Appliance industry sales hitting home. But consolidation, torrid pace point to change

When you're hot, you're hot -- and sales of home appliances such as washers, dryers, dishwashers, and microwave ovens in the United States have been surging to record levels in recent years. Microwave sales, in particular, have soared into the stratosphere, with some 10.6 million units sold last year. That's better than a 200 percent increase in annual sales since 1980. Analysts estimate that some 60 percent of all US households will have a microwave oven by the end of this year.

But as the meteor of microwave sales disappears over the horizon, standard products like washers, dryers, and refrigerators (in traditional white and almond colors, or in toast and platinum, if you prefer), continue to sell well -- although at a slower pace.

Sales are being pushed along by the strong rate of housing starts (prompted by lower interest rates), by higher family income levels, and by the growing need to replace old appliances in American homes. Indeed, the record sales years of 1983 and '84 may have seemed pretty dramatic in what is a very mature industry.

Still, unlike the fancy wheels and zany deals the auto industry is now engaging in, officials in the appliance industry concede that appliance retailing is rather subdued.

One company spokesman says the last really new product was the trash compactor; it came out in the late '60s. The microwave was first marketed in the '50s but did not become inexpensive until the '70s.

``There isn't much the consumer can ask for that we don't already have,'' says Leonard Schweitzer, a spokesman for Whirlpool, the industry's No. 2 manufacturer.

Yet there is a lot going on, according to Mr. Schweitzer, who says the industry is in the throes of the hottest competition and consolidation ever.

After a spate of mergers, the appliancemakers are settling into a period of uncertainty and intense competition. Household names such as Maytag, General Electric, and Whirlpool, and other important corporate players such as White Consolidated and Roper, have been eyeing one another's market share and new products, much like late-night card players looking for an edge on their opponents.

In January, for example, Whirlpool purchased the KitchenAid line of dishwashers. The company plans to use the famous dishwasher brand to market an entirely new, expanded line of major appliances under that label.

Not to be left out, Maytag acquired Magic Chef, whose wide line of more moderately priced products fits well, analysts say, with Maytag's premium-priced products.

No. 3 White Consolidated acquired Westinghouse in 1975 and Frigidaire in '79. But White is even now being absorbed by AB Electrolux, one of Europe's largest appliance manufacturers.

Dominating the appliance industry, General Electric is considered to be outdistancing the rest, making the capital investments it needs to keep ahead while expanding its market share in dishwashers, refrigerators, ranges, and washers and dryers.

``The industry has always been competitive, but it's become even more so,'' says Donna McLean, a spokeswoman for Whirlpool.

To stay up with the competition ``we've really made an effort to streamline our [seven] production facilities during the last two years.''

Competition has pushed the companies to new heights of innovation. In recent years, state-of-the art microprocessors and electronic readouts have been used increasingly to differentiate products and attract buyers. But fancy lights, features, and electronic touch pads haven't always worked.

In 1985, for example, one major air conditioner manufacturer introduced a room air conditioner with a built-in microprocessor and electronic readout to regulate temperature. The product didn't make it into '86 catalogs, says a Brookline, Mass., appliance store owner, possibly because ``some people, particularly the older buyers, were a little intimidated by it.''

Still, adding microprocessor controls to products, like washing machines, that were getting by just fine with old electromechanical controls is definitely the wave of the future. Analysts say such microprocessors, which used to be premium features, are already being offered on more medium-priced products.

It's clear, too, that appliancemakers are looking everywhere for added market share -- and providing a slew of new products to win even small market niches.

``Appliances are products everyone needs and has, but now they're marketed to the elderly, singles, and couples in all kinds of capacity choices,'' says Marian Stamos, spokeswoman for the Association of Home Appliance Manufacturers. ``Just because you're single and need a small refrigerator doesn't mean you don't want ice through the door.''

Maytag recently came out with a full-size stacked washer and dryer combination with microprocessor controls that fits nicely into a closet. Its unique asset is its size compared with other, much smaller stacked versions.

Another example of the push into new product lines can be seen with Roper, a company whose main business is supplying Sears brands. Roper brought out no fewer than 19 new products this year, including a new line of ovens. And there seems to be a payoff here.

``I've done more business in the past three months than I have since last August,'' says an exuberant Samuel Ranallo, a district sales manager with Roper.

``We stamp out 4,000 [gas and electric] ranges a day. . . . Sales are a lot better than they used to be,'' he exults.

Manufacturing on such a large scale makes for greater efficiency, widening the bottom line, Mr. Ranallo says. He says first-quarter earnings are up more than 193 percent over the previous year.

Nevertheless, industry analysts say that sales industrywide will continue at about the current 40 million-plus unit pace during the next few years. There just won't be the dramatic increases like those of '83 and '84, because a lot of people whose machines had virtually worn out during the last 10 years finally decided to go ahead and buy new ones. The average life of major appliances is often said to be 12 to 14 years.

Since that replacement demand has been largely satisfied, there's good strength in the housing market. But that alone isn't enough to make sales boom, says Russell Leavitt, an appliance industry analyst with Salomon Brothers.

``I am not bullish on the industry or the companies, but I do see some gains,'' Mr. Leavitt says.

``We've been in a slower period for over a year. Appliance manufacturers will have improvements in earnings and sales, not dramatic improvements, but they will continue to show modest gains.''

Leavitt says the appliance industry is likely to post gains in the 4 to 5 percent range, compared with record leaps in annual sales of more than 21 percent in 1983 and again in '84.

Last year sales of all appliances rose about 6 percent above the levels of those record years. More get knack of do-it-yourself appliance repair

Chances are that the poor, lonely Maytag repairman with the drooping bow tie is going to get even lonelier because of the recent boom in do-it-yourself appliance repair.

Whether it's a faulty belt on a washer or a burned out heating element on an oven, there's no question that appliance owners are increasingly willing to fix it themselves.

This trend has been helped along by major appliance manufacturers like General Electric and Whirlpool, which have put out simplified repair manuals for home repairers.

In 1976, 15 percent of the people calling Whirlpool's toll-free 800 number sought repair or installation instructions. By 1983, 34 percent were seeking repair advice.

Richard Blake, an appliance repairman for 30 years, has managed to parlay his knowledge into a lucrative business. He has captured a following of home repair enthusiasts by simply advertising that he will sell the parts and tell them how to fix their machines.

``Ten years ago the average person didn't know where or how to fix a machine,'' says Mr. Blake, co-owner of Atlantic Appliance Parts Company of Quincy, Mass.

``We started from scratch seven years ago, and we're doing over a million dollars in business today.''

Blake says it's ``amazing'' how involved some of his customers become in even intricate repair work.

``We're all former repairmen here. People can come in and describe their problem, and our counter people will try to tell them what to do.''

One of Blake's best advertising vehicles is the Yellow Pages, where his ad reads: ``If you've got the smarts, we've got the parts.''

Perhaps even more to the point is the last line of the ad: ``Don't panic -- call Atlantic.''