Home | Business News | Browse by Publication | M | Metal Center News

Housing slump leaves appliance out in the cold: sales of household appliances, which had been surprisingly resilient, finally felt the effects of the housing slump in 2007. Suppliers of metals to kitchen and laundry equipment manufacturers can expect further weakness this year.

Article Excerpt
[ILLUSTRATION OMITTED]

IT IS "BATTEN DOWN THE HATCHES" mode for appliance manufacturers who are being squeezed by rising material costs at the worst possible time--just as potential customers, concerned about the health of the economy, are holding back purchases.

Makers of premium appliance products are faring a little better, however, as they target more affluent customers who are not as concerned with the economic downturn. Some actually feel it's wiser to invest in their homes than in the volatile stock market, says Brian Wellnitz, marketing manager, kitchen ventilation, for Broan-NuTone LLC, Hartford, Wis., which makes kitchen range hoods. This is good news for producers and distributors of stainless steel, which tends to be featured on high-end appliances.

According to the Association of Home Appliance Manufacturers in Washington, D.C., a total of 3.86 million major appliances were shipped in January, down 17 percent from a year earlier. The decline for their "AHAM 6" appliances, which include washers, dryers, dishwashers, refrigerators, freezers and ranges, showed a 7 percent decline vs. the previous January.

For the full year 2007, the trade association reported a 6.3 percent decline for all major appliances and a 5.6 percent decline in AHAM 6 appliances vs. 2006. This was the largest decline the industry has seen in over two decades, notes Jeff Fettig, chairman and chief executive officer of Whirlpool Corp., Benton Harbor, Mich.

This is not surprising given the state of the housing market and the fallout from the subprime mortgage crisis. "While appliances and housing don't go totally hand in hand, there is a strong correlation between the two, and housing clearly is in the tank," says John Mothersole, principal for the industry practice of Global Insight, Washington, D.C.

Sales of existing homes totaled 5.65 million in 2007, down 12.8 percent from the 6.48 million sold in 2006, according to the National Association of...