Appliances Market Suffers Effects Of Housing Downturn

Despite the gloomy outlook for the housing market, the National Association of Home Builders (NAHB), which organizes this week's yearly International Builders Show in Orlando, Fla., says business is good. At least for the show.

The group reported a 15% increase in attendee registrations versus last year. The annual confab--the housing industry's largest annual light construction trade show and exhibition, which runs through Friday--also posted a 37% increase in product dealer/distributor registrants.

The show is also a venue for major appliance makers like Whirlpool, General Electric, Maytag and Sears' Kenmore brand to show their wares. But Laura Champine, appliance market analyst for the N.Y. office of Memphis, Tenn.-based investment firm Morgan Keegan, says the appliance industry is feeling the pinch of the ongoing housing-foreclosure nightmare.

Indeed, the Association of Home Appliance Manufacturers posted dour results for 2007. The industry group's year-end review reported that sales of cooking appliances were down 10%; laundry appliance sales were off 6.3%; kitchen cleanup appliances dropped 5.5%; and sales of refrigerators and freezers slid 6.3%. The only segment of the major appliance market that stayed flat was home comfort, including dehumidifiers and air conditioners.



Champine says the decline is the worst for appliances in two decades. "The decline in new-home starts accounted for most of decline," she says, adding that new home construction accounts for between 15% and 20% of the major appliance market, "so there has to be very significant decline to have that kind of impact."

Champine says that as a result of plummeting housing and consolidation of the appliance market with big-box retailers, fewer appliance makers attend both the Builders Show and the Kitchen and Bath show in Chicago.

"I think that actually, LG and Samsung pulled out of the builders show, and am not sure some of the big guys bother to go to Kitchen and Bath," she says. "In general, there's a move away from the shows because the builder market is weak, and the big dealers can see product whenever they want." She points out that Sears, Lowe's and Home Depot combined comprise half of the major appliance industry.

She adds that while the drop has affected both mass and premium brands, it has probably had a greater impact on GE's bottom line because builders tend to use GE appliances, "so they have suffered more than other brands."

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