Sun, Mar 12, 2006 page12

• When it comes to white goods, the cheap cost more

  High-end refrigerators, washing machines and dryers are becoming more popular as energy efficiency transforms the market

  • NY TIMES NEWS SERVICE
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  The price of home electronics declines each year as technology advances keep making them better -- with a few notable exceptions.

  Kitchen and laundry room appliances, which are now loaded with electronics, have defied the trend over the last decade. While the average price of a laptop computer dropped 23 percent in just one year and big-screen television prices have been falling at the average rate of 30 percent a year, the average price of a dishwasher rose 10 percent in the last decade. Market analysts at the NPD Group calculate the average price of a washing machine went up 16 percent in the last two years.

  Why? Certainly the big appliances are designed to do a lot more than those made a decade ago, but so are laptops and digital cameras. You might think it is the result of high demand during the recent remodeling boom, except that demand has been far stronger for televisions and digital cameras. And white goods are made with more electronics and most are manufactured overseas, which should be bringing prices down.

  

  Michael Laue, director of the European Samsung center of investigation and development for domestic appliances, stands in a lab during the inauguration of the center in Stuttgart, Germany, on Feb. 9. The South Korean electronic group plans to quadruple sales of washing machines to 100,000 this year from 25,000 last year.

  PHOTO: EPA

  It would be easy to blame energy efficiency for the increases. The machines that are the cheapest to operate also carry the heftiest price tags. Those high-priced appliances, like front-loading washers, are still the best deal -- even when the makers wrap the energy-efficient electronics in stainless steel.

  The sales growth in appliances has been in the luxury end of the market, where consumers choose stylish products with expensive finishes. That segment has been growing faster than 10 percent a year, while the rest of the market is flat. And it is in that high-end segment where you'll find most of the energy-saving choices.

  Federal mandates that say manufacturers must make refrigerators, dishwashers, washing machines, dryers and air conditioners more energy-efficient may have inflated prices. US manufacturers like the government regulation, which began in 1987.

  "It's a public policy step that was going to work for everyone," said Joseph McGuire, president of the Association of Home Appliance Manufacturers.

  "Say you have an appliance that is 15 years old," he said. "You'd save 50 percent on energy costs with a new machine."

  The trade group estimates that US consumers will have saved 5 quadrillion British thermal units of energy and as much as 41.6 trillion liters of water by 2030. Americans, by the way, spent 5.67 percent of their income on energy last year, less than the historical average.

  The efficiency movement has also accelerated the replacement of older appliances. The federal government estimates that the typical household spends US$1,500 a year on energy bills and could save up to 30 percent, or more than US$450 a year, with machines given the Energy Star rating by the Department of Energy.

  An analysis made in 2003 by Ronald Sutherland, an economist and law professor at George Mason University, estimated that consumers actually overpaid US$46.4 billion for these appliances because the mandates limited the choice to more expensive models and the new standards made it more difficult for smaller companies to compete. The macroeconomic debate is unlikely to be settled, but it raises a question of whether buying new energy-efficient machines makes sense.

  Let's say you are enamored with Whirlpool's Duet, the country's top-selling front-loaded washing machine. It is one of the more energy-efficient machines, using about 227 kilowatt-hours of electricity a year, according to a government rating that appears on the yellow Energy Guide sticker affixed to all new appliances.

  You can find one for about US$1,400 (but unless you buy a matching Duet dryer at about US$900, your laundry room will look like a squinty-eyed pirate).

  The Duet washer would cost about US$78 a year to operate, compared with US$161 a year for Whirlpool's US$549 Ultimate Care top-loader, according to a downloadable calculator on the Department of Energy Web site.

  But because the Duet costs so much to buy, the total cost of the front loader over seven years is US$1,946, or US$269 more than the Whirlpool classic top-loader.

  Guess what? It still makes sense to buy the more expensive machine. In theory, a dollar today is more valuable than a dollar in seven years. Therefore, you should be willing to pay US$318 more for something that saves you US$546 over seven years. That calculation will be useful anytime you buy a product promising future savings.

  Of course, you are also paying US$269 to let all your friends know you have style. So make sure you leave the door to the laundry room open.
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