CHAPTER 12. P RELIMINARY M ANUFACTURER IMPACT A NALYSIS

T ABLE O F C ONTENTS

**1 2.1**  **INTRODUCTION**

**.................................. .......................................................**  **12­1**

**1 2.2**  **METHODOLOGY**

**................................... .....................................................**  **12­1**

**1 2.2.1**  **Phase I**  **: I**  **ndustry P**  **rofile........................................................................ 12­2** 

**1 2.2.2**  **Phase I**  **I: I**  **ndustry C**  **ash­Flow Analysis**  **a nd**  **I nterview**  **Guide............... 12­2** 

**1 2.2.3**  **Phase I**  **II: S**  **ub­Group Analysis** 

**.............. ...............................................**  **12­3**

**1 2.3**  **PRELIMINARY MANUFACTURER**  **IMPACT O**  **VERVIEW.................... 12­5** 

**1 2.3.1**  **Overview of**  **I ndustry**  **D ata.....................................................................**  **12­5**

**1 2.3.2**  **Preliminary Manufacturing Interview Overview................................... 12­7**

**1 2.4**  **GENERAL S**  **ERVICE F**  **LUORESCENT LAMPS........................................**  **12­9**

**1 2.4.1**  **Product M**  **ix**

**........................................................................................... 12­9** 

**1 2.4.2**  **Conversion C**  **osts**

**................................................................................. 12­10** 

**1 2.4.3**  **Materials A**  **vailability**

**...................... ....................................................**  **12­10**

**1 2.5**  **INCANDESCENT REFLECTOR**  **L AMPS.................................................**  **12­10**

**1 2.5.1**  **Product M**  **ix**

**......................................................................................... 12­10** 

**1 2.5.2**  **Conversion C**  **osts**

**................................................................................. 12­11** 

**1 2.6**  **SUMMARY OF**  **M AJOR**  **I SSUES**  **FROM P**  **RELIMINARY MIA** 

**.. ..........**  **12­11**

**1 2.6.1**  **Retooling Eq**  **uipment t**  **o P**  **roduce S**  **tandards­Compliant L**  **amps**

**.......... 12­11** 

**1 2.6.2**  **Availability of Materials to Produce Standards­Compliant Lamps..... 12­11**

**1 2.6.3**  **Maintaining P**  **roduct A**  **vailability a**  **nd F**  **eatures**

**................................... 12­11** 

**R EFERENCES** 

**........................................................................................................ 12­13** 

L ISTOF T ABLES

**Ta ble**  **1 2.3.1**  **Electric L**  **amp I**  **ndustry Em**  **ployment a**  **nd Ea**  **rnings................................. 12­6** 

**Ta ble**  **1 2.3.2**  **Electric L**  **amp I**  **ndustry C**  **ensus D**  **ata**

**... ..............................................**  **12­6**

**Ta ble**  **1 2.3.3**  **Electric L**  **amp I**  **ndustry C**  **ensus D**  **ata**

**... .............................................**  **12­6**

**Ta ble**  **1 2.3.4**  **Full P**  **roduction C**  **apacity U**  **tilization R**  **ates**

**...................................... 12­7** 

**1 2­i** CHAPTER 12 P RELIMINARY MANUFACTURER IMPACT A NALYSIS

1 2.1 INTRODUCTION

**Th e**  **p urpose**  **o f**  **t he**  **m anufacturer**  **i mpact**  **a nalysis**  **( MIA)**  **i s**  **t o**  **i dentify**  **t he**  **p otential** 

**i mpacts**  **o f**  **e nergy**  **c onservation**  **s tandards**  **o n**  **m anufacturers.**  **Th e**  **P rocess**  **R ule**  **p rovides** 

**g uidance**  **f or**  **c onducting**  **t his**  **a nalysis**  **w ith**  **i nput**  **f rom**  **m anufacturers**  **a nd**  **o ther**  **i nterested** 

**p arties.**  **Th e**  **U .S.**  **D epartment**  **o f**  **En ergy**  **( DOE)**  **will a**  **pply t**  **his m**  **ethodology t**  **o i**  **ts**

**e valuation**  **o f**  **s tandards**  **t o**  **t he**  **e xtent**  **i t**  **i s**  **a ppropriate**  **f or**  **t he**  **d evelopment**  **o f**  **e nergy** 

**c onservation**  **s tandards**  **f or**  **t he**  **l amps**  **c overed**  **u nder**  **t his**  **r ulemaking.**  **Th e**  **P rocess**  **R ule** 

**g ives**  **g uidelines**  **f or**  **t he**  **c onsideration**  **o f**  **f inancial**  **i mpacts**  **a nd**  **a wide**  **r ange**  **o f** 

**q uantitative**  **a nd**  **q ualitative**  **i ndustry**  **i mpacts**  **t hat**  **m ight**  **o ccur**  **a fter**  **a doption**  **o f**  **a**

**standard. F**  **or e**  **xample, a**  **particular s**  **tandard l**  **evel could**  **r equire**  **c hanges**  **i n** 

**m anufacturing**  **p ractices**  **f or**  **g eneral**  **s ervice**  **f luorescent**  **l amps**  **( GSFL)**  **a nd**  **i ncandescent** 

**r eflector**  **l amps**  **( IRL).**  **D OE**  **w ill**  **i dentify**  **a nd**  **a nalyze**  **t hese**  **i mpacts**  **t hrough**  **i nterviews** 

**w ith**  **m anufacturers**  **a nd**  **o ther**  **s takeholders**  **d uring**  **t he**  **NO PR**  **s tage**  **o f**  **i ts**  **a nalysis.** 

**D OE**  **a nnounced**  **c hanges**  **t o**  **t he**  **M IA**  **f ormat**  **t hrough**  **a report**  **i ssued**  **t o**  **C ongress** 

**o n**  **J anuary**  **3 1,**  **2 006**  **( as**  **r equired**  **b y**  **s ection**  **1 41**  **o f**  **EP ACT**  **2 005),**  **e ntitled**  **“ Energy** 

**C onservation**  **S tandards**  **A ctivities.”**  **a Previously,**  **D OE**  **d id**  **n ot**  **r eport**  **a ny**  **M IA**  **r esults** 

**d uring**  **t he**  **A NOPR**  **p hase;**  **h owever,**  **u nder**  **t his**  **n ew**  **format, D**  **OE h**  **as c**  **ollected,**

**e valuated,**  **a nd**  **r eported**  **p reliminary**  **i nformation**  **a nd**  **d ata**  **i n**  **t he**  **A NOPR.**  **S uch** 

**p reliminary**  **i nformation**  **i ncludes**  **e fficacy**  **a nd**  **m arket**  **d ata,**  **k ey**  **i ssues,**  **production m**  **ixes,**

**c onversion**  **c osts,**  **foreign c**  **ompetition, m**  **arket s**  **hares, industry**  **c onsolidation,**  **a nd** 

**c umulative**  **r egulatory**  **i nformation.**  **D OE**  **s olicited**  **t his**  **i nformation**  **d uring**  **t he**  **A NOPR** 

**p reliminary**  **m anufacturer**  **i nterviews**  **a nd**  **r eports**  **t he**  **r esults**  **i n**  **t his**  **c hapter.**  **A ppendix** 

**1 2A**  **p rovides**  **a copy**  **o f**  **t he**  **i nterview**  **g uide**  **u sed**  **f or**  **t he**  **p reliminary**  **m anufacturer** 

**i nterviews.** 

1 2.2 METHODOLOGY

**D OE**  **c onducts**  **t he**  **M IA**  **i n**  **t hree**  **p hases.**  **I n**  **P hase**  **I**

**, D**  **OE c**  **reates a**  **n i**  **ndustry**

**p rofile**  **t o**  **c haracterize**  **t he**  **i ndustry**  **a nd**  **c onducts**  **a preliminary**  **M IA**  **t o**  **i dentify**  **i mportant** 

**i ssues**  **t hat**  **r equire**  **c onsideration.**  **S ections**  **1 2.3**  **­ 12.6 of**  **t his**  **c hapter**  **p resent**  **i nitial** 

**f indings**  **o f**  **t he**  **P hase**  **I analysis.**  **I n**  **P hase**  **I I,**  **D OE**  **p repares**  **a n**  **i ndustry**  **c ash**  **f low**  **model**

**a nd**  **a n**  **i nterview**  **questionnaire t**  **o g**  **uide s**  **ubsequent d**  **iscussions. I**  **n P**  **hase I**  **II,**

**m anufacturers**  **a re**  **i nterviewed,**  **a nd**  **t he**  **i mpacts**  **o f**  **s tandards**  **a re**  **a ssessed**  **b oth** 

**q uantitatively**  **a nd**  **q ualitatively.**  **D OE**  **a ssesses**  **i ndustry**  **a nd**  **s ub­group**  **cash f**  **low and** 

**NP V**  **using t**  **he G**  **overnment R**  **egulatory I**  **mpact M**  **odel (**  **GRIM). Th**  **en i**  **mpacts o**  **n**

**c ompetition,**  **m anufacturing**  **c apacity,**  **e mployment,**  **a nd**  **r egulatory**  **b urden**  **a re**  **a ssessed** 

**a This**  **report is**  **available on**  **th e**  **D OE**  **w ebsite**  **at**

**h ttp://www.eere.energy.gov/buildings/appliance_standards/2006_schedule_setting.html.** 

**12­1 based**  **o n**  **m anufacturer**  **i nterviews**  **a nd**  **d iscussions.**  **Th e**  **NO PR**  **TS D**  **p resents**  **r esults**  **o f** 

**t he**  **P hase**  **I I**  **a nd**  **I II**  **a nalyses.** 

1 2.2.1 Phase I : I ndustry P rofile

**I n**  **P hase**  **I of**  **t he**  **m anufacturer**  **i mpact**  **a nalysis,**  **DOE c**  **ollects p**  **ertinent q**  **ualitative**

**a nd**  **q uantitative**  **f inancial**  **a nd**  **m arket**  **i nformation.**  **Th is**  **i ncludes**  **w ages,**  **employment,**

**a nd**  **i ndustry**  **c osts**  **f or**  **G SFL**  **a nd**  **I RL.**  **S ources**  **o f**  **i nformation**  **i nclude**  **r eports**  **p ublished** 

**b y**  **i ndustry**  **g roups,**  **trade j**  **ournals, the**  **U .S.**  **C ensus**  **B ureau,**  **a nd**  **c opies**  **o f**  **S ecurities** 

**Ex change**  **C ommission**  **( SEC)**  **1 0­K**  **f ilings.**  **I n**  **a ddition,**  **D OE**  **r elies**  **o n**  **i nformation**  **f rom** 

**i ts**  **m arket**  **a nd**  **t echnology**  **a ssessment,**  **e ngineering**  **a nalysis,**  **life­cycle c**  **ost a**  **nalysis, a**  **nd**

**a nalysis**  **o f**  **c onsumer**  **p rices**  **t o**  **c haracterize**  **t he**  **G SFL**  **a nd**  **I RL**  **m anufacturing**  **i ndustries.** 

1 2.2.2 Phase I I: I ndustry C ash­Flow A nalysis a nd I nterview G uide

**I n**  **P hase**  **I I,**  **D OE**  **w ill**  **p erform**  **a preliminary**  **i ndustry**  **c ash­flow**  **a nalysis**  **a nd** 

**p repare**  **w ritten**  **g uidelines**  **f or**  **i nterviewing**  **m anufacturers.** 

1 2.2.2.1 Industry C ash­Flow A nalysis

**D OE**  **u ses**  **t he**  **G RIM**  **t o**  **a nalyze**  **t he**  **f inancial**  **i mpacts**  **o f**  **e nergy**  **c onservation** 

**s tandards**  **o n**  **t he**  **G SFL**  **a nd**  **I RL**  **i ndustries.**  **S tandards**  **may r**  **equire a**  **dditional i**  **nvestment,**

**r aise**  **p roduction**  **c osts,**  **and a**  **ffect r**  **evenue t**  **hrough h**  **igher p**  **rices a**  **nd p**  **ossibly l**  **ower s**  **ales.**

**Th e**  **G RIM**  **u ses**  **s everal**  **f actors**  **t o**  **d etermine**  **a series**  **of a**  **nnual c**  **ash f**  **lows f**  **or t**  **he y**  **ear**

**s tandards**  **b ecome**  **e ffective**  **a nd**  **f or**  **s everal**  **y ears**  **a fter**  **i mplementation.**  **Th ese**  **f actors** 

**i nclude**  **a nnual**  **e xpected**  **r evenues,**  **c osts**  **o f**  **s ales,**  **selling a**  **nd g**  **eneral a**  **dministration c**  **osts,**

**t axes,**  **and c**  **apital e**  **xpenditures r**  **elated t**  **o d**  **epreciation, n**  **ew standards,**  **a nd**  **m aintenance.** 

**I nputs**  **t o**  **t he**  **G RIM**  **i nclude**  **m anufacturing**  **c osts,**  **shipments f**  **orecasts, and**  **p rice**  **f orecasts** 

**d eveloped**  **i n**  **o ther**  **a nalyses.**  **F inancial**  **i nformation,**  **a nother**  **i nput,**  **w ill**  **b e**  **d eveloped** 

**b ased**  **o n**  **p ublicly**  **a vailable**  **d ata**  **a nd**  **c onfidentially**  **s ubmitted**  **m anufacturer**  **i nformation.** 

**D OE**  **c ompares**  **t he**  **r esults**  **o f**  **t he**  **G RIM**  **a gainst**  **b aseline**  **p rojections**  **w here**  **n o**  **s tandards** 

**a re**  **i n**  **p lace.**  **Th e**  **f inancial**  **i mpact**  **o f**  **n ew**  **standards i**  **s t**  **he d**  **ifference b**  **etween t**  **he t**  **wo s**  **ets**

**o f**  **d iscounted**  **a nnual**  **c ash**  **f lows.** 

1 2.2.2.2 Interview G uide

**D OE**  **w ill**  **c onduct**  **i nterviews**  **w ith**  **m anufacturers**  **t o**  **g ather**  **i nformation**  **o n**  **t he** 

**e ffects**  **o f**  **s tandards**  **o n**  **r evenues**  **a nd**  **f inances,**  **direct e**  **mployment, c**  **apital a**  **ssets, and** 

**i ndustry**  **c ompetitiveness.**  **Th ese**  **i nterviews**  **w ill**  **t ake**  **p lace**  **d uring**  **P hase**  **I II**  **o f**  **t he**  **M IA.** 

**B efore**  **t he**  **i nterviews,**  **DOE w**  **ill d**  **istribute a**  **n i**  **nterview g**  **uide t**  **hat w**  **ill h**  **elp i**  **dentify t**  **he**

**i mpacts**  **o f**  **s tandards**  **o n**  **i ndividual**  **m anufacturers**  **o r**  **s ub­groups**  **o f**  **m anufacturers.**  **Th e** 

**i nterview**  **g uide**  **w ill**  **l ikely**  **c over**  **c urrent**  **o rganizational**  **c haracteristics;**  **i ndustry** 

**i nfrastructure;**  **m anufacturer**  **c ash­flow**  **a nalysis;**  **a nd**  **a ssessments**  **o f**  **t he**  **i mpact**  **o n** 

**c ompetition,**  **e mployment,**  **a nd**  **m anufacturing**  **c apacity.** 

**1 2­2** 12.2.3 Phase I II: S ub­Group A nalysis

**P hase**  **I II**  **a ctivities**  **w ill**  **o ccur**  **a fter**  **p ublication**  **o f**  **t he**  **A NOPR.**  **Th ese**  **a ctivities** 

**w ill**  **i nclude**  **m anufacturer**  **i nterviews;**  **r evision**  **o f**  **t he**  **i ndustry**  **c ash­flow**  **analysis; a** 

**manufacturer s**  **ub­group cash­flow**  **a nalysis;**  **a nd**  **a ssessment**  **o f**  **t he**  **i mpacts**  **o n** 

**c ompetition,**  **m anufacturing**  **c apacity,**  **e mployment,**  **a nd**  **t he**  **c umulative**  **r egulatory**  **b urden.** 

1 2.2.3.1 Manufacturer I nterviews

**D OE**  **w ill**  **s upplement**  **t he**  **i nformation**  **g athered**  **i n**  **P hase**  **I and**  **t he**  **c ash­flow** 

**a nalysis**  **p erformed**  **i n**  **P hase**  **I I**  **w ith**  **i nformation**  **g athered**  **d uring**  **i nterviews**  **w ith** 

**m anufacturers**  **d uring**  **P hase**  **I II.**  **Th e**  **i nterview**  **p rocess**  **h as**  **a key**  **r ole**  **i n**  **t he**  **m anufacturer** 

**i mpact**  **a nalyses,**  **since i**  **t p**  **rovides a**  **n op**  **portunity f**  **or i**  **nterested p**  **arties t**  **o e**  **xpress t**  **heir**

**v iews**  **p rivately**  **o n**  **i mportant**  **i ssues,**  **so t**  **hat c**  **onfidential o**  **r s**  **ensitive i**  **nformation c**  **an b**  **e**

**c onsidered**  **i n**  **t he**  **r ulemaking**  **d ecision.** 

**D OE**  **w ill**  **c onduct**  **d etailed**  **i nterviews**  **w ith**  **m anufacturers**  **t o**  **g ain**  **i nsight**  **i nto**  **t he** 

**p otential**  **i mpacts**  **o f**  **s tandards**  **o n**  **s ales,**  **direct e**  **mployment, c**  **apital a**  **ssets, a**  **nd i**  **ndustry**

**c ompetitiveness.**  **B oth**  **q ualitative**  **a nd**  **q uantitative**  **i nformation**  **a re**  **v aluable.**  **I nterviews** 

**w ill**  **b e**  **s cheduled**  **w ell**  **i n**  **a dvance**  **t o**  **p rovide**  **e very**  **op portunity**  **f or**  **k ey**  **i ndividuals**  **t o**  **b e** 

**a vailable**  **f or**  **c omment.**  **A lthough**  **a written**  **r esponse**  **t o**  **t he**  **q uestionnaire**  **w ill**  **b e** 

**a cceptable,**  **D OE**  **prefers a**  **n i**  **nteractive i**  **nterview p**  **rocess, which**  **h elps**  **c larify**  **r esponses** 

**a nd**  **p rovides**  **t he**  **op portunity**  **t o**  **i dentify**  **a dditional**  **issues.**

**M anufacturers**  **w ho**  **p articipate**  **i n**  **t he**  **i nterviews**  **w ill**  **be a**  **sked t**  **o i**  **dentify a**  **ll**

**c onfidential**  **i nformation**  **p rovided**  **d uring**  **a nd**  **f ollowing**  **t he**  **i nterview.**  **D OE**  **w ill**  **c onsider** 

**a ll**  **i nformation**  **t ransmitted**  **i n**  **i ts**  **d ecision­making**  **p rocess.**  **H owever,**  **c onfidential** 

**i nformation**  **w ill**  **n ot**  **b e**  **m ade**  **a vailable**  **i n**  **t he**  **p ublic**  **r ecord.**  **P articipants**  **w ill**  **a lso**  **be**

**a sked**  **t o**  **i dentify**  **a ny**  **i nformation**  **t hey**  **w ish**  **t o**  **b e**  **i ncluded**  **i n**  **t he**  **p ublic**  **r ecord**  **b ut**  **d o**  **n ot** 

**w ant**  **a ttributed**  **t o**  **t hem.** 

1 2.2.3.2 Revised I ndustry C ash­Flow A nalysis

**I n**  **P hase**  **I I**  **o f**  **t he**  **M IA,**  **D OE**  **w ill**  **p repare**  **a preliminary**  **G RIM.**  **D uring**  **t he** 

**i nterviews,**  **DOE w**  **ill s**  **eek c**  **omment a**  **nd s**  **uggestions r**  **egarding t**  **he v**  **alues s**  **elected f**  **or t**  **he**

**p arameters.**  **U pon**  **c ompletion**  **o f**  **t he**  **i nterviews,**  **DOE w**  **ill r**  **evise i**  **ts i**  **ndustry c**  **ash f**  **low**

**m odel**  **b ased**  **o n**  **t he**  **f eedback**  **p rovided.** 

1 2.2.3.3 Manufacturer S ub­Group A nalysis

**U sing**  **a verage**  **c ost**  **a ssumptions**  **t o**  **d evelop**  **an i**  **ndustry c**  **ash f**  **low estimate**  **i s**  **n ot** 

**a dequate**  **f or**  **a ssessing**  **d ifferential**  **i mpacts**  **a mong**  **s ub­groups**  **o f**  **m anufacturers.**  **S maller** 

**m anufacturers,**  **niche p**  **layers, or**  **m anufacturers**  **e xhibiting**  **a cost**  **s tructure**  **t hat**  **d iffers** 

**l argely**  **f rom**  **t he**  **i ndustry**  **a verage**  **c ould**  **b e**  **m ore**  **n egatively**  **a ffected.**  **I deally,**  **D OE** 

**w ould**  **c onsider**  **t he**  **i mpact**  **o n**  **e very**  **f irm**  **i ndividually;**  **h owever,**  **i t**  **t ypically**  **u ses**  **t he** 

**r esults**  **o f**  **t he**  **i ndustry**  **c haracterization**  **t o**  **g roup**  **manufacturers w**  **ith s**  **imilar**

**c haracteristics.**  **D uring**  **t he**  **i nterviews,**  **DOE w**  **ill d**  **iscuss t**  **he p**  **otential s**  **ub­groups t**  **hat**

**1 2­3** **have b**  **een i**  **dentified f**  **or t**  **he a**  **nalysis. D**  **OE w**  **ill a**  **sk m**  **anufacturers a**  **nd o**  **ther s**  **takeholders**

**t o**  **s uggest**  **w hat**  **s ub­groups**  **o r**  **c haracteristics**  **a re**  **t he**  **m ost**  **a ppropriate**  **f or**  **t he**  **a nalysis.** 

1 2.2.3.4 Competitive I mpact A ssessment

**S ection**  **3 42**  **( 6)(B)(i)(V)**  **o f**  **t he**  **En ergy**  **P olicy**  **A ct**  **o f**  **1 992**  **( EPCA)**  **d irects**  **D OE** 

**t o**  **c onsider**  **a ny**  **l essening**  **o f**  **c ompetition**  **t hat**  **i s**  **l ikely**  **t o**  **r esult**  **f rom**  **i mposition**  **o f** 

**s tandards.**  **I t**  **f urther**  **d irects**  **t he**  **U .S.**  **A ttorney**  **G eneral**  **t o**  **d etermine**  **t he**  **i mpacts,**  **if a**  **ny, o**  **f**

**a ny**  **d ecrease**  **i n**  **c ompetition.**  **D OE**  **w ill**  **m ake**  **a determined**  **e ffort**  **t o**  **g ather**  **a nd**  **r eport** 

**f irm­specific**  **f inancial**  **i nformation**  **a nd**  **i mpacts.**  **T he**  **c ompetitive**  **a nalysis**  **w ill**  **f ocus**  **o n** 

**a ssessing**  **t he**  **i mpacts**  **t o**  **s maller**  **m anufacturers.**  **T he**  **a ssessment**  **w ill**  **b e**  **b ased**  **o n** 

**m anufacturing**  **c ost**  **d ata**  **a nd**  **i nformation**  **c ollected**  **f rom**  **i nterviews**  **w ith**  **m anufacturers.** 

**Th e**  **m anufacturer**  **i nterviews**  **w ill**  **f ocus**  **o n**  **g athering**  **i nformation**  **t hat**  **w ould**  **h elp**  **i n** 

**a ssessing**  **a symmetrical**  **c ost**  **i ncreases**  **t o**  **s ome**  **m anufacturers,**  **the p**  **otential i**  **ncrease i**  **n**

**b usiness**  **r isks**  **f rom**  **a n**  **i ncreased**  **p roportion**  **o f**  **f ixed**  **c osts,**  **and p**  **otential b**  **arriers t**  **o**

**m arket**  **e ntry**  **( e.g.,**  **proprietary t**  **echnologies).**

1 2.2.3.5 Manufacturing C apacity I mpact

**O ne**  **o f**  **t he**  **s ignificant**  **o utcomes**  **o f**  **s tandards**  **c ould**  **b e**  **t he**  **ob solescence**  **o f** 

**e xisting**  **m anufacturing**  **a ssets,**  **including t**  **ooling a**  **nd i**  **nvestment. Th**  **e m**  **anufacturer**

**i nterview**  **g uide**  **w ill**  **h ave**  **a series**  **o f**  **q uestions**  **t o**  **h elp**  **i dentify**  **i mpacts**  **o n**  **m anufacturing** 

**c apacity,**  **s pecifically**  **c apacity**  **u tilization**  **a nd**  **p lant**  **l ocation**  **d ecisions**  **i n**  **t he**  **U nited**  **S tates** 

**a nd**  **No rth**  **A merica**  **w ith**  **a nd**  **w ithout**  **a standard;**  **t he**  **a bility**  **o f**  **m anufacturers**  **t o**  **up grade** 

**o r**  **r emodel**  **e xisting**  **f acilities**  **t o**  **a ccommodate**  **t he**  **n ew**  **requirements; t**  **he n**  **ature a**  **nd v**  **alue**

**o f**  **s tranded**  **a ssets,**  **if a**  **ny; a**  **nd e**  **stimates f**  **or a**  **ny o**  **ne­time r**  **estructuring o**  **r o**  **ther c**  **harges,**

**w here**  **a pplicable.** 

1 2.2.3.6 Employment I mpact

**Th e**  **i mpact**  **o f**  **n ew**  **energy c**  **onservation s**  **tandards o**  **n e**  **mployment i**  **s a**  **n i**  **mportant**

**c onsideration**  **i n**  **t he**  **r ulemaking**  **p rocess.**  **To assess**  **how domestic**  **e mployment**  **p atterns** 

**m ight**  **b e**  **a ffected,**  **t he**  **i nterview**  **will e**  **xplore c**  **urrent e**  **mployment t**  **rends i**  **n t**  **he l**  **amp**

**i ndustry**  **a nd**  **s olicit**  **m anufacturer**  **v iews**  **o n**  **c hanges**  **in e**  **mployment p**  **atterns t**  **hat m**  **ay**

**r esult**  **f rom**  **i ncreased**  **s tandard**  **l evels.**  **Th e**  **e mployment**  **i mpacts**  **s ection**  **o f**  **t he**  **i nterview** 

**g uide**  **w ill**  **f ocus**  **o n**  **c urrent**  **e mployment**  **l evels**  **a ssociated**  **w ith**  **m anufacturers**  **a t**  **e ach**  **o f** 

**t heir**  **p roduction**  **f acilities;**  **e xpected**  **f uture**  **e mployment**  **l evels,**  **with a**  **nd w**  **ithout a** 

**standard; d**  **ifferences i**  **n w**  **orkforce s**  **kills; a**  **nd i**  **ssues r**  **elated t**  **o t**  **he r**  **etraining o**  **f**

**e mployees.** 

1 2.2.3.7 Cumulative R egulatory B urden

**D OE**  **s eeks**  **t o**  **m itigate**  **t he**  **o verlapping**  **e ffects**  **o n**  **m anufacturers**  **o f**  **s tandards**  **a nd** 

**o ther**  **r egulatory**  **a ctions**  **a ffecting**  **t he**  **s ame**  **e quipment**  **o r**  **c ompanies.**  **B ased**  **o n**  **i ts**  **o wn** 

**r esearch**  **a nd**  **d iscussions**  **w ith**  **m anufacturers,**  **DOE i**  **dentified s**  **everal r**  **egulations r**  **elevant**

**t o**  **g eneral**  **s ervice**  **f luorescent**  **l amps**  **a nd**  **i ncandescent**  **r eflector**  **l amps,**  **including**

**s tandards**  **f or**  **o ther**  **p roducts**  **m ade**  **b y**  **G SFL**  **a nd**  **I RL**  **m anufacturers,**  **and S**  **tate a**  **nd**

**i nternational**  **e nergy**  **c onservation**  **s tandards.** 

**1 2­4** 12.3 PRELIMINARY MANUFACTURER IMPACT O VERVIEW

**D uring**  **t he**  **A NOPR**  **p hase,**  **D OE**  **i dentified**  **q ualitative**  **a nd**  **q uantitative**  **p ublic** 

**f inancial**  **a nd**  **m arket**  **i nformation**  **t o**  **h elp**  **e valuate**  **t he**  **i mpact**  **o f**  **p otential**  **n ew**  **regulations**

**o n**  **l amp**  **m anufacturer**  **f inancial**  **p erformance,**  **m anufacturing**  **c apacity**  **a nd**  **e mployment** 

**l evels,**  **and p**  **roduct u**  **tility a**  **nd i**  **nnovation. I**  **n a**  **ddition, D**  **OE r**  **esearched t**  **he c**  **umulative**

**b urden**  **t hat**  **i ndustry**  **m ay**  **f ace**  **f rom**  **t he**  **o verlapping**  **e ffect**  **o f**  **n ew**  **or r**  **ecent D**  **OE e**  **nergy**

**c onservation**  **s tandards**  **o r**  **o ther**  **r egulatory**  **a ction**  **a ffecting**  **t he**  **s ame**  **p roduct**  **o r**  **i ndustry.** 

**I n**  **a ddition**  **t o**  **r esearching**  **p ublicly**  **a vailable**  **d ata,**  **D OE**  **c onducted**  **i nterviews**  **w ith** 

**m anufacturers**  **p rimarily**  **i n**  **o rder**  **t o**  **i dentify**  **k ey**  **i ssues**  **a nd**  **g ain**  **i nsights**  **i nto**  **t he** 

**q ualitative**  **i mpacts**  **o f**  **e nergy**  **c onservation**  **s tandards.**  **Th e**  **p rimary**  **s ources**  **o f**  **t his** 

**i nformation**  **w ere**  **i nterviews**  **w ith**  **m anufacturers**  **o f**  **G SFL**  **a nd**  **I RL**  **c onducted**  **d uring**  **t he** 

**f irst**  **q uarter**  **o f**  **F Y**  **2007. To**  **maintain c**  **onfidentiality, D**  **OE d**  **id n**  **ot i**  **dentify t**  **he i**  **ndividual**

**m anufacturers**  **t hat**  **d isclosed**  **i nformation.**  **I nstead,**  **t he**  **e valuation**  **o nly**  **r eports**  **a ggregated** 

**i nformation**  **a nd**  **d oes**  **n ot**  **d isclose**  **s ensitive**  **i nformation**  **o r**  **i dentify**  **c ompany­specific** 

**i nformation.**  **F or**  **e ach**  **p roduct,**  **D OE**  **u sed**  **a n**  **i nterview**  **guide t**  **o g**  **ather r**  **esponses f**  **rom**

**m ultiple**  **m anufacturers**  **o n**  **s everal**  **i ssues.**  **A ppendix**  **1 2A**  **contains a**  **copy o**  **f t**  **he**

**p reliminary**  **m anufacturer**  **i nterview**  **g uide**  **u sed**  **f or**  **G SFL**  **a nd**  **I RL**  **m anufacturers.** 

**Th e**  **f ollowing**  **s ections**  **s ummarize**  **p ublicly**  **a vailable**  **d ata**  **a s**  **w ell**  **a s**  **i nformation** 

**g athered**  **d uring**  **i nterviews**  **f or**  **t he**  **p reliminary**  **m anufacturer**  **i mpact**  **a nalysis.**  **S ection** 

**1 2.3.1**  **summarizes t**  **he p**  **ublicly a**  **vailable i**  **ndustry d**  **ata. S**  **ection 1**  **2.3.2 outlines**  **t he** 

**g eneral**  **i nterview**  **structure a**  **nd s**  **ummarizes t**  **he i**  **ssues d**  **iscussed d**  **uring t**  **he p**  **reliminary**

**M IA**  **i nterviews.**  **S ections**  **1 2.4**  **to** Error! R eference s ource n ot f ound. **present a** 

**summary o**  **f t**  **he p**  **reliminary M**  **IA i**  **nterviews f**  **or e**  **ach p**  **roduct. S**  **ection 1**  **2.6 addresses** 

**i ssues**  **c ommon**  **t o**  **a ll**  **l amps**  **c overed**  **i n**  **t his**  **r ulemaking.** 

1 2.3.1 Overview o f I ndustry D ata

**D OE**  **c ompiled**  **i ndustry**  **d ata**  **t o**  **a ssess**  **t he**  **e lectric**  **la mp**  **i ndustry**  **c ost**  **s tructure**  **a nd** 

**m anufacturing**  **u tilization**  **a nd**  **c apitalization**  **r ates.**  **Th e**  **f ollowing**  **s ection**  **s ummarizes** 

**p ublic**  **d ata**  **D OE**  **ob tained**  **f rom**  **U .S.**  **C ensus**  **B ureau**  **r eports.** 

1 2.3.1.1 Industry C ost S tructure

**D OE**  **d eveloped**  **t he**  **e lectric**  **l amp**  **i ndustry**  **c ost**  **s tructure**  **f rom**  **t he**  **U .S.**  **C ensus** 

**B ureau,**  **A nnual**  **S urvey**  **o f**  **M anufacturers** 

**,** Statistics f or I ndustry G roups a nd I ndustries

**f rom**  **2 002**  **t o**  **2 005.** 

**Ta ble**  **1 2.3.1**  **presents t**  **he e**  **lectric l**  **amp i**  **ndustry e**  **mployment l**  **evels a**  **nd e**  **arnings**

**f rom**  **2 002­2005.**  **Th e**  **s tatistics**  **i llustrate**  **a steady**  **d ecline**  **i n**  **t he**  **n umber**  **o f**  **p roduction** 

**a nd**  **n on­production**  **w orkers**  **i n**  **t he**  **i ndustry.** 

**1 2­5** 1 Table 1 2.3.1 Electric L amp I ndustry E mployment a nd E arnings

Year P roduction W orkers A ll E mployees P ayroll f or A ll E mployees

**( thousand**  **2 005**  **d ollars)** 

**2 002**  **9 ,595**  **1 1,552**  **4 89,781** 

**2 003**  **8 ,972**  **1 0,790**  **4 81,524** 

**2 004**  **8 ,022**  **9 ,867**  **5 12,514** 

**2 005**  **7 ,604**  **9 ,289**  **4 95,057** 

**Ta ble**  **1 2.3.2**  **presents t**  **he c**  **osts o**  **f m**  **aterials a**  **nd i**  **ndustry p**  **ayroll a**  **s a**  **percentage**

**o f**  **s hipment**  **v alue**  **f rom**  **2 002­2005.**  **Th e**  **c ost**  **o f**  **m aterials**  **a nd**  **t he**  **c ost**  **o f**  **p ayroll**  **f or** 

**p roduction**  **w orkers**  **h ave**  **i ncreased**  **s ince**  **2 002.**  **Th e**  **c ost**  **o f**  **t otal**  **p ayroll**  **h as**  **a lso**  **r isen** 

**s ince**  **2 002.** 

2 Table 1 2.3.2 Electric L amp I ndustry C ensus D ata

Year C ost o f M aterials

**( percent**  **o f**  **s hipment** 

**v alue)**  C ost o f P ayroll

f

or P roduction W orkers

**( percent**  **o f**  **s hipment** 

**v alue)**  C ost o f T otal P ayroll:

P roduction +

Administration

**( percent**  **o f**  **s hipment** 

**v alue)** 

**2 002**  **3 3.9**  **14.5 18.6** 

**2003 3**  **6.0 14.0**  **18.5**

**2004 3**  **5.8 15.4**  **20.3**

**2005 3**  **9.6 15.0**  **20.1**

12.3.1.2 Inventory L evels a nd C apacity U tilization R ates

**Ta ble**  **1 2.3.3**  **shows t**  **he y**  **ear­end i**  **nventory f**  **or t**  **he e**  **lectric l**  **ighting i**  **ndustry**

**ob tained**  **f rom**  **t he**  **U .S.**  **C ensus**  **B ureau,**  **A nnual**  **S urvey**  **o f**  **M anufacturers** 

**,** Statistics f or

I

ndustry G roups a nd I ndustries **f rom**  **2 002**  **t o**  **2 005.**  **B oth**  **i n**  **d ollars**  **a nd**  **a s**  **a percentage** 

**o f**  **s hipment**  **v alue,**  **t he**  **e nd­of­year**  **i nventory**  **f or**  **t he**  **i ndustry**  **h as**  **s teadily**  **i ncreased**  **s ince** 

**2 002.** 

3 Table 1 2.3.3 Electric L amp I ndustry C ensus D ata

Y ear E nd­of­Year I nventory

**( million**  **2 005**  **d ollars)**  E nd­of­Year I nventory

**( percent**  **o f**  **s hipment**  **v alue)** 

**2 002**  **2 13,569**  **8 .1** 

**2003 2**  **12,207 8**  **.2**

**2004 2**  **26,482 9**  **.0**

**2005 2**  **35,934 9**  **.6**

**DOE ob**  **tained f**  **ull p**  **roduction c**  **apacity u**  **tilization r**  **ates f**  **rom t**  **he U**  **.S. C**  **ensus**

**B ureau,**  **“ Current**  **I ndustrial**  **R eports,”**  Survey of Plant C apacity **f rom**  **2 001**  **t o**  **2 005.**  **Ta ble** 

**1 2.3.4**  **presents p**  **roduction c**  **apacity u**  **tilization r**  **ates f**  **or t**  **he e**  **lectric l**  **ighting e**  **quipment**

**i ndustry.**  **F ull**  **p roduction**  **c apacity**  **i s**  **d efined**  **a s**  **th e**  **m aximum**  **l evel**  **o f**  **p roduction**  **a n** 

**e stablishment**  **c ould**  **a ttain**  **u nder**  **n ormal**  **op erating**  **c onditions.**  **I n**  **t he**  S urvey of Plant

**1 2­6** **1**

**2**

**3**

**4**

**5** Capacity **r eport,**  **t he**  **f ull**  **p roduction**  **u tilization**  **r ate**  **i s**  **a ratio**  **o f**  **t he**  **a ctual**  **l evel**  **o f** 

**op erations**  **t o**  **t he**  **f ull**  **p roduction**  **l evel.** 

4 Table 1 2.3.4 Full Pr oduction C apacity U tilization R ates

Y ear C apacity U tilization R ates

**( Percent)** 

E lectric L amp B ulb

& Part

M anufacturing R esidential E lectric

L ighting F ixture

M anufacturing C ommercial/Industrial/Institutional

E lectric L ighting F ixture

M anufacturing

**2 00**  **6 3**  **4 6**  **5 8** 

**2 00**  **6 7**  **5 2**  **5 4** 

**2 00**  **6 1**  **6 2**  **5 5** 

**2 00**  **7 1**  **5 5**  **6 3** 

**2 00**  **6 2**  **6 2**  **6 1** 

1 2.3.2 Preliminary M anufacturing I nterview O verview

**I n**  **a ddition**  **t o**  **r eviewing**  **p ublicly**  **a vailable**  **d ata,**  **D OE**  **c onducted**  **i nterviews**  **o f** 

**m anufacturers**  **f or**  **a preliminary**  **m anufacturer**  **i mpact**  **analysis. Th**  **e f**  **ollowing s**  **ection**

**h ighlights**  **t he**  **t opics**  **d iscussed**  **d uring**  **t hese**  **i nterviews.**  **A copy**  **o f**  **t he**  **m anufacturer** 

**i nterview**  **g uide**  **u sed**  **w hen**  **c onducting**  **t hese**  **i nterviews**  **c an**  **b e**  **f ound**  **i n**  **A ppendix**  **1 2A.** 

1 2.3.2.1 Key I ssues

**P erhaps**  **t he**  **m ost**  **i mportant**  **a spect**  **o f**  **t he**  **p reliminary**  **M IA**  **i s**  **t he**  **op portunity**  **i t** 

**c reates**  **f or**  **D OE**  **t o**  **i dentify**  **k ey**  **m anufacturer**  **i ssues**  **early i**  **n t**  **he d**  **evelopment o**  **f n**  **ew**

**s tandards.**  **D uring**  **t he**  **i nterviews,**  **DOE e**  **ngages t**  **he m**  **anufacturers i**  **n a**  **discussion a**  **bout**

**w hat**  **t hey**  **p erceive**  **t o**  **b e**  **t he**  **k ey**  **i ssues**  **i n**  **t he**  **r ulemaking.**  **F or**  **e xample,**  **k ey**  **i ssues**  **i n** 

**p revious**  **r ulemakings**  **h ave**  **i ncluded**  **c oncerns**  **o ver**  **p atent**  **p rotections**  **t hat**  **m ight**  **p revent** 

**s ome**  **c ompanies**  **f rom**  **i mplementing**  **h igher­efficiency**  **d esigns.** 

1 2.3.2.2 Production a nd Pr oduct M ix

**D OE**  **r equests**  **m anufacturers’**  **v iews**  **o n**  **w hat**  **t hey**  **p erceive**  **t o**  **b e**  **t he**  **p ossible** 

**i mpact**  **o f**  **n ew**  **standards o**  **n p**  **rofitability. F**  **or i**  **nstance, t**  **he c**  **apital a**  **nd p**  **roduct c**  **onversion**

**o utlays**  **n eeded**  **t o**  **up grade**  **o r**  **r edesign**  **p roducts**  **a nd**  **p roduct**  **p latforms**  **b efore**  **t hey**  **h ave** 

**r eached**  **t he**  **e nd**  **o f**  **t heir**  **u seful**  **l ife**  **m ay**  **c reate**  **s ignificant**  **c onversion**  **c osts,**  **resulting i**  **n**

**r educed**  **c ash**  **f low**  **a nd**  **s tranded**  **i nvestments.**  **H igher**  **e nergy**  **c onservation**  **s tandards**  **m ay** 

**a lso**  **r esult**  **i n**  **h igher**  **p er­unit**  **c osts**  **t hat**  **c ould**  **c ause**  **c onsumers**  **t o**  **s hift**  **t o**  **l ess**  **c ostly** 

**p roducts.** 

1 2.3.2.3 Conversion C osts

**D uring**  **t he**  **i nterviews,**  **DOE a**  **sks m**  **anufacturers t**  **o q**  **uantify a**  **nd e**  **xplain b**  **oth t**  **he**

**c apital**  **a nd**  **t he**  **p roduct**  **c onversion**  **c osts**  **n ecessary**  **t o**  **r aise**  **t he**  **e nergy**  **e fficiency**  **o f**  **t heir** 

**p roduct**  **l ines**  **t o**  **t he**  **p roposed**  **s tandard**  **l evels.**  **I n**  **s ome**  **i nstances,**  **manufacturers m**  **ay b**  **e**

**a**

**ble t**  **o m**  **eet p**  **roposed s**  **tandard l**  **evels b**  **y m**  **odifying e**  **xisting p**  **roducts. I**  **n o**  **ther c**  **ases, the** 

**1 2­7** **necessary c**  **hanges m**  **ay e**  **ntail a**  **complete p**  **roduct­line r**  **edesign. I**  **n t**  **hese s**  **ituations, an** 

**i ncrease**  **i n**  **a standard**  **w ill**  **c ause**  **m anufacturers**  **t o**  **i ncur**  **o ne­time**  **c onversion**  **c apital** 

**expenditures a**  **nd p**  **roduct­conversion e**  **xpenses. C**  **onversion c**  **apital­expenditures a**  **re o**  **ne**

**time i**  **nvestments i**  **n p**  **roperty, plant**  **a nd**  **e quipment.**  **P roduct­conversion**  **e xpenses**  **i nclude** 

**o ne­time**  **i nvestments**  **i n**  **r esearch,**  **product d**  **evelopment, t**  **esting a**  **nd m**  **arketing.**

**A potentially**  **s ignificant**  **o utcome**  **o f**  **n ew**  **standards c**  **ould b**  **e t**  **he ob**  **solescence o**  **f**

**e xisting**  **m anufacturing**  **a ssets,**  **including t**  **ooling a**  **nd o**  **ther c**  **apital i**  **nvestment. Th**  **e**

**i nterview**  **g uide**  **i ncludes**  **q uestions**  **t o**  **i dentify**  **i mpacts**  **o n**  **m anufacturing**  **c apacity.**  **Th ese** 

**q uestions**  **w ere**  **d eveloped**  **t o**  **u nderstand**  **t he**  **i mpact**  **o f**  **p otential**  **n ew**  **standards o**  **n:**

• **U.S. a**  **nd No**  **rth A**  **merican m**  **anufacturing c**  **apacity;**

• **capacity u**  **tilization a**  **nd p**  **lant l**  **ocation d**  **ecisions i**  **n t**  **he U**  **nited S**  **tates a**  **nd No**  **rth**

**A merica**  **b oth**  **w ith**  **a nd**  **w ithout**  **s tandards;** 

• **the a**  **bility o**  **f m**  **anufacturers t**  **o up**  **grade o**  **r r**  **emodel existing**  **f acilities**  **t o**  **a ccommodate** 

**a new**  **p roduct**  **m ix;**  **a nd** 

• **the n**  **ature a**  **nd v**  **alue o**  **f s**  **tranded a**  **ssets, if**  **a ny.** 

**D OE**  **w ill**  **e xplore**  **c urrent**  **t rends**  **i n**  **p roduction**  **e mployment**  **a nd**  **s olicit** 

**m anufacturer**  **v iews**  **o n**  **c hanges**  **i n**  **e mployment**  **p atterns**  **r esulting**  **f rom**  **n ew**  **energy**

**c onservation**  **s tandards.**  **Q uestions**  **r egarding**  **e mployment**  **i mpacts**  **h elp**  **t o**  **u nderstand:** 

• **current e**  **mployment l**  **evels a**  **ssociated w**  **ith m**  **anufacturing a**  **t e**  **ach p**  **roduction f**  **acility;**

• **expected f**  **uture e**  **mployment l**  **evels w**  **ith a**  **nd w**  **ithout new**  **standards; a**  **nd**

• **differences i**  **n w**  **orkforce s**  **kills a**  **nd i**  **ssues r**  **elated to**  **r etraining.** 

1 2.3.2.4 Exports, Foreign C ompetition, a nd O utsourcing

**En ergy**  **c onservation**  **s tandards**  **f or**  **I RL**  **a nd**  **G SFL**  **c an**  **have a**  **n i**  **mpact o**  **n**

**p rojected**  **e xport**  **s ales,**  **the p**  **ortion o**  **f t**  **he d**  **omestic m**  **arket s**  **erved b**  **y f**  **oreign c**  **ompetition,**

**a nd**  **d omestic**  **p roduction**  **l evels.**  **Th e**  **p reliminary**  **M IA**  **i nterview**  **questions e**  **xamined**

**m anufacturer**  **v iews**  **o n**  **t he**  **i mpacts**  **n ew**  **standards w**  **ould h**  **ave o**  **n e**  **xports, foreign** 

**c ompetition,**  **a nd**  **o utsourcing.** 

1 2.3.2.5 Market S hares a nd I ndustry C onsolidation

**Ne w**  **standards c**  **an a**  **lter t**  **he c**  **ompetitive d**  **ynamics o**  **f t**  **he m**  **arketplace, prompting** 

**c ompanies**  **t o**  **e nter**  **t he**  **m arket,**  **e xit**  **t he**  **m arket,**  **o r**  **m erge**  **w ith**  **o ther**  **c ompanies.**  **Th e** 

**p reliminary**  **M IA**  **i nterview**  **questions a**  **sk m**  **anufacturers t**  **o s**  **hare t**  **heir p**  **erspectives o**  **n**

**i ndustry**  **c onsolidation**  **b oth**  **i n**  **t he**  **a bsence**  **o f**  **n ew**  **st andards**  **a nd**  **a ssuming**  **n ew**  **standards**

**a t**  **v arious**  **e fficiency**  **l evels.**  **Th e**  **i nterview**  **questions f**  **ocus o**  **n g**  **athering i**  **nformation t**  **hat**

**h elps**  **a ssess:** 

• **disproportionate c**  **ost i**  **ncreases t**  **o s**  **ome m**  **anufacturers;**

• **increased p**  **roportion o**  **f f**  **ixed c**  **osts p**  **otentially i**  **ncreasing b**  **usiness r**  **isks; a**  **nd**

• **potential b**  **arriers t**  **o m**  **arket e**  **ntry (**  **e.g., proprietary**  **t echnologies).** 

**1 2­8** **The n**  **eed t**  **o a**  **ssess a**  **nti­competitive e**  **ffects o**  **f p**  **roposed s**  **tandards c**  **omes f**  **rom t**  **he**

**n eed**  **t o**  **p rotect**  **c onsumer**  **i nterests.**  **D uring**  **t he**  **i nterviews,**  **DOE s**  **olicits i**  **nformation t**  **o**

**u nderstand**  **i f**  **n ew**  **standards c**  **ould r**  **esult i**  **n d**  **isproportionate e**  **conomic o**  **r p**  **erformance**

**p enalties**  **f or**  **p articular**  **c onsumer**  **o r**  **u ser**  **s ubgroups.**  **Manufacturers a**  **re a**  **lso a**  **sked i**  **f n**  **ew**

**s tandards**  **c ould**  **r esult**  **i n**  **p roducts**  **t hat**  **w ill**  **b e**  **m ore**  **o r**  **l ess**  **d esirable**  **t o**  **c onsumers**  **d ue**  **t o** 

**c hanges**  **i n**  **p roduct**  **f unctionality,**  **u tility,**  **o r**  **o ther**  **f eatures.** 

1 2.3.2.6 Cumulative B urden

**W hile**  **a ny**  **o ne**  **r egulation**  **m ay**  **n ot**  **i mpose**  **a significant**  **b urden**  **o n**  **m anufacturers,** 

**t he**  **c ombined**  **e ffects**  **o f**  **s everal**  **i mpending**  **r egulations**  **m ay**  **h ave**  **s erious**  **c onsequences** 

**f or**  **i ndividual**  **m anufacturers,**  **g roups**  **o f**  **m anufacturers,**  **or e**  **ntire i**  **ndustries. A**  **ssessing t**  **he**

**i mpact**  **o f**  **a single**  **r egulation**  **m ay**  **o verlook**  **t his**  **c umulative**  **r egulatory**  **b urden.** 

**Ex penditures**  **a ssociated**  **w ith**  **m eeting**  **o ther**  **r egulations**  **a re**  **a n**  **i mportant**  **a spect**  **o f** 

**D OE’s**  **c onsideration**  **o f**  **t he**  **“ cumulative**  **r egulatory**  **b urden”**  **i ndustry**  **f aces.**  **Th e** 

**i nterviews**  **h elp**  **D OE**  **i dentify**  **t he**  **l evel**  **a nd**  **t iming**  **o f**  **i nvestments**  **m anufacturers**  **a re** 

**e xpecting**  **t o**  **i ncur**  **b ecause**  **o f**  **t hese**  **r egulations.**  **Ma nufacturers**  **a re**  **a lso**  **a sked**  **u nder**  **w hat** 

**c ircumstances**  **t hey**  **m ight**  **b e**  **a ble**  **t o**  **m ake**  **e xpenditures**  **r elated**  **t o**  **r egulations**  **a nd** 

**s tandards.** 

1 2.4 GENERAL S ERVICE F LUORESCENT L AMPS

**D uring**  **t he**  **c ourse**  **o f**  **t he**  **p reliminary**  **M IA**  **f or**  **G SFL,**  **DOE i**  **nterviewed**

**m anufacturers**  **o f**  **f luorescent**  **l amps.**  **D OE**  **u sed**  **i nformation**  **f rom**  **t hese**  **i nterviews**  **t o** 

**r eview**  **the e**  **ngineering a**  **nalysis i**  **n C**  **hapter 5** 

**. Th**  **ese i**  **nterviews a**  **lso d**  **iscussed t**  **he**

**b usiness­related**  **t opics**  **s ummarized**  **b elow.**  **D OE’s**  **ob jective**  **w as**  **t o**  **b ecome**  **f amiliar**  **w ith** 

**e ach**  **c ompany’s**  **p articular**  **m arket**  **a pproach**  **a nd**  **f inancial**  **s tructure,**  **a nd**  **i ts**  **c oncerns** 

**a**

**bout n**  **ew energy**  **c onservation**  **s tandards.**  **Th ese**  **m eetings**  **a re**  **c overed**  **b y**  **n on­disclosure** 

**a greements**  **a nd**  **t he**  **c ompany­specific**  **i nformation**  **r esides**  **w ith**  **D OE**  **c ontractors.**  **B efore** 

**e ach**  **v isit,**  **D OE**  **provided c**  **ompany r**  **epresentatives w**  **ith a**  **n i**  **nterview g**  **uide (**  **see**

**A ppendix**  **1 2A)**  **t hat**  **i ncluded**  **t he**  **t opics**  **o utlined**  **i n**  **s ection**  **1 2.3.2**  **of t**  **his c**  **hapter. Th**  **e**

**f ollowing**  **p aragraphs**  **s ummarize**  **m anufacturers’**  **p rinciple**  **c oncerns**  **a bout**  **n ew**  **energy**

**c onservation**  **s tandards**  **f or**  **G SFL,**  **n amely**  **p roduct**  **m ix,**  **c onversion**  **c osts,**  **and m**  **aterials**

**a vailability.** 

1 2.4.1 Product M ix

**M anufacturers**  **i nterviewed**  **b elieve**  **t hat**  **e nergy**  **c onservation**  **s tandards**  **w ill**  **i mpact** 

**t he**  **p roduct**  **m ix**  **o f**  **f luorescent**  **l amps.**  **I n**  **particular, m**  **anufacturers e**  **xpect t**  **hat h**  **igher**

**e fficacy**  **s tandards**  **c ould**  **e liminate**  **t he**  **u se**  **o f**  **c ertain**  **p hosphors**  **o r**  **e ven**  **c hange**  **t he**  **t ype**  **o f** 

**l amp**  **i nstalled.**  **F or**  **e xample,**  **i f**  **s et**  **h igh**  **e nough,**  **n ew**  **standards c**  **ould c**  **ause t**  **he m**  **arket t**  **o**

**c onvert**  **f rom**  **T1 2**  **g eneral**  **s ervice**  **f luorescent**  **l amp**  **p roduct**  **l ines**  **t o**  **T8 lamp**  **p roduct** 

**l ines.**  **F urthermore,**  **s ome**  **m anufacturers**  **a lso**  **c ommented**  **t hat**  **w hile**  **m ost**  **m aterials**  **a re** 

**a vailable**  **t o**  **m ake**  **m ore**  **e nergy­efficient**  **l amps,**  **some m**  **aterials a**  **re i**  **ncreasing i**  **n p**  **rice.**

**Th ese**  **h igher**  **m aterial**  **p rices**  **c ould**  **i n**  **t urn**  **i ncrease**  **t he**  **c ost**  **o f**  **p roducing**  **a lamp,**  **a nd** 

**t hereby**  **h ave**  **a n**  **i mpact**  **o n**  **l amp**  **p rice.** 

**1 2­9** 12.4.2 Conversion C osts

**M anufacturers**  **e xpressed**  **c oncern**  **o ver**  **c onversion**  **c osts**  **a ssociated**  **w ith**  **m aking** 

**t heir**  **e quipment**  **p roduce**  **l amps**  **t hat**  **a re**  **s tandards**  **c ompliant.**  **A t**  **s ome**  **h igh**  **s tandard** 

**l evels,**  **the n**  **ew requirements**  **m ight**  **f orce**  **m anufacturers**  **t o**  **c onvert**  **n early**  **e xclusively** 

**f rom**  **T1 2**  **t o**  **T8 product**  **l ines.**  **C urrently,**  **m ost**  **m anufacturers**  **p roduce**  **b oth**  **T1 2**  **a nd**  **T8**

**lamps. H**  **owever, m**  **anufacturers i**  **ndicated t**  **hat i**  **f t**  **he p**  **roduction v**  **olume w**  **ere t**  **o s**  **hift**

**f rom**  **T1 2**  **t o**  **T8**

**, s**  **ome m**  **anufacturers f**  **elt t**  **hat t**  **he t**  **ypical r**  **egulatory c**  **ompliance t**  **ime**

**p eriod**  **( i.e.,**  **3 y**  **ears) t**  **o c**  **onvert p**  **roduction f**  **rom a**  **T12 e**  **quipment l**  **ine t**  **o a**  **T8 equipment** 

**l ine**  **c ould**  **b e**  **t oo**  **s hort.** 

1 2.4.3 Materials A vailability

**C ertain**  **m anufacturers**  **e xpressed**  **c oncern**  **a bout**  **t he**  **a vailability**  **o f**  **c ertain**  **r are** 

**e arth**  **p hosphors**  **i n**  **s ufficient**  **q uantities**  **i n**  **o rder**  **to comply**  **w ith**  **t he**  **s tandard**  **l evel.**  **I n** 

**p articular,**  **t he**  **c oncern**  **f ocused**  **o n**  **a movement**  **t oward**  **a new**  **minimum e**  **fficacy s**  **tandard**

**t hat**  **w as**  **t oo**  **a ggressive**  **a nd**  **m ight**  **r equire**  **a rapid**  **c onversion**  **t o**  **m ore**  **e fficacious**  **l amps** 

**t han**  **t he**  **p hosphor**  **m anufacturers**  **c ould**  **a ccommodate.**  **D OE**  **n otes**  **t hat**  **t his**  **i s**  **a lso**  **a n** 

**i mportant**  **i ssue**  **f or**  **m anufacturers**  **b ecause**  **t he**  **p hosphor**  **“ wall**  **t hickness”**  **( i.e.,**  **quantity**

**a**

**pplied t**  **o t**  **he i**  **nside o**  **f t**  **he l**  **amp w**  **all) i**  **n a**  **general s**  **ervice f**  **luorescent l**  **amp d**  **irectly**

**r elates**  **t o**  **l amp**  **e fficacy.** 

1 2.5 INCANDESCENT R EFLECTOR L AMPS

**D uring**  **t he**  **c ourse**  **o f**  **t he**  **p reliminary**  **M IA**  **f or**  **I RL,**  **DOE i**  **nterviewed**

**m anufacturers**  **o f**  **r eflector**  **l amps.**  **D OE**  **u sed**  **t he**  **i nformation**  **f rom**  **t hese**  **i nterviews**  **t o** 

**r eview**  **the e**  **ngineering a**  **nalysis i**  **n C**  **hapter 5** 

**. Th**  **e i**  **nterviews a**  **lso d**  **iscussed t**  **he b**  **usiness**

**related t**  **opics s**  **ummarized b**  **elow. D**  **OE’s ob**  **jective w**  **as t**  **o b**  **ecome f**  **amiliar w**  **ith e**  **ach**

**c ompany’s**  **p articular**  **m arket**  **a pproach**  **a nd**  **f inancial**  **structure, a**  **nd i**  **ts c**  **oncerns a**  **bout n**  **ew**

**e nergy**  **c onservation**  **s tandards.**  **Th ese**  **m eetings**  **a re**  **c overed**  **b y**  **n on­disclosure** 

**a greements**  **a nd**  **t he**  **c ompany­specific**  **i nformation**  **r esides**  **w ith**  **D OE**  **c ontractors.**  **B efore** 

**e ach**  **v isit,**  **D OE**  **provided c**  **ompany r**  **epresentatives w**  **ith a**  **n i**  **nterview g**  **uide (**  **contained i**  **n**

**A ppendix**  **1 2A)**  **t hat**  **i ncluded**  **t he**  **t opics**  **d iscussed**  **i n**  **s ection**  **1 2.3.2**  **of t**  **his c**  **hapter. Th**  **e**

**f ollowing**  **p aragraphs**  **s ummarize**  **m anufacturers’**  **p rinciple**  **c oncerns**  **a bout**  **n ew**  **standards**

**f or**  **I RL,**  **n amely**  **p roduct**  **m ix**  **a nd**  **t he**  **t ime**  **a llowed**  **f or**  **c onversion**  **o f**  **h igh­volume** 

**p roduction**  **e quipment.** 

1 2.5.1 Product M ix

**M anufacturers**  **c ommented**  **t hat**  **i ncreasing**  **t he**  **e fficacy**  **s tandard**  **m ay**  **c hange**  **t he** 

**m ix**  **o f**  **p roducts**  **i n**  **t he**  **m arket.**  **I n**  **particular, c**  **ertain l**  **amp s**  **hapes a**  **nd s**  **izes m**  **ay n**  **ot b**  **e**

**a**

**ble t**  **o m**  **eet c**  **ertain e**  **fficacy s**  **tandards. F**  **or e**  **xample, a**  **n R**  **20 h**  **alogen l**  **amp w**  **ould l**  **ikely**

**n ot**  **m eet**  **t he**  **s ame**  **e fficacy**  **s tandard**  **a s**  **o ther**  **c omparable**  **h alogen**  **l amps.**  **F urthermore,** 

**s ubstitute**  **p roducts,**  **such a**  **s C**  **FL r**  **eflector l**  **amps, may**  **b ecome**  **m ore**  **a ttractive**  **i f**  **n ew** 

**e fficacy**  **s tandards**  **c ause**  **I RL**  **t o**  **b e**  **s ignificantly**  **m ore**  **e xpensive,**  **r educing**  **t he**  **r elative** 

**p rice**  **d ifference**  **b etween**  **I RL**  **a nd**  **r eplacement**  **l amps**  **s uch**  **a s**  **C FL**  **r eflector**  **l amps.** 

**1 2­10** 12.5.2 Conversion C osts

**M anufacturers**  **c ommented**  **t hat,**  **d epending**  **o n**  **t he**  **t imeframe**  **f or**  **t ransition,**  **t hey** 

**c ould**  **f ace**  **p roduction**  **c apacity**  **p roblems**  **i f**  **D OE**  **w ere**  **t o**  **r aise**  **s tandards**  **s o**  **h igh**  **t hat** 

**c ompliance**  **r equired**  **t he**  **u se**  **o f**  **h alogen**  **c apsules.**  **S imilarly,**  **m anufacturers**  **c ommented** 

**t hat**  **t hey**  **w ere**  **c oncerned**  **t hat**  **i f**  **D OE**  **w ere**  **t o**  **r aise**  **t he**  **s tandard**  **t o**  **a level**  **t hat**  **r equired** 

**i nfrared**  **r eflective**  **( IR)**  **c oatings**  **o n**  **t he**  **h alogen**  **c apsules,**  **there w**  **ould b**  **e a**  **production**

**c apacity**  **p roblem**  **b ecause**  **t hat**  **p rocess**  **i s**  **t ime**  **c onsuming**  **b ecause**  **i t**  **i nvolves**  **l ayering** 

**d ozens**  **o f**  **t hin**  **f ilm**  **c oatings**  **o n**  **t he**  **c apsule.** 

1 2.6 SUMMARY OF MAJOR I SSUES F ROM P RELIMINARY MIA

**D OE**  **c onducted**  **a series**  **o f**  **p reliminary**  **i nterviews**  **w ith**  **m anufacturers**  **t o**  **a ssess** 

**t heir**  **c oncerns**  **a bout**  **p otential**  **i mpact**  **o f**  **a change**  **i n**  **t he**  **r egulatory**  **s tandard**  **o r**  **c overage** 

**o f**  **f luorescent**  **a nd**  **i ncandescent**  **r eflector**  **l amps.**  **I n**  **g eneral,**  **m anufacturers**  **i dentified**  **t he** 

**f ollowing**  **m ajor**  **i ssues**  **o f**  **c oncern:**  **a )**  **S ufficient**  **ti me**  **t o**  **r etool**  **i n**  **r esponse**  **t o**  **t he** 

**s tandards;**  **b )**  **A vailability**  **o f**  **m aterials**  **t o**  **p roduce**  **s tandards­compliant**  **l amps;**  **a nd**  **c )** 

**M aintaining**  **p roduct**  **a vailability**  **a nd**  **f eatures**  **t hat**  **c onsumers**  **u se.** 

1 2.6.1 Retooling E quipment t o P roduce S tandards­Compliant L amps

**A ll**  **o f**  **t he**  **m anufacturers**  **i nterviewed**  **e xpressed**  **c oncern**  **o ver**  **t he**  **t ime**  **p eriods** 

**a llowed**  **u nder**  **EP CA**  **f or**  **d eveloping**  **s tandards­compliant**  **l amps.**  **F or**  **G SFL,**  **s ome** 

**m anufacturers**  **e xpressed**  **c oncern**  **a bout**  **t he**  **t ime**  **p eriod**  **n ecessary**  **t o**  **r etool**  **t o**  **p roduce** 

**s tandards­compliant**  **l amps**  **( e.g.,**  **converting f**  **rom a**  **T12 p**  **roduct l**  **ine t**  **o a**  **T8 product**  **l ine** 

**a t**  **c ertain**  **s tandard**  **l evels).**  **F or**  **I RL,**  **m anufacturers**  **c ommented**  **t hat,**  **d epending**  **o n**  **t he** 

**t imeframe**  **f or**  **t ransition,**  **t hey**  **c ould**  **f ace**  **p roduction**  **c apacity**  **p roblems**  **i f**  **D OE**  **w ere**  **t o** 

**r aise**  **s tandards**  **s uch**  **t hat**  **i t**  **r equired**  **t he**  **u se**  **o f**  **h alogen**  **c apsules**  **o r**  **i nfrared**  **r eflective**  **( IR)** 

**c oatings**  **o n**  **h alogen**  **c apsules.**  **M anufacturers**  **f elt**  **th ere**  **c ould**  **b e**  **a production**  **c apacity** 

**p roblem**  **d ue**  **t o**  **t he**  **p rocess**  **t ime**  **i nvolved**  **i n**  **l ayering**  **d ozens**  **o f**  **I R**  **r eflective**  **t hin**  **f ilm** 

**c oatings**  **o n**  **t he**  **c apsule.**  **Th e**  **h igh**  **v olumes**  **a ssociated**  **w ith**  **b oth**  **m ajor**  **l amp**  **t ypes**  **w ere** 

**c ited**  **f requently**  **a s**  **t he**  **u nderlying**  **c ause**  **f or**  **c oncern.** 

1 2.6.2 Availability o f M aterials t o Pr oduce S tandards­Compliant L amps

**M anufacturers**  **i nterviewed**  **e xpressed**  **c oncern**  **o ver**  **t he**  **a vailability**  **o f**  **m aterials**  **t o** 

**m anufacture**  **s tandards­compliant**  **l amps.**  **M ore**  **s pecifically,**  **c oncern**  **w as**  **e xpressed**  **o ver** 

**p otential**  **s hortages**  **o f**  **c ertain**  **m aterials**  **( e.g.,**  **certain p**  **hosphors, s**  **uch a**  **s t**  **hose t**  **hat**

**p roduce**  **b lue**  **l ight)**  **t hat**  **c ould**  **i ncrease**  **t he**  **p roduction**  **c ost.** 

1 2.6.3 Maintaining P roduct A vailability a nd F eatures

**M anufacturers**  **e xpressed**  **c oncern**  **t o**  **D OE**  **o ver**  **t he**  **p otential**  **i mpact**  **t he**  **r egulation** 

**m ay**  **h ave**  **o n**  **t heir**  **a bility**  **t o**  **c ontinue**  **t o**  **s upply**  **a wide**  **d iversity**  **o f**  **p roducts**  **w ith** 

**a ttributes**  **a nd**  **f eatures**  **t hat**  **t heir**  **c ustomers**  **r equire.**  **D epending**  **o n**  **t he**  **m andatory** 

**s tandard**  **l evel,**  **m anufacturers**  **e xpressed**  **c oncern**  **t hat**  **c ertain**  **l amp**  **s hapes**  **a nd**  **s izes**  **m ay** 

**1 2­11** **be eliminated**  **f rom**  **t he**  **m arket,**  **o r**  **t hat**  **s ignificant**  **m arket**  **s hifts**  **c ould**  **o ccur**  **( e.g.,**  **from**

**i ncandescent**  **t echnology**  **t o**  **c ompact**  **f luorescent**  **l amps).** 

**D OE**  **w ill**  **b e**  **c onducting**  **t he**  **m anufacturer**  **i mpact**  **a nalysis**  **f or**  **t he**  **NO PR**  **s tage**  **o f** 

**t his**  **r ulemaking.**  **Th erefore,**  **D OE**  **w ill**  **b e**  **i nvestigating**  **t his**  **p reliminary**  **l ist**  **o f**  **i ssues**  **i n** 

**m ore**  **d epth,**  **a s**  **w ell**  **a s**  **d iscussing**  **o ther**  **i mpacts**  **t hat**  **m anufacturers**  **m ay**  **e xperience.** 

**D OE**  **i nvites**  **s takeholders**  **t o**  **c omment**  **o n**  **t hese**  **a nd**  **o ther**  **i ssues,**  **r elating**  **t o**  **t he**  **r egulatory** 

**i mpacts**  **o n**  **m anufacturers.** 

**D OE**  **c onsidered**  **t he**  **p ossible**  **e ffect**  **o f**  **e nergy**  **c onservation**  **s tandards**  **f or**  **G SFL** 

**a nd**  **I RL**  **o n**  **s mall**  **b usinesses.**  **A t**  **t his**  **t ime,**  **D OE**  **i s**  **n ot**  **a ware**  **o f**  **a ny**  **s mall**  **m anufacturers** 

**o f**  **t he**  **l amps**  **b eing**  **c onsidered**  **i n**  **t his**  **r ulemaking.**  **S hould**  **a ny**  **s mall**  **b usiness** 

**m anufacturers**  **b e**  **i dentified,**  **D OE**  **w ill**  **s tudy**  **t he**  **p otential**  **i mpacts**  **i n**  **g reater**  **d etail**  **d uring** 

**t he**  **M IA,**  **w hich**  **D OE**  **w ill**  **c onduct**  **a s**  **a part**  **o f**  **t he**  **NO PR**  **a nalysis.** 

**1 2­12** REFERENCES

**1 U.S.**  **C ensus**  **B ureau.**  **2 005**  **A nnual**  **S urvey**  **o f**  **M anufacturers:**  **Ta ble**  **2 ­ Statistics**  **f or** 

**I ndustry**  **G roups**  **a nd**  **I ndustries:**  **2 005**  **a nd**  **Ea rlier**  **Y ears.**  **D ecember,**  **2 006.**  **W ashington,** 

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

**2 Ibid.** 

**3 U.S.**  **C ensus**  **B ureau.**  **2 005**  **A nnual**  **S urvey**  **o f**  **M anufacturers:**  **Ta ble**  **6**

**– Value**  **o f** 

**M anufacturers’**  **I nventories**  **b y**  **S tage**  **o f**  **F abrication**  **f or**  **I ndustry**  **G roups**  **a nd**  **I ndustries:** 

**B eginning**  **a nd**  **En d**  **o f**  **Y ear.**  **No vember,**  **2 006.**  **W ashington,**  **D .C.** 

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

**U .S.**  **C ensus**  **B ureau.**  **2 005**  **A nnual**  **S urvey**  **o f**  **M anufacturers:**  **Ta ble**  **2**

**– Statistics**  **f or** 

**I ndustry**  **G roups**  **a nd**  **I ndustries:**  **2 005**  **a nd**  **Ea rlier**  **Y ears.**  **D ecember,**  **2 006.**  **W ashington,** 

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

**4 U.S.**  **C ensus**  **B ureau.**  **2 007**  **C urrent**  **I ndustrial**  **R eports:**  **Ta ble**  **1 a** 

**– Full**  **P roduction** 

**C apacity**  **U tilization**  **R ates**  **b y**  **I ndustry:**  **F ourth**  **Q uarters**  **2 001**  **t hrough**  **2 005.**  **J anuary,** 

**2 007.**  **W ashington,**  **D .C.**  **< http://www.census.gov/prod/2007pubs/mqc1­05.pdf>.** 

**1 2­13**