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kanufacturer Impact Analysis

Commercial Clothes Washer (CCW) MIA

n DOE interviewed manufacturers representing nearly 100% of the US unit

CCW shipments.

n Focus topics:

Key

Issues

Current Manufacturer Product Impacts of Cumulative

Market Sub-Grow Utility and Efficiency Regulatory

Conditions Analysis Innovation Standards Burden

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CCW Key Issues

n The risk of eliminating low-cost vertical-axis washers from the market

n Reduced product shipments due to:

• A move away from central laundry facilities to in-unit residential laundry

• Increased repair and remanufacturing of existing units

n Reduced cleaning performance due to the use of some energy-saving

design options

n The possible relocation of production facilities outside the country

n The potential for industry consolidation and/or the elimination of the LowVolume Manufacturer (LVM).

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EE-2006-STD-0127 COMMENT 23.4
CCW Product and Customer Mix

n Current product platforms include vertical-axis and horizontal-axis

models.

• Vertical-axis CCW unit shipments dominate over horizontal-axis unit shipments.

• However, new efficiency standards could eliminate vertical-axis CCWs.

n There are three main groups of buyers for CCWs:

• Route operators

• Multi-family building operators

• Laundromats

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CCW Industry Profitability

n Multiple manufacturers noted:

• Higher efficiency standards are likely to drive up unit costs and hence depress

demand.

• Higher costs could further accelerate the trend away from central laundry facilities to

individual residential installations.

• Higher unit prices would also encourage owners to repair rather than replace

malfunctioning units.

• Sales of dryers are correlated to washers; thus, any decrease in clothes washer

demand will likely precipitate a corresponding drop in dryer sales.

n Unit shipments are very small compared to the residential market.

• In 2006, there were 0.2MM CCW vs. 9.4MM residential clothes washer unit shipments.

• CCWs have little volume to across which to spread investment and research costs.

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inary Manufacturer Impact Analysis

CCW Market Share and Consolidation

n Little consolidation opportunity remains.

• The current market only has three significant competitors.

• However, a standard that eliminates vertical-axis CCWs could result in one significant

manufacturer ceasing clothes washer production altogether.

n In the future, high-volume foreign competitors may elect to extend their

residential lines to also compete in the higher-margin CCW market.

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cturer Impact Analysis

CCW Low Volume Manufacturer (LVM)

n Because of market scale differences between residential and commercial,

manufacturers whose production is largely commercial are affected

disproportionately by standards.

n The LVM has noted that:

• It derives about 87 percent of its clothes washers sales from CCWs (-25 percent of total revenues)

vs. less than 2 percent for its competitors.

• About 2/3 of its CCW sales are agitator, vertical-axis.

• It employs about 1,500 employees in the United States.

• It has decades of agitator, vertical-axis CCW production experience, dedicated facilities, and sunk

investments that would be stranded if vertical-axis CCWs are eliminated.

• CCW standardization around horizontal-axis units would likely cause margin pressure, requiring:

- Research and development to reduce the cost of their current horizontal-axis units.

- Capital expenditures to ramp production up from less than 20% of unit shipments.

- Rebuilding its present US manufacturing facility to standardize around horizontal-axis CCWs,

which is less cost effective than shuttering the plant and moving abroad.

• The LVM doubts that its owners would be willing to make these investments, forcing the LVM to

cease clothes washer and dryer manufacturing altogether. 63

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CCW Efficiency Issues

n As efficiency standards are raised, all manufacturers expect their

customers to be affected according to their group:

• Route operators typically negotiate fixed utility costs and therefore do not benefit

directly from higher-efficiency washers. As a result, the industry expects route

operators to raise per-load prices to cover higher initial and maintenance costs.

• Multi-family homes generally have fixed budgets, reducing demand for commercial

clothes washers as prices rise. Building owners may elect to install residential clothes

washers in individual units instead of commercial clothes washers in common areas.

• Laundromats are the only customers who benefit directly.

• Cleaning performance may suffer for end-use customers in all cases.

n Few owners give coin-op customers an incentive to save water or energy.

Most operators use a constant load price, regardless of water fill height or

cycle temperature selection.

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CCW Product Innovation

n Multiple manufacturers noted:

• CCWs, by virtue of their usage patterns, habitual overloading, etc., must be built to a

different standard than their residential models.

• Unconventional designs that operate satisfactorily in the residential market have been

met with poor CCW market acceptance in the past (spray rinse, for example).

• The CCW market is not large enough to support significant research and development

on its own. High-volume residential manufacturing allows some manufacturers to

amortize their research and development costs across a greater volume of units,

putting lower-volume manufacturers at a disadvantage.

• Intellectual property rights and investment requirements restrict the scope of design

options at higher efficiency levels.

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CCW Conversion Costs

JacfurerImpact Analysis

n Almost 100% of vertical -axis CCWs are produced domestically.

• Any standard that eliminates vertical-axis commercial clothes washers will primarily

affect US jobs and production facilities.

• The remaining US manufacturing facilities are likely to continue manufacturing

domestically only as long as changing energy efficiency requirements results in

incremental unit/factory redesigns.

• One manufacturer stated that its entire clothes washer business is at risk if vertical-axis

CCWs are eliminated.

n All CCW manufacturers agreed that:

• They would have significant stranded assets if vertical-axis CCWs were eliminated.

• Relocating abroad or outsourcing is less expensive than converting existing domestic

vertical-axis production facilities to horizontal-axis use.

n Several horizontal-axis CCW product families are already produced

abroad.

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CCW Cumulative Burden

n Besides the Federal standards , CCW manufacturers have to meet several

differing State energy efficiency standards.

n Multiple CCW manufacturers export to Canada, which has its own set of

standards.

n The LVM is likely to be affected disproportionably relative to its

competitors, since the LVM derives most of its clothes washer revenue

from CCW sales.

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Other Issues

The Department welcomes comments and recommendations from

stakeholders on any aspects related to the Preliminary Manufacturer

Impact Analysis.

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Energy Conservation Standards for

Residential Dishwashers, Dehumidifiers, Cooking Products and

Commercial Clothes Washers

ANOPR Public Meeting

Life-Cycle Cost Analysis

Building Technologies Program

Office of Energy Efficiency and Renewable Energy

U.S. Department of Energy

December 13, 2007

EE-2006-STD-0127 COMMENT 23.4
ANOPR Analyses Flow Diagram

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EE-2006-STD-0127 COMMENT 23.4
#23.4

Purpose

n Energy Use and Water Use Characterization

• To develop energy (and water) consumption savings estimates for selected

product efficiency levels.

n Markups for Equipment Price Determination

• To characterize the channels for how equipment is distributed from the

manufacturer to the customer.

• To determine prices paid by customers based on manufacturer selling prices

for baseline and higher efficiency equipment.

n Life-Cycle Cost and Payback Period Analyses

• To develop the customer life-cycle cost savings and payback period for higher

efficiency equipment.

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ANOPR Issues for Public Comment

n Dishwasher Efficiency and its Impact on Cleaning

Performance (Issue #7)

n Dehumidifier Use (Issue #8)

n Commercial Clothes Washer Per-Cycle Energy

Consumption (Issue #9)

n Commercial Clothes Washer Consumer Prices (Issue #10)

n Repair and Maintenance Costs (Issue #11)

n Efficiency Distributions in the Base Case (Issue #12)

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Dishwashers: Annual Energy and Water Use

n Annual energy and water use = Per-Cycle Use x Number of Cycles per year

n Per-cycle energy use components

• Water-heating

• Machine

• Drying

n Per-cycle water use is proportional to per-cycle energy use

n Average number of cycles per year = 215

• Variability in the number of cycles based on data from the 2001 RECS

n Annual energy and water use of baseline dishwasher (0.46 EF)

• Energy use = 485 kWh/year

- Water-heating = 295 kWh/year

- Machine, drying, and standby = 190 kWh/year

• Water use = 1.8 1000-gallons/year

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