Household Appliance Manufacture
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Industry Overview
The US household appliance manufacturing industry consists of about 300 companies with combined annual revenue of $25 billion. Major companies include GE, Whirlpool, and the US-based operations of Electrolux. The industry is highly concentrated: the top 20 companies hold 95 percent of the market.
Competitive Landscape
Demand is driven by growth in consumer income and by home sales. The profitability of individual companies depends on efficient operations and effective marketing. Large companies have economies of scale in production, marketing, and distribution. Small companies can compete effectively by producing specialty products, subcontracting to the larger manufacturers, or producing name brand goods under contract. The industry is fairly automated: annual revenue per employee is close to $250,000.
Products, Operations & Technology
Major products are refrigerators, household laundry equipment, ovens, ranges, and vacuum cleaners. Refrigerators and freezers account for 25 percent of industry revenue; washers and dryers 20 percent; ovens and ranges 15 percent; and vacuum cleaners 12 percent. Other appliances include dishwashers, fans, microwave ovens, and water heaters.
Most appliance makers produce the body of their product from steel and plastics, and buy components like electric motors, compressors, heat elements, and controls from suppliers. Manufacturing operations consist largely of shaping metal in stamping presses with custom-built dies and assembling components. Steel, either cold-rolled, hot-rolled, or galvanized, is the major raw material. Plastics are used in making vacuum cleaner parts, as an insulating material in other products, and for the interiors of refrigerators. Painting operations are part of most manufacturing plants.
Manufacturers generally produce several models of a particular product in long production runs to achieve economies of scale. Annually, the industry produces about 10 million refrigerators, 10 million washing machines, 10 million ovens and ranges, and 7 million dryers.
Many appliance manufacturers also operate as their own distributor, and some operate retail outlets. Because of the strength of brand names, manufacturers may license a brand name or act as contract supplier for a brand name. For example, Whirlpool is a major producer of the Kenmore brand Sears owns.
Because most household appliances are fairly simple devices, the applications of technology in this industry have focused mainly on improving the manufacturing process with greater automation. Computer technology has also been applied in the design process and in the greater sophistication of appliance controls.
