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Latest in Stimulus: 'Cash for Refrigerators'

Discussion in 'Political Zone' started by WoodysGirl, Aug 24, 2009.

  1. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    By Matthew Boyle Matthew Boyle – 2 hrs 5 mins ago

    A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it's probably not enough to lift companies such as Whirlpool (NYSE:WHR - News) and Electrolux out of the worst down cycle in the sector's history.

    Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won't have to trade in their old appliances.)

    "These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy," Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

    The money can't come soon enough for the home appliance industry, which is mired in an unprecedented sales slump that began when the housing market cooled in 2006. Since then that slump has worsened considerably. Shipments of washers, dryers, refrigerators, and ovens dropped 10% in 2008 and are down 15% through July, according to the Association of Home Appliance Manufacturers. "It's brutal," says Raymond James (NYSE:RJF - News) analyst Sam Darkatsh.

    a marketing push around rebates

    The leading appliance makers have felt the pinch. Whirlpool of Benton Harbor, Mich., which controls about 40% of the U.S. market, has seen its sales drop 20% through the first two quarters of this year. North American shipments for its Stockholm-based rival Electrolux, meanwhile, have dropped for a dozen consecutive quarters. Both companies have laid off hundreds of workers, and General Electric (NYSE:GE - News) mulled shutting down an entire refrigerator plant earlier this year until deciding to keep it open with a reduced workforce.

    Not surprisingly, appliance makers cheered the news. Electrolux spokesman Tony Evans calls the federal program a "great opportunity to encourage consumers to replace their old appliances." Lately, cash-strapped consumers have chosen to repair, rather than replace, hobbled dishwashers and other water-intensive appliances, according to industry analysts. Electrolux says it is readying "aggressive" marketing programs that will run parallel with the rebates, and it's reasonable to expect appliance makers and retailers will devise additional discounts to amplify the rebates' appeal. "We will be ready to go when the new incentive programs hit the market," Evans said.

    Unlike the popular, $3 billion cash-for-clunkers vehicle program, which ends on Aug. 24, there's no guarantee that hard-hit consumers are prepared to plump for new washers, stoves, and fridges. The federal outlay will piggyback on rebate programs for energy-saving appliances that have existed for years in more than 25 states, but which have largely failed to spur demand. Home improvement retailers like Home Depot (NYSE:HD - News) and Lowe's (NYSE:LOW - News) have also offered deep discounts on big-ticket appliances lately, with little impact.

    "The cash-for-clunkers (program) had a discernible value proposition for the consumer, because he knows how much his (clunker) is worth," says Darkatsh, the Raymond James analyst. "With appliances, there is no trade-in. You can walk into Home Depot and get a great deal on a home appliance any time you want one. Why would it drum up sales now?" Laura Champine, an analyst with Cowen & Co. (NasdaqGS:COWN - News), agrees. "I'm not sure if it will be as powerful as cash for clunkers because there is something compelling about that $4,500 discount," she says. "Also, a new car is more fun than a new dishwasher. So I'm not sure if it will be as much of a driver, but any driver is welcome right now."

    Stock Market Overreaction

    Analysts also believe that the stock market's reaction to the program is overblown. Whirlpool's shares rose 6% on Aug. 20 when news of the program circulated, and climbed another 5% the following session. "That's silly," says Darkatsh. He estimates that in a best-case scenario the rebates will equate to about $240 million in incremental sales for Whirlpool. But that's unlikely, as it assumes that every American buying under the voucher program would not have done so otherwise. "The vast majority would have bought them anyway," as purchases of appliances such as fridges and washing machines are far less discretionary than, say, cars or big-screen televisions, Darkatsh says.

    The recession's ability to blunt the program's impact was underscored by a call to the California Energy Commission to discuss its approach to the rebate program. The entire state office is on unpaid furlough each Friday in August; no one picked up the telephone.

    http://news.yahoo.com/s/bw/20090824/bs_bw/aug2009db20090821304909
  2. Yeagermeister

    Yeagermeister Active Member

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    I could use a new dishwasher. Bring it on. :laugh2:
  3. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    I'd like to buy a deep freezer, but the one I want is already cheap as dirt. Can't imagine them discounting them even further.

    I've had all the major appliances the entire time I've lived in my home. Now if they want to give discounts on central A/C units, then I'll jump on that.
  4. Yeagermeister

    Yeagermeister Active Member

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    I could use a new stove and ac also.
  5. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    I've got a cooktop that's pretty old, but I really like it cuz it has a 5th burner.

    My a/c unit has gone out every year for the past 4 years. Almost always during the summer. Every repair guy that comes out says I need a new one, but I can't afford it...even with their "specials."
  6. JBond

    JBond Well-Known Member

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    There is/was a federal program for A/C and heating. I believe it is up to $1500. Plus in my area you can get another $500 from the electric company. Train A/C units also had a $1000 off in a rebate. Very tempting. Not sure if all those are still running, but they were this summer.
  7. WoodysGirl

    WoodysGirl Do it for the Vine! Staff Member

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    For some reason, I thought those were tax credits. Basically buy it and get a credit on your taxes.

    I got new insulation that I believe counts towards that energy credit. If there's a program, then I'll have to look into it.

    I'm also looking into replacing the windows on my home, as well.

    I've got to get my electricity bill down. It's unreal how high my bill gets in the summer.
  8. ShiningStar

    ShiningStar Well-Known Member

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    So we cant prove climate change is real, we cant prove any of this green crap is making a difference and we sure as heck cant ignore what China is about to do to the environment, but we can push this energy effiency crap all over the place and just as long as you are giving it for less and taking advantage of poor folk, than it must be saving the planet somehow.

    Can we say for example if these so called programs are successes, and you dont have to deem what is a success and what is failure, can we say how "green" we are all becoming and by pushing it on people, "we are green folk".
  9. JBond

    JBond Well-Known Member

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    Nothing wrong with being more efficient but government mandates to do is a horrible idea.

    Kansas city was awarded $750,000 in the pork bill to train workers to install insulation. The contract is being run by a community organizer group out of Chicago and it will two years before they train the first person.
  10. JBond

    JBond Well-Known Member

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    I believe you are correct, now that I think about it. It was a tax credit.
  11. DIAF

    DIAF DivaLover159

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    I don't believe anyone is forcing you to buy a "green" appliance. Setting aside the debate on climate change for a second, what exactly is so bad about a more energy-efficient washer or dryer?
  12. ShiningStar

    ShiningStar Well-Known Member

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    Its like you try so hard to miss all the points and still want to argue whatever it is you are seeing.

    let me phrase it this way. They are going to scream the Cash for Clunkers was a success. Okay giving people cheaper stuff is a success, but it must be noted its a "green" thing.

    Continuing down this horrible idea of continious forcing it down our throats and screaming success isnt helping anyone, except for saying "hey we can go green and it finally works" It doesnt work, you are forcing and pandering stuff to poor folk.

    Im just saying its begining to look like "as long as its green and cheap people are going to buy it and its good for the economy" Its not, but what the heck.
  13. Doomsday101

    Doomsday101 Well-Known Member

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    Nothing and if Whirlpool and other compaines want to run these deals to help increase their sales then great but I don't think the Government should be spending tax payer money on these types of deals.
  14. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    There is always going to be a give away program of some sort. The minute you stop giving away stuff, that's the minute the public asks this administration, what have you done for me lately.
  15. JBond

    JBond Well-Known Member

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    I guess I am just old fashion. I go earn my money and buy the things I want with it. Lets go back to that system.
  16. ShiningStar

    ShiningStar Well-Known Member

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    You mean, we can use the word Choose? or Choice? Or what we ourselves want?
  17. DIAF

    DIAF DivaLover159

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    Oh, sort of like you and the sugary drinks obesity thread when I said "america could stand to be less fat" and you went off on a rant about how I was telling you how to live your life or some bull**** like that? Hello pot, how are you?
  18. ShiningStar

    ShiningStar Well-Known Member

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    I will give you that, you try so hard.
  19. DIAF

    DIAF DivaLover159

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    :rolleyes:

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