US appliancemakers feel heat from foreign imports Big-ticket producers are out to prevent another 'Detroit'

US appliancemakers want to avoid becoming the next Detroit.

There are obvious differences between Datsuns and dishwashers. But appliance executives are anxiously eyeing several similarities between Detroit's plight and their own situation.

The makers of refrigerators, ranges, and laundry equipment face a tarnished reputation for product quality, slumping sales, changes in consumer life styles which may favor foreign products, and signs that Japanese producers are aiming for a significant share of the $7.6 billion US major appliance market.

''The circumstances are a little different from Detroit but not so different as not to warrant considering the Japanese high-profile competitors,'' says Ron Fountain, treasurer of White Consolidated Industries.

And Richard Donegan, who recently resigned as manager of General Electric Company's appliance division, told the appliance industry magazine Dealerscope that ''there is no doubt the Japanese are going to take a run at the appliance industry, and we have no intention of allowing to happen to us what happened to the auto industry.''

Appliance executives have firsthand experience with foreign competition, having watched Japanese companies garner 27 percent of the market for countertop microwave ranges. But until recently the industry has not had to battle foreign producers in so-called ''white goods'' like refrigerators, ranges, and laundry equipment.

Japanese companies disavow any plans for a major assault on the white-goods segment. ''It is very difficult to be competitive in this market,'' demurs a Sanyo Corporation executive who asked not to be named. Sanyo was the first Japanese company to enter the US major appliance market, which typically requires building plants in the United States because of high shipping costs. ''We are building small refrigerators which most American companies are not building.''

Sanyo refrigerators vary in size from 1.5 to 11 cubic feet, while the average US refrigerator is 18 cubic feet.

But smaller appliances are expected to get a boost from changing living patterns. More Americans are living alone, in smaller family units, or in condominiums which have less spacious kitchens than the average US home. ''Smaller spaces require smaller appliances,'' notes James M. Barry, the editor of Dealerscope.

While it is not a universally held view in the industry, many executives ''feel the trend in housing and demographics of family unit size will lead us to smaller appliances,'' Mr. Barry says.

The favorable outlook for compact appliances was behind Matsushita Electric Industrial Corporation's announcement last week that it would market a compact washer and dryer set under its Panasonic label. The company has not announced where the product will be built, a spokesman says. But Matsushita already makes microwave ovens and televisions at a factory in Franklin Park, Ill.

Laundry equipment is Matsushita's first entrance into the US white-goods market. But ''looking far down road,'' the spokesman says, Matsushita has plans to offer other major appliances here.

Japanese companies are not alone in targeting the US appliance industry as a growth opportunity. For example, the Italian company Philco Italiana is already turning out refrigerators at a plant in Chesapeake, Va., and ''it is in the long-range plan'' to produce laundry equipment at the facility, says sales administrator Jack Severts.

US producers are taking a number of steps to keep foreign makers from meeting their long-range targets. Perhaps most important, the industry has stepped up its efforts to ensure that high-quality products are built. ''We are seeing a whole new focus on quality by the industry,'' says Paul Roman, marketing vice-president of the Association of Home Appliance Manufacturers.

Surveys by the American Society for Quality Control show that only cars and toys have lower quality reputations with consumers than appliances. Still, Mr. Fountain at White Consolidated argues that quality now ''is a nonissue, due to competition between participants in the US market. This is not the kind of industry which rewards mediocrity in product.''

The industry has also made major strides in increasing productivity, according to data compiled by Charles K. Ryan, a vice-president at Merrill Lynch , Pierce, Fenner & Smith. From 1975 to 1980, the appliance industry's output per employee improved at an average annual rate of 1.7 percent (vs. an average annual productivity gain in the nonfarm business sector of only 0.4 percent). Thus the industry is in an improved position to compete with efficient foreign management.

International companies are not taking aim at the US appliance industry based on its immediate prospects. With interest rates still high and home construction in the doldrums, appliance industry sales are expected to total about 33.4 million units in 1982, up slightly from an estimated 32.4 million units in 1981. By contrast, in 1979 the industry sold 35 million major appliances.

''But quite possibly next year the industry could come alive when housing picks up,'' says Peter Sidoti, an industry analyst with Arnold Bernhard & Co., the publisher of Value Line. And Merrill Lynch forecasts that there will be a market for 200 million appliances in the next five years.

The battle for that market will require different strategies than foreign companies used to capture a major slice of the auto market. Owning a certain brand of refrigerator does not offer any status, Fountain notes. ''Refrigeration is far more of a commodity.''

And using technical innovations to win market share will be much tougher in the commodity-related appliance business than it was in automobiles, he says. ''Quantum jumps in technical superiority have been so expensive that consumers are indifferent'' to them, he says.

You've read  of  free articles. Subscribe to continue.
QR Code to US appliancemakers feel heat from foreign imports Big-ticket producers are out to prevent another 'Detroit'
Read this article in
https://www.csmonitor.com/1982/0129/012945.html
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe