Ballast Manufacture r Impact

Analysis

April 28, 1998 U.S. Department of Energy

Office of Energy Efficiency

and Renewable Energy

1000 Independence Avenue, SW

Washington, DC 20585

DOE Wo

rkshop

EE-RM-97-500 COMMENT 21II

Ballast Manufacturer Impact 

Analysis 

DOE Workshop 

April 28, 1998 u.s. Department of Energy 

Office of Energy Efficiency 

and .Renewable Energy 

1000 Independence Avenue, SW 

Washington, DC 20585 
Ballast Manufacturer Impact Analysis Methodology

eneric Analyfta8 Fra mew

Ballast Indus Profile

Strawman Industry Cash Flow

Ballast Industry Cash F ®w

Ballast Subgroup Impact Ana

Next Steps

U k

ysis

April28, 1998

2

EE-RM-97-500 COMMENT 21II

Ballast Manufacturer Impact Analysis Methodology 

April 28. 1998 

2 

-
Generic Analytical Framework Legislative Requirements

determi ning economical ly Justi fied,

required consider:

"The economic impact of the standard on manufacturers an d on the

consumers of the products subject to such a standard."

"The impact of any lessening of c ompetition, as determined in writing

by the Attorney General , that is likely to result from the imposition of

the standard®"

April 28, 1998

3

EE-RM-97-500 COMMENT 21II

Generic Analytical Framework Legislative Requirements 

In determining whether a standard is economically justified, DOE is 

required to consider: 

J "The economic impact of the standard on manufacturers and on the 

consumers of the products subject to such a standard." 

J "The impact of any lessening of competition, as determined in writing 

by the Attorney General, that is likely to result from the imposition of 

the standard." 

April 28, 1998 

3 
Generic Analytical Framework Legislative Requirements

In the July 1996 Process Rule, the Department comm itted

detailed review manufacturer impact

The new methodology must:

Provide for early stakeholder input.

Utilize an annual cash flow approach deter mine q uantitative

i mpacts, including an assessment of s hort-term cost and capital

requirements.

Develop estimates of critical variables (with input from interested

parties) drawing on multiple sources , both quantitative and qualitative.

Report the distribution of impacts on manufacturers.

Use models that are easy to understand and account for unc ertainty.

Consider the cumulative impacts of re gulation.

Consider the impacts on manufacturin g capacity, plant closures, and

loss of capital investment.

April28, 1998

4

EE-RM-97-500 COMMENT 21II

Generic Analytical Framework Legislative Requirements 

In the July 1996 Process Rule, the Department committed to a 

detailed review of the manufacturer impact analyses methodologies. 

The new methodology must: 

~, Provide for early stakeholder input. 

:J Utilize an annual cash flow approach to determine quantitative 

impacts, including an assessment of short~term cost and capital 

requirements. 

~J Develop estimates of critical variables (with input from interested 

parties) drawing on multiple sources, both quantitative and qualitative. 

:, Report the distribution of impacts on manufacturers. 

,.j Use models that are easy to understand and account for uncertainty. 

lV: Consider the cumulative impacts of regulation. 

, Consider the impacts on manufacturing capacity, plant closures, and 

loss of capital investment. 

April 28, 1998 

4 
Generic Analytical Framework Generic Approach

The manufacturing impact assessment framework includes financial,

employment, competitive, and capacity impacts.

Sub-group

#1

Sub-group

#2

Sub-group

#3

Prototypical

Firm

Financial

Impacts

Employment

Impacts

Competitive

Impacts

Capacity

Impacts

IMPACTS

April 28, 1998

5

EE-RM-97-500 COMMENT 21II

Generic Analytical Framework Generic Approach 

The manufacturing impact assessment framework includes financial, 

employment, competitive, and capacity impacts. 

Sub-group 

#1 

Sub-group 

#2 

Sub-group 

#3 

Prototypical 

Firm 

Financial 

Impacts 

Employment 

Impacts 

IMPACTS 

Competitive 

Impacts 

Capacity 

Impacts 

~ 

April 28, 1998 

5 
Generic Analytical Framework Generic Approach

Both qual itative quantitative i ncluded i n the

analysis.

nputs

Outputs

Qualitative Quantitative

Assessments Assessments

Information Data

Who?

What?

hen?

How Much?

Where

How?

Why?

I

April 28, 1998

6

EE-RM-97-500 COMMENT 21II

Generic Analytical Framework Generic Approach 

Both qualitative and quantitative assessments are included in the 

analysis. 

Information 

Who? 

What? 

When? 

Where 

How? 

W 

Data 

How Much? 

April 28, 1998 

6 
Generic Analytical Framework Generic Approach

The Department intends to use fully documented qual itative

quantitative analytical methods.

4

ualitative assessments of impacts will draw on multiple types of

stakeholder inputs.

Manufacturer inputs will be invited through voluntary interviews

and facilities visits.

Stakeholders will be consulted though interviews, workshops,

surveys, and other means to develop estimates of critical

variables and identify possible impacts.

A central core of analytical tools will be developed, maintained, and

made available to all parties.

The primary focus will be on the Government Regulatory Impact

Model (G RIM) and possible enhancements.

April 28, 1998

7

EE-RM-97-500 COMMENT 21II

Generic Analytical Framework Generic Approach 

The Department intends to use fully documented qualitative and 

quantitative analytical methods. 

;J Qualitative assessments of impacts will draw on multiple types of 

stakeholder inputs. 

.. Manufacturer inputs will be invited through voluntary interviews 

and facilities visits. 

.. Stakeholders will be consulted though interviews, workshops, 

surveys, and other means to develop estimates of critical 

variables and identify possible impacts. 

A central core of analytical tools will be developed, maintained, and 

made available to all parties. 

.. The primary focus w·iII be on the Government Regulatory Impact 

Model (GRIM) and possible enhancements. 

April 28, 1998 

7 
Generic Analytical Framework Generic Approach

The general approach to manufacture r impact analysis i ncludes

basic elements:

Developing an industry profile and defining key issues.

Carrying out an industry cash flow analysis.

Segmenting the industry and analyzing sub-group impacts.

April 28, 1998

8

EE-RM-97-500 COMMENT 21II

Generic Analytical Framework Generic Approach 

The general approach to manufacturer impact analysis includes three 

basic elements: 

J: Developing an industry profile and defining key issues. 

;J: Carrying out an industry cash flow analysis. 

:J Segmenting the industry and analyzing sub-group impacts. 

April 28, 1998 

8 
Generic Analytical Framework

merit.

Impacts on`the Enviror

and°Enerny Security

W§

laf^onal': Benefii

acts on Cons

Flow Diagram of Standards Analysis

Manufacturer Impact Analyses

PHASE 1: Industry Profile

Industry Characterization

Issue Identification

PHASE 2: Industry Cash Clow

Manufacturing Costs

Price Forecasts

Shipment Forecasts

Estimate Industry Cash Flow

PHASE 3: Subgroup Analysis

Estimate Manufacturer Costs

Estimate Prices and Shipments

Cash Flow Analysis

Impacts on Competition

Impacts on Employment

Impacts on Manufacturing

Capacity

April 28, 1998

9

EE-RM-97-500 COMMENT 21II

Generic Analytical Framework 

Engineering ~naIM~is " 

• 

Inairect EmploMment Impacts 

Impacts on Utilities 

Impacts on the Environment 

ana EnergM SecuritM 

Flow Diagram of Standards Analysis 

Manufacturer Impact Analyses 

Impacts on EmploMment 

Impacts on Manufacturing 

Capacity 

April 28, 1998 

9 
Analytical Framework

The Ballast maanalysis wi l l be conducted i n four

steps.

April 28, 1998

10

EE-RM-97-500 COMMENT 21II

Analytical Framework 

The Ballast manufacturer impact analysis will be conducted in four 

steps. 

Industry Profile 

"Strawman" Industry Cash Flow 

Manufacturer Subgroup Analyses 

IInase ~a 

Industry Cash Flow Analyses 

April 28, 1998 

10 
Ballast Manufacturer Impact Analysis Methodology

Generic Analytica Framework

Ballast Industry Profile

Strawman Industry Cash Flow

Ballast Industry Cash F ow

Ballast Subgroup Impact Ana

Next Steps

ysis

April28, 1998

11

EE-RM-97-500 COMMENT 21II

Ballast Manufacturer Impact Analysis Methodology 

April 28, 1998 

11 
Ballast Industry Profile Industry Characterization

DOE has documented descri ptive stati sti cs about the U.S. Ballast

Industry'.

1977 1982 1907 1992

Fluorescent Lamp Ballasts

Shipment value ($ millions) 210.7 312.1 414.5 537.7

Number of companies ° 9 12 9 15

Number of establishments 17 12 14

Corrected Power Factor Type

Shipments (millions) 39.7 38.9 54.8 55.4

Shipment value ($ millions) 181.2 272 378.2 468.9

% Ship. value with Power Factor Correction 86% 87% 91% 87%

No. of All Employees Fluorescent ballasts 6000 4400 5200

No. of Production Workers Fluorescent ballasts 5300 3800 4500

New Capital Expenditures ($ millions) Fluorescent ballasts 10.1 4.8 10.1

Manufacturing Facilities (Shipment: $ millions)

Arkansas (NA) 33.1

Illinois 52.4 135.7 82.6 119

Indiana (NA) 2.4

Kentucky 20-50 6.6

Mississippi >50 73.7

New Jersey 20-50 26

Pennsylvania (NA) 5.4

Wisconsin 20-50 24.2

April 28, 1998

12

EE-RM-97-500 COMMENT 21II

Ballast Industry Profile Industry Characterization 

DOE has documented descriptive statistics about the U.S. Ballast 

Industry. 

Shipment value ($ millions) 

Number of companies ' 

Number of establishments 

Shipments (millions) 

Shipment value ($ millions) 

% Ship. value with Power Factor Correction 

No. of All Employees Fluorescent ballasts 

No. of Production Workers Fluorescent ballasts 

Fluorescent ballasts 

Manufacturing Facilities (Shipment: $ millions) 

Arkansas 

Illinois 

Indiana 

Kentucky 

Mississippi 

New Jersey 

Pennsylvania 

Wisconsin 

210.7 312.1 414.5 537.7 

9 12 9 15 

17 12 14 

39.7 38.9 54.8 55.4 

181.2 272 378.2 468.9 

86% 87% 91% 87% 

6000 4400 5200 

5300 3800 4500 

10.1 4.8 10.1 

(NA) 33.1 

52.4 135.7 82.6 119 

(NA) 2.4 

20-50 6.6 

>50 73.7 

20-50 26 

(NA) 5.4 

20-50 24.2 

April 28, 1998 

12 
Ballast Industry Profile Industry Characterization

Department representatives preli mi nary

five manufacturers and three othe r interested organizations.

Companies visited were:

Advance Transformer Company at Monroe, WI

Howard Industries , Inc., at Laurel,

MagneTek, Inc., at Nashville,

Motorola Lighting , Inc., at Buffalo G rove, IL

- Power Lighting Products (Valmont Electric) at El Paso, TX

Others interviewed were:

The Alliance to Save Energy at Washington,

- The American Council for An Energy-Efficient Economy at

Washington, DC

- The Natural Resources Defense Council by telephone

April 28, 1998

13

EE-RM-97-500 COMMENT 21II

Ballast Industry Profile Industry Characterization 

Department representatives conducted preliminary interviews with 

five manufacturers .and three other interested organizations. 

:.t Companies visited were: 

- Advance Transformer Company at Monroe, WI 

- Howard Industries, Inc., at Laurel, MS 

- MagneTek, Inc., at Nashville, TN 

- Motorola Lighting, Inc., at Buffalo Grove, IL 

- Power Lighting Products (Valmont Electric) at EI Paso, TX 

[.j Others interviewed were: 

~ The Alliance to Save Energy at Washington, DC 

- The American Council for An Energy .. Efficient Economy at 

Washington, DC 

- The Natural Resources Defense Council by telephone 

April 28, 1998 

13 
Ballast Industry Profile Industry Characterization

Preliminary interviews in 1996/97 review public literature

suggest that analysis guided in following:

The manufacturer impact analysis shoul d be performed on a

company-by-company basis.

The analysis should recognize the increasingly global nature of the

industry.

The analysis should consider direct industry suppliers as appropriate.

April28, 1998

14

EE-RM-97-500 COMMENT 21II

Ballast Industry Profile Industry Characterization 

Preliminary interviews held in 1996/97 and a review of public literature 

suggest that the analysis should be guided in part by the following: 

:i/J The manufacturer impact analysis should be performed on a 

company-by-company basis. 

:i/J The analysis should recognize the increasingly global nature of the 

industry. 

:i/J The analysis should consider direct industry suppliers as appropriate. 

April 28. 1998 

14 
Ballast Manufacturer Impact Analysis Methodology

eneric Analytical Fra

Ballast Industry Profile

trawmari hn i

ework

Ballast Industry Cash Flow

Ballast Subgroup Impact Ana

Next Steps

ISIS

April 28, 1998

15

EE-RM-97-500 COMMENT 21II

Ballast Manufacturer Impact Analysis Methodology 

April 28, 1998 

15 
raw an Industry Cash Flow GRIM Description

The Department proposes to use the Government Regulatory Impact

Model (GRIM) to conduct the Industry Cash Flow Analysis.

GRI M is a tool that helps identify the financial impacts of

efficiency and other regulations on manufacturers.

Based on conventional analysi s of discounted cash

flows

Creates full computations of cash flow for both

base case (as is) and standards case (with

regulation)

Computes Industry Values (NPV) for both

scenarios

Offers numerical and graphical comparisons

April 28, 1998 16

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow GRIM Description 

The Department proposes to use the Government Regulatory Impact 

Model (GRIM) to conduct the Industry Cash Flow Analysis. 

'v: GRIM is a tool that helps identify the financial impacts of energy 

efficiency and other regulations on manufacturers. 

• Based on conventional analysis of discounted cash 

flows 

• Creates full computations of cash flow for both 

base case (as is) and standards case (with 

regulation) 

• Computes Industry Values (NPV) for both . scenarios 

• Offers numerical and graphical comparisons 

April 28, 1998 

16 
rave an Industry Cash Flow GRIM Description

GRIM uses manufacturer prices, shi pments, and

fi nancial i nformation for arrivi ng

i ndustry

Manufacturer Prices Manufaqturinq_^^osts

Shipments Financial Information

Cash Flow

April 28, 1998

17

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow GRIM Description 

GRIM uses manufacturer prices, manufacturing costs, shipments, and 

financial information to calculate cash flows used for arriving at the 

industry value. 

Manufacturer Prices bJIt ----/----11 0IIII Manufacturing Costs 

Shipments __ --+-___ 1\1 0IIII . Financial Information 

Cash Flow 

April 28, 1998 

17 
Strawman Industry Cash Flow

The Department has developed a "strawman" using

industry-average prices,

costs, shipments, financial information.

Manufacturer prices were estimated from the Current Industrial

Reports published by the Bureau of Census.

Manufacturing cost data is "reverse-calculated" using above

mentioned prices and manufacturer markups estimated from ballast

industry cost structure.

Ballast industry cost structure was developed from industryspecific information published in SEC 1O-K reports and Census of

Manufactures (a Bureau of Census publication).

Shipments are obtained from the "National Energy Savings

Spreadsheet" developed by LB L.

Financial information (e.g., tax rate, working capital, depreciation,

etc.) is obtained from manufacturers' 10-K statements and other

publicly available industry statistics (e. g., RobertMorris

Associates).

April 28, 1998

18

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow 

The Department has developed a "strawman" cash flow using 

industry-average values for manufacturer prices, manufacturing 

costs, shipments, and financial information. 

iJ Manufacturer prices were estimated from the Current Industrial 

Reports published by the Bureau of Census. 

:il Manufacturing cost data is "reverse-calculated" using above 

mentioned prices and manufacturer markups estimated from ballast 

industry cost structure . 

.. Ballast industry cost structure was developed from industryspecific information published in SEC 10 .. K reports and Census of 

Manufactures (a Bureau of Census publication) . 

. JJ Shipments are obtained from the "National Energy Savings 

Spreadsheet" developed by LBNL . 

• ~ Financial information (e.g., tax rate, working capital, depreciation, 

etc.) is obtained from manufacturers' 1 O-K statements and other 

publicly available industry statistics (e.g., Robert-Morris 

Associates) . 

April 28, 1998 

18 
Straw man Industry Cash Flow Strawman Estimate of Ballast Prices

Current Industrial estimate

prices.

2nd, 3rd & 4th Quarters 1997

(Quantity in 1,000 ballasts; Value in $1,000)

Product description

MAGNETIC TYPE .........................

Two-lamp 96T12 &.72T12 ......

Two lamp 40W/48T12/RS......*

Two lamp 32W/48T8/RS ....

Other rapid start. ... ...... .. ........ .

ELECTRONIC TYPE .....................

Instant start:

and 2 lamp 32W/48T8. . .....

I 3 and 4 lamp 32W/48T8...........

GRIM

Quantity Value ; Avg. Price Product Class

4,510 47,615 $10.56 2 F96T12

19,864 . 115,177 2 F40T12

1,721

___

12,489 $7.26 1 F40T12

3,786 55,032 $14.54 12 F96T12HO *

__

,899 139,783 F$11.75 ^ 1 & 2 F32T8

9, 134, 600 $13.81 3 & 4 F32T8

472 7439 $15.76 2 F40T12 RS

Quantityand Value represent combined values for One lamp 40W/48T12/RS and Two lamp

32W/48T8/RS to avoid disclosing data for individual companies.

* Since shipments of 2F96T12HO represent a minor fraction of this CIR category, the,price estimate

is not as reliable as for other ballast types. ^^^

April 28, 1998

19

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Strawman Estimate of Ballast Prices 

Current Industrial Reports were used to estimate manufacturer 

prices. 

2nd, 3rd & 4th Quarters 1997 

~"'--~-~'-~"""--"""""'-"""~(Qucintifyin"T, 000 hciHasts;'vaTueTn $1, o6or'c"~-,~".~,, 

",~,~~,. ___ ,~_~_.,.,.,c"_"_~ __ ,_.! .. ,,,,,_~, .. ~__ -'~'~-~~-. ·.~.r,~'.~, ........ :",-, ...• ·~, .... ·.~" __ .' ... J.~'.-'.,' .. '.~, ..·,3~, R.'i.M,· .......................... . _,_,~_,,"_,~ __ ",_",",'.~_",'_,.,','c,'.,,_"_,_,_"""-"""""'1"" •• _,c •• "., .. ...• . .. c., ,. ..... .... c".·C""" ., " ........ " ... 'c .. ·.· ................. . Product description : Qu . Product Class '''''_~,,.'''''~''''''''"'.,,·''''.,..W'''''~M«'W'*'''''''',,..'''''~'',.,'w,_''''·''''''·'··'''4 ww.,,""',,"'=_y'W'»"_4_'l'W& .. w""''''·'w~_''¥' .~,.~"~~""-W~~"",,,~,,,,~,,·,~~,,,,,~W" '_''> 

MAGNETIC TyPE .......•••........... . -.-~,.-, .. ,-,-~--,~-,~.~~""~-".-,,.. ..... , ... ,-.. -~" 

Two-lamp 96T12 & 72T12 ....... 

Two lamp 40W/48T121RS .... .. 115,1 

,,_,_c,!~?~~£~~('~!3T8/RS ....... . 12,489 ! "'."~.""'<M«k."'""."'''''"'N~_-.-,M''~~'.7 .. ~~'''',''''...,..,,,, ~ 

~, __ , ..,_"2.!.~~~,,,~~Ei,~,~,!~c~··· ................ . 55,032 

F40T12 RS 

* Quantity and Value represent combined values for One lamp 40W/48T12/RS and Two lamp 

32W/48T8/RS to avoid disclos data for individual com 

April 28, 1998 

19 
Strawman Indust Cash Flow Industry Cost Structure

For " reverse-calculating" i manufacturing costs, ballast ndustry

structure was developed using ava publ icly i lable i nformation.

Profit before

tax

6.3%

SG&A

17.0%

Depreciation

2.6%

Overhead

9.3%

Cost of Labor

11.2%

Cost of

Materials

53.7%

April 28, 1998

20

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Industry Cost Structure 

For "reverse-calculating" manufacturing costs, ballast industry cost 

structure was developed using publicly available information. 

Profit before 

tax 

6.30/0 

SG&A 

Depreciation 

2.6% 

Ove 

9.3% 

Cost of 

Materials 

53.7% 

April 28, 1998 

20 
raw an I ndustry Cash Flow Strawman Estimate of Manufacturing Costs

Starting from the manufacturer prices, structure

used to estimate disaggregated manufacturing

Ballast C R Using Industry Cost Structure

type 1997 Labor Material Tooling Overhead; Totaf

1 F40T12 OEM / Mfg. price 7.26;

(Magnetic) Mfg. cost 0.81 3.901 0.191 0.67 5.57,

2F40T12 OEM / Mfg. price 5.80;

(Magnetic) Mfg. cost 0.651 3.111 0.15' 0.54E 4.451

2F96T12. OEM / Mfg. price 10.56; f f

(Magnetic) Mfg. cost 1.181 5.67 0.281 0.98' 8.11

2F96T12HO OEM / Mfg. price 14.541

(Magnetic ) Mfg. cost 1.631 7.81 0.38 ` 1.35; 11.16;

2F40T12 OEM / Mfg. price 15.761 j '•

(Electronic ) Mfg. cost 1 1.76 8.47; 0.41; 1.46 12.1®

1 F32T8 OEM/ Mfg. price 11.75

(Electronic ) Mfg. cost

_ _ _

1.311 6.31 0.31 1.091 9.02

2F32T8 OEM / Mfg. price 11.751 F f

(Electronic) Mfg. cost 1.31! 6.31; 0.311 1.09! 9.021

3F32T8 OEM / Mfg. price ( 13.81

(Electronic) Mfg. cost 1.55; 7.421 0.36. 1.28 ^ 10.61

4F32T8 OEM / Mfg. price 13.811

(Electronic) Mfg. cost 1.55 7.421 0.36; 1.28: 10.61 i

* Tooling costs are approximate ly equal to depreciation costs.

April28, 1998

21

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Strawman Estimate of Manufacturing Costs 

Starting from the manufacturer prices, the industry cost structure was 

used to estimate disaggregated manufacturing costs. 

* Tooling costs are approximately equal to depreciation costs. ".,~"""_"""_~."",,L,~",, "."",,, 

April 28, 1998 

21 
Strawman Industry ash Flow Financial Information

Publicly available

used to financial information estimate

alb Assumptions Page for

Fluorescent Lamp Ballasts

Scenario Description

Base Year . . o^

Announcement Year

Standard SG&A

Research and Development

OrdinaryCapital Expenditures

Beginning year for analyticalpurposes

Year in which the regulation announcement is made

D - The Dept. will seek additional information

evenue

evenue

Revenue

April28, 1998

22

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Financial Information 

Publicly available sources (Sec 10 .. Ks and Industry Composites) were 

used to estimate financial information 

GRJM:Assumptions Page for 

Fluorescent Lamp Ballasts 

\ ! 

.~w~~!!,~!i~_!?~~"cIiPl!~!!w._ .. w~,~.,_~ __ ,,~ ___ .~~_'" Fluorescent Lamp Ballasts 

"~.~~~ ___ N~"'-"'~~~~NA~_"""V~_' 

Base Year 1998 ~~~,~.'!~~!'!!.X~a,.~£l!.~,~'!~!l.!~~"'!!l!}!'Et;!,~.~!"...".,,, 'W , ""~'wN)"""'.Mffi~""".",,o."""''''''~'''"ffi"'''''''"''''''= NY',"""'-','>' 

Announcement Year 1999 Year in which the regulation announcement is made . .---. , ,,, ' __ '~'~' __ ~""""~~=~''''''''''''''W~N __ '''-'N''=NN'~'''"' __ '~~'''''W __ MW~'''''',~ww~~~_,.y"""'~~'''~',=~"._~'.v~ 

Standard Year L-~2 Year in which the.r~gulfl:~~t;!!!!akes,,!!l.f!.~t _."_,,_.~ ____ ,,.~~_~ " ~~'~~~--'-" / '\ . " .. """", ... 

Tax Rate V 37.2% 1\ .- ~~""",~ __ .y",,"_""~~N''''''''.,v'''_N,_~w~'~m 

Discount Rate for NPV T~D - The Dept. l TBD ~i?L~~~ k,.q~~~Hf2,!:!!:j"i,!:[qJ:!natio n 

,~,,~£~,~t ~P,~!~!_"'_"' __ "w''''w'~_''_''',"_'' __ M_'_''' __ L I16.4% o/fevenue 

, I 

_____ ____ o ~'m >V,~y~~'A __ ~' 

Standard SG&A 15.9% q[!. evenue 

~esearch and Development 1.8% o!~ evenue "'-~ ~'''''''-''''~-~~ ~~'~"N._"","_"",""",V=~Nww."<_~_'~~N~"""~'~~=~N·'N'~ __ ~'~~_N~",·","""",'=~,",",~~~~_"""",",,, 

\ I 

,Q!:!!,!!!~!Y}2~P!~~~!'!~'!!_AW""~ __ '~""A'W_''''.''_.''_''''''''~ 2.90% o/Revenue 

,ordinary .9tpi!al ~~,!l:~it~es I, 

~ ~ -3.40% II! Revenue .""---"'.-'----~-""~~'-".--~-~~""-'----"~---'-""--"-'~~-

April 28, 1998 

22 

! 
Str w an I ndustry Cash Flow Strawman Ballast Shipments

Sh o'pment val ues in are National

Savings Spreadsheet (NESS)

NESS uses shipment values to identify the national energy savings

potential of ballast energy efficiency standards

Using shipment values from NESS will ensure that the shipment

inputs are consistent with other parts of the ballast regulatory

impact analyses

For the purpose of calculating the impact of standards, GRI M will

only consider those ballasts that are i mpacted by standards

Consistent with the national benefits and life -cycle-cost analyses,

GRI M will use two different scenarios for s h ipments forecasts

Constant Shipments Scenario

Declining Shipments Scenario

April 28, 1998

23

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Strawman Ballast Shipments 

Shipment values used in GRIM are obtained from the National Energy 

Savings Spreadsheet (NESS) 

i/J NESS uses shipment values to identify the national energy savings 

potential of ballast energy efficiency standards 

~-.i Using shipment values from NESS will ensure that the shipment 

inputs are consistent with other parts of the ballast regulatory 

impact analyses 

:iA For the purpose of calculating the impact of standards, GRIM will 

only consider those ballasts that are impacted by standards 

lii Consistent with the national benefits and life-cycle-cost analyses, 

. GRIM will use two different scenarios for shipments forecasts 

- Constant Shipments Scenario 

- Declining Shipments Scenario 

April 28, 1998 

23 
rave an Indust ash love Ballast Shipment Scenarios

The impact of new ballast standards are dependent on assumptions

about the "base case"

c

9

I I I 1

1997 2000 2003 2006 2009 2012 2015 2018

Std. Year

-.- Constant Shipments Scenario -A- eclinin i ents cenari

April 28, 1998

24

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow . Ballast Shipment Scenarios 

The impact of new ballast standards are dependent on assumptions 

about the "base case" 

U) 

-

c: 

CD 

E 

c. .-

1997 2000 2003 2006 2009 2012 2015 2018 

Std. Year 

1-.- Constant Shipments Scenario -.- Declining Shipments Scenario I 

April 28, 1998 

24 
Straw man Indust ash Flow Declining Shipments Scenario

For the purpose of calculating the impact of standards, GRIM will only

consider those ballasts that are impacted

Baseline Case

(Magnetic Ballast Sales)

-+-1 F40T12

- -2F40T12

-:-2F96T12

-2F96T12H0

35

30

25

20

15

0

Standards Case

(Magnetic Ballast Sales)

Std. Year

5

0 ^_ s t ^ rte'--cr

1998 2000 2002 2004 2006 2008 2010 2012

Baseline Case

(Electronic Ballast Sales)

35

30

25

20

15

10

5

0

1998 2000 2002 2004 2006 2008 2010 2012

1F40T12

2F40T12

3F40T12

4F40T12

0 1998 2000 2002 2004 2006 2008 2010 2012

Standards Case

(Electronic Ballast Sales)

35

1

30-I

25

20

15

10

5

0

1998 2000 2002 2004 2006 2008 2010 2012

Std. Year

-+-1 F40T12

2F40T12

-A-2F96T12

- --2F96T12HO

-+-1 F40T12

2F40T12

---3F40T12

--x- 4F40T12

April28, 1998

25

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Declining Shipments Scenario 

For the. purpose of calculating the impact of standards, GRIM will only 

consider those ballasts that are impacted by standards 

25 

20 

15 

10 

5 

o 

Baseline Case 

(Magnetic Ballast Sales) 

--1F40T12 

--2F40T12 

___ 2F96T12 

--*-2F96T12HO 

1998 2000 2002 2004 2006 2008 2010 2012 

Baseline Case 

(Electronic Ballast Sales) 

35 

30 

25 1F40T12 

2F40T12 

20 3F40T12 

15 4F40T12 

10 

5 

0 

1998 2000 2002 2004 2006 2008 2010 2012 

35 

30 

25 

20 

15 

10 

5 

o 

Standards Case 

(Magnetic Ballast Sales) 

Std. Year 

1998 2000 2002 2004 2006 2008 2010 2012 

35 

30 

25 

20 

15 

10 

5 

o 

Standards Case 

(Electronic Ballast Sales) 

Std. Year 

1998 2000 2002 2004 2006 2008 2010 2012 

__ lF40T12 

__ 2F40T12 

___ 2F96T12 

--*-2F96T12HO 

__ lF40T12 

__ 2F40T12 

___ 3F40T12 

--*-4F40T12 

April 28, 1998 

25 
raw an Industry Cash Flow Ballast Investments

For each "base case" scenario timing investments

estimated

Constant Shipments Scenario

Base Case Shipments Base Case Investments

of Magnetic Ballasts in Electronic Ballasts

Std. Year Std. Year

Standards Case Shipments Standards Case Investments

of Magnetic Ballasts in Electronic Ballasts

Std. Year Std. Year April 28, 1998

26

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Ballast Investments 

For each "base case" scenario the timing of new investments must be 

estimated 

Constant Shipments Scenario 

Base Case Shipments 

of Magnetic Ballasts 

Std. Year 

Standards Case Shipments 

of Magnetic Ballasts 

Std. Year 

Base Case Investments 

in Electronic Ballasts 

Std. Year 

Standards Case Investments 

in Electronic Ballasts 

Std. Year April 28, 1998 

26· 
raw an Industry ash Flow Ballast Investments

For each "base case" scenario timing

estimated

Declinina ShOments Scenario

Base Case Shipments Base Case Investments

of Magnetic Ballasts in Electronic Ballasts

I t A t A ttt

Std. Year Std. Year

Standards Case Shipments Standards Case Investments

of Magnetic Ballasts in Electronic Ballasts

Std. Year Std. Year April 28, 1998

27

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Ballast Investments 

For each "base case" scenario the timing of new investments must be 

estimated 

Declining Shipments Scenario 

Base Case Shipments 

of Magnetic Ballasts 

Std. Year 

Standards Case Shipments 

of Magnetic Ballasts 

Std. Year 

Base Case Investments 

in Electronic Ballasts 

Std. Year 

Standards Case Investments 

in Electronic Ballasts 

Std. Year April 28, 1998 

27 
raw an Industry Cash Flow Strawman Inputs-Constant Shipments Scenario

"Strawman" manufacturing shipments various

ballast types will using shipment weighted

before input "Strawman"

BASE CASE SCENARIO

^^ udic 13;mlh t TleOrunic Ballasts Shipment

1998 Default 'Value 1F,40T12 214(17'12 2MT12 2F96T12H0 Default Value 1F40T12 2140472 3F40'17.12 4Ti+40'T1 2 m;eightedawv.

Price/Unit ($) (from CIR) 7.26 5.80 10.56 14.54 (fnnnCOR) 15,76 15.76 15.76 15.76 $6.89

Unit Sales (millions) (from NESS)* 2.20 23.00 6.00 0.30 (from NESS) 0.00 0.00 0.00 0.00 31.50

Unit Sales (millions) (Manufacturer)

Cost o Sales ($) (% Of Pri e/Unit) (% Of Pnee/Unit)

Labor/Unit 11.19% 0.81 0.65 1.18 1.63 11.20% 1.77 1.77 1.77 1.77 $0.77

Material/Unit 53.72% 3.90 3.12 5.67 7.81 53.70% 8.46 8.46 8.46 8.46 $3.70

Overhead/Unit 9.27% 0.67 0.54 0.98 1.35

_

9.30% 1.47 1.47 1.47 1.47 $0.64

NESS: National Energy Savings Spreadsheet (developed by LBNL) - NESS is under development. These values are preliminary"

Inputs-Base Case

Unit Sales

Revenues

Cost of Sales

Fluorescent Lamp B al las is

Income Staten V11

Matenal

Overhead

De reciatton

Base Case Cash Flow

I Base Year

1998~M 1999

6.89

31.50

24.3

116.6

20.1

6.89

31.50

6.89

116.6

6.891 6.89

31.501 31.50

6.89

31.50

20.1 20.1 l 20.1

6.3 .>, ,. 6.3

217.1

24.3

116.6

20.1

6.3

April 28, 1998

28

EE-RM-97-500 COMMENT 21II

Strawman Industry Cash Flow Strawman Inputs-Constant Shipments Scenario 

"Strawman" manufacturing costs, prices and shipments for various 

ballast types will be aggregated using shipment weighted averages 

before input to the "Strawman" GRIM spreadsheet 

II IIIIIDIII a 

IIlIamllll 

111111111111 20.1 

6.3 

April 28, 1998 

28 
Ballast Manufacturer I mpact Analysis Methodology

Generic Analytical Framework

Ballast Industry Profile

Strawman Industry Cash Fle

j 4 Ballast IndUstry Cash Floirif

Ballast Subgroup Impact

ext Steps

analysis

April28, 1998

29

EE-RM-97-500 COMMENT 21II

Ballast Manufacturer Impact Analysis Methodology 

April 28, 1998 

29 
Ballast Industry cash Flow Aggregation Approach

The Department proposes to develop the industry

"bottom-up" approach.

The Government Regulatory Impact Model (GRI M) will be used to

encourage all parties to use a common annual cash flow analysis

under current vs. new energy-efficiency standards scenarios.

The Department will provide stakehold ers with the "strawman" cash

flow using publicly available valu es for price , cost, shipments, and

financial information.

The Department has prepared a list of financial values for input to

the GRIM as a starting point for discussion at the workshop .

Each manufacturer will provide its own cash flow analysis to be

aggregated with others to build the industry picture .

April28, 1998

30

EE-RM-97-500 COMMENT 21II

Ballast Industry Cash Flow Aggregation Approach 

The Department proposes to develop the industry cash flow using a 

"bottom-up" approach. 

VJ The Government Regulatory Impact Model (GRIM) will be used to 

encourage aJI parties to use a common annual cash flow analysis 

under current vs. new energy-efficiency standards scenarios. 

[Ii The Department will provide stakeholders with the "strawman" cash 

flow using publicly available values for price, cost, shipments, and 

financial information. 

~i/J The Department has prepared a list of financial values for input to 

the GRIM as a starting point for discussion at the workshop. 

[iA Each manufacturer will provide"its own cash flow analysis to be 

aggregated with others to build the industry picture. 

April 28, 1998 

30 
Ballast Industry ash Flow Rolling Up Manufacturer Cash Flows to Industry Level

The "Strawman " wi l l serve as a starting po i nt and benchmark from

which individual manufacturers' cash flows can be created.

Manufacturer

A

"Strawman"

Industry Cash Flow

Manufacturer

B

Industry Cash Flow

Manufacturer

C

Eh

April 28, 1998

31

EE-RM-97-500 COMMENT 21II

Ballast Industry Cash Flow Rolling Up Manufacturer Cash Flows to Industry Level 

The "Strawman" will serve as a starting point and benchmark from 

which individual manufacturers' cash flows can be created. 

"Strawman" 

Industry Cash Flow 

Manufacturer 

A 

I!!!I-----...e-! Manufactu rer 

B 

Manufacturer 

C 

Industry Cash Flow 

April 28, 1998 

31 
Ballast Industry Cash Flow Aggregation Process

Individual manufacturer's will aggregated arrive

the Industry Cash Flow (and to prevent f disclosure irm-specific

information).

I ndustry Cash Flow

RIM

April 28, 1998

32

EE-RM-97-500 COMMENT 21II

Ballast Industry Cash Flow Aggregation Process 

Individual manufacturer's cash flows will be aggregated to arrive at 

the Industry Cash Flow (and to prevent disclosure of firm-specific 

information ). 

Manufacturer 1: Cash Flow 

1------+ GRIM +----11 

Industry Cash Flow 

Manufacturer 2: Cash Flow 

1------+ GRIM +----11 

III II 

II III 

III II 

III III 

III III 

III III 

III III 

III III 

III III 

Manufacturer n: Cash Flow 

1----+ GRIM +---_lI! 

April 28. 1998 

32 
Ballast Industry Cash Flog Public Record

For the public record the i nformation

summary sheet of the i ndustry

Proprietary information will not be di sclosed :

Shipments by ballast type

Prices by ballast type

Manufacturing costs by ballast type

Man financial information (tax rate, working

capital, etc.)

April 28, 1998

33

EE-RM-97-500 COMMENT 21II

Ballast Industry Cash Flow Public Record 

For the public record the information that will be presented is only the 

summary sheet of the industry cash flow for each scenario. 

Proprietary information will not be disclosed: 

:~ Shipments by ballast type 

,I tvj Prices by ballast type 

l~ Manufacturing costs by ballast type 

[~ Manufacturer-specific financial information (tax rate, working 

capital, etc.) 

April 28, 1998 

33 
The Industry Cash Flow will be presented both with

and without standards (Baseline

Taxes [

Net Income Before Financing

_34 -5 11 34.5 34.5 1 34.5 34.5

38 38 .. _...... 38... 38 a 3. 8

2000

11.4 11.4 11.4 i

4.3

7 . 2 72t 72 72 72 72'1

63 63 631 63t 63 63

13 .5 13.5 13.5 135 135 13.5 1

(7.4) (7 4) (7.4)1 (7 4),............ (7 4)1

(7.4) (7.4)1 (7.4)

61 6. 1 61

10000 0 9259 0 8573 0 7938 0.7350 0.6806

6t 56 52 48 4.5, 4.2

----- ------- ------

2001 2002 2003

Ballast Industry ash love

Unit Sales

Revenues

Cost ofS ales

Labor

Material

...................................................

Overhead

Standard SG&A

R&D

iProduct C onversion t. es(

(Electronic Ballast)

Profit Before Tax

Ca.h 1loH Rtatimcnt

Net Income

_ Depreciatio q

L jChane m W orking Capital

Cash Flows from Operations

Ordinary Capital Expenditures

..........

Conversion Capital Expenditures

Cash Used In Investment

Depreciation

d Administrative

Net Cash Flow

Terminal Value

€Present Value Factor

Discounted Cash Flow

6.89

31.50

6.89

31.50

6.89

31.50

6.89

31.50

6.89

31.50

217.1 217.1

6.89

31.50

Output for Public Review

6.89

31.50

6 . 1

76.2

0 3405 ,

28.0

_April 26,_t 938

34'

EE-RM-97-500 COMMENT 21II

Ballast Industry Cash Flow Output for Public Review 

The Industry Cash Flow will be presented both with (Standards Case) 

and without standards (Baseline Case) 

1111111111111111 

1111111111111 

111111111111111 

IID1I1I8. 

11111111111111 

.DIIIIIIII 

IIBIIIIIIII 

I ···w •. ~~} 

I ! 

I·····-~·-~···! i 2012 I 

I~~:::~=:~==j 

I 31~5~1 i 217.1 : 

t-~~~ i 116.6 i 

ijQ:ll 

f 6.3 I f····· ·····1 ! ..... ··~4.5J I 3.8 i f _, 

I·~·--·--j 

f~ '<N,mN ,,".,.~,,.'w",,,,~·~~l 

l 11.4 . r····-·········~··\ 

! "4.3\ 

i 1 

7.2 : 
Ballast Manufacturer Impact Analysis Methodology

Generic Analytica Framework

Ballast Industry Profile

Strawman Industry Cash Flow

Ballast Industry Cash Flow

Ballast Subgroup Impact Ana

Next Steps

ysis

April28, 1998

35

EE-RM-97-500 COMMENT 21II

Ballast Manufacturer Impact Analysis Methodology 

April 28, 1998 

35 
Ballast Subgroup I mpact Analysis

The subgroup impact analysis consists of 5 tasks:

3. Estimate Employment Impacts

4. Estimate Impact on Manufacturing, Capacity

1. Manufacturer Cash-Flow Analysis

2. EsUmate Competitive Qmt{acts

5. Summarize Quantitative and Qualitative Findings

April28, 1998

36

EE-RM-97-500 COMMENT 21II

Ballast Subgroup Impact Analysis 

The subgroup impact analysis consists of 5 tasks: 

1. Manufacturer Cash-Flow Analysis 

2. Estimate Competitive Impacts 

3. Estimate Employment Impacts 

4. Estimate Impact on Manufacturing, Capacity 

5. Summarize Quantitative and Qualitative Findings 

April 28, 1998 

36 
Ballast Subgroup Impact Analysis Manufacturer Cash Flow

Average i ndustry manufactu ri ng 111 not be used to assess the

i mpacts

Preliminary interviews and other information strongly suggest that cost

structures and cash flow descriptions be developed on a company-bycompany basis.

Vj, Manufacturers will be asked to pe rform cash flow analyses using the

GRI M spreadsheet and their own values for co mpany-specific inputs.

- L will assist as needed in adapting the GRIM procedure to

individual manufacturer situations.

- Important variances from the strawman or industry norms will be

discussed and documented.

Cash flow reports will be prepared with and without new ener gy

efficiency standards.

April28, 1998

37

EE-RM-97-500 COMMENT 21II

Ballast Subgroup Impact Analysis Manufacturer Cash Flow 

Average industry manufacturing costs will not be used to assess the 

impacts for subgroups of manufacturers. 

~J Preliminary interviews and other information strongly suggest that cost 

structures and cash flow descriptions be developed on a company-bycompany basis . 

. i/ Manufacturers will be asked to perform cash flow analyses using the 

GRIM spreadsheet and their own values for company .. specific inputs. 

- ADL will assist as needed in adapting the GRIM procedure to 

individual manufacturer situations. 

- Important variances from the strawman or industry norms will be 

discussed and documented . 

.; Cash flow reports will be prepared with and without new energy 

efficiency standards. 

April 28, 1998 

37 
Ballast Subgroup I mpact Analysis Estimate Competitive Impacts

DOE it solicit early i in

structuring the competitive Impact assessment.

Competitive Analysis will focus on assessing the impacts to smaller,

significant manufacturers.

J has offered to participate in drafting questions to be used in

manufacturer interviews.

Questions will pertain to an assessment of the likeliness of increased

concentration levels and other market conditions that could lead to

non-competitive pricing behavior.

-Asymmetrical cost increases to some manufacturers

-Increased proportion of fixed costs potentially increasing

business risk

-Barriers to market entry (proprietary technologies, etc.)

April 28, 1998

38

EE-RM-97-500 COMMENT 21II

Ballast Subgroup Impact Analysis Estimate Competitive Impacts 

DOE will solicit early involvement of the Department of Justice in 

structuring the competitive impact assessment 

l~ Competitive Analysis will focus on assessing the impacts to smaller, 

significant manufacturers. 

r.A DOJ has offered to participate in drafting questions to be used in 

manufacturer interviews. 

,.j Questions will pertain to an assessment of the likeliness of increased 

concentration levels and other market conditions that could lead to 

non-competitive pricing behavior. 

-Asymmetrical cost increases to some manufacturers 

-Increased proportion of fixed costs potentially increasing 

business risk 

-Barriers to market entry (proprietary technologies, etc.) 

April 28, 1998 

38 
Ballast Subgroup I mpact Analysis Estimate Employment Impacts

DOE wi l l review trends in manufacturing

different fluorescent lamp ballasts i n

supplement this i nformation rer-supplied data.

DOE will use interviews with each major ballast manufacturer to gather

employment levels at existing plants, particularly those that serve the US

market.

Existing data and manufacturer intervi ews will be used to estimate

employment level differences between different standards levels.

Interviews will be used to establish differences in workforce skills required

under different levels of energy-efficiency standards.

DOE interviews with manufacturers will establish likely impact of new

energy-efficiency standards on product mix and employment levels .

April 28, 1998

39

EE-RM-97-500 COMMENT 21II

Ballast Subgroup Impact Analysis Estimate Employment Impacts 

DOE will review trends in employment levels for manufacturing 

different types of fluorescent lamp ballasts in the US, and will 

supplement this information with manufacturer-supplied data. 

V DOE will use interviews with each major ballast manufacturer to gather 

..' employment levels at existing plants, particularly those that serve the US 

market. 

V Existing data and manufacturer interviews will be used to estimate 

employment level differences between different standards levels. 

Interviews will be used to establish differences in workforce skills required J under different levels of energy-efficiency standards. 

DOE interviews with manufacturers will establish likely impact of new tV energy-efficiency standards on product mix and employment levels. 

April 28, 1998 

39 
Ballast Subgroup Impact Analysis Estimate Impact on Manufacturing Capacity

DOE will review trends manufacturing for

fluorescent lamp ballasts in the US, and wil l supplement this

information with r® lled data.

Interviews will be used to supplement existing public information on

differences in capital equipment required for electronic vs . magnetic ballast

manufacture .

DOE interviews with manufacturers will establish likely impact of new

energy-efficiency standards on product mix and production capacity.

Manufacturers will be questioned about the value of any strande d

assets associated with new energy -efficiency standards.

April28, 1998

40

EE-RM-97-500 COMMENT 21II

Ballast Subgroup Impact Analysis Estimate Impact on Manufacturing Capacity 

DOE will review trends in manufacturing capacity levels for 

fluorescent lamp ballasts in the US, and will supplement this 

information with manufacturer-supplied data. 

if: Interviews will be used to supplement existing public information on 

, differences in capital equipment required for electronic vs. magnetic ballast 

manufacture. 

[~ DOE interviews with manufacturers will establish likely impact of new 

energy-efficiency standards on product mix and production capacity. 

Manufacturers will be questioned about the value of any stranded US 

assets associated with new energy .. efficiency standards. 

April 28, 1998 

40 
Ballast Subgroup I mpact Analysis Interview Guide

The Department i will conduct manufacturer interviews

manufacturer-specific views important

The Department has developed a questionnaire to guide the interviews and

invites comments and suggestions on its content from all interested parties.

The purpose of the interviews is to gain understanding and ensure

confidence in the results of the manufacturer impact analysis.

® Some questions will be irrelevant to some manufacturers, and some

manufacturers or suppliers may want to provide information in

addition to that requested.

Arthur D. Little is assisting the Department in car ing out the interviews

and in providing third-party confidentiality for proprietary information.

April28, 1998

41

EE-RM-97-500 COMMENT 21II

Ballast Subgroup Impact Analysis Interview Guide 

The Department will conduct manufacturer interviews to gather 

manufacturer-specific data and views on important issues. 

rJ The Department has developed a questionnaire to guide the interviews and 

invites comments and suggestions on its content from all interested parties . 

. i/ The purpose of the interviews is to gain understanding and ensure 

confidence in the results of the manufacturer impact analysis. 

- Some questions will be irrelevant to some manufacturers, and some 

manufacturers or suppliers may want to provide information in 

addition to that requested. 

;J, Arthur D. Little is assisting the Department in carrying out the interviews 

and in providing third-party confidentiality for proprietary information. 

April 28. 1998 

41 
Interview Guide

The will cover a range of topics. interviews

Current Organizational Characteristics

Industry Infrastructure

Global Competition

Manufacturer Cash Flow Analysis

Competitive Impacts Assessment

Employment Impacts Assessment

Manufacturing Impacts Assessment

Topics Covered

April 28, 1998

42

EE-RM-97-500 COMMENT 21II

Interview Guide 

The interviews will cover a range of topics . 

.j 

.J .. , : 

" .. ; 

'.; 

,." .t(.l 

.. -./ .............•. 1 ! 

~ . j 

..... JJ ....! ! '- .J 

...... i .. 'VI 

Current Organizational Characteristics 

Industry Infrastructure 

Global Competition 

Manufacturer Cash Flow Analysis 

Competitive Impacts Assessment 

Employment Impacts Assessment 

Manufacturing Impacts Assessment 

Topics Covered 

April 28, 1998 

42 
Interview Guide Organizational Characteristics

DOE i in better understanding current organizational

characteristics

The Department's interest is focused toward the plant or profit center

directly concerned with ballast production.

- The details of production levels, product mix, costs, and other

variables are not generally public information at the plant level, so

the Department invites manufacturers t discuss these and other

characteristics confidentially to the extent practical.

The organizational setting within which the plant operates is important to

round out the Department's understanding of the impact that new energyefficiency standards might have on future ballast manufacturing.

April 28, 1998

43

EE-RM-97-500 COMMENT 21II

Interview Guide Organizational Characteristics 

DOE is interested in better understanding the current organizational 

characteristics of each manufacturer . 

.; The Department's interest is focused toward the plant or profit center 

directly concerned with ballast production. 

- The details of production levels, product mix, costs, and other 

variables are not generally public information at the plant level, so 

the Department invites manufacturers to discuss these and other 

characteristics confidentially to lhe extent practical. 

,./ The organizational setting within which the plant operates is important to 

round out the Department's understanding of the impact that new energyefficiency standards might have on future ballast manufacturing. 

April 28. 1998 

43 
Interview Guide Industry Infrastructure

DOE i interested i n better current

i nfrastructure it efficiency

standards.

DOE is especially interested in tw o general segments of the industry

infrastructure.

- Major customer types, and the distribution channels through which

ballasts reach the end user.

- Major suppliers, the trade allies which would be most stron gly

affected by new energy efficiency stan dards.

The industry infrastructure on the supply side can be affected directly by

significant changes in manufacturer's product mix or location of

production.

- DOE representatives will be available to meet with suppliers to

discuss these secondary impacts.

April 28, 1998

44

EE-RM-97-500 COMMENT 21II

Interview Guide Industry Infrastructure 

DOE is interested in better understanding the current industry 

infrastructure and how it would be affected by new energy efficiency 

standards. 

'J, DOE is especially interested in two general segments of the industry 

infrastructure. 

- Major customer types, and the distribution channels through which 

ballasts reach the end user. 

- Major suppliers, the trade allies which would be most strongly 

affected by new energy efficiency standards. 

,.; The industry infrastructure on the supply side can be affected directly by 

significant changes in manufacturer's product mix or location of 

production. 

- DOE representatives will be available to meet with suppliers to 

discuss these secondary impacts. 

April 28, 1998 

44 
Interview Gui de Global Competition

Ballasts are easily sh ipped and can be manufactured in a wide variety

of locations .

The Department is interested in learning how ballast manufacturers

view current trends in the global nature of the lamp ballast industry and

how these trends are affecting marketing and plant siting strategies.

Department representatives also woul d like to get manufacturer views

on how energy-efficiency standards might affect production and

marketing decisions in a global enviro nment.

April28, 1998

45

EE-RM-97-500 COMMENT 21II

Interview Guide Global Competition 

Ballasts are easily shipped and can be manufactured in a wide variety 

of locations. 

J The Department is interested in learning how ballast manufacturers 

view current trends in the global nature of the lamp ballast industry and 

how these trends are affecting marketing and plant siting strategies. 

;.j: Department representatives also would like to get manufacturer views 

on how energy-efficiency standards might affect production and 

marketing decisions in a global environment. 

April 28, 1998 

45 
Interview Guide Manufacturer Cash Flow Analysis

Cash flow analys i s i bei ng

impact of standards on the ballast i ndustry, and the Department

wishes discuss fully results with manufacturer.

Each manufacturer will be given the GRI M spreadsheet and a sample

worked- out "strawman" industry cash flow to facilitate underst and ing

among manufacturers about the mo del and how it works.

Each manufacturer can then input its own data an d assumptions to

develop its own expected cash flow.

® This cash flow output should exhibit a format and content similar

to the strawman example provided.

April 28, 1998

46

EE-RM-97-500 COMMENT 21II

Interview Guide Manufacturer Cash Flow Analysis 

Cash flow analysis is a key procedure being used to measure the 

impact of standards on the ballast industry, and the Department 

wishes to discuss fully the results with each manufacturer. 

J Each manufacturer will be given the GRIM spreadsheet and a sample 

worked .. out "strawman" industry cash flow to facilitate understanding 

among manufacturers about the model and how it works. 

'~ Each manufacturer can then input its own data and assumptions to 

develop its own expected cash flow. 

- This cash flow output should exhibit a format and content similar 

to the strawman example provided. 

April 28, 1998 

46 
Interview Guide

The Strawman Flow guide

each manufacturer cash flow.

BASE CASESCENAFIIO l Base Year

Income Statement

82.3__.

24.3

116.6

11.4

7.2 72. 721 72

6.3 63 6. 3 63

1.0000

24.3 24. 3 24.3

116 6 116.6 116.6

20 1 20.1 20.1

6.3 ( 6.3 6.3

34 5 34 S ,.. ..,..... 34.5 1

38!____. 38 3. 8

11.4 j 11.4 tt 11.4

43 [ 4.3 43

t i

7.2 7.2 7.2

135 135 13.5

(7.4) (7.4)... (7.4)

I I

(7.4)1 (7.4) (7•4);

31.50 31.50

217.1 217.1

6 1 6.1

0.8573

31.50

24.3

1 16.6

20.1

6.3

34.5

0.7938 ° 0.7350

3150

217.1

1.4

4.3

7.2

6.3

Material

Overhead

De P elation

Selling General and Administrative

Standard SG&A

R&D

Product Conversion Ex ense

'

-(Electronic

Profit Before Tax

Taxes

Net Income Befoi ..... ........... 1....... ..._.

Net Income

Depreciation

Change m Working Capital

Ordinary Capital Expe nditures

f Conversion Capital Expenditures

Cash Used In Investment

Net Cash Flow

Terminal Value

Present Value Factor

Discounted Cash Flow

Industry Value (Net Present Value)

Manufacturer Cash Flow Analysis

6.89

museum

MURDER

a'EEaa

OREEaa

6.89

31.50

Apri128, 1998

47

EE-RM-97-500 COMMENT 21II

Interview Guide Manufacturer Cash Flow Analysis 

The Strawman Industry Cash Flow can be used as a guide to develop 

each manufacturer cash flow. 

11111111111111 

amalliiS 

1IIlIIIIII1B 

11l1li111118. 

11111111111111 

IIDIIIIIIIIII 

1111111111111 

I "=~~:=~:~:=~:j I 7.2 J I .... ~· .... · ........ " .. ~ .. · .... ! 

1 6.3 I 1 "~'~N"" . ·~w ~,~. """1 

1:::::~::lt~l 

I ............ (7.4)1 

.. , 

i7.4) I .. '''''·'1 

6.1 i 

L ........... i§jJ L .... Q:?1Q5 .... j 

f::::::::=:8~=j .... ..!\pril .. 2 .. 1l, ...... 1!:l .. ~8 47 
. Interview Guide Manufacturer Cash Flow Analysis

analysi s Cash flow is procedure being measure

impact of standards Department

wishes to discuss

An important goal of each interview is to fully discuss the results of this

cash flow analysis under each scenario.

- The cash flow analyses prepared before the intervi ew are for

discussion purposes only.

- Problems and/or unique circumstances affecting the cash flow

results can be discussed and resolved during the interview.

Each interview should include an informal review of a draft cash flow

analysis for the manufacturer.

- The draft can then be revised after the discussion for sub mission to

third-party review and inclusion in the industry rollup.

April 28, 1998

48

EE-RM-97-500 COMMENT 21II

. Interview Guide Manufacturer Cash Flow Analysis 

Cash flow analysis is a key procedure being used to measure the 

impact of standards on the ballast industry, and the Department 

wishes to discuss fully the results with each manufacturer. 

:..; An important goal of each interview is to fully discuss the results of this 

cash flow analysis under each scenario. 

- The cash flow analyses prepared before the interview are for 

discussion purposes only. 

- Problems and/or unique circumstances affecting the cash flow 

results can be discussed and resolved during the interview. 

J Each interview should include an informal review of a draft cash flow 

analysis for the manufacturer. 

- The draft can then be revised after the discussion for submission to 

third-party review and inclusion in the industry rollup. 

April 28, 1998 

48 
Interview Guide Competitive Impacts

DOE is i nterested in viewpoints which

new eff energy. i ciency standards would i ncrease market power and

thereby lessen competition wi thi n the bal last industry.

Discussion topics will be prepared with Department of Justice input.

April28, 1998

49

EE-RM-97-500 COMMENT 21II

Interview Guide Competitive Impacts 

DOE is interested in manufacturer viewpoints on the extent to which 

new energy efficiency standards would increase market power and 

thereby lessen competition within the ballast industry. 

r./ Discussion topics will be prepared with Department of Justice input. 

April 28, 1998 

49 
Interview Guide Employment Impacts

The employment i mpacts is an

important consideration i n the rulemaking process.

DOE seeks to explore current trends in ballast production employment

and solicit manufacturer views on how employment patterns mi ght be

affected by new energy efficiency standards.

DOE is also interested in the extent to which the workforc e at

facilities might need extensive retrainin g or replacement?

e

Secondary employment impacts of new energy efficiency standards could

occur particularly for important suppliers, and this is a topic for discussion

as well.

April28, 1998

50

EE-RM-97-500 COMMENT 21II

Interview Guide Employment Impacts 

The employment impacts of new energy efficiency standards is an 

important consideration in the rulemaking process. 

,.; DOE seeks to explore current trends in ballast production employment 

and solicit manufacturer views on how employment patterns might be 

affected by new energy efficiency standards. 

- DOE is also interested in the extent to which the workforce at US 

facilities might need extensive retraining or replacement? 

lV: Secondary employment impacts of new energy efficiency standards could 

occur particularly for important suppliers, and this is a topic for discussion 

as well. 

April 28, 1998 

50 
Interview Guide Manufacturing Capacity Impacts

An energy efficiency utilization for

the ballast i ndustry in number of ways.

Energy-efficiency standards could brin g about manufacturin g

capacity impacts that can be best antici pated by the manufacturers.

is interested in manufacturer views on this issue.

April28, 1998

51

EE-RM-97-500 COMMENT 21II

Interview Guide Manufacturing Capacity Impacts 

An energy efficiency standard could change capacity utilization for 

the ballast industry in a number of ways. 

it! Energy-efficiency standards could bring about manufacturing 

capacity impacts that can be best anticipated by the manufacturers. 

-DOE is interested in manufacturer views on this issue. 

April 28, 1998 

51 
Ballast Manufacturer Impact Analysis Methodology

Generic Analytical Framewo

Ballast Industry Profile

Strawman Industry Cash Flo

Ballast Industry Cash F ow

Ballast Subgroup Impact Analysis

Next Steps

k

w

Apra 28, 1998

52

EE-RM-97-500 COMMENT 21II

Ballast Manufacturer Impact Analysis Methodology 

April 28, 1998 

52 
Next Steps

Draft Schedule for Ballast Manufactur i ng Impact Analys is.

V Complete draft methodology for MIA workshop

V Hold MIA approach workshop

End workshop comment perio d

Complete GRI M strawman

Complete interview questionnaire

Begin interviews

Complete d raft M IA document

Hold M IA draft results workshop

April 7,

April 28, 1998

May 28, 1 998

June 11, 1 998

June-11,1 998

July 1,1998

Late September

Late October

April 28, 1998

53

EE-RM-97-500 COMMENT 21II

Next Steps 

Draft Schedule for Ballast Manufacturing Impact Analysis. 

~ Complete draft methodology for MIA workshop 

~ Hold MIA approach workshop 

• End workshop comment period 

• Complete GRIM strawman 

• Complete interview questionnaire 

• Begin interviews 

• Complete draft MIA document 

• Hold MIA draft results workshop 

April 7, 1998 

April28, 1998 

May 28, 1998 

June 11, 1998 

June 11, 1998 

July 1,1998 

Late September 

Late October 

April 28. 1998 

53