some firms (e.g., small businesses)?

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K.2 NON­STANDARD SIZE PACKAGED TERMINAL AIR CONDITIONERS AND

PACKAGED TERMINAL HEAT PUMPS MANUFACTURER INTERVIEW GUIDE

Packaged Terminal Air Conditioners
 

and Packaged Terminal Heat Pumps Rulemaking
 

Manufacturer Impact Analysis Interview Guide:
 

Non­Standard Size Packaged Terminal Air Conditioners and
 

Packaged Terminal Heat Pumps
 

May 18, 2007
 

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1 KEY ISSUES

The Department of Energy (DOE) is currently reviewing five efficiency levels for the package

terminal air conditioner (PTAC) and packaged terminal heat pump (PTHP) rulemaking analyses.

For the purpose of this interview guide, DOE refers to replacement PTACs and PTHPs as “nonstandard” size PTACs and PTHPs. Non­standard size PTACs and PTHPs refers to equipment

with a wall sleeve dimension having an exterior wall opening less than 16 inches high or less

than 42 inches wide or equipment with cross­sectional area less than 670 square inches. The

efficiency levels are presented below as they apply to non­standard size PTACs and PTHPs

product classes. In responding to this questionnaire, please refer to the EER values described

below.

Table 1.1 Efficiency Levels

Product Class Efficiency Efficiency Level 0 Efficiency Efficiency Efficiency Efficiency

(cooling capacity) Metric Baseline Level 1 Level 2 Level 3 Level 4

(ASHRAE/IESNA

90.1­1999)

PTAC all capacities

Non­standard Size EER 8.6 9.5 10.0 10.7 11.2

PTHP all capacities EER 8.5 9.4 9.9 10.6 11.2

Non­standard Size COP 2.6 2.8 2.8 2.9 2.9

1.4	 What are the key issues for your company regarding PTACs and PTHPs related to energy

conservation standards and this rulemaking?

1.5	 For the issues identified, how significant are they for each efficiency level?

1.6	 How can we most effectively incorporate these issues in the Manufacturer Impact Analysis

(MIA)?

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

DOE is interested in understanding manufacturer impact at the plant or profit center level

directly pertinent to PTAC and PTHP production. However, the context within which the plant

operates and the details of plant production and costs are not readily available from the published

literature. Therefore, DOE invites you to provide these details confidentially in your own words

to the extent possible and practical. Understanding the organizational setting around the PTAC

and PTHP industry profit center will help DOE understand the probable future of the PTAC and

PTHP manufacturing activity with and without energy conservation standards.

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2.1	 Do you have a parent company, and/or any subsidiaries relevant to the PTAC and PTHP

industry?

2.2	 Do you manufacture hvac products other than PTACs and PTHPs? If so, what other

products do you manufacture?

2.3	 What percentage of your total manufacturing is for PTACs and PTHPs?

2.4	 Where are your production facilities located, and what type of product is manufactured

at each location? Could you provide figures for your company’s manufacturing at each

location by product type (PTACs and PTHPs), cooling capacity, and efficiency (i.e.,

provide the product mix for each location).

2.5	 From the facilities listed from the previous question, do you manufacture products other

than PTACs and PTHPs at those facilities? How important are the PTAC and PTHP

lines at those facilities to keeping facility open?

2.6	 At a particular facility, would potential PTAC and PTHP redesigns be difficult to

manufacture? If so, would your company modify the facility or develop a new facility?

2.7	 What are your employment levels at these facilities?

2.8	 What are your company’s total PTAC and PTHP production volumes (i.e., units per

year) for the past 5 years?

2.9	 What are your product lines, niches and relative strengths in the PTAC and PTHP
 

market?
 

3 FINANCIAL PARAMETERS

Navigant Consulting, Inc. (NCI) has developed a “strawman” model of the PTAC and PTHP

industry financial performance called the Government Regulatory Impact Model (GRIM), using

publicly available data on PTAC and PTHP manufacturers. All estimates and calculations in the

GRIM are based on PTACs and PTHPs using the refrigerant R­22. This section attempts to

understand how your company’s financial situation differs from our industry aggregate picture.

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3.1	 Please compare your financial parameters to the grim parameters tabulated below.

Table 3.1 Financial Parameters for Replacement (Non­Standard Size) PTAC and PTHP

Manufacturers

GRIM Input Definition PTAC and

PTHP GRIM

Estimated

Value

Your Actual (if

significantly

different from

our estimate)

Income Tax Rate Corporate (average)

effective income tax paid

(percentage of earnings

before taxes, EBT)

35.4%

Discount Rate Weighted average cost of

capital (inflation­adjusted

weighted average of

corporate cost of debt and

return on equity)

5.0%

Working Capital Current assets less current

liabilities (percentage of

revenues)

3.5%

SG&A Selling, general, and

administrative expenses

(percentage of revenues)

14.1%

R&D Research and development

expenses (percentage of

revenues)

1.6%

Depreciation Amortization of fixed

assets (percentage of

revenues)

1.7%

Capital

Expenditures

Outlay of cash to acquire

or improve capital assets

(percentage of revenues,

not including acquisition

or sale of business units)

1.8%

3.2	 How might new energy conservation standards impact your company’s financial
 

parameters?
 

4 R­410A

As part of the rulemaking process, DOE is interested in understanding the cumulative burden on

manufacturers of PTACs and PTHPs due to other regulatory actions. DOE is aware that the

Environmental Protection Agency (EPA) has mandated the phase­out of

hydrochlorofluorocarbon (HCFC) refrigerants by 2010. For analysis purposes, DOE has

assumed that R­410A will replace R­22 as the refrigerant of choice in PTAC and PTHP

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equipment. This questionnaire attempts to understand how your company is preparing for the

refrigerant phase­out and its effects to your company’s operations. DOE would also like to

understand the effects that the refrigerant phase­out will have on PTAC and PTHP design

performance.

4.1	 Has your company identified the steps to converting from R­22 to R­410A (or another

refrigerant) for PTAC and PTHP products? If so, please explain any steps your

company is currently taking to address the conversion issue.

4.2	 Will your company invest the capital and product conversion expenditures to be able to

market R­410A PTACs and PTHPs at your current R­22 PTAC and PTHP efficiencies

by 2010? If so, could you please provide a detailed quantitative and qualitative

description of the types of expenditures that would be necessary to fully convert your

product lines? Please refer to the table below to provide your company’s estimates.

Table 4.1 Non­Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity)

R­410A Conversion Capital

Expendituresc

R­410A Product Conversion

Expensesd

PTAC

PTHP

4.2a	 If your company does not plan to maintain your current R­22 PTAC and PTHP

efficiencies, could you please provide qualitative and quantitative information about

your company’s plans to address the refrigerant phase­out and the types of investments

that would be needed to convert your product lines to R­410A? Please refer to the table

below to provide your company’s estimates. Please provide additional information,

such as a time frame, cost breakdowns, type of tooling needed, etc., to help us

understand the nature of your investments.

Table 4.2 Non­Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity)

R­410A Conversion Capital

Expenditures

R­410A Product Conversion

Expenses

PTAC

PTHP

4.3	 What changes do you expect, if any, in your estimated profitability following the
 

refrigerant phase­out in 2010?
 

4.4	 Do you expect your projected production volume and shipments to be altered by the

c Conversion Capital Expenditures ­ One­time investments in plant, property, and equipment (PPE) necessitated by

an energy conservation standard. These may be completely incremental to existing PPE or they could involve

replacement of existing PPE.

d Product Conversion Expenses ­ One­time expenses in research, product development, testing, and marketing

necessitated by an appliance energy conservation standard.

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refrigerant phase­out? If so, can you please provide your R­410A PTAC and PTHP

production volume and shipments estimates?

4.4	 Will the refrigerant phase­out cause you to discontinue production of any product lines

including different cooling capacities and equipment type (PTAC and PTHP)?

4.5	 DOE would like to compare current full production costs for R­22 PTACs and PTHPs

with estimated R­410A PTACs and PTHPs full production costs (i.e., manufacturing

production costs, which include materials, labor, overhead, and depreciation costs).

Could you please compare your current R­22 equipment full production costs with the

industry estimates provided below? Are they representative of your product’s full

production costs? If not, could you please explain any differences? Could you please

provide an estimated percentage difference in full production cost between R­22 and R410A PTACs and PTHPs?

Table 4.3 R­22 and R­410A Non­Standard PTAC Full Production Cost

Efficiency Level EER

Industry

Estimated

R­22 Full

Production

Cost

Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost

Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

Baseline (ASHRAE

90.1­1999) 8.6 $448.10

Efficiency Level 1 9.5 $456.03

Efficiency Level 2 10.0 $464.33

Efficiency Level 3 10.7 $480.63

Efficiency Level 4 11.2 $495.61

Table 4.4 R­22 and R­410A Non­Standard PTHP Full Production Cost
 

Efficiency Level EER

Industry

Estimated

R­22 Full

Production

Cost

Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost

Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

Baseline (ASHRAE

90.1­1999) 8.5 $497.78

Efficiency Level 1 9.4 $504.70

Efficiency Level 2 9.9 $512.45

Efficiency Level 3 10.6 $527.96

Efficiency Level 4 11.2 $545.61

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4.6	 Does your company have any working prototypes of R­410A PTACs and PTHPs?
 

Could you provide any prototype or simulation testing information?
 

4.7	 Are there any other concerns regarding the refrigerant phase­out that you would like

DOE to be aware of?

5 PRODUCTION COST BREAKDOWN

DOE estimated the full production costs of various R­22 PTAC and PTHP units of different

efficiencies for all cooling capacities, as shown in the previous section. With the combined data,

DOE calculated the industry average percentage of each cost in the full production cost.

5.1	 Please compare your full production cost percentages to the grim full production cost

percentages tabulated below. Are the different percentages of each cost representative

of your company or the R­22 PTAC and PTHP industry? Please explain any

differences.

Table 5.1 Breakdown by Percentage of Full Production Costs for Non­Standard Size R­22

PTACs and PTHPs

Components of Full Production Costs Estimated % of Full

Production Cost

Your Actual (if

significantly different

from our estimate)

Materials 65.3%

Labor 11.9%

Overhead 9.8%

Depreciation* 13.1%

* Depreciation is calculated based on a completely new factory

5.2	 Do you anticipate your full production cost percentage breakdown will change as a

result of the refrigerant phase­out in 2010? If so, can you please provide your estimates

in the table below?

Table 5.2 Estimated Breakdown by Percentage of Full Production Costs for Non­Standard

Size R­410A PTACs and PTHPs

Components of Full Production Costs R­410A Estimated %

of Full Production Cost

Materials

Labor

Overhead

Depreciation*

* Depreciation is calculated based on a completely new factory
 

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6 SHIPMENT PROJECTIONS AND MARKET SHARES

A new energy conservation standard can change overall shipments by changing product

attributes, marketing approaches, product availability, and price. The GRIM bases revenue

projections on shipment projections obtained from the National Energy Savings Spreadsheet

(NES) prepared by the Pacific Northwest National Laboratory (PNNL). The NES includes

shipment forecasts for the base case (absent new standards) and new standards at each efficiency

level being analyzed.

6.1	 Please compare DOE’s projections of industry­wide shipments for R­22 non­standard

size PTACs and PTHPs with your company’s projections of industry­wide shipments?

Table 6.1 2012 Industry­Wide Shipment Projections for R­22 Non­Standard Size PTACs

and PTHPs (Number of Units)

PTAC All PTHP All

Case Cooling Cooling

Capacities Capacities

Base Case

ASHRAE/IESNA 37,800 28,500

90.1­1999

Comments Or

Your Company’s

Projection

6.2	 Does your company anticipate the industry­wide shipments for PTACs and PTHPs to

change as a result of the refrigerant phase­out? If so, could you please provide an

estimated percent change in the shipments?

Table 6.2 2012 Industry­Wide Shipment Projections for R­410A Non­Standard Size

PTACs and PTHPs

PTAC All PTHP All

Efficiency Level Cooling Cooling

Capacities Capacities

Comments Or

Your Company’s

Projection

6.3	 DOE assumed that total industry shipments for 2012 would not be affected by increasing

standards levels (i.e., total industry shipments remain constant at the various analyzed

standard levels in comparison to the base case). Could you provide your company’s

estimates and/or any qualitative information on expected changes in total industry

shipments due to the different analyzed efficiency levels?

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Table 6.3 Changes in Shipments versus Base Case in 2012 for R­22 Non­Standard Size
 

Equipment
 

Efficiency

PTAC All Cooling

Capacities

PTHP All Cooling

Capacities

Levels EER %

Change Comments EER %Change Comments

Efficiency

Level 1 9.5 9.4

Efficiency

Level 2 10.0 9.9

Efficiency

Level 3 10.7 10.6

Efficiency

Level 4 11.2 11.2

6.4	 What is your company’s approximate market share of the PTAC and PTHP industry?

6.5	 Would you expect your market share to change once higher energy conservation
 

standards become effective?
 

6.6	 Would you expect your market share to change as a result of the refrigerant phase­out?

7 PRODUCT MIX

Current differences in product mix (distribution of product sales by efficiency level) among

manufacturers can lead to different reactions to and impacts from new energy conservation

standards.

7.1	 If your company offers multiple product lines with different efficiency levels, how does

your mix of PTACs and PTHPs sales by product efficiency compare to our projected

2012 industry average distribution for the ASHRAE/IESNA 90.1­1999 base case as

shown in table 7.1 – table 7.2? If your company does not offer multiple product lines

with different efficiency levels, is the projected distribution representative of the PTAC

and PTHP industry?

Table 7.1 Percentage of Total Shipment by Efficiency Level for R­22 Non­Standard Size

PTAC All Cooling Capacities

Year Percent of Total Shipments by Efficiency Level

8.6 9.5 10.0 10.7 11.2

2012 22.4% 21.9% 20.8% 18.5% 16.5%

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Table 7.2 Percentage of Total Shipment by Efficiency Level for R­22 Non­Standard Size
 

PTHP All Cooling Capacities
 

Year Percent of Total Shipments by Efficiency Level

8.5 9.4 9.9 10.6 11.2

2012 21.4% 21.7% 20.8% 19.1% 17.0%

7.2	 Do you expect the product mix to change over time absent any new energy conservation

standards?

7.3	 Do you expect the product mix to change due to the refrigerant phase­out for 2012? If

so, could you provide estimates or any information that could help DOE understand the

effects of the refrigerant phase­out on industry product mix? Please use the tables

below.

Table 7.3 Percentage of Total Shipment by Efficiency Level for R­410A Non­Standard Size

PTAC All Cooling Capacities

Year Percent of Total Shipments by Efficiency Level

8.6 9.5 10.0 10.7 11.2

2012

Table 7.4 Percentage of Total Shipment by Efficiency Level for R­410A Non­Standard Size
 

PTHP All Cooling Capacities
 

Year Percent of Total Shipments by Efficiency Level

8.5 9.4 9.9 10.6 11.2

2012

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7.4	 a new energy conservation standard affects the product mix by eliminating the sale of

products below the minimum efficiency level. The nes forecasts the distribution of r­22

ptacs and pthps sales by efficiency level after standards. Are the nes forecasts described

in the tables below for the year 2012 consistent with your own expectations for the

industry? Would you expect your own product mix to differ?

Table 7.5 R­22 Non­Standard Size PTAC All Cooling Capacities Product Mix (2012)

Standard Level

Efficiency Level (EER)

8.6 9.5 10.0 10.7 11.2

8.6 22.4% 21.9%  20.8%  18.5%  16.5%

9.5 NA 44.2%  20.8%  18.5%  16.5%

10.0 NA NA 65.0% 18.5%  16.5%

10.7 NA NA NA 83.5%  16.5%

11.2 NA NA NA NA 100%

Table 7.6 R­22 Non­Standard Size PTHP All Cooling Capacities Product Mix (2012)
 

Standard Level

Efficiency Level (EER)

8.5 9.4 9.9 10.7 11.2

8.5 21.4% 21.7% 20.8% 19.1% 17.0%

9.4 NA 43.1% 20.8% 19.1% 17.0%

9.9 NA NA 63.9% 19.1% 17.0%

10.7 NA NA NA 83.0% 17.0%

11.2 NA NA NA NA 100%

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7.5	 Does your company expect any changes to the above product mixes due to the

refrigerant phase­out? Please explain both qualitatively and quantitatively if possible.

8 INSTALLATION, MAINTENANCE, AND REPAIR COSTS

DOE recognizes that new energy conservation standards have potential impacts on the

installation, maintenance, and repair costs of equipment such as PTACs and PTHPs. To meet

new energy conservation standards, manufacturers may implement more efficient components

and design options that can possibly affect the installation, maintenance, and repair costs. As

part of the life cycle cost analysis, DOE estimated the installation, maintenance, and repair costs

of non­standard size PTACs and PTHPs for each efficiency level.

8.1	 Are these installation and annual repair cost estimates representative of the industry for

the different equipment? Please explain any differences.

Table 8.1 Average Installation and Average Annual Repair Costs for Non­Standard Size

PTAC All Cooling Capacities

Efficiency Level Average Installation

Costs

Average Annual Repair

Cost

Efficiency Level

1

$247 $16

Efficiency Level

2

$251 $16

Efficiency Level

3

$260 $16

Efficiency Level

4

$268 $17

Table 8.2 Average Installation and Average Annual Repair Costs for Non­Standard Size
 

PTHP All Cooling Capacities
 

Efficiency Level Average Installation

Costs

Average Annual Repair

Cost

Efficiency Level

1

$245 $16

Efficiency Level

2

$250 $16

Efficiency Level

3

$257 $16

Efficiency Level

4

$266 $17

8.2	 Does your company expect there will be changes to equipment installation and annual

repair cost due to the refrigerant phase­out? If possible, can you provide any estimates

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on the changes to the installation and annual repair costs due to the refrigerant phaseout?

8.3	 Are the failure and repair rates for your products a function of efficiency? If so, please

explain.

9 CONVERSION COSTS

An increase in energy conservation standards may cause your company to incur one­time capital

and product conversion costs. DOE calls these conversion costs because they are the costs of

changing your business to comply with new energy conservation standards.

9.1	 What level of conversion costs do you anticipate incurring under the different efficiency

levels? Refer to the tables below to provide your company’s estimates. Please provide

additional qualitative information to help us understand the nature of your investments.

Table 9.1 Non­Standard Size PTAC All Cooling Capacities Conversion Costs

Standard

Level

Conversion Capital Expenditures Product Conversion Expenses

8.6 EER

9.5 EER

10.0 EER

10.7 EER

11.2 EER

Table 9.2 Non­Standard Size PTHP All Cooling Capacities Conversion Costs
 

Standard

Level

Conversion Capital Expenditures Product Conversion Expenses

8.5 EER

9.4 EER

9.9 EER

10.7 EER

11.2 EER

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9.2	 What portion of your conversion capital expenditures will go towards replacing existing

assets, which would become obsolete under a new energy conservation standard? Does

your answer depend upon the efficiency level? If yes, please provide an estimate with

the corresponding efficiency level.

Table 9.3 Portion of Conversion Capital Expenditure to Replace Existing Assets

Efficiency Level Portion of Conversion Capital

Expenditures For Replacing

Existing Assets

Baseline

(ASHRAE/IESNA 90.1­1999)

Efficiency Level 1

Efficiency Level 2

Efficiency Level 3

Efficiency Level 4

9.3	 What is your depreciation period for the capital expenditures (building, equipment, and

tooling)?

10 MARKUPS AND PROFITABILITY

One of the primary objectives of the MIA is to assess the impact of efficiency levels on industry

profitability. In this section, DOE would like your assistance understanding how the efficiency

levels would impact your company’s markups and profitability.

10.1 Do profit levels vary by product class (i.e., PTAC and PTHP at different cooling

capacities)? Do profit levels vary by efficiency level? Please explain why or why not?

10.2 What changes do you expect, if any, in your estimated profitability following the new

energy conservation standard?

10.3 What are the causes of any expected changes in profitability?

11 CUMULATIVE REGULATORY BURDEN

Cumulative regulatory burden refers to the burden that industry faces from overlapping effects of

new or revised DOE standards and/or other regulatory actions affecting the same products or

industry.

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11.1 Are there other recent or impending regulations, excluding the refrigerant phase­out, that
 

PTAC and PTHP manufacturers face (from doe or otherwise)? What level of

investment are you expecting to incur as a result of these regulations?

11.2 Under what circumstances would you be able to coordinate any expenditures related to

other regulations thereby lessening the cumulative burden?

12 EXPORTS / FOREIGN COMPETITION / OUTSOURCING

Disparity between domestic and foreign energy conservation standards could impact exports or

imports. Labor content and material changes, resulting from energy conservation standards, may

impact sourcing decisions.

12.1 Does the bulk of your company’s PTAC and PTHP production occur domestically?

Absent standards, are production facilities being relocated to foreign countries? Would

standards impact your domestic vs. foreign manufacturing decision?

12.2 Could a new standard affect your export sales? What would the resulting impact be, if

any, on your manufacturing operations and profitability?

12.3 What percentage of the U.S. market has been captured by foreign competition? Would

standards have an impact on foreign competition?

13 DIRECT EMPLOYMENT IMPACT ASSESSMENT

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

in the rulemaking process. This section of the interview guide seeks to explore current trends in

PTAC and PTHP production employment and solicit manufacturer views on how domestic

employment patterns might be affected by new energy conservation standards.

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13.1 Would your domestic employment levels change under new energy conservation
 

standards?
 

13.2 Would the workforce skills necessary under new energy conservation standards require

extensive retraining or replacement of employees?

14 CONSOLIDATION

New energy conservation standards can alter the competitive dynamics of the market. This can

include prompting companies to enter or exit the market, or to merge. DOE and the Justice

Department are both interested in any potential reduction in competition that would result from a

new energy conservation standard.

14.1 Please comment on industry consolidation and related trends over the last 5 years.

14.2 In the absence of new standards, do you expect any industry consolidation? Please

describe your expectations.

14.3 How would new standards affect your ability to compete?

14.4 Could new standards disproportionately advance or harm the competitive positions of

some firms (e.g., small businesses)?

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