Appliance manufacturers and retailers in Connecticut looking for a reprieve from the recession doldrums could see a boost in activity in the coming months as the state prepares for a new rebate program modeled after the popular “Cash for Clunkers” auto program.
“Cash for Appliances,” as some people are calling it, is a $300-million program funded through the federal stimulus package that will provide consumer rebates on Energy Star appliances.
Unlike clunkers, states will be charged with running their own program, and Connecticut is slated to receive $3.4 million. Last week, the state Office of Policy and Management submitted its application on how it intends to run the program. It calls for providing between $50 and $500 in rebates for Energy Star refrigerators, clothes washers, freezers, and room and central air conditioners.
Raymond Wilson, of OPM, said the goal is to create an incentive for consumers to purchase energy saving appliances and spur local economic activity.
“We are trying to incentivize people not to buy the cheapest thing out there, but to get the more expensive energy saving appliances,” Wilson said. “Obviously there is going to be some economic activity in the retail sector because of it, and it should also stimulate some tax revenue as well.”
OPM intends to launch the program in mid-December if the U.S. Department of Energy approves the application in a timely manner. Based on available resources, the program could run again in April and May, as well as in July, Wilson said.
OPM will provide program oversight, but it is proposing to partner with Connecticut Light & Power, Connecticut Municipal Electric Energy Cooperative and United Illuminating, to actually manage the rebates.
All three companies are experienced in managing Energy Star appliance rebate programs and currently have their own rebate programs in place, Wilson said.
“The goal is to use this rebate program in conjunction with the rebates offered by the utility companies, which could double or triple the savings,” Wilson said.
Unlike the clunkers program, customers will not have to bring their old appliances into the store, but they will have to attest that the purchased product is replacing an existing one.
OPM is projecting that the program will pay out 42,868 rebates, replace 42,439 appliances, and create nearly 40 jobs.
The program comes at a time when the appliance industry is down considerably, said Jill Notini, a spokesperson for the Association of Home Appliance Manufacturers.
Through August, appliance manufacturers are down 15 percent in terms of shipments of major appliances. In 2008, those manufacturers were down 10 percent, Notini said.
“Because of the economy, more consumers are opting to repair appliances rather than replace them,” she said.
Notini said she is uncertain about the overall economic impact the rebate program will have because all 50 states are crafting their own program, creating uncertainty about the types of appliances that will be selected in other states.
“We are certainly hopeful this program entices people to get back into the retail environment,” Notini said.
Among those looking to benefit from the program in Connecticut is Brian Schonfeld, a store manager of West Hartford-based Marc’s Appliance Warehouse.
Schonfeld said he has seen fewer people come into his 16-year-old store to buy new appliances, but he has been able to survive the recession through product repairs and replacements.
“With the economy being what it is, people are looking to fix things and put a Band-Aid on it instead of buying something new,” Schonfeld said.
By providing people incentive to purchase Energy Star appliances, which are more expensive than regular products, he said that should boost his company’s profit margin.
“We are expecting to get a lot of people to upgrade their purchases,” Schonfeld said. “That should mean more money for us.”
Connecticut manufacturers are also hoping for a boost from the program. Just last week Farmington-based Carrier Corp., a United Technologies’ subsidiary, which makes heating, ventilating and air conditioning equipment, posted a 26 percent decline in the third quarter with operating profit falling to $312 million from $421 million in the year ago period.
Neil Beup, the manager of state government affairs at United Technologies, said he is optimistic the program will provide benefits nationwide. But just as important as potentially boosting sales, Neup said the rebate program should help spur the proliferation of energy efficient products, saving money for customers in the long run as well helping the environment.
Kim Freeman, a spokeswoman for General Electric Consumer & Industrial, said the program is good news for the appliance industry. “We expect that the program, if implemented consistently, will help encourage consumers to transition to new Energy Star appliances,” Freeman said. “That will certainly help our sales and increase production in our factories which can help preserve jobs.”
