Major Household Appliances PRODUCTION • CONSUMPTION • TRADE Selected Foreign Countries U.S. DEPARTMENT OF COMMERCE THE PENNSYLVANIA STATE UNIVERSITY LIBIW DC; ,J Business and Defense Services Administration University Library -■ ■•: ' For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25 D.C. Price 75 cents J& w^ Major Household Appliances PRODUCTION e CONSUMPTION • TRADE Selected Foreign Countries U.S. DEPARTMENT OF COMMERCE Frederick H. Mueller, Secretary Business and Defense Services Administration William A. White, Sr., Administrator Consumer Durable Goods Division Edward R. Killam, Director Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://archive.org/details/majorhouseholdapOOunit Foreword This publication discusses production, consumption, and trade of selected ma- jor household appliances in various countries of the world. Emphasis is given to competitive factors, market potential, trade opportunities, and other factors of in- terest to U.S. industry. Special appreciation is extended to the following members of the U.S. Foreign Service and others at Foreign Service posts abroad who supplied the basic data: Australia : Paul L. Aylward, Jr. I. MacDiarinid Austria : Robert B. Rosselot K. Doepfl Belgium : J. W. Vander Laan Y. Pottier Brazil : G. S. Pierce D. D. Hanierman Chile : Dale M. Povenmire R. Gatica Colombia : M. C. Bozzelli F. H. Thomas Cuba: Edward P. Kardas Denmark : F. X. Collopy H. Grut Federation of Malaya: Daniel P. Sullivan Finland : E. Maentakanen France : M. R. de Capua Hong Kong, British Crown Colony : W. A. Brown COUNTRY AND CONTRIBUTOR India: B. S. Sahi K. B. Singh Italy : D. W. Coster M. Notari G. B. Scandelli R. R. Melone Japan : R. N. Benson H. Ushijima K. Kamiyama Lebanon : H. Ayoub Luxembourg : Robert Taylor J. Faber Mexico : C. A. Gendreau Netherlands : Edward W. M. Bryant J. A. Surig Pakistan : D. X. Menezes Paraguay : Richard Rueda, Jr. Peru : C. Carnilloni Republic of Panama : Eugene J. Bashe Republic of the Congo : Owen W. Roberts Republic of the Philippines : L. C. Limjoco Portugal : Thomas D. Kingsley M. S. Nunes Spain : John E. Williams P. V. Castro Sweden : B. Olin Charles J. Barrett Switzerland : O. B. Moussman Union of South Africa : R. C. Carlucci Mary G. Crain United Kingdom : R. B. Parke W. Nicoll Uruguay : George W. Landau A. J. Barcelo Venezuela : Russell E. Olson West African Countries (French- Speaking) : J. A. Harary West Germany : R. C. Huffman Value figures have been converted from national currencies to U.S. dollar equivalents at applicable exchange rates. Only selected foreign countries are treated in this survey. Further details on any of these countries or basic data on other countries may be obtained from the Consumer Durable Goods Division. This publication was prepared by Mary A. Chorba, under the direction of John V. McCarthy. September 1960. WILLIAM A. WHITE, SR., Administrator, Business and Defense Services Administration. 111 Contents Page Foreword iii World Trade in Major Household Appli- ances: An Overall View 1 Market Factors 1 Import Controls 1 Suitability of Appliances 1 Electric Current Characteristics ... 2 Cost of Electricity 2 Credit Terms 2 Living Customs 2 Repairs and Maintenance 2 The U.S. Role as an Exporter 3 Canada 9 Latin America: Brazil 19 Chile 23 Colombia 25 Cuba 28 Mexico 31 Paraguay 39 Peru 42 Republic of Panama 45 Uruguay 48 Venezuela 50 Europe: Austria 55 Belgium 58 Page Europe — Continued Denmark 63 Finland 66 France 70 Italy 78 Luxembourg 82 Netherlands 83 Portugal 88 Spain 91 Sweden 93 Switzerland 98 United Kingdom 103 West Germany 110 Africa: Republic of the Congo 117 Union of South Africa 120 West African Countries (French-Speak- ing) 125 Middle and Far East: Australia 127 Federation of Malaya 129 Hong Kong, British Crown Colony ... 132 India 134 Japan 137 Lebanon 142 Pakistan 143 Republic of the Philippines 146 World Trade in Major Household Appliances: An Overall View As world production and trade have expanded since World War II, levels of consumer income have risen in many countries — particularly among the middle and lower income groups. These groups, which represent a large market potential, are anxious to satisfy pent-up desires for house- hold appliances, and many of them have already done so. Yet, despite increased worldwide sales of appli- ances, market saturation remains low in many countries of the world. In Finland, for example, only 25 percent of the households are equipped with washing machines and 17 percent with vacuum cleaners; approximately 17 percent of French, and 5 percent of Japanese households, have refrigerators. On the other hand, the saturation rate in the United States is 93 percent for washers, 73 percent for vacuum cleaners, and 98 percent for refrigerators. Consumers abroad show a marked preference for appliances of U.S. manufacture because of their styling and technical advancement. How- ever, aside from foreign competition and trade barriers, a number of other marketing factors affect U.S. sales of appliances abroad. MARKET FACTORS Import Controls Immediately after World War II, many coun- tries imposed rigid import restrictions because of their limited supplies of foreign exchange, re- duced production capacity, and an exceptional demand for imports. These restrictions have since been somewhat relaxed, but many countries still retain varying degrees of control over im- ports, including those from the United States. Methods of control vary greatly in each country, but usually provide for a graduated range of restrictions, under which items are rated accord- ing to essentiality and to the availability of the exporting coimtry's currency. Individual im- port requests are also considered on a case-by- case basis, and licenses are granted according to prevailing conditions. Less-developed countries, the best potential markets, usually maintain stricter import con- trols than countries having more advanced economies. They do this to protect their balance- of -payment positions and to assure a steady sup- ply of the goods essential to their economic development programs. Therefore, they have tended to permit imports of needed raw materials and capital equipment from the dollar areas and to restrict finished appliances rather severely. Suitability of Appliances Probably the most important factor in sales of American appliances is suitability of the appli- ance to the particular foreign market. In Bel- gium, for example, over 80 percent of the refrigerators sold are under 8-cubic-foot capacity. Consumers prefer to market daily, thus obviating the need for a larger refrigerator, and frozen foods are virtually nonexistent. On the other hand, Brazilians prefer large-size refrigerators, desiring to market once a week for their fami- lies — which are frequently large. Many foods, such as salt and bread, not normally kept under refrigeration in the United States are refriger- ated in Brazil. The moist climate causes rapid deterioration of food, and distribution is often made without refrigeration. Often a slight and easily made modification will greatly increase sales of American appli- ances. For example, a scaled-down version of a more costly American range was sold with some success in Peru in 1958 against competition with comparable European makes. Electric Current Characteristics Adequacy and availability of electric current abroad are also important market factors. In the United States, the electric current characteristics are 118/236 volt, 60 cycle, 3 wire, single phase, without a power restriction on the 236-volt line. In most other countries, the power supply differs, and many countries have power restrictions and fluctuating current. A common misconception is that a transformer is the remedy for all elec- trical problems. A transformer actually does nothing more than step up or down the voltage, and does not affect the difference in cycle fre- quency. Furthermore, a transformer's use should be limited to equipment of comparatively low wattage consumption. The difference between the domestic 60-cycle and the foreign 50-cycle current presents a prob- lem that can be most critical. When 60-cycle appliances are operated on 50 cycles, all machines having timing mechanisms, or operated by motors, will run slower and longer for any given setting ; and on some appliances, the motors, solenoids, and timing devices may burn out. Electric Current Abroad, published by the U.S. Department of Commerce and available for 25 cents from the Superintendent of Documents, Washington 25, D.C., or Department of Com- merce Field Offices, lists the characteristics of electric current available in principal foreign cities throughout the world. Cost of Electricity The high cost of electricity in some areas often limits sales of appliances. In the Philippines, for example, a drawback to the widespread use of electrical household appliances is the exorbi- tant cost of electricity hi most population centers outside Manila. Likewise, in Venezuela and the Congo the cost is prohibitive for all but the higher income groups. Credit Terms Attractive credit terms offered by traders in major exporting countries are a decisive factor in taking business away from U.S. exporters. The foreign credit systems are usually based on a governmental guarantee against losses to lending institutions and exporters. The extent of the guarantee varies, but creditors can still give longer payment terms than they could otherwise. As in consumer installment credit, the length of terms varies according to the nature and value of the sale. In Panama, the availability of credit rather than selling price reportedly determines sales prospects. Credit terms are extremely important to importers of electrical appliances in Peru. In Austria, American exporters' insistence on pay- ment in advance or upon receipt of merchandise is considered an obstacle to increased trade. Living Customs Some marketing factors are unique to certain countries because of living customs. In some areas, the widespread employment of domestic servants by the upper income group makes un- likely larger increases in sales of laborsaving ap- pliances, such as washing machines and vacuum cleaners, although the growing middle-income group is a potential market. Homeowners in Hong Kong and the Philippines who can afford washers usually employ unskilled, low-paid serv- ants to do the washing by hand. Likewise, in Spain the majority of people above the laboring class now employ servants. In some areas, not- ably Paraguay and Venezuela, only a small market exists for vacuum cleaners because rugs are not used ordinarily. Floors are usually ter- razzo and are maintained with floor polishers. Repairs and Maintenance Repair and maintenance service for electrical appliances of U.S. manufacture is adequate in most countries. Facilities for servicing refrigera- tors in the West African Countries are inadequate because of a shortage of qualified technicians, and service charges are excessive. Spare parts are usually imported after a refrigerator has broken down. In Pakistan and Paraguay, service facili- ties are poor. Austrian firms are reluctant to invest in stocks of spare parts, which are soon made obsolete by rapid changes of models. THE U.S. ROLE AS AN EXPORTER The United States, long a major exporter of household appliances, faces increased competition in world markets. The post-World War II eco- nomic resurgence of Western Europe and Japan especially has resulted in increasing trade com- petition. For example, just before World War II, in 1939, the United States produced about 90 per- cent, or 1.9 million units, of the world's total annual refrigerator output of 2 million units. In 1958, U.S. production accounted for only about 37 percent of the world's production of 8.6 mil- lion units. Estimated production of assembled or fully manufactured compressor- and absorption-type refrigerators by selected countries was as follows in 1955, 1958, and 1959: Country 1956 1958 1959 Argentina 110,000 194,600 184,600 Australia 247, 000 219, 800 231, 000 Austria 28,000 60,300 49,900 Belgium 3,000 12,000 12,000 Brazil 125,000 174,000 181,000 Canada 248,000 213,000 256,600 Chile 45, 000 45, 000 n.a. Colombia 6,750 7,700 Denmark 33,500 49,000 59,000 Finland 18,500 16,000 22,400 France 250, 000 675, 600 720, 000 Country 1965 1958 India 525 1,900 Italy 140,000 500,000 Japan 30,600 414,800 Lebanon 100 Luxembourg 1,000 Mexico 32,000 44,600 Netherlands 3, 500 Norway 48, 000 32, 500 Paraguay 50 100 Philippines 2, 600 2, 600 Spain 15, 000 15, 000 Sweden (including freezers) 189,000 200,000 Switzerland 50, 000 50, 000 Union of South Africa 20, 000 30, 000 United Kingdom, _ . 325, 000 562, 200 Uruguay 33, 000 30, 000 U.S.S.R 200,000 360,000 West Germany 514,000 1,600,000 United States 4, 200, 000 3, 1 1 7, 000 Total 6, 907, 775 8, 631, 350 n.a. — Not available. U.S. exports of major household electrical appliances by country of destination for repre- sentative years are shown in table 1. Exports by major type of appliance appear in table 2. Ex- ports of appliance parts, not presented in all tables, are in many cases substantial in volume. 1959 3, 800 750, 000 549, 000 n.a. 20, 000 44, 000 4, 000 39, 200 n.a. 5, 000 n.a. n.a. n.a. 18, 000 994, 300 21, 000 n.a. 1, 900, 000 3, 750, 000 555532—60- Table 1. — U.S. Exports of Household Electrical Appliances, by 15 Major Destination.:, 1955, 1958, and 1959 [Quantity in units ; value in dollars] Country of destination 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machi nes, nonautomatic Total, all countries Total, 15 major countries Canada Chile Costa Rica Cuba Guatemala Iran Iraq Jordan Lebanon Mexico Netherlands Antilles Panama, Republic of Peru Saudi Arabia Venezuela Total, all countries Total, 15 major countries Canada Costa Rica Cuba Guatemala Iraq Lebanon Mexico Morocco Netherlands Panama, Republic of Sweden Switzerland Union of South Africa Venezuela West Germany 39, 000 3, 255, 068 33, 898 2, 989, 022 35, 531 3, 340, 723 29, 560 2, 412, 879 30, 091 2, 626, 068 33, 028 3, 108, 559 10, 834 758, 063 8, 191 640, 624 8, 221 663, 256 419 44, 786 156 17, 876 226 30, 054 1, 651 137, 572 893 81,021 744 69, 352 1, 805 141, 129 1,203 80, 606 380 34, 680 77 7, 864 226 33, 342 171 16, 586 50 5, 251 73 8, 141 289 25, 515 254 22, 907 698 79, 748 752 82, 366 11 953 180 16, 784 222 22, 818 1, 549 115, 111 1, 746 139, 275 2,015 175, 521 2,000 88, 563 364 27, 250 302 40, 353 549 49, 680 1, 143 100, 823 1, 156 106, 216 566 49, 685 285 29, 190 389 36, 284 1, 173 101, 805 1,617 155, 975 944 85, 329 102 10, 203 255 20, 290 302 29, 153 8,520 879, 307 13,061 1, 195, 123 16,915 1, 691, 076 Washing machines, semi- and fully automatic 43, 642 6, 558, 011 54, 181 8, 261, 352 67, 180 10, 021, 380 33, 878 4, 964, 671 46, 480 7, 120, 782 60,312 8, 950, 130 18, 496 2, 660, 723 21, 877 3, 578, 490 34, 511 5, 285, 193 313 42, 230 909 169, 096 940 120, 368 2, 124 245, 728 2, 632 338, 200 1,990 255, 784 373 61, 330 795 129, 841 604 117, 412 198 31, 716 234 32, 339 738 90, 160 245 32, 939 553 58, 930 515 57, 501 853 147, 814 697 151, 700 854 166, 432 691 103, 513 316 47, 813 292 37, 918 152 20, 252 1,029 157, 514 1,402 214, 321 384 58, 589 762 109, 511 755 111,391 1,322 226, 081 421 77, 605 796 127, 700 966 447 156, 790 58, 524 798 194 128, 107 23, 630 941 257 171, 922 32, 586 6, 644 1, 016, 973 14, 746 2, 005, 343 15, 124 2, 016, 333 680 101, 469 517 112,663 593 145, 109 1 Table 1. — U.S. Exports of Household Electrical Appliances, by 15 Major Destinations, 1955, 1958, and 1959 — Continued Country of destination 1955 Quantity Value 1958 Quantity Value 1959 Quantity Value Total, all countries. Total, 15 major countries. Bahamas Belgium Bermuda Canada Cuba Greece Guatemala Iran Lebanon Mexico Panama, Republic of_ Peru Portugal Switzerland Venezuela 69, 061 66, 215 147 Total, all countries Total, 15 major countries Canada Canal Zone Costa Rica Cuba Dominican Republic Ecuador El Salvador Guatemala Jamaica Kuwait Peru Philippines, Republic of Trinidad United Kingdom Venezuela 60, 120 524 58 24 27 51 3,643 173 487 36 211 714 Vacuum cleaners 2, 582, 265 2, 453, 917 6, 553 2, 202, 992 20, 118 2,682 1,090 1,250 2, 138 144, 224 7,933 19, 537 1,621 13, 500 30, 279 105, 136 102, 893 186 118 46 97, 378 748 216 202 116 72 830 30 609 402 955 985 3, 731, 288 3, 629, 209 7, 650 4,393 2, 341 3, 396, 390 27, 151 7,255 7,551 4,203 3,548 25, 816 1,500 24, 191 14, 511 55, 913 46, 796 128, 602 127, 594 110 239 189 122, 679 274 246 111 163 107 640 328 349 356 317 1,486 Ranges 4, 369, 302 4, 313, 870 5,560 9,543 7,547 123, 851 9,759 9,069 5,357 6,311 4,560 19, 402 11,215 8,892 12, 636 19, 157 61,011 33, 910 4, 127, 776 20, 436 2, 673, 028 13, 098 1, 901, 179 30, 071 3, 600, 391 17, 002 2, 160, 034 11,081 1, 555, 440 23, 090 2, 686, 225 4, 193 579, 676 3,919 627, 321 673 53, 000 411 50, 086 474 49, 639 222 27, 190 457 61, 325 509 64, 988 2,475 277, 851 7,267 776, 112 2,542 268, 812 266 38, 126 342 51,701 213 28, 433 199 31, 657 143 21, 960 159 23, 882 240 35, 980 324 48, 931 312 45, 613 97 16, 820 807 119, 511 521 80, 210 193 21, 758 222 34, 851 249 35, 214 74 10, 209 149 29, 153 165 26, 793 704 98, 050 1,581 202, 700 706 95, 906 502 84, 967 263 54, 818 338 67, 853 4 672 101 13,756 214 29, 784 21 4,066 106 20, 393 238 36, 143 1, 311 213, 820 636 95, 061 522 74, 849 Table 1. — U.S. Exports of Household Electrical Appliances, by 15 Major Destina ions, 1955, 1958, and 195& — Continued Country of destination 1955 1958 1959 Quantity Value Quantity Value Quantity Value Total, all countries. Total, 15 major countries- Belgium Canada Cuba Ecuador Iran Jamaica Kuwait Netherlands Sweden Switzerland Thailand Trinidad Union of South Africa. Venezuela West Germany Total, all countries Total, 15 major countries Canada Cuba Dominican Republic El Salvador Greece Hong Kong Iran Iraq Kuwait Lebanon Netherlands Antilles Peru Portugal Union of South Africa Venezuela Refrigerators 303, 632 211,980 92, 917 29, 497 2,055 2,051 2,290 2, 104 9,041 4,968 842 10, 235 1,641 10, 432 3, 100 9,608 31, 199 49, 072, 973 33, 482, 629 14, 4, 169, 370 145, 874 359, 863 396, 236 401, 691 329, 195 532, 434 915, 784 155, 098 875, 797 267, 201 640, 774 495, 516 558, 372 239, 424 308, 051 237, 085 87, 500 35, 075 5,013 3,459 2,836 2,514 9, 159 5,540 1,363 6,946 2,576 9, 511 4, 109 6,364 55, 120 47, 142, 341 34, 920, 284 12, 134, 103 4, 430, 994 773, 047 658, 234 473, 553 400, 606 1, 500, 739 967, 427 241, 953 1, 208, 105 409, 145 1, 473, 417 627, 555 1, 016, 307 8, 605, 099 265, 435 211, 324 73, 088 21, 031 3,265 2,522 2,964 2,507 15, 818 5,671 2, 101 5,794 2, 765 3,665 4,634 4,402 61,097 Farm and home freezers 56, 758 53, 214 314 44, 685 545 572 253 117 168 275 3,240 674 167 138 189 1,582 295 11,568,622 10, 783, 567 50, 518 8, 959, 235 103, 814 118, 209 64, 887 23, 786 38, 218 45, 545 758, 952 137, 623 36, 131 32, 003 37, 377 316, 774 60, 495 62, 746 58, 623 1,007 47, 603 529 613 199 261 130 545 3,329 735 282 203 447 1,507 1,233 11, 083, 436 10, 147, 669 69, 563 8, 132, 840 96, 818 130, 975 47, 125 58, 665 27, 024 107, 332 565, 935 192, 198 61, 702 47, 557 95, 180 292, 800 221, 955 57, 301 53, 455 999 40, 228 437 206 464 396 341 1,474 5, 468 554 357 224 585 1, 286 436 42, 644, 425 32, 876, 707 10, 767, 613 3, 096, 134 502, 708 464, 010 450, 262 410, 421 2, 654, 083 955, 572 363, 332 945, 529 412, 025 596, 957 660, 193 742, 758 9, 855, 110 10, 361, 531 9, 492, 837 162, 581 6, 998, 836 81,312 45, 211 109, 748 89, 323 70, 664 284, 122 890, 146 144, 319 73, 424 50, 027 131, 243 260, 574 95, 307 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of Census, U.S. Department of Commerce. TAbLe %.^Value of U.S. Exports of Household Appliances, by Major Type, 1955-59 [In thousands of dollars] Product description 1955 1956 1957 1958 1959 Electric washing machines, nonautomatic, including wringer type Electric washing machines, automatic and semiautomatic, including combinations Electric washing machine parts Electric or gas clothes dryers, automatic Electric laundry equipment and parts, n.e.c Electric dishwashers Electric vacuum cleaners Electric vacuum cleaner parts Electric refrigerators Electric farm and home freezers Complete mechanical refrigerating systems for electric re- frigerators and freezers Parts n.e.c. for electric refrigerators and freezers Mechanical refrigerators and farm and home freezers, except electric Parts for mechanical refrigerators and freezers, except electric Electric cooking ranges, over 2}i kilowatts Electric cooking range parts Electric cooking appliances and utensils and parts, n.e.c Electric heating appliances and parts, n.e.c Gas cooking stoves and ranges Kerosene cooking stoves and ranges Other cooking stoves and ranges, except electric Gas heating stoves and space heaters Kerosene heating stoves and space heaters Other heating stoves and space heaters, except electric Parts n.e.c. for nonelectric cooking and heating stoves and water heaters Total 3,255 6,558 4,002 n.s.s. 2,270 908 2,582 998 49, 073 11, 569 2,028 14, 007 2,426 450 4, 128 4,019 3,828 1,743 6,917 5,470 551 636 2,298 480 4,807 135, 003 3, 189 8,313 5,492 n.s.s. 3,021 1,383 3,273 1,289 51, 115 10, 344 1,375 14, 771 588 292 3,338 5, 126 3,820 2,012 7,794 4, 167 486 962 2,813 639 5,911 3, 021 9,072 5,080 n.s.s. 2,696 1,450 3, 608 1,072 48, 268 9,812 1,634 11,474 650 237 2,737 4,241 3,921 1,841 7,410 3,878 539 947 2,008 605 5,469 2,989 8,261 5,404 1,996 1,085 1,810 3,731 1, 187 47, 142 11,083 1,058 9,357 933 274 2,673 4, 132 4,041 2,203 6,885 4, 175 403 919 995 1, 110 6,449 141,513 131, 670 130, 295 3,341 10, 021 5,216 2,911 1,370 2,300 4,369 1,469 42, 644 10, 362 1, 515 9,433 983 232 1,901 4,990 4,234 2,119 7,077 4,852 462 925 887 1,079 6,678 131, 370 n.e.c. — Not elsewhere classified, n.s.s. — Not shown separately. Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Canada Production The manufacture of household electrical appli- ances is one of the largest industries in Canada. Production of major household appliances in 1959 increased over 1958, although refrigerator volume did not reach the peak attained in 1956. In 1959, some 15 firms accounted for total pro- duction of 314,166 washing machines. The pro- portion of automatic machines to total output in- creased from 14.5 percent in 1954 to 24.6 percent in 1959, as shown in table 3. Table 3. — Canada: Production and Factory Shipments of Domestic Washing Machines, 1954-59* [Quantity in units; value in US$1,000] Production (units) Factory shipments Year Auto- matic Conven- tional Total Automatic Conventional Total Quantity Value 2 Quantity Value 2 Quantity Value 2 1954 1955 1956 1957 1958 1959 30, 391 31,049 54, 777 51, 752 60, 676 77, 294 179, 499 231, 007 240, 042 212, 927 241, 058 236, 872 209, 890 262, 056 294, 819 264, 679 301, 734 314, 166 27, 629 36, 782 49, 765 52, 569 59, 984 75, 769 5, 597 7,236 9, 441 10, 756 n.a. n.a. 191, 560 236, 798 250, 406 220, 536 235, 786 238, 766 19, 253 23, 034 23, 884 21, 143 n.a. n.a. 219, 189 273, 580 300, 171 273, 105 295, 770 314, 535 24, 851 30, 270 33, 324 31, 899 n.a. n.a. n.a. — Not available. 1 Does not include apartment-type or gasoline-powered machines. (Production of gasoline-powered units totaled 4,048 in 1959 and has averaged 4,850 annually over the past 6 years.) 2 Manufacturers' value. Source: Dominion Bureau of Statistics, Industry and Merchandising Division. Dominion statistics indicate that seven firms noted in table 4, factory shipments for earlier manufacture vacuum cleaners. Although produc- years will give some indication of actual tion figures are available only for 1958-59, as production. Table 4. — Canada: Production and Factory Shipments of Domestic Vacuum Cleaners, 1954-59 [Quantity in units; value in US$1,000] Production (units) Factory shipments Year Upright floor models Cylinder models ' Total Upright floor models Cylinder models ' Total Quantity Value 2 Quantity Value 2 Quantity Value 2 1954 1955 1956 1957 195S 1959 n.a. n.a. n.a. n.a. 28, 399 35, 618 n.a. n.a. n.a. n.a. 129, 881 131,670 n.a. n.a. n.a. n.a. 158, 380 167, 288 22, 801 19, 795 20, 727 22, 516 25, 940 34, 619 1, 565 1,360 1,567 1,753 n.a. n.a. 88, 381 125, 711 145, 621 126, 252 129, 770 129, 878 4, 882 6,928 8,236 7,355 n.a. n.a. 111, 182 145, 506 166, 348 148, 768 155, 710 164, 497 6,447 8,288 9,803 9,108 n.a. n.a. n.a. — Not available. ' Includes other straight-suction types. * Manufacturers' value. Source: Dominion Bureau of Statistics, Industry and Merchandising Division. 9 Production figures on electric cooking ranges are again used in table 5 to indicate production for available only for 1959, and factory shipments are earlier years. Table 5.- — Canada: Production and Factory Shipments of Household Electric Cooking Stoves or Ranges, 1954-59 [Quantity In units; value in US$1,000] Production (units) Factory shipments Year Electric (3 or 4 elements) with ovens Combination electric and solid fuel or oil Electric, over 35 amperes, with ovens Combination electric and solid fuel or oil Quantity Value > Quantity Value 1 1954 ..... . . ... n.a. n.a. n.a. n.a. n.a. 2 253, 081 n.a. n.a. n.a. n.a. n.a. 7, 139 167, 716 199, 132 217, 159 194, 178 n.a. 244, 938 26, 030 31, 367 33, 757 31, 638 n.a. ( 3 ) 8, 275 8, 226 9,639 8, 604 n.a. 7,036 1, 884 1955. .. . . -____-_ --___.. 1, 896 1956 . 2, 156 1957. __ -. ------ -_-_-_ - _ . 2, 156 1958 . - — _. n.a. 1959- - ----- -- 1, 733 n.a. — Not available. i Manufacturers' value. ' Some 15,201 built-in electric cooking ovens and 15,152 built-in electric cooking top mountings were also produced. > Combined shipments of electric ranges, 13,134 built-in electric cooking ovens, and 13,341 built-in electric cooking top mountings amounted to $41,030,058. Source: Dominion Bureau of Statistics, Industry and Merchandising Division. After a decline in 1958, resulting in the lowest unit volume of production since 1949, refrigerator output of 256,566 units in 1959 improved substan- tially. However, volume did not approach that of 1956, or of 1950, when factory shipments totaled 341,596 units. Manufacture of home freezers reached a new high of 51,769 units in 1959. Production and factory shipments of refriger- ators and freezers for the period 1954-59 are shown in table 6. Of a total of 15 producers of refrigerators and freezers covered by official statistics, 11 manu- factured refrigerators and 12 manufactured freezers. No breakdown of production is avail- able by electric and gas units. The majority of appliance producers are located Table 6. — Canada: Production and Factory Shipments of Domestic Mechanical Refrigerators ' and Electric Home and Farm Freezers, 195^-59 [Quantity in units; value In US$1,000] Production (units) Factory shipments Year Refrigera- tors Freezers Refrigerators Home freezers • Quantity Value 2 Quantity Value 2 1954-. .- -. 236, 022 247, 629 293, 348 217, 649 213, 006 256, 566 9,090 11, 995 12, 129 24, 127 30, 981 51, 769 229, 964 271, 532 269, 213 235, 539 224, 193 239, 137 45, 236 50, 242 48, 202 44, 250 n.a. n.a. 8, 159 13, 081 12, 691 20, 908 32, 230 47, 460 2,232 1955 3, 343 1956 3,227 1957 4,818 1958 n.a. 1959 n.a. n.a. — Not available. 1 Includes electric and gas units. 2 Manufacturers' value. Source: Dominion Bureau of Statistics, Industry and Merchandising Division. 10 in or near Toronto or Hamilton, Ontario; and two large producers are located in Montreal, Que- bec. Most of the remaining plants are located in other areas of Quebec and Ontario. In 1957, production employees in the Canadian electrical apparatus and supplies industry worked an average of 40.3 hours per week and received average annual wages of U.S.$3,660. Hourly wages in the industry averaged $1.89 for male employees and $1.35 for female employees. Consumption The high level of income and the relatively low cost of electricity in Canada have contributed in large measure to the tremendous growth in con- sumption of electrical household appliances. Results of a survey, covering approximately 98.6 percent of all households in Canada, indicate the number of households having electricity and the number equipped with major appliances. This information appears in table 7. Table 7. — Canada: Households With Electrification and Households Equipped With Major Appliances, 1956-59 1 [In thousands of units] House- holds covered by survey House- holds with electrifi- cation Washing machines Vacuum cleaners Electric stoves 2 Refrigerators Home Year 1 Electric Other mechanical freezers Electric Gasoline 1956 1957 1958 1959 3,974 4,053 4, 173 4,303 3,739 3,870 4,015 4, 164 3, 226 3,356 3,517 3,688 118 94 84 64 2, 199 2,356 2,543 2,726 1, 797 1,970 2,082 2,271 3, 143 3, 319 3.555 3,794 43 43 44 39 271 297 341 418 1 Presumably figures are for Jan. 1 of each year. 1 Includes combination electric and wood or coal stoves. Source: "Household Facilities and Equipment" (May 1959), Special Service Division, Dominion Bureau of Statistics. Based on the above-mentioned survey, satura- Imports tion ratios (for households with electrification) in Despite the volume of Canada's household ap- early 1959 would appear to be 87 percent for pliancQ output> the country represents the largest washing machines, 63 percent for vacuum clean- single export market for v ^ app ]iances and ers, 53 percent for electric ranges, 89 percent for parts In 19595 the United gtates accoimted for electric and other mechanical refrigerators, and 99 8 percent of the total value of imports of wash- 10 percent for home freezers. mg machines and parts into Canada ; 83.9 percent Based on the survey, annual consumption for of vacuum cleaners and parts; 99.4 percent of the period 1956-58 may be estimated as foUows e i ect ric cooking stoves of $25 or more unit value; (m units) : gg_ 9 percent of domestic and store refrigerators 1956 1957 1958 and parts (household refrigerators are not shown Washing machines 130,000 161,000 171,000 separately in Canadian trade statistics) ; and 100 Vacuum cleaners 157,000 187,000 183,000 percent of electric home and farm freezers. Minor Electric stoves 173,000 112,000 189,000 ,. ,. TT ., ,_..., . , n Electric refrigerators 176,000 236,000 239,000 suppliers are the United Kingdom and the Home freezers 26, 000 44, 000 77, 000 Netherlands. 11 Details on 1957-59 imports of major household appliances into Canada are shown in table 8. Table 8. — Canada: Imports of Major Household Appliances, 1957-59 [Quantity in units; value in dollars] Country of origin 1957 1958 1959 Quantity Value Quantity Value Quantity Value Electric domestic washing machines United Kingdom 240 35, 721 18, 608 5, 281, 780 170 30, 959 13, 706 4, 509, 188 171 42, 039 1 11, 127 United States _ 6, 345, 903 Others 207 Total 35, 961 5, 300, 388 31, 129 4, 522, 894 42,211 6, 357, 237 Other domestic power washing machines Total (all from United States) 179 17, 869 706 132, 412 562 123, 901 Domestic washing machine parts Switzerland. - 982 821 3, 970, 755 6,696 United Kingdom. _ _ . 4,076 4, 362, 160 1,274 United States _ 5, 592, 815 Others 22 Total 4, 366, 236 3, 972, 558 5, 600, 807 Household electric vacuum cleaners Denmark . _ _ 566 10, 892 485 23, 981 2,564 100, 558 18, 824 266, 348 38, 965 522, 142 77, 956 3, 771, 110 1, 102 9,760 430 18, 412 2, 101 37, 979 229, 069 37,613 499, 352 64. 981 130 11,806 800 16, 115 1,556 132, 337 21 4,544 Netherlands 268, 370 Sweden.. _ __ . 56, 849 United Kingdom 445, 949 West Germany 48, 000 United States __ .. 104, 433 4. 035. 524 4, 800, 750 Others _________ _ . _ . ___ 50 1,484 2,644 Total . 139, 046 4, 695, 345 136, 288 4, 906, 002 162, 765 5, 627, 106 Hand v. icuum cleaners, attachments, and parts of all vacuu m cleaners Japan__ 7,928 9,262 10, 579 621, 473 1, 658, 142 5,859 17,631 7,340 8, 834 531, 796 1, 837, 530 4,361 19, 710 Netherlands 5,260 Sweden. _. . 4, 886 United Kingdom 526, 416 United States 2, 418, 139 Others ______ 3, 103 Total 2, 313, 243 2, 407, 492 2,977, 514 12 Table 8. — Canada: Imports of Major Household Appliances, 1957-59 — Continued Country of origin 1957 1958 1959 Quantity Value Quantity Value Quantity Value Electric cooking stoves ($25 or more unit value) United States __ _ _. . 8, 167 11 1, 002, 569 3, 603 6, 353 8 778, 569 3,365 4, 400 4 709, 428 Others . _ _ _ 3, 933 Total . . 8, 178 1, 006, 172 6, 361 781, 934 4, 404 713,361 Electric refrigerators (domestic or store) 1 United Kingdom. .. . ._ . West Germany 5,287 408, 664 4, 790 1,002 99, 220 22 344, 575 43, 652 16, 775, 586 2,413 4,014 78 86, 960 148 300, 199 7,919 United States 89, 375 2 16, 312, 467 199 16, 192, 840 Others _ ________ 8, 135 Total ..... 94, 664 16, 721, 330 105, 034 17, 166, 226 91, 200 16, 509, 093 Other refrigerators ' Belgium. _ _ ____._-. 208 19 2, 292 51, 425 1, 678 238, 897 15 43 3, 245 3,940 5, 123 229, 078 223 26 3,084 29 56, 097 United Kingdom _ _ _ 2, 557 United States 227, 722 Others 4, 428 Total. ... 2, 519 292, 000 3,303 238, 141 3,362 290, 804 Refrigerator parts United Kingdom. __ _ 728, 353 11, 410, 997 1,494 1, 649, 602 8, 205, 271 8, 569 3, 202, 276 United States. _ _ _ . . 12, 274, 814 Others ... _ _ . 2, 910 Total 12, 140, 844 9, 863, 442 15, 480, 000 Electric home and farm freezers United Kingdom 201 42, 145 19, 277 7, 445, 639 United States 49, 290 8, 581, 438 41, 024 7, 256, 336 Total _._ 42, 346 7, 464, 916 49, 290 8, 581, 438 41, 024 7, 256, 336 1 Equipped or not. Source: Trade of Canada — Imports, Dominion Bureau of Statistics. 13 U.S. exports to Canada of major household appliances and parts for such equipment in 1955, 1958, and 1959 are shown in table 9. Table 9. — U.S. Exports of Major Household Appliances and Parts to Canada, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 Quantity Value 1958 Quantity Value 1959 Quantity Value Washing machines: Nonautomatic Semi- and fully automatic Washing machine parts Vacuum cleaners Vacuum cleaner parts Electric ranges Electric range parts Electric refrigerators Electric freezers Mechanical refrigerating systems and other parts for electric refrigerators and freezers Other mechanical refrigerators and freezers Parts for other mechanical refrigerators and freezers 10, 834 18, 496 60, 120 23, 090 92, 917 44, 685 2, 185 758, 063 2, 660, 723 2, 467, 886 2, 202, 992 913, 074 2, 686, 225 3, 078, 594 14, 169, 370 8, 959, 235 808, 997 297, 010 165, 159 8, 191 21, 877 97, 378 4, 193 87, 500 47, 603 1, 585 640, 624 3, 578, 490 2, 782, 096 3, 396, 390 990, 983 579, 676 3, 159, 915 12, 134, 103 8, 132, 840 669, 929 173, 321 49, 038 8,221 34, 511 122, 679 3, 919 73, 088 40, 228 893 663, 256 5, 285, 193. 3, 464, 133; 4, 123, 851 1, 308, 098 627, 321 3, 728, 829 10, 767, 613 6, 998, 836 6, 339, 171 86, 237 21, 649 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 14 Canadian import duties on household appliances are as follows: Description Ad valorem rate of duty (pei cent) Sales tax 2 (per- Tariff No. British prefer- ential Most favored nation ' General cent of duty-paid value) 415 Electric vacuum cleaners and attachments therefor; hand vacuum cleaners; and complete parts of all the foregoing, in- cluding suction hose, not otherwise pro- vided for ____________ 5 20 25 415a ... . ... Refrigerators, domestic or store, completely equipped or not: (i) Electric _ 17J_(GATT) 17}_(GATT) 20(GATT) 40 (ii) Other than electric . _ _____ 20(GATT) 30 (iii) Refrigerator parts, of iron or steel or of which iron or steel or both are the component material of chief value. 7>'2 20 35 (iv) Refrigerator parts of aluminum, 11 nickel-plated, etc., or gilt refrigerator parts; all of the foregoing when for use in the manufacture of refriger- ators 3 . _ _ . ... 12J_ 20 30 415b Washing machines, domestic, with or with- out motive power incorporated therein; complete parts of washing machines. 15 22H (G ATT) 35 415c Clothes wringers, domestic, and complete parts of metal thereof 20 22}_(GATT) 35 443 Apparatus and parts thereof for cooking or for heating buildings (includes electric ranges) . _ _______ 15 22J.(GATT) 30 1 Applies to import? from the United States. 2 A general tax that applies to domestic manufactured goods as well as imported. Duty-paid value is invoice price plus duty. 3 Temporary items effective until June 30, 1962. Exports For the period 1957-59, Venezuela was the major recipient of Canada's exports of household washing machines and parts. It accounted for more than 36 percent of the total value in 1959 and 29 percent in 1958. Although the Union of South Africa's purchases of complete washing machines were not large in total, its purchases of parts in 1958 and 1959 made it the second rank- ing market for exports of washing machines and parts — 17 percent of total value in 1959 and 21 percent in 1958. Iraq and Lebanon were large purchasers in 1959, and Peru in 1957 and 1958. The United Kingdom is the principal purchaser of electric cooking stoves, taking approximately 79 percent of total value in 1959, 59 percent in 1958, and 69 percent in 1957. Mexico, Jamaica, and Trinidad purchased the largest quantities of power refrigerators and parts in 1958 and 1959. Their combined purchases represented 76 percent of the total value in 1959 and 78 percent in 1958. Canada's exports of vacuum cleaners have been negligible. 15 Table 10 furnishes more detail on Canada's exports of major appliances in 1957-59 : Table 10. — Canada: Exports of Major Household Appliances, 1957-59 [Quantity in units; value in dollars] Country of destination 1957 1958 1959 Quantity Value Quantity Value Quantity Value Electric household washing machines Arabia . _______ 249 102 544 60 826 80 973 400 260 2,245 114 370 2, 665 14 1,283 20, 395 8,733 48, 766 5,231 67, 926 6, 405 82, 767 34, 615 22 252 190, 164 9, 357 36, 308 238, 315 1, 520 120, 983 259 179 290 194 448 110 1,039 379 66 1, 817 183 246 3,717 7 681 19, 996 15, 957 25, 539 16, 571 37, 032 8, 691 88, 055 32, 051 5, 579 155, 096 17, 001 22, 716 340, 141 1,255 60, 812 167 217 137 271 1,309 132 1,099 355 101 634 222 30 4, 644 58 763 15 479 Bermuda - . __ _ ___ __ 19 956 Greece. ____ _ - ___ 13 303 Iran . . _ Iraq 23, 067 111 731 Jordan.. . ___ 10 837 Lebanon _ __ . _ 92 403 Netherlands Antilles 30 293 Panama _ 9 182 Peru 54 792 Trinidad _. _ 19, 927 Union of South Africa _ _ 2, 789 Venezuela _____ __ 423, 662 United States. _ _ _ _ _ __ - 5, 500 Others _ __ _ _ 72, 280 Total. 10, 185 893, 737 9, 615 846, 492 10, 139 905, 201 Other household washing machines Union of South Africa _ _ _ _ 185 1 4 22, 494 138 723 132 1 3 15, 252 120 370 3 297 United States, _ ____ __ __ Others ___ __ 3 443 Total -__ _ _ _ 190 23, 355 136 15, 742 6 740 Parts of domestic washing machines Mexico. _ _ _ _ _ __ 14, 204 72, 984 17, 044 37, 780 47, 085 210, 537 12, 108 38, 848 17, 504 Union of South Africa 199, 512 United States _ 6, 192 Others. _ _ _ . . 41, 146 Total . _. 142, 012 308, 578 264, 354 Electric vacuum cleaners and parts l Portuguese West Africa _ 266 1 16 12,817 3,747 1,209 United States 1 4 3,619 713 5 9 3, 140 Others __ .. -.._. 2,468 Total. ... 5 4,332 283 17, 773 14 5,608 See footnotes at end of table. 16 Table 10. — Canada: Exports of Major Household Appliances, 1957-59— Continued Country of destination 1957 1958 1959 Quantity Value Quantity Value Quantity Value Electric cooking stoves Bermuda . _._ .-__ 62 52 48 531 17 161 10, 129 7,533 5,804 125, 895 2,252 31, 407 80 29 59 357 11 173 12, 148 3, 229 6, 713 83, 681 2, 892 32, 317 131 108 177 1,805 26 87 21, 295 Jamaica _________ 14, 596 Trinidad 20, 447 United Kingdom. _ 289, 474 United States 5, 252 Others . 16, 175 Total . 871 183, 020 709 140, 980 2,334 367, 239 Power refrigerators and part s» Bermuda _______ 1 126 183 171 27, 500 36, 317 61,810 63, 956 46, 477 52, 857 92, 893 3 83 538 576 243 30 14 75 649 18, 097 97, 340 72, 927 45, 496 6,696 14, 304 20, 436 149 102 925 2, 074 742 7 29 85 23, 877 British Guiana __ 23, 562 Jamaica _ __ _ 148, 656 Mexico . .. _ 169, 588 Trinidad __ ______ Union of South Africa _ _ __ 300 1,006 11 392 130, 739 6, 066 United States 60, 533 Others 26, 088 Total 2,019 381, 981 1, 562 275, 945 4, 113 589, 109 1 Values include parts. Source: Trade of Canada — Exports, Dominion Bureau of Statistics. Market Potential A large number of household appliance firms in Canada are subsidiaries of foreign companies, and a great many others produce equipment under licensing agreements with foreign companies. The industry is subject to keen competition from U.S. imports, which appeal to the Canadian con- sumer particularly because of their styling. In some cases, domestic output of an American sub- sidiary must even compete in the market with imports coming from the parent organization. Because the volume of production by individual Canadian firms is not sufficient to effect the econo- mies achieved in mass production methods used by U.S. appliance manufacturers, the prices of Canadian appliances are generally higher than prices for comparable products in the United States. However, the growth of the Canadian market has enabled domestic manufacturers to compete more effectively in recent years. De- mand for household appliances is expected to continue at a high rate and, according to a 1957 survey of the economic prospects of the Canadian electrical manufacturing industry, out- put can be expected to increase at the rate of 7 percent annually.* Canada will probably continue to represent the major export market for U.S. household appli- ances, particularly refrigerators. U.S. exports of electric ranges have been principally in the form of components. An obstacle to expansion of the market for finished units is a Canadian electrical standard in effect in all areas except Quebec requiring separate fusing of each element in a cooking range, rather than permitting use of American-type ranges incorporating a single fuse block for all elements. *The Canadian Electrical Manufacturing Industry, by Clar- ence L. Barber, Professor of Economics at the University of Manitoba. (Prepared for Royal Commission on Canada's Eco- nomic Prospects, 1957.) 17 Latin America BRAZIL Production Production of household appliances in Brazil has increased notably over the past few years, principally because severe import and exchange restrictions have drastically reduced imports, xlccording to Produgdo Industrial Brasileira, Oonselho Nacional de Estatistica, production of selected appliances was as follows in 1956 and 1957 (in units) : 1956 1957 Clotheswashing machines 26,810 29,674 Vacuum cleaners 27,974 23,687 Domestic and commercial refrig- erators 164,200 178,550 Industry sources estimate 1958-59 production of household appliances as follows (in units) : 1958 1959 Washing machines 75, 000 90, 000 Vacuum cleaners 21, 000 21, 000 Refrigerators 174, 000 181, 000 Electric ranges 8,000 10,000 Output of 210,000 household refrigerators, prin- cipally compressor type, is forecast for 1960. The main producing area is the city and State of Sao Paulo. Less important centers of produc- tion are Rio de Janeiro and Porto Alegre (State of Eio Grande do Sul). A number of manufac- turers are subsidiaries of foreign companies or produce under licensing arrangements with foreign firms. The Brazilian Government does not subsidize the appliance industry, but exchange and import restrictions offer protection by rendering importa- tion of competitive equipment economically unfeasible. Although the Brazilian appliance industry originally imported a high percentage of parts and engaged primarily in assembly, most compo- nents are now manufactured locally. Exchange regulations and heavy import duties on small motors make the price of imported motors prohibitive. The household refrigerator industry, which is the most highly developed segment of the appli- ance industry, imports some compressors, thermo- stats, and copper tubing. Electric motors are either manufactured by the producers of refrig- erators or purchased from other local manufac- turers. Dials, interior linings, shelves, drawers, knobs, and similar items are supplied by the do- mestic plastics industry. Insulating materials are also produced locally. In 1959, the industry was somewhat affected by an inadequate supply of steel plate. The Sao Paulo area suffered also from power shortages, which should be alleviated to some extent by the installation of additional thermoelectric plants. Lack of adequate surface transportation facilities handicaps distribution of raw materials and manufactured products. So far as can be determined, labor does not constitute any particular problem for the appli- ance industry. Technical know-how is supplied by foreign technicians or Brazilian nationals trained abroad. Unskilled labor is relatively plentiful and is easily trained. Apprentice and evening training programs are available, and the Ministry of Health and Education offers full- time vocational training in engineering, drafts- manship, and various industrial trades. Channels of Distribution Appliance stores are located in all large cities. One appliance producer maintains distributors in every major city. In large cities, such as Rio de Janeiro, Sao Paulo, Belo Horizonte, Recife, and Porto Alegre, a single producer may have more than one authorized distributor. Distributors 19 and agents of distributors are usually authorized to service equipment. Consumption Consumption of electrical household appliances has expanded greatly since the close of World War II. In 1947, major household appliances were considered luxuries and their use was con- fined largely to homes of wealthy Brazilians and foreign residents. However, along with the in- dustrial development of the country, the standard of living has risen and the demand for household appliances has mounted. Strong demand has de- veloped even in the interior of the country, where appliances such as washing machines and re- frigerators are often acquired for purposes of prestige. Keen competition among appliance manufac- turers and dealers has led to the employment of advanced promotion and sales techniques and the offer of low downpayment and long-range credit terms to attract buyers who could not otherwise afford appliances. Most purchases are on the installment plan, and monthly payments for larger deluxe models are usually no higher than those for smaller size units. In view of the negligible volume of appliances being imported, consumption is approximately equal to production. Washing machines reportedly sell better in Sao Paulo than in Rio de Janeiro, partly because of the greater number of individual houses in Sao Paulo as contrasted with the predominance of apartments in Rio, and also because of the greater concentration of industry and the improved in- come of the working class in the Sao Paulo area. In recent years there has been a growing prefer- ence for fully automatic washing machines. In the case of refrigerators, a preference for larger size units has apparently developed because of a preponderance of large families and because of the custom of marketing once a week. Another factor influencing demand for larger refrigerators is the moist climate, which causes rapid deteriora- tion of food — especially when distribution is made without the use of refrigeration equipment — and makes it advisable to refrigerate even salt and bread. The preference for larger refrigerators is in- dicated by the percentage of sales in 1955 and 1956, by cubic-foot capacity : 1955 1956 6 6.0 9.0 7 43.2 32.9 8 8.4 12.6 9 or more 42.4 45.5 Although current information is not available on prices of appliances, representative 1958 retail prices for household refrigerators in the Sao Paulo area were as follows, by cubic-foot capacity : 6.5 $486 8.5 $540 10.0 $621-$675 10.5 Up to $742 Imports Imports of household washing machines into Brazil dropped from approximately $530,000 in 1954 to slightly more than $1,000 in 1958 ; house- hold refrigerators and freezers, from about $242,000 to approximately $6,000; and vacuum cleaners, from about $58,000 to $6,500 (table 11) : 20 Table 11. — Brazil: Imports of Selected Household Appliances, 1954-58 and January-June 1959 [Quantity in units; value in dollars] Country of 1954 1955 1956 1957 1958 Jan.-June 1959 origin Quan- tity Value Quan- tity Value . Quan- tity Value Quan- tity Value Quan- tity Value Quan- tity Value Washing machines Canada 40 33 77 2,647 25 6,398 2,997 12, 994 504, 638 2,887 Netherlands West Germany 2 2 1 698 358 40 United States . . Other . 6 873 43 1 6, 887 113 13 8 2, 223 766 6 1, 109 Total 2,822 529, 914 6 873 44 7,000 21 2,989 5 1,096 6 1, 109 Vacuum cleaners Norway _ . 172 1,041 282 8,000 43, 838 4, 000 428 126 61 1 357 19, 907 4,901 2,051 654 4, 514 180 210 3,000 7,752 Sweden 25 72 4 969 1,000 598 121 74 4,426 1,052 West Germany United States. 1 16 63 571 1 2 211 Other 68 1,995 28 1,012 57 Total 1,563 57, 833 973 32, 027 101 2,567 407 11,386 223 6,490 3 268 Refrigerators and free szers Denmark - 61 274 4 823 36 8,874 50, 198 822 177, 300 5,200 11 19 1 30 2,009 3, 120 132 9, 956 1 883 Sweden _ _ _ . 3 262 West Germany. _ 1 27 113 9,557 United States Other.. 48 4 12, 185 1, 225 14 6, 174 3 2, 000 Total 1, 198 242, 394 61 15,217 52 13, 410 29 10, 553 14 6, 174 6 2,262 Source : Estatlstica do Comercio Exterior. Brazil is still a large consumer of components for refrigerators, as indicated by the following Estatistica do Comercio Exterior import data on compressors, parts, and accessories for all types of refrigerators and freezers : 1954 $6, 142, 761 1955 5, 064, 386 1956 3, 355, 677 1957 4, 976, 774 1958 4, 416, 751 January-June 1959 1, 870, 267 The United States, Denmark, and the United Kingdom were the chief sources of supply for these refrigerator parts. Imports of electric ranges, which are grouped in Brazilian statistics along with electric heaters, furnaces, and similar equipment, have been con- sistently negligible. All imports in this category from 1954 through 1958 totaled only $23,493, or an annual average of about $4,700. U.S. exports of major household appliances to Brazil in the years 1955, 1958, and 1959 are shown in table 12. 21 Table 12.- — U.S. Exports of Major Household Appliances to Brazil, 1955, 1958, and 1959 [Quantity in units; value in dollarsj Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic 16 10 2,017 2,400 6 12 30 479 3,490 1,350 Semi- and fully automatic Vacuum cleaners 13 2,783 Electric ranges Electric refrigerators Other mechanical refrigerators and freezers _ 77 9 14 19, 577 2, 652 5, 073 192 10 53, 250 2 250 149 46 33, 884 16, 532 Electric freezers 18 6, 378 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Brazilian import duties on household appliances are as follows : Tariff No. Description Ad valorem? (percent of c.i.f. value) Consumption tax 1 (per- cent of Import duty Customs surtax duty-paid value) Section XVI: 84-17 84-59-001 Refrigerators of all kinds (commercial and household) Machinery and appliances for washing or drying dishes, linen, and other articles 120 120 120 120 5 5 5 5 10 10 85-12-002 Warmers, chafing dishes, stoves, cookers, ovens, ranges, and the like (electric) _ 10 85-12-003 Vacuum cleaners 10 1 Consumption tax also applies to domestic goods. Note. — All the above appliances are in a special category that requires payment of the exchange premium at the rate of 476 cruzeiros for US$1, as compared with the free market rate (about 186 cruzeiros for US$1 in July 1960) and results in prohibitively high costs to both importers and ultimate consumers. Because of this unfavorable exchange rate and the high import duties which are levied, virtually no market exists for equipment of this kind. Exports Because production of major household ap- pliances is not altogether sufficient to supply do- mestic demand, only insignificant quantities are exported. Except for 1958, when refrigerators valued at $42,037 were exported to Paraguay, an- nual exports of major appliances have rarely exceeded a total of $1,000. Market Potential Brazil is the fifth largest country in the world. Its population, which numbered some 63 million in December 1958, is expected to reach 65.5 million in 1960. The potential market for household appliances is enormous, particu- larly in the areas beyond the States of Rio de Janeiro and Sao Paulo and Minas Gerais. Un- less inflationary tendencies operate as a deterrent, consumption and use of appliances should show significant gains by 1961. Factors favoring expansion of the market are rising personal income and expansion of power facilities, although power shortages will prob- ably continue to plague industrial Silo Paulo and Belo Horizonte for some time. New installations in Minas Gerais will be operating in 1961 or 1962, but full potential will probably not be real- ized until about 1965. 22 Possibilities for future export of household ap- pliances from the United States to Brazil are ex- ceedingly bleak. High import duties and un- favorable exchange virtually exclude appliances. Also, existing production facilities of the appli- ance industry are expected to expand. Investment Opportunities No restrictions are placed on direct investments by foreign companies nor is local capital partici- pation required. Opportunities exist for new investment. Brazilian laws regulating foreign investments offer some advantages to foreign in- vestors desiring to transfer equipment for entire plants to Brazil. However, import tariffs are levied on such equipment unless exempted by a specific law. Joint participation with local capi- tal has been successful in the field of appliance manufacture. CHILE Production Official Chilean reports do not give data on pro- duction of household electrical appliances. Fol- lowing are estimates of the average number of major household appliances produced annually, all of which are consumed in the country : Estimated Units retail value Washing machines 12,000-15,000 $1,709,000 Electric ranges 2, 000- 3, 000 228, 000 Refrigerators 45, 000-50, 000 1 4, 245, 000 All electrical appliances are manufactured in the Santiago area. Production of electric ranges has declined because of the increasing availability of less expensive petroleum-gas ranges. Vacuum cleaners and home freezers are not manufactured, but a local company is constructing a plant and expects to begin production of these two items in 1960. Electrical appliance companies also manufac- ture products such as heaters, motors, cooking utensils, and metal furniture. Specialized tool- ing machinery and assembly setups devoted to individual items would be uneconomical because of the small volume and variety of production. All parts are finished and painted individually by hand. Assembly is generally broken down into two or three operations in a "semiassembly line" technique. The domestic industry procures locally most of the basic material needed for the manufacture of electrical appliances. Steel plates and shaped parts, screws, rivets, electric wire, plastic parts, and paints are available locally; but refrigera- tion units, bearings, coils, switches, thermostats, other electrical assemblies, gaskets, and insulation materials are imported. A local company expects to produce sealed compressors in 1960 under licensing arrangements with the Argentine sub- sidiary of a U.S. firm. Producers estimate that production could be increased by 15 to 20 percent. Cited as problems of the industry are the lack of imported parts, the lack of capital for the required import depos- its, and a need for better fabricating equipment. Plants producing electrical appliances began operation in small quarters during and immedi- ately after World War II. The buildings have been enlarged several times, and the firms are now faced with the problem of overcrowding and lim- ited space. These firms have surpassed their allotted quota of electric power, and increases in production would mean either sharply increased electricity rates or power shortages. Both skilled and unskilled labor is available in sufficient quantity. Standards used for defining the general classification "skilled labor" are con- siderably more elastic than in the United States. Information on wage scales is difficult to evaluate because of the complications resulting from the extensive social security system. No governmental subsidies are granted to the industry. Only one firm is foreign owned, but many producers manufacture under licensing ar- rangements with United States, West German, and United Kingdom firms. These agreements often include technical assistance and the use of equipment. Channels of Distribution The main distribution center is Santiago, where headquarters of all the manufacturers are located. 23 Appliances are distributed directly to retailers. No special public or private programs encour- age appliance sales, nor is there an industry association. Consumption Appliances are usually sold within 30-60 days. Difficulties and expenses involved in importing essential components restrict desired increases in production and sales. Demand is strong, espe- cially for refrigerators and, to a lesser extent, for washing machines and cooking ranges. Re- frigerator models in 8- to 12-cubic-foot sizes are popular. Appliances are still considered something of a luxury in Chile because of the relatively high initial purchase price and the expense of opera- tion. An average refrigerator represents ap- proximately 10 weeks' salary for an upper bracket white-collar worker, and the prevailing high rates for electric current prove an additional deterrent to ownership. Although the desirability of having refrigeration is generally recognized, the majority of Chileans cannot afford it. Because of high production costs and low con- sumer purchasing power, most washing machines are made for small capacities. The most popu- lar model is a machine made under license having a capacity of 3 or 4 pounds and selling for about $125. A semiautomatic washing machine pro- duced under license, the only automatic machine made in Chile, has a limited market due to its price of $495. Another factor limiting the mar- ket for washing machines is the abundance of manual labor available to do laundry work at low wages. Seiwice facilities are adequate. Because of the high cost of electrical appliances, replacements are infrequent. Refrigerators and washing ma- chines are kept in working condition for many years by numerous small repair shops. It is not unusual to see 20-year-old refrigerators in good working order. Appliances of domestic manu- facture are normally given a 1-year guarantee. Approximately 3 percent of the appliances sold are returned to the factory for repair (within the guarantee period) if transportaion facilities are available. Otherwise, appliances are repaired in small workshops. The following are representative 1959 retail prices of appliances in Santiago : Washing machines : 3^t lb. capacity $142 8-lb. capacity 493 Electric ranges : With 3 burners and oven 113 With 4 burners and oven 142 Refrigerators : 8-cubic-foot capacity 360 12-cubic-foot capacity 522 Note. — Chilean cooking ranges do not have time-control switches or some of the other features popular in the United States. Refrigerators have less Interior equipment and are less attractive than U.S. products. Imports Prohibitions against importation of household electrical appliances were removed in 1959. Ap- proximately 80 percent of the components not made in Chile and needed in the production of appliances are imported from the United States, approximately 15 percent from Germany, and 5 percent from Denmark. U.S. exports of major household appliances to Chile for 1955, 1958, and 1959 are shown in table 13. A legal basis for effecting important changes in the import and exchange regulations of Chile is provided by a far-reaching omnibus economic bill (No. 13,305, promulgated April 4, 1959) which granted the President wide authority to im- pose new duties and taxes on imports and to make other important changes affecting the country's foreign commerce. Principal provisions of in- terest to U.S. exporters of household electrical appliances are summarized as follows : Merchandise imported into Chile which is dis- embarked from its maritime ports pays a tax of 1 gold peso per gross hundred kilograms or fraction thereof (1 gold peso=U.S.$0.2061). (Art. 131) When the nation's requirements so demand, the President is authorized to suspend or reduce duties, taxes, or other charges levied through customhouses on articles of prime necessity or indispensable to public health. On the other hand, he may raise (up to 50 percent) the duties, taxes, and other charges on imported articles similar to articles produced in sufficient quantity by domestic industry. (Art. 1G3) The President is authorized to establish by basic decree an additional tax on imported merchandise of up to 200 percent of its c.i.f . ( cost, insurance, and freight) value for the purpose of permitting, at the same time, a gradual reduction or suppression of the import deposit guarantee system now in effect. The President may eliminate, suspend, reduce, or modify the new tax when the nation's requirements so dictate. (Art. 169) The 1959 law also abolished the 2-percent tax which had been charged on the sale of foreign ex- change. (Art. 170) 24 Table 13. — U.S. Exports of Major Household Appliances to Chile, 1955, 1958, and 1959 [Quantity In units ; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic - 419 171 44, 786 39, 925 156 382 30 159 1,647 10 14 17, 874 67, 494 4,070 28, 855 236, 119 2, 650 3,828 226 272 46 40 1,016 2 34 30, 054 Semi- and fully automatic. _ — Vacuum cleaners _ 55, 609 2, 439 Electric ranges 84 547 17, 472 119, 709 10, 992 Electric refrigerators . _ 195, 896 Other mechanical refrigerators and freez- ers 530 Electric freezers __ 41 13, 700 11, 517 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Import duties on household electrical appliances are as follows : Tariff No. Description Specific duty per gross kilogram Ad valorem surtax on duty paid value (per- cent) 1270 __ Stoves, cookers, heaters, furnaces, caldrons, kitchen ranges, braziers, and other similar appliances, provided with a fireplace or burner, except those of tinplate, nickel plate, or chromium plate: for house- hold use, electric, alcohol or petroleum. __ $0. 4122 . 025763 . 092745 .6183 .2061 . 10305 30 1358 Machines, not elsewhere mentioned (washing machines) 30 1411 Components and spare parts, not specifically mentioned, for electric machinery, apparatus, and material . 48 1904 . ... -.. Carpet sweepers and vacuum cleaners, also their components and spare parts _ . __ . ._ 62 1936 . . Refrigerating chests _ __ __ 62 1936-B.- Refrigerators for domestic use, for the preservation of foodstuffs, up to 10 cubic feet in capacity . __ 48 Market Potential and Investment Opportunities Now that the prohibition against appliance im- ports has been removed, some improvement should be noted in expansion of trade with Chile. How- ever, the high duties and surtaxes levied on ap- pliances still represent a deterrent to very great expansion of exports. No specific regulations prevent the participation of U.S. capital, either exclusively or in partnership with Chileans. However, licensing arrangements with Chilean manufacturers will probably continue to provide one of the best means of competing in the market. COLOMBIA Production Refrigerators are at present the only major household appliance being assembled in substan- tial volume in Colombia, and no electrical house- hold appliances are exported. Two or three firms engage in limited assembly of electrical ranges. Government statistics show production of all types of electric cooking apparatus, including hotplates, 25 totaling 16,296 units in 1958 and an estimated 18,500 in 1959. Production of washing machines is neo-liffible— 124 units in 1958 and 150 in 1959. Annual output of vacuum cleaners in 1958-59 totaled 10 units or less. Several firms commenced assembly of refriger- ators from basic materials in 1958 as a result of severe restrictions on importation of completed units and parts. Output of household refriger- ators by 3 large and 2 small plants totaled 6,751 units in 1958, and 7,700 in 1959. Production ca- pacity and output will be significantly increased upon completion sometime in 1960 of a new plant now imder construction by a wholly owned U.S. subsidiary. Plans call for production to start in August. When operating at full capacity early in 1961, the plant will be capable of producing 20,000 refrigerators annually. The largest refrigerator assembler also planned to install an enameling works by late 1959 and to double the size of its existing plant for increased production of refrigerators and for contemplated production of washing machines and other appli- ances. The second largest producer expanded and modernized its plant in 1959 and is engaged in large-scale assembly of household refrigerators. The third largest plant, which began production in early 1958, has indicated no plans for further expansion. In addition to the U.S. subsidiary which is building the new plant, two other com- panies contemplate entering the field of household appliance production. Most producers of household refrigerators are located in Bogota, where technicians and semi- skilled labor are readily available, power is ade- quate, and ready access to the Government is pro- vided. One sizable firm is located in Manizales, and some small producers are operating in Bar- ranquilla. A small producer of electric ranges is located in Medellin. Compressors for refrigerators are imported. Plastic parts, rubber gasket lining material, and other rubber parts are fabricated by Colombian plants. Metal shelves, ice trays, and similar items are manufactured by local refrigerator assemblers. The uncertainty of the electricity situation in Colombia has been a factor in limiting production of appliances other than refrigerators. Bogota has plans for the early expansion of power facili- ties. Electricity in Medellin has been rationed for an average of 4 hours daily during the dry seasons (June to mid- September and December to mid-March) . Channels of Distribution Bogota represents the largest single market in Colombia. Distribution of domestically produced refrigerators is usually made from the factory di- rectly to retail outlets or to a few wholesaling or- ganizations, all of whom receive the same discount and are expected to maintain a standard retail price schedule. Marketing of imported appliances is through exclusive distributors, direct importers, retailers, and sales agents. Consumption In 1959 an estimated 118,000 compressor-type and 22,000 absorption refrigerators were in use in Colombia. Assemblers were reportedly selling all the refrigerators they could produce. De- mand in 1960 is expected to be 20,000-28,000 units. By 1965 some trade sources expect that annual consumption will be about 70,000 units. Except for U.S. export figures, no statistics are available on consumption of other major appli- ances. The use of electric ranges is limited by the low supply and high cost of electricity. Consumption is expected to increase slowly as electrical power becomes more readily available in principal cities and towns. Before severe import restrictions were imposed on electrical appliances, trade sources estimated that demand for electric ranges would reach 5,000-8,000 in 1960; for electric washing ma- chines, 10,000-14,000. However, in view of the small number of appliances being imported at the present time and the delays in establishing domestic production facilities, present consump- tion of washing machines and ranges would ap- pear to be limited. Consumption of vacuum cleaners is also believed to be negligible. The electric current in Bogota is 150/260 volt, 60 cycle, which requires the use of transformers with standard American appliances. Electric current characteristics in Medellin and Cali are 110/220 volt, 60 cycle; and in Barranquilla 115/230 volt, 60 cycle. Kepresentative wholesale prices of domes- 26 tically produced refrigerators in 1959 were $218, $240, and $265 for 8-, 10-, and 12-cubic-foot models, respectively. No information is avail- able on prices of other appliances. Imports The latest year for which official import statis- tics are available is 1957, and separate statistics are not available for electric ranges or vacuum cleaners. During the period 1954-57, the United States supplied approximately 90 percent of all domestic washing machines and 90 percent of all refrigerators. Table 14 shows U.S. exports of major house- hold appliances and parts to Colombia for the period 1954-59. Prior import licenses are required for all im- ported items with the exception of heating ele- ments. No licenses are reportedly being issued for refrigerators and electric ranges. An import deposit of 130 percent is required and is not re- Table 14. — U.S. Exports of Major Household Appliances and Parts to Colombia, 1954-59 [Quantity in units; value in dollars] Item Quantity Value Quantity Value Quantity Value 1954 1955 1956 Washing machines: Nonautomatic 1,374 4, 768 1,067 129, 770 814, 127 20, 907 50, 527 570 310, 156 58, 479 2, 884, 313 300, 320 111,780 540, 513 13, 305 333 2, 677 484 854 25, 281 417, 131 14, 896 19, 450 1,200 102, 078 101, 795 861, 325 48, 072 35, 936 247, 978 19, 340 275 1,839 21, 757 Semi- and fully automatic, . Washing machine parts 282, 935 20, 856 Vacuum cleaners 496 17, 501 Vacuum cleaner parts 1, 750 Electric ranges 2, 416 1,617 204, 226 Parts for electric ranges 162, 108 Electric refrigerators 15, 467 1,425 5, 439 244 1, 469 6,457 332 975, 704 Electric freezers 67, 341 Electric refrigerator and freezer parts ' 99, 659 Other mechanical refrigerators and freezers . _ . _ 2, 035 128 23, 273 Parts for other mechanical refrigerators and freezers 16, 836 1957 1958 1959 Washing machines: Nonautomatic _ . _ _ _ 30 21 1,950 4,030 5,418 17 64 2, 497 Semi- and fully automatic 43 8,798 14, 187 18, 392 2, 640 42, 552 144, 263 29, 234 5, 240 388, 944 12, 868 Washing machine parts 28, 878 Vacuum cleaners 309 30 1, 550 Vacuum cleaner parts 12 497 34 5,392 2, 699 93, 480 63, 403 7, 658 594, 340 Electric ranges - 246 10 1, 970 Parts for electric ranges _ . 167, 682 Electric refrigerators 140 20 114 24 23, 597 Electric freezers 6, 846 Electric refrigerator and freezer parts * 757 821 Other mechanical refrigerators and freezers- _________ 3 840 Parts for other mechanical refrigerators and freezers 1,826 10, 867 6 998 1 Includes refrigerating systems for household refrigerators and freezers. Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 555532 — 60- 27 Colombian import duties on household appliances are as follows : Tariff No. Description Specific duty per gross kilogram Ad valorem duty based on c.i.f. value (percent) 839(a) 846(a) 862(b) 865(b) 865(c) Refrigerators and freezers, except those for scientific use: (1) Compressor type (2) Other type (1) Domestic clotheswashing machines: A. Machine and apparatus B . Centrifuge container C. Cabinet and parts thereof D. Other components and parts Vacuum cleaners and waxing machines for domestic use (1) Domestic electrothermic apparatus: B. Kitchen stoves, ranges, hotplates, toasters, waterheaters, etc Heating elements $0. 7463 . 4478 . 7463 . 7463 . 4478 . 7463 . 7463 . 2985 50 50 50 25 50 50 50 50 25 Note. — Exchange rate for assessment of duties varies but has been calculated at certificate market rate In effect in August 1960 (6.70 pesos to US$1). turned until 45 days after imports have been cleared through customs. Bogota imposes a surtax of 20 pesos ($2.99) per ton on imports. Market Potential Because of the high duties levied and the strict control exercised in issuance of import licenses for appliances, prospects for U.S. exports to Colom- bia of completely assembled units are rather poor. The best opportunity for competing in the market lies in local manufacture, either by a subsidiary, a joint Colombian-American enterprise, or through licensing arrangements. CUBA Production Household electric ranges and hotplates are the only electrical appliances produced in Cuba, by one firm employing 47 workers. The firm imports electrical heating elements, other specialized parts, and fiberglass from the United States, and assem- bles the components in metal cabinets manufac- tured and porcelainized in Cuba. The firm also produces alcohol and kerosene ranges and has oidy recently added electric ranges to its line of products. Monthly production in 1959 amounted to 130- 140 units, comprising four styles: A two-burner hotplate, a three-burner hotplate, a two-burner range with oven, and a three-burner range with oven. In addition to electric ranges, the firm plans to produce a low-cost electric water heater. Cuba exports no electrical household appliances. Channels of Distribution Havana and Santiago are the two principal dis- tribution centers. Distributors, often on an ex- clusive basis, import electrical appliances and sell to the consumer through retail agents or dealers. The larger distributors maintain service facilities and supervise their outlets to assure that main- tenance standards are met. Consumption and Imports Consumption of household electrical appliances is considered roughly equivalent to imports. Table 14A shows household electrical appliance imports during the period 1956-58, the United States being the principal supplier. 28 Table 14A. — Cuba: Imports of Selected Household Appliances, 1956-58 [Quantity in units ; value in dollars] Appliance 1956 1957 1958 Quantity Value Quantity Value Quantity Value Washing machines. 2, 917 3, 871 32, 196 417 n.a. 321, 265 445, 536 4, 434, 698 74, 112 n.a. 3,686 2, 967 32, 171 427 n.a. 376, 651 345, 864 4, 544, 792 74, 706 n.a. 2, 917 4,970 26, 209 336 n.a. 322, 812 Electric ranges 544, 111 Electric refrigerators _ Electric freezers. . Vacuum cleaners 3, 481, 202 65, 898 n.a. n.a. — Not available. Imports of household electrical appliances in the first 2 months of 1959 were as follows : Units Value Washing machines 153 $17, 574 Electric ranges 430 4,216 Electric refrigerators 449 65,924 Electric freezers 24 4, 578 Vacuum cleaners n.a. n.a. n.a. — Not available. Despite unsettled conditions in 1959, price-con- trolled electrical appliances continued to be sold in satisfactory volume. However, import licenses for household appliances have not been granted since early in 1960, and wholesale inventories were virtually exhausted by the middle of March. As a result, 1960 sales will undoubtedly drop signifi- cantly from previous years. U.S. exports of major appliances to Cuba in 1955, 1958, and 1959 are shown in table 15. Table 15. — U.S. Exports of Major Appliances to Cuba, 1955, 1958, and 1959 [Quantity in units, value in dollars] Appliance 1955 Quantity Value 1958 Quantity Value 1959 Quantity Value Washing machines: Nonautomatic Semi- and fully automatic Vacuum cleaners Electric ranges Electric refrigerators Other mechanical refrigerators and freezers Electric freezers 1,805 2, 124 524 2,475 29, 497 715 545 141, 129 245, 728 20, 118 277, 851 4, 145, 874 154, 092 103, 814 1, 203 2, 632 748 7,267 35, 075 486 529 80, 606 338, 200 27, 151 776, 112 4, 430, 994 121, 130 96, 818 380 1,990 274 2, 542 21, 031 154 437 34, 680 255, 784 9, 759 268, 812 3, 096, 134 22, 618 81,312 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. The decline in value of U.S. exports from 1958 to 1959 was 31 percent for all types of household washing machines, 64 percent for vacuum clean- ers, 65 percent for electric ranges, and 31 percent for all household refrigerators and freezers. 29 Cuban import duties and other taxes on household electrical appliances are as follows: Tariff No. Description Ad valorem rate of dutv to ILS. (percent) Public- works surtax (percent of duty) Exchange surcharge (percent of f.o.b. value) Purchase sales tax (percent of ex-customs value) 1 223__. Electrical machinery and apparatus, including loose parts and accessories for the same, not specifically classi- fied: A Electric washing machines 8 3 60 10. B All others (including electric vacu- um cleaners and ranges for household use). 11.9 3 60 10. 225-A Refrigerators, electric, mechanical com- bination, or thermodynamic; refrig- eration equipment of all kinds; and spare parts and accessories which by their nature can have no other appli- cation than that of forming part of said equipment and apparatus, such as compressors, condensers, and sim- ilar, not otherwise specified. Note. — Refrigerators, freezers, assembled or un- assembled, are dutiable under Item 225-A, if for household use. 9 3 60 10. on refrigerators and freezers of less than 9 cu. ft.; 15. on those of more than 9 cu.ft. 1 The purchase sales tax is levied on the value of the merchandise on leaving the customshouse (ex-customs value), Including all duties, surtaxes, and other charges. Note. — Public works surtax and purchase sales tax also apply to domestic goods. Import licenses are now required for all com- modities, and must be obtained for each transac- tion. Priority is given to essential foodstuffs and raw materials. As of February 1960, no import licenses were granted for household appliances. When and if importation is once again per- mitted, appliances will require not only the issu- ance of a license but also the opening of commercial letters of credit. Importers must apply for import licenses through authorized banks, which send the applications to the Mone- tary Stabilization Fund for approval. A letter of credit in the approved amount and period of validity must be established within 30 days fol- lowing date of approval of an import license. If application for import license is approved, the letter of credit can be given simultaneous official approval if the commercial bank has submitted copy of letter of credit together with application for import license. Extension of letters of credit requires authorization of the Cuban Monetary Stabilization Fund, and total liquidation of a credit terminates the validity of the import li- cense. Expiration of the period of validity of a credit only partly negotiated cancels the license for the amount of credit not utilized. Shipments in transit through Cuba are not affected by the new licensing regulations. No import licenses are required for gift shipments valued under $100. However, the recipient must pay applicable duties and surcharges. Market Potential The prospects for U.S. exports of appliances to Cuba are now rather bleak in view of current re- strictions on granting of import licenses, the high surcharges and taxes levied, and Cuba's precari- ous foreign exchange position. A good future market for appliances should develop whenever conditions improve and housing construction be- comes normal again. Overall construction activ- ity in February 1960 was reportedly only one-third the normal rate, but if plans for large-scale Gov- ernment housing projects are carried to comple- tion, a corresponding demand for household 30 appliances would result. In any event, the poten- tial market for U.S. appliances will depend upon the easing of present restrictions on imports into Cuba. MEXICO Production Except for two firms located in Monterrey, the entire Mexican household appliance industry is located in or near Mexico City, Federal District- Little is available in the way of Government sta- tistics, but production estimates based on Govern- ment and industry information for the period 1956-59 are shown in table 16. Table 16. — Mexico: Estimated Production of Household Appliances, 1956-59 [Quantity in units; value in $1,000] Appliance 1956 Quan- tity Retail value 1957 Quan- tity Retail value 1958 Quan- tity Retail value Preliminary 1959 Quan- tity Retail value Washing machines Vacuum cleaners Electric ranges Electric refrigerators Gas refrigerators Farm and home freezers 27, 406 1, 500 n.a. 35, 652 n.a. 1,500 7, 218. 4 178. n.a. 14, 260. n.a. 714.0 30, 886 2, 500 n.a. 44, 086 n.a. 1,700 8, 135. 3 240. n.a. 17, 634. 4 n.a. 811. 4 36, 850 8,000 60 43, 395 1, 180 1,850 9, 755. 3 960. n. a. 18, 200. n.a. 891. 6 40, 000 10, 000 500 42, 500 1,500 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. — Not available. The manufacture of household electrical appli- ances is not impeded by any shortages of power, raw materials, or labor. More and more skilled and semiskilled labor is available, although a good deal of training for skilled positions is still required in most industries. Not all parts comprising the finished products are of Mexican origin because the relatively lim- ited size of the market and the prohibitive cost of tooling for a small volume of production make it more economical to import certain components. Patent controls on some mechanisms also preclude domestic manufacture. Washing Machines. — Production of washing machines dates from about 1947, when two firms initiated assembly operations. Seven firms are now engaged in the prodtiction of some 25 different models. Of the seven firms producing washing machines, three are virtually wholly owned U.S. subsidi- aries. A fourth is a joint effort with Mexican governmental and private capital and U.S. capi- tal participation, licensing, and management. Of the other three firms, which are wholly owned Mexican corporations, two have licensing arrange- ments with U.S. companies. In 1958, the percentage breakdown by types of washing machines produced was approximately as follows : Conventional wringer-washers 40 Semiautomatic and automatic 28 Small capacity hand- and power-wringer models 29 Table-top models 3 A trade association estimates that production has increased 300 percent in 10 years. Since the inception of the industry, when only a few parts were manufactured domestically, the industry has aspired to transform itself into a bona fide manu- facturing industry and eliminate the importation of component parts. By 1958, about 65 percent of the average washing machine was entirely manufactured in Mexico, either by appliance pro- ducers or manufacturers of components. Conven- tional wringer- washers are almost entirely made in the country, but the automatic and semi- 31 automatic washers still require considerable imported components for final assembly. Production of washing machines was stimulated by the rigid application of import restrictions in 1948 and was given additional impetus by the de- valuation of the peso in 1954, causing increases in production of washing machines from 7,438 units in 1954 to 19,010 units in 1955 (155 percent) and 27,406 in 1956 (44 percent). Since 1956, annual rates of increase in production have been more moderate, averaging about 16 percent. Some measure of the scope of assembly opera- tions may be derived from the following Bureau of the Census data on U.S. exports of electrical household washing machine parts to Mexico : 1956 $1, 112, 321 1957 1,252,709 1958 1, 150, 173 1959 817,652 Vacuum Cleaners. — Six firms assemble or manufacture vacuum cleaners. Probably only three companies manufacture a large enough por- tion of their products to classify as bona fide man- ufacturers, although all firms claim to manufac- ture in their own plants at least 10 percent of the total value of their products, a prerequisite to benefits under tax-inducement legislation. Two of the six firms are subsidiaries of foreign enterprises; two other firms utilize trademarks, presumably on a licensing basis, which are known in the United States. The remaining two pro- ducers have no affiliation of any sort with foreign manufacturers, although one uses the trademark of a subsidiary of a large U.S. retail chainstore. Based on estimates provided by various manu- facturers and dealers, the production attributable respectively to manufacture and assembly is roughly (in units) : Manufacture Assembly 1956 500 1, 000 1957 1,000 1,500 1958 2,500 5,500 The extent to which assembly-manufacture is replacing imports of finished units may be gaged by the increase in U.S. exports to Mexico of parts for vacuum cleaners, a large part of which can be attributed to assembly and manufacturing operations: 1956 $38,928 1957 63,656 1958 151,537 1959 96,711 In addition to the United States, Sweden and Germany are major exporters of vacuum cleaner parts to Mexico. The product of the largest as- sembler of vacuum cleaners carries a Swedish trademark, supporting a conclusion that substan- tial quantities of parts originate in Sweden. One Mexican vacuum cleaner company manu- factures in its own plant, or that of an affiliate, everything but the plastic accessories and rubber hose. Other firms manufacture a substantial por- tion of their products in their own plants and sub- contract some parts to other shops. Among assemblers, the production process ranges from the mere assembly of parts of completely finished cleaners which are imported "knocked down, 1 ' to the manufacture of only the tank and a few other parts and the incorporation of locally manufac- tured motors and other imported parts. All vacuum cleaners assembled or manufactured in Mexico at the present time are tank or canister models. No "hand" or upright models are believed to be produced or distributed. Electric Ranges. — Only one firm produces elec- tric ranges in Mexico, having begun production early in 1957. This firm is affiliated with and uses the trademark of a large U.S. electrical equipment manufacturer, which has less than 30 percent capital participation in the Mexican firm. No production statistics are available. However, the relatively high cost of electricity limits the market for electric ranges, and output of the firm probably does not exceed 500 units a year. Two models of electric ranges are produced by the firm. Coils, electronic controls, clocks, and, to some extent, decorative trim are imported and the rest of the range is manufactured locally. Although it is impossible to determine the pro- portionate cost of production represented by im- ported parts, it has been estimated that 65 percent of the total cost of a range is produced in Mexico. Some idea of the scope of production may be obtained from Bureau of the Census figures on U.S. exports to Mexico of electric range parts, most of which are presumably used for assembly : 1956 $82, 785 1957 27, 089 1958 89, 112 1959 104, 924 Even if production is expanded, parts for elec- tric ranges will continue to be imported in sub- stantial quantities because the small market makes 32 domestic manufacture of some parts economically unfeasible. This is also true in gas range produc- tion, which in 1958 totaled only about 150,000 units. Household Refrigerators. — The assembly of household refrigerators was initiated after the Mexican Government placed severe tariff restric- tions on imports in July 1947. The three largest producers account for 65 percent of production. Except for compressors and condensers, which are imported, the equipment is completely assembled from materials and parts of Mexican origin. As- sembly line methods are common. According to Government and industry sources, Mexican production of household refrigerators for the period 1951-59 was as follows (in units) : 1951 32, 468 1952 27, 460 1953 22, 310 1954 28, 414 1955 31, 772 1956 35, 652 1957 44, 086 1958 44, 575 1959 44, 000 In 1958, compressor-type electric refrigerators accounted for approximately 95-97 percent of do- mestic production. Breakdown of compressor- type production by cubic-foot capacity is as follows : Percent of Units total Less than 7 1,866 4.3 7 5,641 13.0 8 15,579 35.9 9-12 18,877 43.5 Over 12 1,432 3.3 Table 17. — Value of U.S. Exports of Parts for Household Refrigerators and Farm and Home Freezers, 1956-59 43, 395 100. Some 1,180 gas refrigerators were produced in 1958 and about 1,500 in 1959. An estimate of the amount of imported compo- nents used in the assembly and production of re- frigerators and farm and home freezers may be derived from the figures on U.S. exports to Mexico of parts presented in table 17. Farm and Home Freezers. — The production of electric farm and home freezers is a comparatively new development in Mexico. The availability of inexpensive domestic help, the custom of purchas- ing food requirements on a daily basis, and the year-round availability of fresh fruits and vege- tables obviate the necessity for preserving or freez- ing foods for long periods of time. Hence, the Year Mechanical refrigerating systems for refrigerators and freezers Parts for electric refrigerators and freezers Parts for other mechanical refrigerators and freezers 1956 1957 $191, 401 83, 528 89, 614 91, 302 $1, 293, 301 1, 008, 186 1, 053, 875 458, 877 $73, 878 60, 602 1958 64, 378 1959 55, 607 Source: Report No. FT-410, U.S. Fxports of Domestic and Foreign Mer- chandise, Bureau of the Census, U.S. Department of Commerce. market for freezers is rather small. Domestic production amounted to 1,500 units in 1956; 1,700 in 1957; and 1,850 in 1958. Freezers are manufactured in 4-, 7-, 10-, and 15- cubic-foot capacities. Approximately 97 percent are horizontal boxes; the rest, upright models. Three manufacturers comprise the industry, and the production conforms to the same pattern as for household refrigerators with respect to the source of the components. Of the 10 firms producing refrigerators and freezers, 2 of the 3 largest are wholly owned U.S. affiliates. The other large producer has a U.S. minority investment and utilizes U.S. patents, brand names, and technical know-how. Foreign investment and the use of foreign technical serv- ices and brand names now characterize the indus- try. The only Government, subsidies are benefits under the "Law for New and Necessary Indus- tries." This law relates to import, income, and mercantile tax reductions over a specified period of years. Channels of Distribution Mexico City, the Federal District, is the major distribution center and constitutes the largest market for appliances of Mexican origin, exceed- ing the total combined consumption of the rest of the country. Products flow from it to the princi- pal subdistribution centers — Monterrey, Guadala- jara, and Puebla. Other major commercial centers for the sale of appliances are Torreon, Ciudad Obregon, Durango, Merida, Chihuahua, Veracruz, Ilermosillo, San Luis Potosi, and Guanajuato. 33 Some manufacturers distribute or sell appli- ances exclusively through their own branches or representatives or through affiliated or other mer- chandising corporations. In the latter case, products often bear the name of the merchandiser. Two vacuum cleaner manufacturers sell their products on a house-to-house basis, one of whom employs neither distributors nor wholesalers. A vacuum cleaner manufacturer and a freezer manu- facturer produce brand-name equipment for an- other manufacturer of household appliances originally established as a distribution-retailing chain for imported appliances but now function- ing as both a producer and national distributor. The sole manufacturer of electric ranges distrib- utes through subsidiary branches established in the principal cities but does not limit sales to its branches. In areas that have no representation of manufacturers or affiliated merchandising com- panies, chain "distributors ,, sell primarily on a retail basis and handle numerous product lines. Department stores often purchase appliances di- rect from manufacturers on a wholesale basis. Consumption A United Nations economic study External Disequilibrium in the Economic Development of Latin America — The Case of Mexico, Economic Commission for Latin America, April 1957, projected an increase in demand for major house- hold appliances of approximately 93 percent be- tween 1955 and 1965. The projection apparently included not only finished units, whether im- ported or manufactured domestically, but also spare parts. The 9.3-percent annual rate has proved quite accurate to date. In cooperation with the appliance industry, the electric power generating company serving the largest area in Mexico is undertaking a public relations program designed to increase the con- sumption of domestic appliances. However, in some areas of the country, power shortages, par- ticularly for necessary industry, may limit the success of the plan. A similar cooperative pro- gram initiated in 1957 between the manufacturer of electric ranges and the major power producer in Central Mexico does not appear to have sub- stantially increased sales of electric stoves. Estimates of Mexican consumption of electrical appliances and percent saturation based on num- ber of wired dwellings are indicated in table 18. As may be noted from the following list of representative 1959 retail price levels in Mexico for various electrical household appliances, do- mestic appliances produced in Mexico usually cost much more than their U.S. counterparts: Washing machines: Small capacity: Hand wringer $130-$134 Power wringer 180- 192 Standard capacity, power wringer 215- 264 Semiautomatic and automatic 224- 480 Vacuum cleaners 92- 165 Electric ranges: Standard model 240 Deluxe model 264 Electric household refrigerators: 6 cu. ft. and under 240- 256 8.6 cu. ft 304- 400 9 cu. ft 311- 400 12 cu. ft.: Standard 544- 560 Self-defrosting 616-640 14 cu. ft.: Standard 640 Self-defrosting 704 Electric farm and home freezers: 4 cu. ft 344 7 cu. ft 432 10 cu. ft 536 15 cu. ft 656 For almost all appliances, wholesalers obtain discounts ranging from 20 to 35 percent. Adequate and, in some cases, excellent main- tenance facilities for electrical appliances are pro- vided by manufacturers or their merchandising organizations or by private repair shops. In con- trast to most personal services in Mexico, which are less expensive than in the United States, the cost of servicing appliances approaches or exceeds U.S. costs. Washing Machines. — Consumption of washing machines during the last 3 years appears to have increased at a rate of about 10 percent each year, as compared with the 16-percent annual increase in production in the same period. Although sales as a percentage of production have not declined appreciably, imports have been decreasing as do- mestically produced units are substituted for them. For the next 5 years, consumption is ex- pected to increase 10 to 12 percent annually, the latter figure approximating the rate of increased consumption of electrical energy in Mexico for the past several years. Conventional, standard-size w ringer- washers lead in sales. In second place are small-capacity, relatively inexpensive hand-wringer models sell- 34 Table 18. — Mexico: Marketing Data on Household Electrical Appliances, 1966-58 [Units] 1956 1957 1958 Number of families .. 4, 402, 000 1, 281, 900 29 4, 543, 000 1, 428, 400 32 4, 681, 000 Number of dwellings wired for electricity 1, 578, 500 Percent of dwellings wired _ 35 Washing machines: Estimated imports __ 4, 054 27, 406 1,440 30, 886 1, 550 Estimated domestic production _ _ 36, 850 Total imports and domestic production . _ _ 31, 460 32, 326 38, 400 Estimated sales _ ______ 28, 800 133, 790 10. 4 6,000 1,500 30, 050 163, 840 11.5 5,000 2,500 34, 365 Estimated units in use 198, 205 Percent saturation . - - _ 12. 6 Vacuum cleaners (rough estimates) : Estimated imports __________ .__ 1, 750 Estimated domestic production _ 8,000 Total imports and domestic production 7,500 7,500 9,750 Estimated sales . 6,800 50, 000 3. 9 65 7,000 58, 800 4. 1 50 n.a. 8,600 Estimated units in use __ _ - 67, 400 Percent saturation __ _ . 4. 3 Electric ranges: Estimated imports. _ ______ - 100 Estimated domestic production 60 Total imports and domestic production _ n.a. n.a. 160 Estimated sales _ _ _ n.a. n.a. n.a. 820 35, 652 n.a. n.a. n.a. 1,500 44, 086 n.a. Estimated units in use - - - 2,500 Percent saturation _ _ 0. 2 Refrigerators: Estimated imports 1, 666 Estimated domestic production 43, 395 Total imports and domestic production _ 36, 472 45, 586 45, 061 Estimated sales _ 1 38, 000 259, 400 20. 2 44 1,500 38, 500 297, 000 20. 8 40 1, 700 41, 000 Estimated units in use _ _ _ _ _ 338, 900 Percent saturation _ _ _ _ _ 21. 5 Farm- and home-type freezers: Estimated imports _ _ _ 106 Estimated domestic production 1, 850 Total imports and domestic production 1, 544 1, 740 1, 956 Estimated sales 1„ 390 n.a. n.a. 1,560 n.a. n.a. 1, 760 Estimated units in use _ 8, 000 Percent saturation 0. 5 n.a. — Not available. 1 Assumed to include inventory carryover and possibly used units. Source: Sales — industry estimates; imports — Bureau of the Census and Mexican official import statistic^ 555532—60- 35 ing for about half the price of the more costly standard power- wringer machine. Two firms are now producing small machines of approximately the same capacity as the hand-wringer models, but equipped with power wringers. More auto- matic washers appear to be produced than semi- automatics, but the recent introduction of a semiautomatic machine selling at a price com- parable to power- wringer models may bring about an increase in the share of the market held by semiautomatic washers. Vacuum Cleaners. — The market for vacuum cleaners is small and can be expected to develop gradually. Most floors are of tile or terrazzo con- struction and, even where wooden flooring is found in second-story bedrooms, small scatter rugs are more likely to be used than large rugs or carpeting. The necessity for vacuum cleaners is further diminished by the abundant supply of domestic servants. Local customs and housekeep- ing practices in Mexico are not likely to change so drastically in the foreseeable future that de- mand for and production of vacuum cleaners will increase at a rate substantially greater than in the recent past. Consumption hi the last 3 years has increased about 20 percent annually, which is probably the absolute maximum that may be attained through vigorous sales campaigns by manufacturers and distributors. From 1959 to 1965, the average annual rate of growth is more likely to be 12 or 13 percent, in which case by 1965 annual vacuum cleaner sales will approxi- mate 20,000-25,000 units. Electric Ranges. — Dealers tend to sell electric ranges on a to-order basis. Insufficient time has elapsed since domestic production was initiated to afford any reliable indicators on future con- sumption trends, but prospects seem unfavorable at present. A survey by the sole manufacturer of electric ranges disclosed that, in 1956, the aver- age cost in the Federal District area for operating an electric stove was $25 a month, compared to $6.40 for a gas stove. No appreciable change in the cost differential between gas and electricity for cooking is anticipated in the foreseeable future. Household Refrigerators. — The demand for household refrigerators in 1957, 1958, and the first half of 1959 failed to keep pace with the rate projected in External Disequilibrium in the Eco- nomic Development of Latin America. However, sales were expected to pick up somewhat by late 1959. Although the ratio of household refrigera- tors to wired dwellings implies market satura- tion of 21.5 percent by the end of 1958, actual saturation is probably somewhat lower because sales of household refrigerators undoubtedly in- clude purchases by small commercial establish- ments. Most gas refrigerators are used in those areas of southeast Mexico where electricity is not available. Farm and Home Freezers. — Because the market for freezers is quite limited, production volume is geared closely to demand. By no means are all freezers acquired for farm or home use. A sig- nificant percentage are purchased for use in com- mercial establishments such as restaurants, bars, and motels. Growth in consumption is expected to be very gradual unless Mexican customs in food preparation and preservation change radically and the frozen-food industry greatly expands. The rising prices of foodstuffs of all kinds may eventually engender such changes. Imports External Disequilibrium in the Economic De- velopment of Latin America estimated that by 1965 imports, including parts and spares, would account for approximately 31 percent by value of the total household appliance market. However, the growth of domestic manufacture of integral parts and assembly of finished units has pro- gressed at a far greater rate than anticipated. From 1955, the base year of the above study, to 1957, the proportion of imported parts to the total value of the finished units produced in Mexico had fallen from about 45 percent to 25- 30 percent. Mexico is a very minor market for U.S. ap- pliance manufacturers, except for parts. Appli- ances are subject to prohibitive import duties and to import licensing requirements which are so administered as to effectively preclude imports from any country. Such restrictions reflect the Government's policy of protecting and fostering the domestic manufacture of household appli- ances. The market for impoi'ted components used in the assembly or manufacturing process has re- mained high since 1948, while imports of finished appliances have dropped drastically. Virtually without exception, the value of parts and sub- assemblies imported into Mexico is greater than the total value of finished appliances formerly imported. The decline in U.S. exports of complete house- hold appliances to Mexico may be noted in table 19. 36 Table 19. — U.S. Exports of Major Household Appliances to Mexico, 1952-59 [Quantity in units ; value in dollars] Washing machines Year Nonautomatic Serai- and fully automatic Vacuum cleaners Electric ranges Quantity Value Quantity Value Quantity Value Quantity Value 1952 1953 1954 1955 1956 1957 1958 1959 4,297 3, 341 2, 327 2, 000 273 182 364 302 453, 301 362, 438 241, 826 88, 563 35, 353 26, 157 27, 250 40, 353 1,419 745 624 843 607 591 697 854 209, 712 127, 199 98, 446 147, 814 122, 538 132, 917 151, 700 166, 432 1, 790 2, 529 1, 940 3, 643 1, 336 1, 230 830 640 58, 466 84, 190 103, 572 144, 224 63, 662 49, 344 25, 816 19, 402 115 65 72 44 65 49 52 4 22, 137 12, 145 16, 387 10, 730 8,942 7, 832 9,223 1,433 Year Electric refrigerators Mechanical refriger- ators and freezers Electric freezers Quantity Value Quantity Value Quantity Value 1952 1953 1954_ 1955 1956 4,595 3,008 3, 188 560 770 1, 457 1, 666 1, 192 898, 484 634, 798 566, 399 118, 603 182, 598 291,251 385, 930 299, 780 425 355 1, 011 422 171 244 34 35 98, 001 79, 580 188, 842 93, 655 39, 278 38, 727 11, 735 8,950 250 142 60 26 44 40 106 66 63, 633 38, 708 19, 294 8, 633 8, 540 1957 10, 105 1958 1959 30, 362 23, 728 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Mexican import duties on household appliances are as follows: Tariff No. Description Specific duty Ad valorem duty (take higher rate) Percent of invoice value Official valuation 715.03.00 i 715.03.01 742.04.00 » 742.04.01 i 742.04.02 See footnotes at end of Washing machines weighing up to 100 kilograms each (220 lbs.) , per gross kilogram Washing machines weighing over 100 but not over 800 kilo- grams each (over 220 but not over 1,760 lbs.), per gross kilogram Aluminum agitators without plastic coating for washing ma- chines, per legal kilogram Sides, skirts, with or without feet, fronts, backs, tops, and vats of ordinary metal, neither enameled or painted, for washing machines, per legal kilogram Wringers, assembled as an operating unit, for washing ma- chines, per gross kilogram table. $0. 120 . 048 . 040 . 040 .008 100 80 90 90 $2. 00 1. 76 2. 48 3.36 1.88 37 Mexican Imp ort Duties — Continued Description Specific duty Ad valorem duty (take higher rate) Tariff Xo. Percent of Official invoice value valuation 743.04.98 > Separate parts and repair parts of iron and steel, enameled or painted in whole or in part, for washing machines, not specified, per legal kilogram $0. 080 80 None 743.04.99 Separate parts and repair parts for washing machines, not specified, per gross kilogram. ._ . ______ . 008 10 None 735. 02. 05 > Electric stoves of all kinds, weighing up to 40 kilograms each (88 lbs.), per legal kilogram. _ . 160 80 $2, 16 735.02.06 > Electric stoves of all kinds, weighing over 40 kilograms each (88 lbs.), per gross kilogram . . 160 80 2. 04 735.04.03 ' Vacuum cleaners and carpet sweepers, per gross kilogram Refrigerators 2 and Parts . 200 50 2. 96 718.01.06 ' Refrigerators of base metal which burn liquid or gas fuel, up to 200 kilograms (440 lbs.), per legal kilogram . 240 100 1. 74 718.01.07 ' Same, weighing over 200 kilograms (440 lbs.), per legal kilo- gram — ________ . 048 60 N ne 735.07.00 ' Electric refrigerators of base metal, up to 200 kilograms (440 lbs.), per legal kilogram . . . . 400 100 2. 54 735.07.01 ' Same, weighing over 200 kilograms (440 lbs.), per legal kilo- gram . ..... . 048 70 1. 56 742.09.00 ' Cabinets for gas or liquid fuel burning refrigerators, per legal kilogram ________________ . 320 . 320 50 50 None 742.09.01 i Cabinets for electric refrigerators, per gross kilogram Separate parts and assembly material, not painted or enameled, None 743.05.00 except cabinets and their parts, for gas or liquid fuel refrig- erators, per gross kilogram.. . 008 5 None 743.05.02 ' Separate parts of base metal, whether or not painted or enameled, of any weight, for gas or liquid fuel refrigerator cabinets, per gross kilogram _ ______ . 320 . 320 50 50 None 743.05.03 > Same, for electric refrigerator cabinets, per gross kilogram None 743.05.04 Aluminum trays used in household refrigerators to make ice cubes; also their separators, per gross kilogram.. . 080 20 2. 20 743.05.05-. Dehydrators or dryers for refrigerator installation, consisting of cylinders of ordinary metals of all kind, over 3 and up to 15 centimeters (1.181 to 5.905 inches) in diameter, generally charged with drying agents, per gross kilogram... _ . . . 016 25 None 743.05.06 Apparatus used for lowering temperature in refrigerators which operate on liquid or gaseous fuels, per gross kilogram .008 3 None 743.05.07 Compressors for lowering temperatures in electrically operated refrigerators, per gross kilogram. ... .OOS 10 None 743.05.08 Coils for electrically operated refrigeration or heating systems, even with ventilators, per gross kilogram- .032 40 None 743.05.0'J ' Circuits comprising compressor, coils, and their connections, for electrically operated refrigeration or heating systems, per gross kilogram _ . 032 40 None 743.05.99. Separate parts and assembly material, neither painted nor enameled, for electric refrigerators not specified, except cabinets and integral parts therefor not specified, per gross kilogram . _ _ . 008 5 None 1 Goods in these classifications are subject to import control; the importer must obtain an import permit from the Mexican Ministry of Industry and Com- merce before placing firm orders for the goods. 1 Freezers aro classified as refrigerators. Note. — A surtax of 3 percent of the total duties is levied on all imports other than by mail; 10 percent on mail imports. 38 Exports Mexican exports are negligible. Market Potential and Licensing Opportunities In view of the relatively limited size of the Mexican market and the potential productive ca- pacity of the numerous companies engaged in the manufacture of household appliances, the market is believed to be near the saturation point. Com- peting for a share of the market, no one com- pany is able to achieve economies in production which would significantly reduce unit costs or re- tail prices for finished products. Under the cir- cumstances, the prospects for any additional entries into the field would seem to be poor. Only in the vacuum cleaner and home freezer fields do opportunities for additional licensing ar- rangements appear to exist. Licensing is common in other segments of the appliance industry, and the experience has generally proved mutually satisfactory to licensors and licensees. However, owing to the limited volume of production of vac- uum cleaners and freezers, this device may not be profitable enough for Mexican companies and American licensees. Though the import of finished products from the United States is virtually excluded, the mar- ket for appliances has not altogether vanished. The demand for parts used in assembly operations will probably continue at a high level. American manufacturers must, however, attempt to meet in- trusion of foreign competitors offering lower prices and extended terms. Imports of German compressors, for example, are priced 60 percent below comparable U.S. units and terms are granted up to 6 months from date of landing. To maintain their share of the market, Ameri- can exporters should give better service to the Mexican importer by exercising care in packing, in more efficient handling of orders and invoices, and by providing service and guidance compara- ble to that given their own U.S. distributors. PARAGUAY Production The household electrical appliance industry in Paraguay engages in assembly rather than manu- facture of equipment. The entire industry is lo- cated in Asuncion. No foreign capital is involved in any of the companies. Four small firms assem- ble refrigerators from imported components and domestically produced cabinets. One other plant assembles refrigerators, using imported parts only. Two small firms assemble hotplates from imported parts. No other appliances are assembled in Paraguay. Assembly of refrigerators totaled less than 200 units in the last 3 years, and hotplates less than 150. Channels of Distribution The principal distribution center is Asuncion. Modern retailing and distribution techniques are not used, although there is widespread newspaper advertising in the country's three newspapers, all printed in Asuncion. Individual retailers of elec- trical appliances import all items themselves, and apparently no effort is made to insure that stocks of appliances are on hand at all times; retailers sell out inventories, and weeks or months may pass before a new shipment is received. Shops are old fashioned, and very few retail establishments have outlets outside Asuncion. Consumption Consumption of electrical appliances in Para- guay is actually the consumption in Asuncion. Outside of the capital city, few places have electric power. The preponderance of the purchasing power of Paraguay and of the demand for elec- trical appliances is concentrated in the 250,000 inhabitants of Asuncion and the bordering areas. No official consumption figures are available. Table 20 shows imports into Paraguay for 1957 and 1958. Householders have developed a strong desire for electrical appliances during the last few years, but have had to curb it because of the limited availability of electric power. New consumers will be added as electricity is provided in those areas lacking it and as service is improved in areas 39 Table 20. — Paraguay: Imports of Major Household Appliances, 1957-58 [Units] Country of origin Washing machines Electric ranges Refrig jrators Free zers 1957 1958 1957 1958 1957 1958 1957 1958 Argentina 221 299 19 50 243 341 38 1 64 Brazil Canada 1 Denmark 2 1 5 2 219 Germany . - 5 1 67 49 2 46 9 25 575 104 6 Great Britain 1 Sweden United States 5 63 3 19 75 Total 233 429 19 104 472 1,035 123 146 now electrified. A new 10,000-kilowatt generator group will soon begin operating in Asuncion, and should satisfy demands for electricity through 1960. When the advance deposit requirement is abolished, more appliances can be imported at lower prices. If credit restrictions are eased, im- porters will be able to finance larger imports. Demand for household refrigerators is espe- cially strong because the hot and humid climate necessitates refrigeration of food. Demand for freezers is low. Paraguayan families first use their limited purchasing power for refrigerators, then for freezers. Washing machines are becom- ing more common in private homes, the automatic type being preferred. Almost no market exists for electric ranges. However, hotplates are widely used, and some small two-burner and small oven-combination ranges are now appearing in the market. Use of electric ranges is restricted by the high cost of electricity in Asuncion, which makes any appli- ance using an electric heating element expensive to operate. The present charge for 1 kilowatt- hour is the equivalent of 4 cents. Because most of the floors in Paraguay are of tile and few rugs are used, little demand exists for vacuum cleaners. No estimates of future consumption are avail- able. After many years of import restriction, 1958 was the first full year when no direct import controls were in effect. Electrical appliances in use throughout the country at the end of 1958 were estimated as follows: Units Washing machines 1,000 to 1,200 Electric ranges 200 to 300 Refrigerators 10,000 to 12,000 Freezers 350 to 500 Service facilities for electrical appliances are very poor. Many spare parts for U.S. appliances are not available, although some spare parts for Argentine appliances can be obtained. Many re- tailers do not provide service or sell spare parts, but the more responsible dealers have one or two locally trained servicemen to answer calls. It should be noted that electric motors burn out fast in Asuncion as a result of the drop in the line volt- age from 220 volts to 170-185 volts during peak- load hours. The following April 1959 retail prices for ap- pliances in Asuncion are for cash sales, the price being about 10 percent higher for installment-plan purchases : Washing machines : Argentine make : Nonautomatic $120 Automatic 200 U.S. make, automatic 280 Electric ranges : European make 220 Argentine make 180 Refrigerators : Brazilian make, 7 cubic ft 350 European make, 7 cubic ft 490 Argentine make, 9 cubic ft 500 U.S. make, 9 cubic ft 640 Freezers : Argentine make, 12 cubic ft 600 U.S. make, 12 cubic ft 740 40 Prices are high and play an important part in determining sales. Installment buying has been encouraged in order to increase sales. Imports Paraguayans show a strong preference for U.S. appliances. Owing to removal of import restric- tions and increasing demand for these products, imports increased in 1958 over previous years. U.S. -made appliances are meeting strong price competition from European and Argentine prod- ucts. Brazilian refrigerators have also appeared in the market. The exemption from advance de- posits applying to imports from bordering coun- tries gives a price advantage, partly offset by consumer preference for U.S. appliances. U.S. exports of major household appliances to Paraguay in 1955, 1958, and 1959 appear in table 21. Table 21. — U.S. Exports of Major Household Appliances to Paraguay, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic _ . . Semi- and fully automatic Vacuum cleaners 10 10 1,085 3, 900 20 6 2, 390 1, 955 70 14 8, 560 4, 934 Electric ranges 10 899 2 36 2, 500 Electric refrigerators Other mechanical refrigerators and freezers^ _ . Electric freezers _ . ___ 126 31 5 27, 422 11, 520 1, 438 550 2 50 108, 913 665 12, 516 158, 424 579 10, 535 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Paraguayan import duties on electrical household appliances are as follows : Tariff No. Description Rate of duty Additional duty Exchange surtax ' (percent) 699 Electric washing and drying machines for clothes and dishes. 27.5 percent of f.o.b. value. 15 percent f.o.b 780 2 Refrigerators of wood or of any other material, for preserving food, cooling drinks, and for like purposes, electric iceboxes, refrigerating rooms of any system, and also special parts and acces- sories therefor. Per gross kilogram. $0.007787 15 percent f.o.b Note.— Nothing under the heading of electric freezers appears in the Paraguayan Tariff. Freezers would probably be included under Tariff Item Number 780. 15 706 Electric utensils, such as smoothing irons, bread- toasters, hairdryers, cookers, stoves, radiators, caloriferes, coffeepots, cocktail shakers, polishers for silver plate, forks and spoons, etc., teapots, mate pots, "tireless cookers," and the like, com- plete or not. Per legal kilogram. §0.031147 15 percent f.o.b Note. — None of the items under 706 will bear a duty of less than 27.50 percent ad valorem. Electric cooking ranges and vacuum cleaners are included under Tarill Item No. 706. These 2 items do not appear as such anywhere in the Paraguayan Tariff. 1 This additional 15-percent surcharge is levied on the landed costs of virtually all imports, including household appliances. Commercial banks collect this exchange surtax, and goods are not released from customs without proof of payment by the importer. For goods imported under deferred payment schemes or with foreign exchange supplied by foreigners, the 15 percent must be paid on the value of goods upon arrival in customs. 2 The duty for Tariff Item 780 is bound by the United States-Paraguay Trade Agreement of 1946. Note.— Imports of refrigerators of all kinds, including freezers, are subject to prior deposits of 300 percent. All other items listed require a prior deposit of 200 percent. Prior deposits are retained by banks for a minimum period of 120 days. 41 Market Potential The strong consumer preference for U.S. -made electrical appliances makes the outlook good for exports to Paraguay. As consumption increases, the United States should maintain its share of the market, or even increase it when the advance de- posit system for imports is liberalized or abolished — enabling U.S. exports to compete pricewise with Argentine appliances. The free exchange system inaugurated in Argentina may increase Argentine appliance prices, which would bring them closer to U.S. prices. Moreover, plans are now under- way to increase significantly Paraguay's general exports, which will eventually result in increased capacity for imports. Many appliances imported from Argentina are produced by subsidiaries or licensees of U.S. man- ufacturers. Paraguay will probably continue to grant some preference to imports from neighbor- ing countries, and electrical appliances produced in Brazil, Uruguay, and Argentina will thus have some advantage in the Paraguayan market other than savings on ocean freight. Counterbalancing this, however, is the marked consumer preference for U.S. -made appliances. Little promise exists for direct U.S. investment in the manufacture of electrical appliances in Paraguay. The small size of the domestic market makes any direct investment or licensing arrange- ment unprofitable. PERU Production Household electrical appliances are not manu- factured in or exported from Peru, but arrange- ments reportedly have been concluded to under- take the manufacture of certain appliances in the near future. Channels of Distribution The bulk of the market for electrical home ap- pliances is in Lima and in the surrounding area known as Greater Lima, served by the seaport of Callao. Other important commercial centers are Arequipa in the southern region, and the northern cities of Trujillo, Chiclayo, and Pirua. The port of Callao in 1957 and 1958 accounted for the im- port of 96 percent of Peru's refrigerators and freezers, 95 percent of its washing machines, 93 to 94 percent of its cooking ranges, and 94 to 95 percent of its vacuum cleaners. Some appliances are forwarded by Lima importers to nearby pro- vincial districts. Greater Lima absorbs approximately 85 per- cent of all the washing machines and 90 percent of all refrigerators, freezers, ranges, and vacuum cleaners sold. The limited distribution of elec- trical appliances elsewhere is attributed to the in- adequacy of electric current in most provinces. For this reason, kerosene models are in greater de- mand. Household electrical appliances are marketed through exclusive distributors in Lima who carry stocks and sell at wholesale to subdistributors and dealers. The distributors also sell at retail. Lima distributors cover the principal provincial re- gions, either through branch houses or subdistrib- utors. Consumption Consumption in 1955-57 of electrical home ap- pliances in most cases doubled that of the 3 pre- ceding years, but the situation changed with the country's economic deterioration beginning in mid-1957. The Peruvian sole depreciated from 19 soles per dollar in 1955-57 to an average of 23.30 soles in 1958 and 27 in 1959. Reductions in ap- pliance imports and sales in 1958 were reportedly due to the strict limitations on bank credit applied by the Government as part of its financial stabili- zation program. In April 1959, heavy additional ad valorem taxes were imposed on numerous ar- ticles considered nonessential. In 1957-58 estimated consumption was as fol- lows (in units) : 42 1957 1D58 Washing machines, automatic and non- automatic 6,300 5,400 Vacuum cleaners, tank type 2, 900 2, 700 Electric ranges, cabinet type 4, 400 4, 300 Refrigerators 9,500 9,000 Freezers, home type 150 120 The bulk of the demand for washing machines in 1958 was for the nonautomatic type (particu- larly 6-pound capacity wringer-washers), which accounted for some 90 percent of sales. Because of price considerations and the fact that most American machines offered in this market are of 9-pound or larger capacity, European machines continued to dominate the washing machine mar- ket in 1958 to the extent of about 65 percent of total sales. A low-priced British wringer-washer has become very popular. The largest demand for vacuum cleaners in 1958 was for the tank type. Of total vacuum cleaner sales, European makes accounted for about 80 percent, the remainder being American. The principal competitor in this field is a Swedish tank model that was introduced in 1953. Since then, it has gained steadily in popularity and accounted for 48 percent of the trade in 1957. Sales of this machine receded in 1958 to about 40 percent be- cause of more active competition from American and other foreign makes. The significant success attained by the Swedish cleaner is ascribed en- tirely to an intensive house-to-house demonstra- tion and sales campaign. Price was not a factor because it is more expensive than any American or other foreign make sold in Peru. Others offer- ing strong competition to American cleaners, both on a quality and price basis, are British and Dan- ish makes. Because of the very competitve situa- tion, American makes have made slow progress in recent years, but demand for them should gain when trade conditions improve. American vac- uum cleaners are considered to be as good as or better than those of other countries, and are com- petitive in price. Cooking ranges of the three- and four-plate, standard-type cabinet models (with oven) were preferred over all other types in 1958. Of the total cooking- range consumption in 1958, approxi- mately 55 percent was of three-plate and 45 per- cent of four-plate units. Substantial price ad- vantages accounted for the fact that European ranges outsold all competitors to the extent of nearly 70 percent of the total imports. American ranges offered in Peru are of better design and have more gadgets, but the price difference is so marked that most of the market goes to the sim- pler and cheaper European ranges. European models are very well regarded for their perform- ance and durability. A low-priced American range was sold with some success against compe- tition with comparable European makes. Prin- cipal foreign competitors in the cooking range area are German, Swedish, and Dutch. In 1958, 8-9-cubic-foot standard-type refrigera- tors accounted for nearly 70 percent of sales, fol- lowed by 10-, 11-, and 12-cubic-foot models. Larger size machines, as well as combination re- frigerator-freezers, remained slow sellers. Consumption of freezers continued to be limited, but the upright home model gained some ground at the expense of the horizontal models. Ameri- can makes of refrigerators and freezers dominated the market in 1958. Service facilities are very important in selling home appliances. Most local distributors of American and foreign makes maintain special repair and service shops. Electric current characteristics in Greater Lima and other important consumer centers are a.c, 60 cycle, 220 volts. Price and credit terms are important factors to the Peruvian purchaser. Over 90 percent of household electrical appliance sales are made on the installment plan; carrying charges and terms extend from 10 to 24 months. Average retail prices in 1959 of popular models sold under the installment plan were as follows : European nonautomatic wringer-washers, 6-lb. capacity $244 European low-priced vacuum cleaners, tank-type, with accessories 120 High-priced Swedish vacuum cleaner, flat-tank type, with accessories 166 American vacuum cleaners, upright tank type, with regular accessories 126 European cooking ranges, enameled : 3-plate model, with oven 253 4-plate model, with oven 304 American refrigerators, standard type : Enameled, 8 cubic foot 532 Enameled, 9 cubic foot 601 These prices were 25-30 percent higher than in 1958. Discounts of 10-15 percent usually are granted for cash purchases of small appliances; 20-30 percent on large appliances. Price and credit terms are relatively less im- portant in the sale of refrigerators and freezers, which are supplied almost entirely by U.S. firms 43 whose quotations and terms are very similar. In the case of other appliances, although American suppliers usually are able to meet the terms offered by European firms, U.S. quotations are generally substantially higher, a considerable obstacle in the Peruvian price-conscious market, particularly at present when the exchange situation is very stringent. Appliances in use in Peru at the end of 1957 and 1058 were estimated to be as follows (in units) : Dec. 31, Dec. 31, 1957 1958 Washing machines 37, 600 43, 000 Vacuum cleaners, tank type 8, 600 11, 300 Electric ranges, cabinet type 26, 000 30, 300 Refrigerators 61, 000 70,000 Freezers 980 1, 100 Table 22. — U.S. Exports of Major Household Appliances lo Peru, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance Washing machines: Nonautomatic Semi- and fully automatic Vacuum cleaners Electric ranges Electric refrigerators Other mechanical refrigerators and freezers Electric freezers 1955 Quantity 1, 173 354 487 704 10, 432 368 124 Value 101, 805 49, 916 19, 537 98, 050 1, 640, 774 81, 835 21,008 1958 Quantity 1, 617 431 609 1, 581 9, 511 25 159 Value 155, 975 65, 622 24, 191 202, 700 473, 417 6, 625 31, 679 1959 Quantity 944 343 349 706 3,665 44 157 Value 85, 329 49, 179 8, 892 95, 906 596, 957 11, 583 32, 702 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Peruvian import duties on household electrical appliances are as follows: Tariff No. Description Specific duty per gross kilogram Unified surcharge (percent of c.i.f. value) 2791 2792 Electric refrigerating apparatus of all classes, complete or incomplete The same, with the exterior enameled with china or porcelain _ $0. 0840 . 1050 . 0630 . 2625 . 0315 . 0840 43. 5 43. 5 2796 2902 2909 Machines and apparatus for cleaning, in general, such as washing ma- chines, floor scrapers, floor polishers, etc., whether or not operated by electricity and weighing each more than 20 kilograms (44 lbs.). Note. — Machines mentioned under this number, electrically operated and weighing up to 20 kilograms (44 lbs.), are classified under Tariff Item No. 2902. Electric household apparatus for general cleaning purposes, such as vacuum cleaners, floor waxers, and the like. Note. — Machines mentioned under this number weighing more than 20 kilograms (44 lbs.) are included under Item No. 2796. Electric heating apparatus for industrial, laboratory, and household use, such as ovens . . . recooking . . . reheating, and similar apparatus whose weight in each instance is more than 100 kilograms (220 lbs.). Electric heating apparatus for industrial, laboratory, and domestic use, such as heaters, stoves, ovens, toasters, hot water heaters, pressing irons, and similar, the weight of which, in each instance, is more than 10 kilo- grams (22 lbs.). 23. 5 35. 67 15. 67 2910-.- 35. 67 44 The average life in Peru for refrigerators, freezers, and cooking ranges is 10 years, and for washing machines and vacuum cleaners 6 years. Imports Peruvian import statistics do not list individual household appliances separately. In a category including washing machines, floor scrapers, and floor polishers, the United States accounted for 38 percent of 1958 imports; the United Kingdom, 27 percent ; and Canada, 20 percent. Sweden is the principal supplier of vacuum cleaners and floor waxers, furnishing 46 percent of 1958 imports. The United States supplied 17 percent; the United Kingdom, 16 percent; and Germany, 14 percent. The United States fur- nished approximately 64 percent of all electrical cooking and heating equipment weighing more than 10 kilograms (22 pounds), and Germany ac- counted for 25 percent. Of total imports of all classes of electrical refrigerators, the United States supplied 88 per- cent, the only other important sources being Sweden and the United Kingdom. In view of adverse trade conditions, 1959 im- ports of most electrical home appliances Avere ex- pected to decline by at least 30 percent below the 1958 levels. As shown in table 22, the decline from 1958 to 1959 in value of U.S. exports to Peru was 39 percent for all types of household washing machines, 63 percent for vacuum cleaners, 53 per- cent for electric ranges, and 58 percent for all classes of household refrigerators and freezers. Market Potential The long-range outlook for electrical household appliances is favorable because of steadily im- proving living standards. HoAvever, prospects for the immediate future are not encouraging. Persistent unfavorable trade conditions are re- stricting imports in general, and particularly of those items that have been subject to heavy addi- tional import duties and taxes. It is anticipated that 1960 exports of appliances from the United States, as Avell as from other sources, will continue at below 1958 levels unless Peru's economic condi- tion improves greatly. REPUBLIC OF PANAMA Channels of Distribution Household electrical appliances are not pro- duced in Panama. American manufacturers cus- tomarily market their products by appointing an exclusive distributor to handle sales throughout the country. Distributors usually locate their principal establishments in Panama City, and may have branch outlets in some of the larger towns of the interior. No special distribution problems exist. Consumption Sales of electrical appliances in 1958 were esti- mated to be (in units) : Washing machines 1, 150 Vacuum cleaners 65 Electric ranges 35 Refrigerators 3, 200 Freezers 65 Generally, an increase Avas registered over the 1957 level. Part of the 1958 demand was satisfied from dealers' stocks acquired in 1957 ; in that year a neAV tariff schedule was under consideration, but an anticipated increase in import duty did not materialize. A potential market exists for 10,000 AA 7 ashing machines, 6,000 vacuum cleaners, 6,000 electric ranges, 20,000 refrigerators, and 12,000 freezers. Within this market, refrigerators should continue to move at least as briskly as in 1958. Despite the ready a Availability of servants at low wages, elec- tric washing machines are becoming more popu- lar. A long-range potential for both vacuum cleaners and freezers is reported, but sales are not expected to expand substantially in the near fu- ture. The high cost of cooking with electricity, as compared with natural gas, will be a strong deterrent to the sale of electric ranges in the fore- seeable future. A new sales incentive plan of a major utility company is expected to have some effect in stimu- lating the sales of all appliances in the immediate future. The long-range picture will be affected primarily by extensive hydroelectric projects (now only in the planning stage) in several sections of 45 the country. If these projects materialize, they will provide cheaper electricity to a larger area of the Republic, resulting in new consumers and higher per capita consumption of electricity. The number of electric appliances in use in 1957 and 1958 in principal consumer areas, representing 75 percent of the Republic's domestic consumers, are estimated as follows : 1957 195S Washing machines 9,600 10,450 Vacuum cleaners 480 520 Electric ranges 240 265 Refrigerators 14,400 16,400 Freezers 480 520 Dealer markups of 30-100 percent over cost (averaging 80 percent), a minimum annual inter- est rate of 9 percent, and heavy surcharges com- bine to create a high retail price for appliances purchased on credit. Though these high prices restrict the volume of sales, the availability of credit, rather than the selling price, determines sales prospects in this market. Representative 1959 retail prices in the higher and lower brackets, depending on quality and/or size, for leading American appliances in Panama City were as follows : Higher bracket Lower bracket Automatic washing machines $395-$550 $200-$350 Vacuum cleaners 1 119 85- 100 Electric ranges 475- 700 295- 395 Refrigerators 499- 850 259- 550 Freezers 499- 695 389- 425 1 Complete with set of attachments. Less expensive models are available In Panama but have not been stocked by the leading distributors. Imports Table 23 shows imports of major household ap- pliances for 1956-58 : Table 23. — -Panama: Imports of Major Household Appliances, 1956-58 [Quantity in units; value in dollars] Appliance ' 1956 1957 1958 Quantity Value Quantity Value Quantity Value Washing machines, dryers, and ironers 2 . _ Electric ranges Refrigerators _ . _ . _._ Freezers _... . 1, 793 169 4, 137 n.a. 148, 301 9, 319 547, 748 n.a. 1, 58S 187 4. 397 n.a. 181, 518 14, 207 655, 281 n.a. 1, 108 n.a. 3 3, 442 4 429 115,452 n.a. 3 548, 441 4 12, 540 n.a. — Not available. 1 No import statistics are available on vacuum cleaners. a Principally washers. 3 Includes 441 nonelectric units valued at $81,256. * Includes 66 nonelectric units valued at $9,324. Source: Commercio Exterior, Estadistica Panamefia. U.S. exports of major appliances to the Repub- lic of Panama in 1955, 1958, and 1959 are shown in table 24. Market Potential American factories now provide 95 percent of the major electrical appliances imported into Panama, but European manufacturers may soon try to enter this market. More than 90 percent of appliances are sold on extended credit; therefore those manufacturers who enable their distributors to offer the best long-term credit at a reasonable cost to the consumer may dominate the market. Any direct investment of U.S. capital in pro- duction facilities in Panama would not seem feasible at this time because of the small market. 46 Table 24. — U.S. Exports of Major Household Appliances to the Republic of Panama, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic . _ - _ 566 384 173 87 2, 704 100 123 49, 685 58, 589 7,933 12, 656 439, 746 23, 988 19, 425 285 762 30 43 2, 514 90 105 29, 190 109, 511 1, 500 6,928 408, 382 24, 869 19, 308 389 755 328 158 2,559 36 33 36, 284 Semi- and fully automatic Vacuum cleaners _ - 111,391 11, 215 Electric ranges Electric refrigerators Other mechanical refrigerators and freezers Electric freezers _ 24, 231 418, 539 10, 098 6, 902 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Aferchandise, Bureau of the Census, U.S. Department of Commerce. Panamanian import duties on household electrical appliances are as follows : Ad valorem Tariff No. Description duty (percent) Subgroup 721-12 __ Portable electric tools, accessories and replacement parts, not elsewhere classified (including household appliances) : 721-12-02 Electric household machines for washing, drying, or ironing clothes 20 721-12-99 Other electric appliances for household use, not elsewhere classified (.beaters, vacuum cleaners, polishers, etc.). 20 Subgroup 721-06 Electrothermic apparatus (including those for household use) : 721-06-02 Ranges, ovens, toasters, waterheaters, and other household electro- thermic apparatus, not elsewhere classified. 20 Subgroup 899-08 Mechanical refrigerators and freezers (electric, gas, or other), complete, self-contained units, for household use. (Note. — Those for industrial use are in subgroup 716-12): 899-08-01 Complete, including separately imported chests therefor 15 899-08-09 Accessories and replacement parts, not elsewhere listed, for this group__ 10 Note. — Effective January 1960 till imports were subject to an additional 1 percent surcharge based on f.o.b. value. 47 URUGUAY Production No official Uruguayan statistics are available on production of household electrical appliances, but estimates for the period 1956-59 are as follows (in units) : Washing machines, non- 1956 1957 1958 1959 automatic 9, 000 11,000 10.000 8,000 Vacuum cleaners 1. 600 2, 000 1, 500 1. 500 Electric ranges 16,700 20,000 15.000 9,000 Electric refrigerators— 33. 000 40, 000 30, 000 21, 000 No household electrical appliances are exported. Local manufacture of fully automatic washing machines is precluded by the high cost of produc- tion. Freezers are not produced at present be- cause demand is small, but manufacturers of electrical appliances foresee the possibility of de- veloping a market in the future. Only one factory manufactures complete household electrical ap- pliances, importing only the necessary raw ma- terials. All other factories assemble from imported accessories, parts, and raw materials. Imports of essential parts and raw materials have declined approximately 65 percent since 1957 be- cause of the acute scarcity of dollar exchange. Skilled labor is abundant, but power resources have been extremely limited since a flood disaster in 1959 devastated facilities and necessitated ra- tioning of electricity. No Government subsidies are granted to the in- dustry. Foreign capital, principally from the United States, represents approximately 51 per- cent of the capital invested in the industry. Wages for workers of the electrical appliance industry range from $l-$4 per day for males, and from $l-$2 per day for females. Fringe benefits include retirement and pensions, unemployment and labor accident compensation, and family allot- ments — and are financed by 13-15 percent with- held from the worker's salary and 24.2 percent contributed by the employer. Channels of Distribution The principal distribution center is Montevideo, where the majority of manufacturers are located. In Montevideo and the interior of the country, washing machines, vacuum cleaners, ranges, and refrigerators are distributed by dealers and re- tailers, who buy from the manufacturers. Consumption Output approximates consumption because im- ports have been curtailed by rigid restrictions on dollar exchange. Montevideo consumed about 70 percent of the total production and the interior of the country, the remainder. Demand for electrical appliances in 1955-58 showed a constant upward trend, in 1958 exceed- ing production by approximately 50 percent. Be- cause of deteriorating economic conditions and in- flationary trends, the volume of future consump- tion is unpredictable. Undoubtedly the electric power rationing has had a depressing effect on sales of electrical appliances. Servicing facilities are adequate for refrig- erators, but not for washing machines, vacuum cleaners, or electric ranges. Domestic and Un- manufactured products are considered to have bet- ter servicing facilities than European appliances. Accessories and parts for repairs of imported units are manufactured locally. Average 1959 retail prices for appliances in Uruguay were as follows : Washing machines (nonautomatic) $98 Vacuum cleaners 71 Electric ranges 129 Refrigerators 265 Wholesalers' prices are 80 percent of retail prices. Imports Although U.S. -made appliances are desirable because of their technical quality and styling, im- ports from the United States have declined owing to the exchange crisis in Uruguay. Preference in granting import licenses has in the past been given to countries maintaining bilateral trade agree- ments with balances favorable to Urugua} r . If the importer could prove that the desired goods were unobtainable from one of these countries, preferably having a "soft currency," he would be allowed to import from other countries, including the United States, on a 180-day deferred-payment basis. To protect local manufacturers against foreign competition and to conserve scarce dollar funds of the country, the Government also placed im- ported appliances in a "nonessential" category of the Import Code, assigned to them the free ex- 48 Table 25. — U.S. Exports of Appliances to Uruguay, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic 248 715 228 49 316 1 30, 985 124, 453 10, 455 5, 805 70, 773 583 Semi- and fully automatic . . 10 150 1 64 2, 080 4, 743 535 17, 995 50 86 7 97 2 10, 387 Vacuum cleaners .. Electric ranges Electric refrigerators, _ _ Other mechanical refrigerators and freezers . Electric freezers 3, C56 926 33, 077 550 1 600 Source: Report No. FT-410, U.S. Fiports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Uruguayan import duties on household electrical appliances are as follows : Rate of Port han- duty ! dling charge General Tariff No. Description Surcharge surtax (Per 100 gross kilograms) Position 838 — Apparatus for heating, cooling, etc.: (a) In iron or steel: 1. Up to 50 kilograms Cl 10 lbs.) in weight, with parts and pieces separate. 189 J. Mechanical refrigerators 2. Up to 100 kilograms (220 lbs.) - 3. Up to 500 kilograms (1,100 lbs.) Position 862 — Small electromechanical imple- $3 89 $0 036 191 $1 44 $0 036 192 $0.99 $0,036 ments up to 15 kilograms (33 lbs.) in weight; electromechanical apparatus for domestic use, not elsewhere specified: 534 (c) Vacuum cleaners and apparatus for clean- ing, waxing, and polishing floors. $10.23 $0,036 50 percent ' Position 865 — Electrotechnical apparatus: of sum of 1 percent (b) Electrotechnical apparatus not else- duties of total 'H where mentioned (including electric and port charges. kitchen ranges) : handling 559 1 . Of iron or steel $4.26 $12.45 $8.52 $0,036 $0,036 $0,036 charges. 2. Of other common metals _ 3. Of other materials Position 854 — Machinery, apparatus, and me- chanical appliances not elsewhere specified: (c) Mechanical machinery and apparatus for domestic use, parts and pieces: 366 1. Machinery and apparatus: F. Others (including washing ma- 56 percent $0.55 per chines). of c.i.f. value. each $100 value. 1 Rate of duty and port handling charge converted to U.S. dollars on basis of value of peso in August 1960 (duty originally shown in Uruguayan tariff schedule as percentage of AFORO, official valuation in pesos per gross kilogram). 49 change rate (8.95 pesos to the dollar), added cer- tain surcharges, and imposed rigorous quota re- strictions. These regulations purposely priced the imported products out of the market and elimi- nated their competition with locally manufactured items. The decline in U.S. exports of appliances to Uruguay in recent years may be seen in table 25. In the past, the above items have been listed as nonessential goods and, as such, subject to licensing and prior deposit requirements. The enactment of a new monetary and exchange law in Decem- ber 1959 instituted a single, freely fluctuating ex- change rate for the peso and effectively released imports from quantitative restrictions. However, the executive branch was empowered to prohibit for a period of 6 months, subject to renewal for similar periods of time if necessary, the total or partial importation of products deemed nonessen- tial or competitive with national industry and to require prior deposits and surcharges not higher than 300 percent of the c.i.f. price of such goods. Effective June 1960 no licenses were being granted for washing machines, vacuum cleaners, electric ranges, or assembled refrigerators and freezers. However, machinery for refrigeration equipment (probably refrigerating systems) as well as other refrigerator parts can be imported and are sub- ject to a prior deposit requirement of 150 percent. The list of importable items is subject to change. Prior deposits are payable at time of application for an import license, are held for a minimum of 180 days, and are reimbursable within 3 days fol- lowing customs clearance. Market Potential Possibilities for expansion of U.S. exports to Uruguay are slight, owing to the Government's policy of giving protection to domestically manu- factured items. There are no impediments or par- ticular requirements for foreign investment. Foreign firms receive the same treatment as Uru- guayan firms. VENEZUELA Production Household electrical appliances were not pro- duced in Venezuela in 1959. One manufacturer of small kerosene stoves and hardware items in- tends to manufacture electric ranges, washing ma- chines, and refrigerators; however, the extent of production and the price levels for the proposed line are not known. Another firm broke ground in July 19G0 for a plant that will produce electric refrigerators and other products under American license. Channels of Distribution Most American appliances are sold through Caracas distributors or their branch houses in other cities, or to individual outlets in the interior. Maracaibo in the west is a less important distribu- tion center. The largest firm retailing vacuum cleaners sells from door to door. Consumption Venezuelan customs classifications prior to 1959 do not show imports of household appliances sepa- rately, and no other official statistics are available on consumption. Because the United States is the principal source of supply (except for vacuum cleaners, which come mostly from Sweden), its exports to Venezuela would indicate the level of consumption in that country. In 1959 the follow- ing appliances were exported from the United States, according to the Bureau of the Census : Units Value AVashing machines 32,039 $3,707,409 Vacuum cleaners 1,486 61,011 Electric ranges 522 74,849 Electric refrigerators 61,097 9,855,110 Electric freezers 1,286 260,574 Other mechanical refrigerators and freezers 1, 735 453, 113 Representative 1959 retail prices for major ap- pliances in Caracas were : Automatic washing machines $3OO-$500 Semiautomatic washing machines 230- 280 "Wringer washing machines 150- 225 Spin-dry washing machines 345 Vacuum cleaners 60- 150 Electric ranges : 30-in 335 40-in 390- 855 Refrigerators n.a. n.a. — Not available. 50 A.C. current is used throughout Venezuela. In Caracas and North Central Venezuela, voltages are generally 120 single phase, 50 cycles. In the interior, the same voltage is supplied with 60 cycles for residential dwellings. In addition, 208/240-volt lines, single or polyphase in 50 or 60 cycles (depending on the region of the country), are available for industry. Good service facilities exist in the principal dis- tribution centers. In all other areas, service is de- pendent upon a local distributor who services his own line or upon a local repairman. Washing Machines. — The United States fur- nishes about 95 percent of all washing machines sold in Venezuela. Its exports in 1952-59 are given in table 26. Table 26. — U.S. Exports of Washing Machines to Venezuela, 1952-59 [Quantity in units; value in dollars] Year Nonautomatic Automatic and semiautomatic Total Quantity Value Quantity Value Quantity Value 1952 1953 1954 2, 199 7, 118 11,306 8, 520 9, 665 9,327 13, 061 16, 915 208, 210 652, 184 1, 099, 550 879, 307 1, 060, 203 1, 029, 020 1, 195, 123 1, 691, 076 4, 567 4,661 6, 679 6, 644 8, 212 10, 818 14, 746 15, 124 628, 090 806, 522 1, 102, 124 1, 016, 973 1, 244, 936 1, 617, 679 2, 005, 343 2, 016, 333 6, 766 11, 779 17, 985 15, 164 17, 877 20, 145 27, 807 32, 039 836, 300 1, 458, 706 2, 201, 674 1955 1, 896, 280 1956 2, 305, 139 1957 1958 2, 646, 699 3, 200, 466 1959 3, 707, 409 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. U.S. exports of washing machine parts totaled expensive, the Swedish model is well established $94,858 in 1957, $150,325 in 1958, and $157,311 in and has a good reputation ; in addition, the distrib- 1959. utor has an excellent sales organization. Ameri- Washing machine sales are expected to rise can manufacturers can probably increase their indefinitely. The market is split fairly evenly be- portion of the market through intensive adver- tween nonautomatic and automatic machines. A tising and by stressing the lower prices of Ameri- preference for the automatic seems to be develop- can vacuum cleaners. ing, particularly in Caracas. In 1959, however, Until recently, no other country has exported a the United States exported a greater number of significant number of vacuum cleaners to Vene- nonautomatic machines to Venezuela. Among z 1 uela - pome German units have begun to enter , ,• i ,-, n , , the market and have reportedly met with favor, automatic washers, the preference runs to a top- A1jl ,^ ^ n , ^ ., + Although German export figures do not siiow "_ fe '» to , , C T , \r« r™ 1( . vacuum cleaners separately, official trade statistics Household Vacuum Cleaners. — The market for i , , -. T n » , i -, -, . . ' „ , show exports to Venezuela of household vacuum vacuum cleaners is rather small because rugs are ck floQr Uah and ts tota]i $128) . not used ordinarily. Floors are mostly terrazzo 75g ^ 19gg and $292?97g ^ ^ firgt 1Q monthg of and are maintained with floor polishers, which out- -, qp-o sell vacuum cleaners by 3 or 4 to 1. However, the us vacuum deaner rtg to Venezuela were upward trend in the market for vacuum cleaners ag foU accord ing to the Census Bureau: is continuing, as Americans and Europeans come to Venezuela, bringing with them their preference 1952_. 712 $23, 925 for vacuum cleaners, regardless of flooring. 1953 1,099 43,835 The principal supplier of vacuum cleaners to 1954 808 36,427 Venezuela has been Sweden, whose exports of 195 ^ 714 30 > 279 units having a maximum weight of 100 kilograms J^ J' ^ ^' ^J (220 lbs.) totaled $249,549 in 1958, as compared 1958 _ " 985 46^796 with U.S. exports totaling $46,796. Though more 1959 1,486 61,011 51 Electric Household Ranges. — Electric ranges represent a small fraction of all stoves sold in Venezuela. The electric range market is almost entirely dominated by the United States, whose exports of electric ranges and parts totaled ap- proximately $128,000 in 1958 and $109,000 in 1959, compared with about $334,000 in the boom year of 1957. U.S. exports of complete units to Venezuela for 1952-59, according to the Bureau of Census, were as follows : Units Value 1952 551 $74, 1S4 1953 637 84,550 1954 521 90,188 1955 1,311 213,820 1956 870 138,886 1957 1,517 270,932 1958 636 95,061 1959 522 74,849 The percentage of electric ranges, compared to gas, used in Venezuela is not expected to increase. The cost of electric power and installation is pro- hibitive for all but the higher income groups. Gas, particularly in the eastern and western sec- tions, is plentiful and inexpensive. Several domestic dealers no longer stock electric stoves, on the grounds that those who can afford tc install an electric kitchen are wealthy enough to order in advance the largest, most expensive stoves available. Refrigerators and Freezers. — Consumption of refrigerators has risen to more than 62,000 units annually from 33,000 in 1955. Approximately 93 percent of imports are American made. U.S. ex- ports of refrigerators and freezers to Venezuela for 1952-59 are shown in table 27. Table 27. — U.S. Exports of Household Refrigerators and Freezers to Venezuela, 1952-59 [Q.uantity in units; value in dollars] Year Electric refrigerators Electric freezers Other mechanical refrigerators and freezers Quantity Value Quantity Value Quantity Value 1952 20, 631 24, 229 32, 131 31, 199 32, 712 43, 845 55, 120 61, 097 3, 439, 990 4, 195, 142 5, 590, 097 5, 239, 424 5, 541, 232 7, 447, 933 8, 605, 099 9, 855, 110 886 1, 214 1, 293 1, 582 1,064 1, 716 1,507 1, 286 195, 652 268, 150 254, 290 316, 774 221, 050 310, 121 292, 800 260, 574 1, 956 1, 785 1, 815 1, 494 1, 465 2, 726 1, 128 1,735 508, 376 1953 432, 211 1954.__ . ___________ 449, 151 1955 391, 239 1956 _ _ 370, 999 1957 1958 ... 649, 877 296, 279 1959 453, 113 Source: Report No. FT-410, U.S. Fiports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. U.S. exports of parts for electric and other me- chanical refrigerators and freezers, including re- frigerating systems, amounted to $278,526 in 1957, $355,347 in 1958, and $368,627 in 1959. U.S. refrigerators have been favored and have been widely used throughout the country. How- ever, the American share of the refrigerator mar- ket is expected to drop slightly, reflecting the pref- erence by lower income families in the interior of the country for refrigerators of 4- to 6-cubic-foot capacity available from Germany at lower prices. Substantial quantities of this type are also being imported from Sweden. Although official statis- tics for West Germany have not heretofore listed exports of household refrigerators separately, fig- ures for the first 10 months of 1959 reveal a total of $267,036 of household refrigerators and parts exported to Venezuela. Official Swedish statistics show 1958 exports to Venezuela of household re- frigerators, freezers, and parts valued at $665,657. Sales of American household freezers are slow. Increased demand would depend on growth in frozen food consumption, currently at a low level. 52 Venezuelan import duties on household electrical appliances are as follows : Description Rate of duty per gross kilogram Tariff No. For other countries Conven- tional ' Subgroup 721-12 __ _ Portable electric tools, and accessories (including household appliances) : Electric household machines for washing, drying, or ironing clothes. Other electric appliances for household use, n.e.m. (beaters, vacuum cleaners, polishers, etc.): Up to 15 kilograms (33 lbs.) each $0. 003 . 15 . 003 (2) . 12 . 15 .048 721-12-02 721-12-03 _ $0. 003 721-12-03-1 . 15 721-12-03-9 More than 15 kilograms (33 lbs.) each .003 Subgroup 721—08 Electrothermie apparatus (including those for household use): Ranges, cookers, and ovens; electric heaters, including waterheaters. Refrigerators: Up to 100 kilograms (220 lbs.) net each 721-06-02 (2) Subgroup 899-08-00 899-08-01 . 06 899-08-02 _._ .. Over 100 kilograms up to 250 kilograms (over 220 and up to 550 lbs.) net each. Apparatus made up of several appliances for domestic use. (This designation comprises apparatus consisting of a refrigerator, a cooker, a dishwasher, etc., with or without drawers for other purposes.) . 09 899-08-04 . 048 n.e.m. — Not elsewhere mentioned. 1 Conventional duty rates accorded to imports from the United States under the Supplementary United States-Venezuela Trade Agreement of Aug. 28, 1952, effective Oct. 11, 1952. 2 Free. Market Potential The United States has long dominated the Venezuelan appliance market, and already has 90 percent of the sales in most appliance lines ; there- fore, increased imports from America are unlikely. The exception is the vacuum cleaner market, now largely Swedish, in which the American share can be increased. Expansion of the U.S. share of the market may be achieved through direct investment or licensing. Local capital participation, though not required, is desirable for contact and public relations purposes. 53 Europe AUSTRIA Production Estimates of Austrian production of selected household appliances, based on official statistics and industry information, are shown in table 28. Production methods comprise complete manu- facture of washing machines, vacuum cleaners, and ranges ; and manufacture and assembly of re- frigerators and freezers, using imported compres- sors. Principal production areas are Vienna, Vorarlberg, and Styria. Power and skilled labor are available in sufficient quantities. Switches, compressors, mica, and plastic insulating material are imported. No subsidies are provided to the industry by the Government, and no barrier exists against foreign capital investment. Local minimum hourly wages as of February 1, 1959, were (in cents) : Men, highly skilled 33 Men, semiskilled 26 Men, unskilled 23 Women, semiskilled 21% Women, unskilled 21 Earnings of electrical industry workers in Vienna average 36 cents per hour. This average exceeds the above minimum rates because 15-20 percent higher hourly rates are paid under plant agree- ments, which also provide higher rates for over- time, after 45 hours per week, and holiday work. Additional fringe benefits raise average hourly wage cost to 52 cents. Channels of Distribution The principal distribution centers are, in order of importance, Vienna, Graz, Linz, Salzburg, and Innsbruck. Only a few manufacturers have their own trade outlets ; most sell to wholesalers, who in turn sell to retailers. Appliances are imported by wholesalers and agents of foreign manufacturers. Table 28. — Austria: Estimated Production of Household Appliances, 1956-59 [Quantity in units; manufacturers' value In $1,000] Appliance 1956 1957 1958 1959 Quantity Value Quantity Value Quantity Value Quantity Value Washing machines Vacuum cleaners. _ _ - 4, 150 46, 500 41, 500 n.a. 1, 330. 7 n.a. 6, 600 43, 000 46, 300 n.a. 1, 150. n.a. 6, 520 32, 800 34, 740 969.0 767. 8 2, 774. 4 24, 930 28, 950 36, 890 3, 591. 6 676.0 Electric ranges _ - - 2, 794. Refrigerators, total . . 28, 600 2, 323. 33, 500 2, 489. 60, 310 4, 716. 9 49, 870 3, 830. 8 Compressor-type Absorption-type _ n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15, 000 45, 310 1, 783. 2. 933. 9 15, 120 34, 750 1, 702. 2, 128. 8 Farm and home freezers __ _- - n.a. n.a. n.a. n.a. 2,500 n.a. 2,500 n.a. n.a. — Not available. 55 Consumption Estimated annual demand and appliances in use at the end of 1959 were as follows (in units) : Annual demand In uxe Washing machines. ._ 30, 000-40, 000 140, 000 Electric ranges 40, 000 325, 000-350, 000 Refrigerators 55,000-65,000 199,000 Vacuum cleaners (') 810,000-835,000 1 Not available. With the improved standard of living, demand lias increased for the more expensive durable con- sumer goods and products that make life more comfoi-table. Electric washing machines are not yet used in many of the 2.2 million households ; instead, pub- lic laundry facilities are employed. The market for washing machines is far from saturated, and increased sales may be expected in the coming years. Consumers prefer washing machines hav- ing built-in heating units. Vacuum cleaners can be afforded by most families because of their rela- tively low cost and are used primarily in urban homes. Most purchases are replacements. Electric ranges are used principally in rural areas and where manufactured gas is not avail- able. Vienna, a city having 762,000 households, had only 30,000 electric ranges in use in 1957. Its power circuit is antiquated, and power conduits would have to be reinforced in many houses and apartments to carry the extra load of additional electrical appliances. Nevertheless, sales of elec- tric ranges should increase, especially in the west- ern provinces of Austria. Sales of electric household refrigerators can be expected to increase. People having smaller in- comes prefer absorption-type refrigerators. Freezers are not used in Austrian households. Kepresentative 1959 retail prices for major ap- pliances in Austria follow : Washers: With roller wringer: 3 lbs. dry wash $150 <6Y 2 lbs. dry wash 190-235 11 lbs. dry wash 325 With centrifugal wringer: 6}i lbs. dry wash 365 11 lbs. dry wash 450 Vacuum cleaners 35- 75 Electric ranges: 5,500 watts 95 6,500 watts, with grill 125 Refrigerators, by cubic-foot capacity: Absorption-type: 1.6 _ 90 2.3 125 2.8 140 Compressor-type : 3.5 . 190 5.0 225 6.7 325 9.2 400 The relatively high cost of U.S. appliances and American exporters' insistence on payment in ad- vance or upon receipt of merchandise are obstacles to increased trade. Furthermore, Austrian firms are reluctant to tie up a great deal of capital in stocks of spare parts that are soon made obsolete by rapid changes of models. As a result, spare parts arrive from the United States long after they are needed to repair or service equipment. Many U.S. appliances are not made for use in Austria, usually being too large. The common current in Austria is 220/380 volt, three-phase, four-wire system, 50 cycle. Customers prefer equipment that can be used without transformers ; in the case of refrigerators, 4- to 5-cubic- foot-ca- pacity models best suit their size and price re- quirements. Literature on appliances should be printed in German. Austria is still lagging behind other Western European countries in respect to the percentage of households owning and using electrical house- hold appliances. If the current economic level is maintained, more people will buy electrical equip- ment; the electric power system will be further expanded ; and inadequate power grids, especially in Vienna, will be strengthened or replaced to ac- commodate a larger number of electrical appli- ances. Imports Although leveling off, imports will probably continue on a large scale. Austrian importers buy equipment that meets domestic needs at the lowest available prices. Because West German manu- facturers are able to furnish good equipment at satisfactory prices and terms, they have become and will undoubtedly continue to be the principal source. As indicated in table 29, U.S. exports of appli- ances to Austria have been consistently negligible. 56 Table 29. — U.S. Exports of Major Household Appliances to Austria, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Semi- and fully automatic 33 6, 941 25 4, 910 50 8, 872 Electric refrigerators 36 6, 107 18 5, 800 41 7, 664 Other mechanical refrigerators and freezers Electric freezers . 92 13, 112 147 31, 637 33 7, 112 Source: Report No. FT-ilO, U.S. Fiports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Austrian import duties on household electrical appliances are as follows : Tariff No. Description Ad valorem import duty (percent) Turnover-equali- zation tax l (percent of duty- paid value) 84.15 Refrigerators and refrigerating equipment (electrical and other) : A. Refrigerators (absorption type) : 1. Of a capacity not exceeding 120 liters (4.24 cu. ft.)__ 2. Of a capacity exceeding 120 liters (4.24 cu. ft.) B. Other 17 10 18 23 25 30 • Ex 8440 .. C-2. Other washing machines, including those for household use of the following capacity: a. Up to 12 kilograms (26 lbs.) of dry laundry.. Vacuum cleaners, household 5. 25 Ex 8506 Ex 8512. Electrical ranges, household. _ 1 Comparable taxes apply to domestic goods. Note. — In October 1959, industrial goods (as distinguished from agricultural goods) that were liberalized to the Organization for European Economic Coopera- tion (OEEC) were liberalized to dollar areas. Thus, all the above household appliances (except used vacuum cleaners, for which import licenses are still re- quired) are liberalized and are now presumed to be entering Austria freely. Exports Austrian production of household electrical ap- pliances is consumed, for the most part, in the domestic market. Export statistics do not sepa- rate and identify specific household electrical ap- pliances, but Czechoslovakia and Yugoslavia are the major recipients of a group of exports entitled "Electrothermic apparatus and appliances, not elsewhere specified." Market Potential and Licensing Opportunities Prospects are dim for direct entry into the Aus- trian market by U.S. firms. West German com- panies have firmly entrenched themselves in the Austrian market and are offering strong competi- tion to the domestic electrical industry. They offer appliances of good quality at attractive prices and provide prompt service and speedy procure- ment of spare parts, which are either in stock with agents in Austria or shipped within 24 to 48 hours from West German plants. Agents of West German companies are given up to 36 months' credit. Guarantees on refrigerators are reportedly given for 5 years and sometimes longer. A large West German manufacturer of electric refrig- erators is advertising widely in Austrian news- papers and has continually reduced prices. 57 Possibilities of entering the market through licensing arrangements are limited because of the small area. However, Austrian manufacturers of electrical appliances might consider offers cover- ing all of Western Europe. Sales of household appliances in Austria by subsidiaries and licensees of U.S. manufacturers in third countries are now being effected by a number of U.S. firms. BELGIUM Production No official statistics are available on Belgian production of household electrical appliances. Annual output of washing machines probably totals more than 200,000 units. Most of the 150 manufacturers are small. Four of the largest firms produce machines similar to American brands. One American washing machine, intro- duced in Belgium about 12 years ago when the market was virtually untapped, accounts for 24 percent of total sales. Annual production of vacuum cleaners is esti- mated to be 35,000-10,000 units. Only one large company, under licensing agreement with a Swiss firm, manufactures complete units and accounts for about 20 percent of total annual sales. A small producer uses motors purchased from the largest manufacturer of motors in Belgium. Three firms produce electric ranges. The largest uses its brand name, although it has manufactur- ing and distributing arrangements with an Amer- ican company for a complete line of electrical household equipment. The other two, less im- portant but well known on the domestic market, produce electric, gas, and coal ranges. The larger producers of washing machines, vac- uum cleaners, and ranges usually manufacture complete units; the smaller ones assemble appli- ances, using parts obtained locally. Production of refrigerators by three companies has been limited to assembly of cabinets, interiors, and tubing, using imported compressors and con- trols supplied by Danish and Italian companies producing under U.S. license. Of the three as- semblers of refrigerators, one is Dutch owned, one is 80-percent U.S. owned, and the third is Swiss owned. Annual output of refrigerators in 1958- 59 was an estimated 12,000 units, about equally di- vided between compressor-type and absorption units. Except for the refrigerator industry, no for- eign capital is involved in the Belgian appliance industry. Although the Government does not di- rectly subsidize the industry, a 10-percent advan- tage on bids for Government contracts is afforded domestic producers employing Belgian labor, pro- vided the corporation is Belgian owned. Producing areas are Koulers, Huy, Ransart, and Schellebelle for washing machines; Haren-Vil- vorde and Berchem-Brussels for electric ranges; Brussels for vacuum cleaners; and Antwerp, Wavre (near Brussels), and Turnhout for refrig- erators. Raw materials, parts (except for im- ported refrigerator compressors and controls), power, and labor ai'e adequate. Hourly wages range from 40-52 cents. Fringe benefits provided by social security laws, for which the employer contributes about 31.45 percent of the gross wage of manual workers and 24.85 percent of that of clerical workers, include annual vacations; old- age pensions; family allowances, which increase with the birth of each additional child; sickness, disability, industrial accident, and unemployment benefits ; and paid public holidays. Channels of Distribution Appliances are sold mainly in the. larger cities. Washing machines are sold direct to the retailer by the importer or manufacturer ; electric ranges are sold by power companies ; and refrigerators al- most entirely through retail outlets, many of them independent agencies representing a single major foreign manufacturer. Vacuum cleaners are sold from door to door. The largest producer has a sales force representing one-third of his total per- sonnel. However, most large firms rely on an- nual trade fairs, where potential consumers ex- amine the equipment on display and make pur- chases. Manufacturers and importers usually maintain service facilities. Except in the case of the larger retailers, servicing is not usually provided by re- tailers. 58 Consumption Consumption of major household appliances has kept pace with the standard of living, which has been improving rapidly since 1950 in all of West- ern Europe. Estimated annual sales in units, number of appliances in use, and percent satura- tion based on 3 million households, follow : Percent satura- Number in use Hon 60 22 Annual sales Washing machines,. 100, 000 1, 800, 000 Vacuum cleaners. _ . 75, 000 675, 000 Electric ranges 15,000 235,000 8 Refrigerators 66,000 575,000-600,000 19-20 The high cost of electricity is an impediment to increased use of electric ranges, and sales are prin- cipally for replacement. Ten German brands are marketed. Consumption of refrigerators has been at a high level since 1957, when sales of an estimated 62,000 units were almost double 1955 volume. After a decline to 50,000 units in 1958, caused by depressed business, sales in 1959 rose to an estimated 82,000 units. Absorption-type refrigerators accounted for about 13 percent of 1957 sales, and compressor- type, 87 percent; since then, the compressor type has been increasingly favored. Approximately 80 percent of 1957 sales were units under 8-cubic-foot capacity, and 37 percent under 5-cubic-foot. Use of refrigerators has been limited by the tem- perate climate and the low volume and high cost of food distribution. A few supermarkets are ap- pearing in the larger cities, but their prices are less than 5 percent below those of other grocers. Great- ly increased consumption may not occur unless the pattern of food distribution changes. How- ever, the outlook for the immediate future is op- timistic because of the continuing high level of construction of apartments equipped with re- frigerators. Representative appliance prices in 1959 were as follows : Washing machines (pound capacity): 6.6 (British) $156 16.5 (United States) 650 22.0 (Belgian) 319 26.5 (Swedish) 590 Vacuum cleaners: Belgian 44 Dutch 38-53 German 50 British 88-1 12 Swedish 110 Electric ranges: Belgian 90-130 German 130-180 United States 392 Refrigerators, by cubic-foot capacity: 1 3.8 170 4.7 200 4.8 220 6.4 270 8.8 310 9.1 380 15.0 680 1 All Imported, but source not available. Imports Belgian import-export data are combined with those of Luxembourg under the Belgium-Luxem- bourg Economic Union. During 1956-59, the United Kingdom was the leading supplier of washing machines, followed by West Germany. West Germany, the Netherlands, and the United Kingdom have been the principal suppliers of vac- uum cleaners. West Germany has also been the most important source of refrigerators, but in 1959 Italy for the first time offered strong competition. Products entering from the Netherlands, a Benelux country, have the special advantage of being exempt from import duties, enabling a Netherlands vacuum cleaner to retail in Brussels for as little as $38. Imports from the United States are low because of the relatively high prices of the products. The United States accounted for about 7 percent of the total value of refrigerator imports into Belgium and Luxembourg in 1959, compared with 78 per- cent in 1950. Table 30 shows imports of washing machines, vacuum cleaners, and refrigerators into Belgium and Luxembourg in 1956-59 by country of origin : 555532—60- 59 Table 30. — Belgium-Luxembourg: Imports of Major Appliances, 1956-59 [Quantity in units; value in $1,000] Country of origin 1956 Quan- tity Value 1957 Quan- tity Value 1958 Quan- tity Value 1959 Quan- tity Value France Netherlands United Kingdom. West Germany.. Other Total. Netherlands Sweden United Kingdom. West Germany. . Other Total. Italy Sweden United Kingdom. West Germany .. United States Other.... Total. Household washing machines 8, 177 19, 448 9,334 3,569 40, 528 278 1,310 674 388 2, 650 7, 182 17, 276 8,894 4,619 37, 971 271 1, 111 790 495 2, 667 2, 164 4,459 15, 456 9,898 836 32, 813 230 5, 174 179 3, 759 1,480 16, 294 921 11,313 112 931 2,922 37, 471 Vacuum cleaners 30, 003 20, 734 26, 542 11, 829 89, 108 691 531 608 282 2, 112 33, 189 3,700 20, 683 26, 528 2,506 86, 606 757 150 597 678 82 2,264 25, 001 6, 115 15, 683 27, 612 3,336 77, 747 540 276 449 639 98 2,002 35, 620 25, 359 38, 736 8,388 108, 103 Refrigerators 6,249 20, 487 8, 152 5,239 40, 127 689 2,280 1,338 461 4,768 5,269 37, 450 8,494 10, 676 61, 889 658 3,913 1,393 875 6,839 7,460 6, 223 41, 120 5,697 13, 615 74, 115 527 794 3,733 955 1,459 7,468 26, 629 3,773 45, 864 4, 161 23, 336 103, 763 606 168 1,548 1, 140 116 3,578 671 748 721 295 2,435 2,592 506 4,480 744 1,935 10, 257 > Not exceeding 2 cubic motors (70.7 cu. ft.) of exterior volume, capacity 350 liters (12.36 cu. ft.) or less. Source: Bulletin Mensuel du Commerce Eiterieur, Belgium-Luxembourg Economic Union. 60 U.S. exports of major household appliances to Belgium-Luxembourg, in 1955, 1958, and 1959 are shown in table 31. Table 31. — U.S. Exports of Major Household Appliances to Belgium-Luxembourg, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 Quantity Value 195S Quantity Value 1959 Quantity Value Washing machines: Nonautomatic Semi- and fully automatic Vacuum cleaners Electric ranges Electric refrigerators Other mechanical refrigerators and freezers Electric freezers 323 1, 131 147 119 8,024 50 314 34, 991 177, 784 6,553 18, 116 1, 152, 390 7,967 50, 518 178 238 118 137 4, 359 18, 909 40, 205 4,393 27, 069 610, 372 1,007 69, 563 73 200 239 24 1,838 1 999 9,026 33, 196 9, 543 5,817 286, 597 500 162, 581 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Belgian import duties on household electrical appliances are as follows : Tariff No. Description Ad valorem import duty J (percent) Transmission tax (percent of duty-paid value) 2 84.15 Refrigerating equipment: (a) Complete refrigerators: 1. With external volume not exceeding 2 cubic meters (approximately 70.7 cu. ft.). (6) Other refrigerating apparatus and equipment- B. Electrical household washing machines 12 6 6 12 15 ex84.40 15 for household use; 10 for others. 10 15 on those not exceeding 10 kg. (22 lbs.) dry wash capacity; 5 on others; 10 on parts and accessories. 14 ex85.06 Electromechanical apparatus: Vacuum cleaners for household use ex85.12. Electric ovens _ _ 9 i Duties on these commodities have been reduced by 20 percent for member countries of the European Economic Community. 2 Comparable taxes apply to domestic goods. Exports Belgium is not a large exporter of appliances and has little opportunity to export to the United States because of differences in electric character- istics and consumer taste. Table 32 shows exports in 1956-59, by country of destination. Market Potential and Investment Opportunities To expand their share of the Belgian market, U.S. manufacturers must produce equipment at prices competitive with those of the United King- dom, West Germany, and the Netherlands. Al- though consumers generally concede the superior quality of American equipment, price is the most important factor in brand choice. Moreover, in the case of refrigerators, Belgians prefer smaller units than are produced in the United States. Entry into the Belgian market may be achieved through subsidiaries or licensees of American manufacturers in neighboring countries, where wages and transportation costs are low, delivery time is short, and electrical characteristics and 61 Table 32. — Belgium-Luxembourg: Exports of Major Appliances, 1956-59 [Quantity in units; value in $1,000] 1956 1957 1958 1959 Quantity Value Quantity Value Quantity Value Quantity Value Household washing machines Austria . _ 1,064 52 1,329 799 1, 166 5,848 76 68 80 284 1, 198 517 419 5, 649 67 48 35 295 1, 412 356 309 6, 283 86 Belgian Congo 35 France 1, 486 4, 831 372 516 2,612 120 245 29 40 242 25 Netherlands ._ __. 324 Norway Poland _ . Switzerland-. - . 1, 171 424 115 22 258 56 53 20 Syria Union of South Africa 326 2,205 1, 151 29 150 86 West Germany _ 3, 396 3, 202 179 207 3, 103 1, 281 213 93 1, 793 772 134 Other 85 Total .. 17, 479 1, 114 15, 121 951 11, 723 766 10, 978 709 Vacuum cleaners Austria 1,021 31 1, 103 31 France 2, 191 13, 683 57 Netherlands ._ 4,392 124 10, 511 2, 163 4, 785 2,257 291 45 137 146 13, 496 307 316 Norway. United Kingdom . 1,788 1,958 48 85 6, 169 2, 155 154 93 319 1, 432 9 Other. .. . . 34 Total ... 9, 159 288 20, 819 650 21, 820 554 17, 625 416 Refrigerators ' Algeria . _ _ . . _ 102 15 203 102 49 215 32 18 8 44 130 106 112 13 20 19 14 3 165 53 480 22 x\ngola 10 Belgian Congo Canada . _ . 77 75 21 11 28 Finland . . . 1, 956 303 62 France _____ 287 160 25 29 495 306 48 56 117 19 28 India. . _ _ Kuwait . ... . __ ____ 401 322 124 3, 092 1, 361 11 Morocco. 213 128 638 33 20 53 89 56 868 11 10 117 83 75 2, 145 12 13 195 13 Mozambique. . 17 Netherlands.. 281 Norway .. _. _ _______ 41 Portugal ._ ... 136 104 114 31 12 12 17 6 21 31 186 223 3 4 27 36 Switzerland ... Tunisia - ... 39 91 6 17 Union of South Africa.. 29 8, 722 228 2, 639 3, 955 6 United Kingdom ... 258 Venezuela ____ . ... 16 331 1, 412 2 36 228 228 473 851 44 74 155 42 West Germany. ........ , 694 964 47 167 96 Other ---... 264 Total 3,824 520 4,502 628 4, 463 591 23, 830 1, 179 I Not exceeding 2 cubic meters (70.7 cu. ft.) of exterior volume, capacity 350 liters (12.30 cu. ft.) or less. Source: Bulletin Mentutl du Commerce Eiterieur, Belgium-Luxembourg Economic Union. 62 size of units could be tailored for Western Europe. In the case of a Benelux country, no import duty is levied on such manufacture. U.S. refrigerator sales in Belgium through subsidiaries in other European countries are substantial. Direct private American investment in other industries is encouraged, but established appli- ance manufacturers would probably not welcome American competition. Licensing agreements permit access to the local market and avoid direct investment. Consumption of washing machines and vacuum cleaners is expected to increase about 10 percent annually. Electric range consumption will be primarily for replacement purposes. Increased consumption of electric refrigerators is antici- pated because of the low market saturation and the high level of construction. DENMARK Production Raw materials, components, power, and labor are adequately available in Denmark for produc- tion of appliances. Except in the case of one prominent Swedish-controlled vacuum cleaner as- sembler, no foreign capital is invested in the in- dustry. Government subsidies are not available to the industry. Industry hourly wage rates, according to offi- cial statistics, in 1958 averaged (in cents) : Provincial Copenhagen areas Men, skilled 98 83 Men, unskilled 81 74 Women 59 51 The industry employs mostly unskilled workers. Fringe benefits are not common because the work- ers prefer payment in cash. However, one major producer of refrigerators and freezers has insti- tuted a profit-sharing plan and maintains summer houses for the use of company employees. Washing Machines. — Official statistics and in- dustry sources indicate that production of wash- ing machines in 1955-59 was as follows : Estimated Manufacturers' units value 1955 16,000 $1,743,625 1956 16,000 1,820,330 1957 20,000 2,245,180 1958 24,000 n.a. 1959 27,000 n.a. n.a.— Not available. Automatic machines approximate 25 percent of the total production. Electric household washing machines are produced by 12 manufacturers. Four manufacturers account for approximately 95 percent of total Danish production. The large producers of washing machines do much of the manufacturing themselves, although most of them procure motors from other Danish manufacturers. The small companies do assembling primarily. Vacuum Cleaners. — The following household vacuum cleaners were produced in 1955-59, accord- ing to Government statistics and industry esti- mates : Manufacturers' Units value 1955 114,717 $4,328,975 1956 97,987 3,634,280 1957 124,000 4,749,330 1958 114,000 n.a. 1959 (estimate) 1 1 5, 000 n.a. n.a. — Not available. Vacuum cleaners are produced by eight firms, seven of which are manufacturers and one, con- trolled by Swedish capital, is an assembler of a Swedish model. Five plants are located in Copen- hagen, two in Odense (Funen), and one in Randers (Jutland). The dominant manufacturer accounts for 50-60 percent of total domestic production. The Swedish-controlled assembler leads the smaller companies in production. The most commonly used vacuum cleaner is the canister type. Although various types of portable cleaners are produced, the small size enjoys only limited popularity. Electric Ranges. — Government statistics and in- dustry sources indicate that production of electric ranges during 1955-59 was : Manufacturers' Units value 1955 16,000 $1,132,160 1956 16,000 1,238,300 1957 21,000 1,566,435 1958 24,000 n.a. 1959 (estimate) 35,000 n.a. n.a.— Not available. 63 Four manufacturers produce electric ranges, three in the Copenhagen area and one in Fred- eriksvaerk (Zealand). The largest producer manufactures a wide line of electrical equipment, household ranges accounting for about 18 percent of the company's total production and about 65 percent of the total Danish production of elec- tric ranges. Of the other three manufacturers, two account for about 15 percent each of the total national production and one for the remainder. A popular electric range produced in Denmark is a model equipped with three seven-speed cook- top units and a thermostatically controlled oven. A more expensive model has three or four seven- speed cooktops, a larger thermostatically con- trolled oven, and a warming cupboard. Refrigerators. — Production of household re- frigerators and farm- and home-type freezers, ac- cording to official statistics and industry sources, in 1955-59 was: Manufacturers' Units value 1955 33,500 $3,771,015 1956 36,719 4,738,020 1957 52,000 6,013,440 1958 54,388 n.a. 1959 (Estimate) 65,000 n.a. n.a. — Not available. Only electric refrigerators are made in Den- mark. The above statistics include both compres- sor and absorption types, but trade sources esti- mate that absorption models account for well below 50 percent of total production. Farm and home freezers account for no more than 10 percent of total production of refrigerators and freezers. Of the three principal producers, who account for approximately 90 percent of the production of refrigerators and virtually all production of freez- ers, one is located in Copenhagen and two in Jut- land. Most of the smaller producers are located in the Copenhagen area. Two of the principal producers procure compressors from another Dan- ish firm. The output of the third major producer is based almost entirely on assembly of compo- nents. The very small producers operate on a com- bined assembler-manufacturer basis. Popular models of household refrigerators are 2.7-, 4.5-, 5.3-, and 8.0-cubic-foot capacity. All ex- cept the largest can be supplied as separate or built-in units. The 2.7-cubic-foot model is an ab- sorption type, all others compressor type. Farm- and home-type freezers range from 5- to 10-cubic- foot capacity, and are compressor-operated, chest types. Channels of Distribution Approximately 70 percent of the washing ma- chines and ranges retail through hardware stores, electrical supply houses, and department stores. Of the remainder, the washers are sold door to door and the ranges are sold direct to builders. Vacuum cleaners are sold extensively door to door, but consumer sales of refrigerators and freezers are made exclusively by retailers because Danish law prohibits door-to-door selling of such articles. Consumption There are 1.3 million households in Denmark; some in rural areas are not electrified. In 1957, consumption of washing machines rose to about 18,000 from 15,000 annually in 1955-56. Approximately 90 percent of consumption is met by domestic production. At the end of 1957, an estimated 115,000 household washing machines were in use in Denmark. Urban apartment build- ings are usually equipped with laundering facili- ties for the use of tenants. Consumption of vacuum cleaners has remained constant at about 60,000 units annually during the last 3 years. At least 95 percent of the consump- tion is met by domestic production. The number of vacuum cleaners in use is estimated at between 800,000 and 1 million. Consumption of electric ranges, estimated at 15,000 annually in 1955 and 1956, rose to 20,000 in 1957, and was estimated at 30,000 in 1958. Ap- proximately 90 percent of the consumption is met by domestic production. The number of electric household ranges in use at the end of 1957 was estimated at 225,000. A great percentage of the houses in urban and suburban areas are equipped with electric ranges. The uptrend in use is ex- pected to produce a 15-percent annual increase in sales during the next 10 years. Consumption of household refrigerators in- creased from 35,000 in 1956 to about 50,000 in 1958. Approximately 90 percent of the consumption was met by domestic production. Consumption of farm- and home-type freezers during 1956-58 was 64 estimated at 3,000 to 3,500 units annually, all of domestic production. The number of household refrigerators in use at the end of 1958 is estimated at 300,000, and farm- and home-type freezers at 17,000. Danish appliance manufacturers provide ex- tensive after-purchase service. The usual guaran- tees are : Washing machines 6-12 months Vacuum cleaners 1 year Electric ranges 2 years Refrigerators 5 years Sales on the installment plan allow 12-24 months for payments. Representative retail prices are : Washing machines $116-$150 Vacuum cleaners: Canister type 58- 62 Smaller type portable 36- 43 Electric ranges: Inexpensive 85 Expensive 177 Deluxe 195 Refrigerators (cubic feet) : 2.7 100 4.5 183 5.3 224 8.0 316 Freezers (cubic feet) : 5.0 268 10.0 384 Washing machines and electric ranges are re- portedly sold at 20 percent off list price to dealers and agents, and 28 percent off list price to whole- salers. This results in an 11-percent markup on cost to wholesalers and a 25 -percent markup on cost to dealers and agents. Retail markup on vacuum cleaners, refrigerators, and freezers is 15 percent. Imports Danish production of appliances has progressed to such an extent that relatively little demand exists for imports. Imports prior to 1959 ac- counted for only 5 percent of vacuum cleaner sales and for 10 percent of washing machine, electric range, and household refrigerator sales. Prelimi- nary figures for 1959 show vacuum cleaner imports valued at $94,395 and 7,406 household refrigera- tors valued at $631,185. In 1957, the latest year for which a country breakdown is available, 75 percent of household refrigerator imports came from West Germany, 17 percent from Sweden, and 7 percent from the United Kingdom. Import permits are required for most appliances and are seldom granted for imports from dollar areas. In late 1959, vacuum cleaners were freed from licensing restrictions, but no market for U.S. equipment is likely to develop. As may be noted from table 33, the Danish market for U.S. ap- pliances has virtually disappeared : Table 33. — U.S. Exports of Major Household Appliances to Denmark, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic Semi- and fully automatic Vacuum cleaners Electric ranges 10 9 2,910 1,700 Electric refrigerators _. 36 4,953 39 5 6, 193 Other mechanical refrigerators and freezers -- 2, 198 Electric freezers Source: Report No. FT-110, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 65 Danish import duties on household appliances are as follows Tariff Xo. Description Ad valorem duty (percent) Import restrictions 84.15 Machines and apparatus for cooling and freezing, electric and other (including refrigerators): A. Fordampere (evaporator) Free 15 12 15 15 15 Import licenses required for such equipment as well parts. License required. Liberalized: no license re- quired. License required. ill 84.40 B. Other kinds: 1. Refrigerators with capacity up to 250 liters (8.83 cu. ft.), including parts thereof. 2. Others Washing machines, including ironers and pressers, for household use, and including parts. Electromechanical household appliances with self-con- tained electric motor (includes vacuum cleaners) . Electrothermic domestic appliances (including elec- tric ranges) ; electric heating resistances other than of carbon, etc. as 85.06 85.12 Exports Vacuum cleaner and refrigerator exports, which go to a large number of European countries, repre- sented 33 percent and 10 percent, respectively, of production in 1957. Of the refrigerators, 29 per- cent went to Sweden, 20 percent to West Germany, and 17 percent to Norway. Preliminary 1959 figures indicate vacuum cleaner exports valued at $1,328,780 and 11,353 refrigerators valued at $919,155. Export of washing machines and elec- tric ranges is insignificant. Market Potential and Licensing Opportunities Danish-made appliances appear firmly en- trenched. Washers, vacuum cleaners, ranges, and refrigerators of domestic manufacture will con- tinue to dominate this market because of their good quality, reasonable prices, satisfactory guarantees, and service facilities to support con- tinued sales. Denmark may be expected to expand local output, satisfy national demand, and gradu- ally expand its role as an exporter. The industry does not seek foreign capital. Interest in new product developments is high, and establishment of licensing arrangements is suggested as a means of entering 1 the Danish market. FINLAND Production Annual production capacity for electrical house- hold appliances in Finland is estimated as follows (in units) : Washing machines 70.000 Vacuum cleaners 20,000 Electric ranges 35,000 Refrigerators 35,000 Domestic production for the latest available years is shown in table 34. Appliances are made by 12 producers. The largest makes motors and other parts, and uses assembly-line methods. Other producers do some subcontracting. Household appliances frequently represent only a portion of production. Helsinki, Lahti, Pori, and Vaasa are the most important production centers. Time switches for washing machines, refrigera- tion units, and switches and hose for vacuum cleaners are imported, principal^ from West Ger- many. At the end of 1958, wage rates in the metal man- ufacturing industry, which includes household ap- 66 Table 34. — Finland: Production of Selected Household Electrical Appliances, 1955-59 [Quantity In units; value in dollars] 1955 1956 1957 1958 > 1959 * Appliance Quan- tity Manufac- turers' value Quan- tity Manufac- turers' value Quan- tity Manufac- turers' value Quan- tity Quan- tity Washing machines Vacuum cleaners. Refrigerators 2 Electric ranges 52, 299 n.a. 18, 765 n.a. 3, 285, 000 n.a. 1, 931, 250 n.a. 43, 439 20, 159 25, 911 n.a. 3, 003, 750 789, 060 2, 530, 310 n.a. 58, 303 18, 324 31, 159 n.a. 4, 269, 375 819, 690 3, 206, 560 n.a. 45, 655 6,036 15, 969 26, 000 55, 101 12, 294 22, 438 33,000 n.a. — Not available. i Manufacturers' value not available. 2 Including less than 100 freezers annually. Source: Finnish Central Statistical Office. pliances, were 63 cents per hour for men and 52 cents for women. The work week averages 45 hours. Accident insurance and sick leave are paid by the employer. Paid vacations average 12 days for under 5 years' service and up to 24 days for over 10 years' service. Some foreign capital is invested in Finnish ap- pliance companies, especially in washing machines and vacuum cleaners. A number of licensing ar- rangements have received the required approval of the Bank of Finland. Channels of Distribution Distribution is direct from producers to retail- ers, as well as through wholesalers. Electric ranges and refrigerators are also sold direct to housing contractors. In many instances producers are involved in the wholesaling and importing of not only appliances but a wide variety of other goods. Consumption Table 35 shows estimated retail sales in recent years. The 1958 reduction in sales of all items was attributable to a recession in business. Of an estimated 1 million households in Fin- land in 1959, one-fourth have washing machines; one-seventh, refrigerators; one-seventh, vacuum cleaners; and one-ninth, electric ranges. Consumers now want larger refrigerators, pref- erably 4.2-cubic-foot, rather than the standard 2.5- cubic-f oot size used since World War II. Only a few household freezers are in use. Frozen foods have become available commercially only recently, and their prices are high. Demand for electric Table 35. — Finland: Estimated Retail Sales of Selected Household Electrical Appliances, 1955-58 [Units] Appliance 1955 1956 1957 1958 Domestic Imported Domestic Imported Domestic Imported Domestic Imported Washing machines Vacuum cleaners Electric ranges 56, 081 25, 986 25, 403 16, 704 5,516 15, 732 74 915 53, 315 41, 296 34, 552 23, 948 336 10, 364 69 1,002 67, 687 28, 264 33, 885 28, 894 258 10, 498 202 1,420 43, 454 6,829 25, 688 18, 003 2, 150 17, 911 405 Refrigerators J 4,829 1 Includes less than 100 freezers annually. Source: Industry sources. 555532—60- 67 ranges is based primarily on new housing con- struction, estimated at 20,000 household units an- nually. In addition, some demand exists for re- placement and modernization. Most new apart- ments are equipped with electric ranges, but sales of gas ranges provide active competition, espe- cially in Helsinki. A latent demand exists for American-type mix- ers, grills, blenders, etc., but lack of dollars and high prices have restricted this market. Electric current is mostly 220 volt, 50 cycle. Imports Increased imports of refrigerators and other appliances are indicated by official statistics for the period 1956-58 (table 36). Table 36. — Finland: Imports of Major Household Appliances, 1956-58 [Quantity in units; value in dollars] Appliance 1956 1957 1958 Quantity Value Quantity Value Quantity Value Complete washing machines . Other washing machine equipment 1,409 100, 810 243, 498 532 46, 589 170, 846 2, 624 309, 983 61, 784 Total . . . ... .. 344, 308 359, 520 211, 979 217, 435 262, 817 185, 818 371, 767 Complete vacuum cleaners, between 2.2 and 33 lbs. net weight per unit Other vacuum cleaner equipment under this classification ... 27, 653 15, 214 21, 741 566, 555 70, 716 Total., . ... . 671, 499 64, 283 448, 635 121, 135 n.a. 637, 271 Electric ranges and stoves, total- n.a. n.a. 218, 345 Complete refrigerators _ „ 1,375 179, 598 6, 182 1, 772 222, 370 999 6,950 768, 535 Other refrigerating equipment __ 22, 655 Total .. ... 185, 780 223, 369 791, 190 n.a. — Not available. Source: Official Statistics of Finland — Foreign Trade. Table 37. — U.S. Exports of Major Household Appliances to Finland, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic Semi- and fully automatic 20 4,880 Vacuum cleaners _ Electric ranges _ 10 21 1, 670 3,725 Electric refrigerators ._ Other mechanical refrigerators and freezers Electric freezers. _ Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Jiferchandise, Bureau of the Census, U.S. Department of Commerce. 68 West Germany and the United Kingdom are the principal sources. Of total imports in 1958, West Germany accounted in terms of value for 22 per- cent of washing machines, 18 percent of vacuum cleaners, 77 percent of electric ranges and stoves (54 percent in 1957), and 49 percent of refrig- erators (27 percent in 1957). The United King- dom supplied 57 percent of the total value of washing machines and 37 percent of vacuum clean- ers, compared with 77 and 48 percent, respectively, in 1957. Sweden furnished 26 percent of refrig- erators and 11 percent of electric ranges and stoves; the Netherlands accounted for 20 percent of vacuum cleaners; and East Germany supplied 17 percent of vacuum cleaners, compared with 36 percent in 1957. Rigorous licensing of household appliance im- ports from dollar areas through 1959 has virtually closed the Finnish market to imports of appliances from the United States (table 37). Specifications of the Finnish Electrical Inspec- torate are considered rather rigid and affect imports adversely. Finnish import duties and other taxes on household electrical appliances are as follows : Tariff number Description Rate of duty General Import sales tax : restrictions 72-058 Refrigerator machines _ 15 percent ad va- None. lorem. 72-126 Machines for washing clothing, including electrical. _ Electromechanical combinations, such as household and shop machinery and apparatus, even with series of cutters, not elsewhere classified, total net weight per unit 100 kilograms (220 lbs.) maximum: Total net weight per unit exceeding 15 kilo- 15 percent ad valorem. None. 73-108 grams (33 lbs.): Vacuum cleaners _ $0.22 per kilo- ■ 15 percent None. gram. Total net weight per unit over 1 kilogram (2.2 lbs.) but not over 15 kilograms (33 lbs.): 73-109 Vacuum cleaners- __ 15 percent ad License re- valorem. quired. Electrothermic apparatus, but not electrically heated steam boilers or parts therefor: 73-117 Electric ranges and stoves 13 percent ad License re- valorem. quired. 1 Also applies to similar domestic products. Prior to January 1960, washing machines, refrigerators, and vacuum cleaners of over 15 kilo- grams (33 lbs.) but not exceeding 100 kilograms (220 lbs.) could be imported into Finland from Western European countries without license, whereas imports from the United States and other dollar area nations were subject to rigorous re- strictions. Global quotas for other appliances were only partly open to the dollar area. Since the beginning of the year, the United States and Canada have been accorded equal treatment with OEEC countries. Exports Finnish productive capacity for household elec- trical appliances is not being fully utilized, but export of appliances is negligible and is not ex- pected to increase because the products apparently do not meet the competition of the advanced styl- ing and low prices offered by West European manufacturers. 69 Market Potential Domestic production will probably continue be- low capacity for some time inasmuch as the de- mand for household appliances will follow the slowly improving general economic development of the country. Increasing import competition, particularly from Western Europe, linked with Finnish preference for foreign-made vacuum cleaners and refrigerators, is also holding produc- tion down. Some opportunity for export of U.S. -manufac- tured washing machines and refrigerators should result from elimination of licensing requirements. The possibility of exporting U.S. electric ranges and vacuum cleaners also arises, despite the con- tinuing requirement for import licenses, as a con- sequence of increased global quotas made available for these products. However, because of the small size of the Finnish market and the difficulty of competing from a price standpoint, American ex- porters of household appliances cannot hope for great expansion of sales. Importation through third-country licensees or subsidiaries appears to be a suitable but not very promising alternative. FRANCE Production Although the French electrical household ap- pliance industry suffered from the 1958 business recession, which caused some layoffs, substantial recovery occurred in 1959. On the other hand, higher costs of coal, transportation, raw materials, power, and labor have reportedly increased the cost of production and lowered the margins of profit. Table 38 shows production and shipments in the period 1956-59. Approximately 500 firms comprised the French appliance industry in 1957, of which 24 accounted for 70 percent of output. Many companies pro- duce under licensing arrangements with foreign companies. Nine manufacturers represented 82 percent of total washing machine production; others were principally assemblers of component parts. Ap- proximately 42 firms specialize in the production of refrigerators, and some others produce other types of appliances in addition. Some 80 percent of refrigerator sales are accounted for by five or Table 38. — France: Production and Shipments of Major Household Appliances, 1956-59 [In units] Appliance Washing machines Vacuum cleaners Electric ranges Combination electric and gas ranges Electric refrigerators, total Compressor-type Absorption-type 1956 Produc- tion 387, 000 325, 000 n.a. 290, 000 n.a. n.a. Ship- ments n.a. n.a. n.a. 374, 640 270, 960 103, 680 1957 Produc- tion 490, 000 470, 000 n.a. 580, 000 n.a. n.a. Ship- ments n.a. n.a. n.a. 548, 280 474, 000 74, 280 1958 Produc- tion 480, 000 349, 000 24, 700 44, 700 675, 565 614, 765 60, 800 Ship- ments 480, 000 341, 400 n.a. 578, 040 525, 120 52, 920 Preliminary 1959 estimates Produc- tion 500, 000 405, 000 27, 000 48, 000 720, 000 673, 200 46, 800 Ship- ments 498, 150 404, 700 n.a. C) (') n.a. — Not available. 1 Statistics for full year not available. Shipments for 9 months of 1959 estimated at 556,110 compressor-type and 38,370 absorption-typo refrigerators, an estimated total for 9 months of 594,480 units. Source: Shipment figures from Bulletin Afensuel de Stalistique Induslrielle (Mlnistere de l'lndustric et du Commerce); production figures are trade estimates. 70 six manufacturers. Employment in the house- hold refrigerator industry in 1959 was estimated at 6,500. About six manufacturers account for the bulk of vacuum cleaner production. The quality of French appliances has improved steadily, spurred by the use of mark-of-quality labels for equipment that meets strict standards established by representative organizations of the industry. Washing machine manufacture covers the entire range from small, nonautomatic units of 4.4- pound drywash capacity to fully automatic ma- chines. The manner of heating and emptying is usually semi- or fully automatic, and most ma- chines have an integral dryer. The most popular sizes are 8.8- to 11-pound capacity. The vacuum cleaner has become an indispensa- ble tool in French households and is available in small portable sizes for cleaning furniture and automobile upholstery as well as in standard up- right and canister models, which are sold with numerous attachments. Electric ranges of 5 to 8 kilowatts have one to six burners, one or two ovens, and even grills or warming ovens. Combination electric and gas ranges are also available. Both compressor-type and absorption refriger- ators are produced, but approximately 80 percent of refrigerator sales in the past 2 years have been of the electric compressor type. Refrigerators of 3- to 4-cubic-foot capacity were formerly pre- ferred, but about 50 percent of current sales are 5-cubic-foot models. Sales of larger or deluxe models are limited by their higher prices and be- cause of the French custom of daily marketing. The household appliance industry, which in 1957 employed approximately 16,000 workers, is located mostly in the Paris area, where wages and salaries are higher than in any other region of France. A large number of employees are women, whose wages are comparable to those paid male employees. In the French electrical equipment in- dustry average hourly take-home pay, including premiums and bonuses but excluding year-end gratuities, canteen bonuses, and overtime and nightwork premiums, was as follows in 1958 (in cents) : Unskilled workers 42-45 Semiskilled workers 47-54 Skilled workers 62-85 Channels of Distribution Electrical household equipment is sold through a variety of retail agencies, 15,000-20,000 in all: Exclusive sales agencies of large producers, who also handle other types of household appliances manufactured by other producers; sales agents of smaller producers who operate in specified ter- ritories ; department stores ; appliance and house- wares shops; hardware stores; and electricians located throughout the country, even in small towns and villages. Refrigerators are normally distributed through "concessionaires" or retailers. Concessionaires of well-known brands usually handle a single line. Competition is keen among manufacturers of household appliances, and advertising is an im- portant factor in sales promotion. Daily news- papers are becoming an important medium for advertising. National magazines and women's publications are widely used, as are billboards and commercials in movie houses. Exhibitions and fairs held regularly in Paris, Lyon, Lille, Marseilles, Strasbourg, and Bordeaux are considered the best means of advertising and displaying household equipment. A sizable in- crease in volume of sales is usually registered at the "Salon des Arts Menagers" home show held each spring in Paris, where a complete line of household appliances and scientific advances in household arts are shown. In addition, itinerant exhibitions tour rural areas in an effort to stimu- late consumer interest in modern household equip- ment and other products. Consumption Before World War II, the average householder considered refrigerators, washing machines, and vacuum cleaners expensive luxuries, but these ap- pliances have since become increasingly popular. Of the 14 million French households in mid-1959, an estimated 2.7 million, or 19 percent, had wash- ing machines; 3.1 million, 22 percent, had vacuum cleaners; 1.07 million, 7.6 percent, had electric ranges; and 2.5 million, 18 percent, had refrigera- tors. In the past 10 years, about 9 percent of all refrigerator sales were reportedly made to rural customers, who represent about 20 percent of the total households. Sales of electrical household equipment declined in 1958 from an alltime peak in 1957 because of 71 the business recession as well as the stringent in- stallment credit policy and high sales taxes im- posed by the Government. Washing machine sales dropped from 582,000 to 500,000, and refrigerator sales from 580,000 to 450,000. Vacuum cleaner sales dropped 25-30 percent, to 349,000, and elec- tric ranges also declined 25-30 percent. However, higher sales were being recorded in 1959, and industry spokesmen were optimistic about the future, chiefly because the market is far from saturated. Consumption should be stimulated by the active construction program. Approximately 290,000 new dwelling units were completed in 1958, and the same number was estimated for 1959. The demand for low-cost housing remains high. A 1959 study based upon an extensive poll of consumers revealed a significant potential market for modern household equipment. For example, 5.7 million families expressed a desire for a wash- ing machine, 63 percent favoring electrically heated washing machines for use where no normal hot water supply is installed; 2 million families wanted to replace their cooking ranges, approxi- mately 33 percent preferring a combination elec- tric-butane kitchen, and 25 percent an electric kitchen; and 6.2 million families would like to own a refrigerator. The likelihood of realizing actual sales on the basis of this potential demand may be appraised in the light of a poll of consumers conducted in the spring of 1956 : Appliance Number of ap- pliances consum- ers intended to buy Units actually sold Julv 1956- July 1957 Percent sold Washing machines Kitchen ranges: Electric Butane with electricity Refrigerators 850, 000 218, 000 306, 000 250, 000 500, 000 45, 000 50, 000 431, 000 58. 5 20.6 16.3 34. 5 The small sales in proportion to the potential buyers can be attributed to the inadequacy of elec- trical wiring in most homes, the cost of converting to an adequate electrical system, the comparative- ly high prices of appliances, stringent credit terms, and the cost of operating electrical equip- ment. Although 99 percent of French households have electricity, the present wiring system in 67 percent of the homes will not support the consumption of as much as 1 kilowatt at any one time, whereas a complete electrical system would require 5 to 8 kilowatts. In August 1959, consumers in the Paris area paid approximately 6.7 cents per kilowatt- hour for the first 120 kilowatt-hours used, plus 1.6 cents per kilowatt-hour in excess of 120. In order to facilitate electrical modernization of French households and to provide cheaper elec- tricity rates, Electricite de France has taken the following measures : Offered customers a single-meter system for all electrical uses, which will permit economies resulting in lower rates to consumers. Previously, separate meters were required for lighting, power, heating of water, kitchen use, etc. Established a schedule of fixed rates for installa- tion and reinforcement of electrical connections, per- mitting a 50-percent discount on scheduled prices if a client subscribes to a certain level of electricity con- sumption. Entered on a progressive program of conversion from the 110-115-volt system to 220-volt electric power. Conversion to a standard, high-tension sys- tem will prove more economical and permit a tripling of network capacity. The 50-percent discount on new service lines and the extension and reinforcement of existing lines are expected to stimulate sales of electrical house- hold appliances, particularly in the rural sections. Within the next few years, the proportion of households having both washing machines and re- frigerators should rise to about 30 percent. Despite rising production costs, prices of elec- trical household appliances, excluding taxes, have decreased in recent years, but they are still higher than in neighboring countries. Household refrig- erator prices have been lowered from a high of $105 per cubic foot in 1952 to $76 in 1957 and $60 in 1959. One company's new 1960 line is reported- ly priced 14 percent lower, and a 4^-cubic-foot- 72 capacity refrigerator that previously retailed for $270 will sell for $232 ; in 1959 a similar refriger- ator reportedly retailed in Germany for $125 or less, and in England for $169. In the United States a 9-11 cubic-foot refrigerator can be pur- chased for approximately $200. Washing machines in 1959 ranged in price from $165 for small, manual-wringer models to over $400 for larger capacity automatic models with gas or electric heating systems. No recent prices are available on vacuum cleaners or electric ranges. The high French sales tax and stringent credit terms have added to retail prices of appliances. The tax on value added (TVA) in 1959 amounted to 23 percent, and had been as high as 27.5 percent, in September 1958. Since December 1958 a pros- pective buyer has been required to make a down- payment of 25 percent cash, as compared with 35 percent prior to August 1958. Annual carrying charges average 15-20 percent, and the balance of the obligation is payable within 18 months, com- pared with 12 months prior to December 1958. More than 50 percent of washing machine and refrigerator purchases are on the installment plan. Refrigerators carry 5-year guarantees, washing machines 2-year, and electric ranges 1-year. Imports Owing to the shortage of foreign exchange, strict quantitative control has in the past been ex- ercised over imports of electrical household appli- ances. The Government has reportedly exerted pressure on industry to reduce imports and has of- fered incentives to companies making special ef- forts to export. The devaluation of the franc at the close of 1958 automatically raised import prices by 17.5 percent and reduced prices of French goods in world markets by about 15 percent. However, some categories of appliances have now been lib- eralized for import from OEEC countries and the dollar area. Import data for 1959 are not yet available on a country basis. By comparison with 1958, prelimi- nary figures for 1959 indicate increased imports of washing machines and dryers, which are grouped together, and of vacuum cleaners, al- though the latter were considerably below the quantities imported in 1957. Total imports of all types of household refrigerators and electric ranges and ovens have declined markedly since 1957. Details on French imports of major household appliances for 1956-59 are shown in table 39. Table 39. — France: Imports of Major Household Appliances, 1956-59 Country of origin 1956 Pre- liminary 1959 i Washing machines 2 and dryers Belgium-Luxembourg Netherlands United Kingdom West Germany United States Other Total value Total units See footnotes at end of table, $118, 386 30, 293 33, 178 64, 962 27, 819 3,831 $79, 530 44, 217 46, 227 53, 142 22, 497 12, 882 $33, 789 32, 503 34, 079 74, 616 32, 929 15, 012 278, 469 2,947 258, 495 3,017 222, 928 2,552 $287, 344 3, 120 73 Table 39. — France: Imports of Major Household Appliances, 1956-59 — Continued Country of origin 1956 1957 1958 Pre- liminary 1959 ' Vacuum cleaners Belgium-Luxembourg _ ______ _____ $122, 238 Denmark _ _ ________ ___ $49, 256 177, 132 83, 366 199, 787 134, 977 53, 589 Netherlands __ _ __ _ ______ ____ $284, 897 23, 407 233, 954 98, 218 76, 274 347, 984 Sweden _ __ ___ United Kingdom _ ___. ___ 321, 052 126, 400 79, 708 West Germany. ____ _ _ _____ Other.. _ _ _ _ _ . ______ _._ __ Total value _ _ 716, 750 30, 472 997, 382 43, 166 698, 107 26, 180 $714 874 Total units __ 28 929 Electric ranges, ovens, etc. 3 Switzerland-- ____ ____ __ __ $23, 131 378, 072 9,448 West Germany. _ $499, 872 29, 693 $524, 559 40, 397 Other ------- .- __._ Total value __ _ __ __ _. __ 529, 565 n.a. 564, 956 n.a. 410, 651 n.a. $245 671 Total units __ __ -- _ n.a. Household refrigerators (compressor-type) United Kingdom -_ _ _ __ $101, 663 126, 491 98, 212 59, 138 $34, 947 118,839 189, 733 48, 677 $13, 888 92, 471 7,748 11,074 West Germany .__ ___ United States ____________ _____ Other _ __ -__ -_--. Total value ___ _ ___ 385, 504 n.a. 392, 196 n.a. 125, 181 n.a. $134, 249 Total units. _ _____ _ _ n.a. Household refrigerators (absorption and others) Sweden __ __ _ $16,619 $83, 317 $10, 641 14, 486 18, 531 664 United Kingdom _ _ _ _ United States _ _ __ ___ 19, 428 9,428 183, 808 37, 400 Other. . _ _-.- __. _._ _____ __ Total value. _ ._ _ _ __ _ _ 45, 475 n.a. 304, 525 n.n. 44, 322 n.a. $30, 372 n.a. Total units ___ __ _ __ _ ___ ___ n.a. — Not available. ' Country breakdown not available. 1 Dry linen capacity not exceeding 6 kilograms (13.2 lbs.). I Includes otber heating devices for household use but not hotplates, grills, or dryers. Source: 1956-58 — Tableau General du Commerce Eilirieur, Commerce de la France arec la Zone Franc cl le.i Pays Etrangers; 1959— Statistique Mensutlle du Commerce Eilirieur de la France. 74 U.S. export figures on major household appliances to France for 1955, 1958, and 1959 appear in table 40. Table 40. — U.S. Exports of Major Household Appliances to France, 1955, 1958, and 1959 [Quantity in units: value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic. 163 392 50 19 1,901 19, 738 55, 560 2,070 2, 351 331, 406 Semi- and fully automatic. . _ _ _ 130 274 2 246 25, 129 10, 473 627 53, 239 45 21 8, 940 Vacuum cleaners - _ . l |985 Electric ranges -.. . . Electric refrigerators _ 131 33, 180 Other mechanical refrigerators and freezers Electric freezers _ _ _ 2 763 20 5, 660 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandhe, Bureau of the Census, U.S. Department of Commerce. French import duties and other taxes on household electrical appliances are as follows: Description Percent ad valorem Tariff No. Minimum import duty ! [applies to the United States] Sales tax based on c.i.f. duty-paid value 2 Import restrictions applicable to OEEC countries and the dollar area 84.15 84.40 85.06 85.12 Refrigerators and refrigerating equipment (electrical and other) : A. Furniture and installations incor- porating a refrigerating unit. B. Furniture and installations designed to be fitted with a refrigerating unit. C. Refrigerating equipment: 1. Fixed on a common base or forming a group: a. Compressor type b. Other (absorption, etc.). 2. Other D. Parts C. Clotheswashing machines with a dry linen capacity not exceeding 6 kilograms (13.2 lbs.); domestic clothes dryers (other than those of centrifugal type) : (a) Electric Electromechanical domestic appliances with self-contained electric motor: B. Vacuum cleaners, including those with rotating brushes or carpet- beating devices. E. Other electrothermic domestic appliances : a. Domestic ovens of all kinds, plate warmers, toasters, driers, and simi- lar kitchen appliances. 13. 5 16. 2 16. 2 16. 2 16. 2 16.2 18 20 18 30 for installations of 300 liter (10.6 cu. ft.) and less , capacity excluding those for profes- sional use — 25 for others. 30 30 25 Not liberalized except for refrigerators of the compressor type. Liberalized. Liberalized. Liberalized. 1 General rate is 3 times the minimum rate. 2 Sales tax also applies to domestic goods. Additional tax: Customs stamp tax of 3 percent ad valorem, based on total customs. Note. — Import licenses are required for all refrigerators except the compressor type. 75 Exports France exports appliances principally to the French-speaking areas identified in trade statistics as the franc zone, including French possessions and countries formerly under French control. Ex- ports to other areas have been limited because of the. high prices of the equipment. Nevertheless, in 1958, 17 percent of exports of household size wash- ing machines and dryers went to Germany and 24 percent of vacuum cleaners to the United Kingdom. Some refrigerator manufacturers have started to develop an export market for types that do not compete with established production in the coun- try concerned, and they hope to find a steady mar- ket in the United States and elsewhere for small refrigerators suitable for use in recreation rooms, house trailers, and boats. Preliminary statistics for 1959 indicate that exports of compressor re- frigerators were more than double the 1958 volume and that more than 50 percent of total refrigerator exports went to foreign countries outside the so- called franc zone. French exports of major household appliances for 1956-59 are shown in table 41. Table 41. — France: Exports of Major Household Appliances, 1956—59 Countrv of destination Preliminary 1959 > Algeria Belgium-Luxembourg . Italy Morocco Switzerland West Germany Other Total value. Total units - Algeria Belgium-Luxembourg . Madagascar Morocco United Kingdom Mexico Other Total value _ Total units _ Washing machines 2 and dryers $1, 474, 909 247, 111 87, 167 213, 058 146, 656 195, 604 2, 364, 505 15, 273 $103, 998 14, 754 44, 264 48, 352 56, 241 267, 609 7,434 $3, 136, 801 398, 809 153, 833 298, 277 197, 196 355, 679 4, 540, 595 28, 583 $2,911,492 225, 902 199, 078 40, 077 43, 601 695, 650 658, 717 4, 774, 517 30, 831 Vacuum cleaners $223,611 6,985 44, 315 37, 364 312,275 8,784 $268, 741 42, 277 30, 293 104, 816 74, 248 520, 375 16, 163 $5, 132, 217 39, 606 $436, 152 14, 189 See footnotes at end of table. 76 Table 41. — France: Exports of Major Household Appliances, 1956-59 — Continued Country of destination 1956 1957 1958 Preliminary 1959' Electric ranges, ovens, etc. 3 Algeria _ _ _ _ _ . _ __ $76, 965 79, 359 143, 067 $131, 434 53, 912 100, 865 $131,981 65, 961 126, 226 Morocco -_ _ . - - Other .. ... ._ . .. Total value 299, 391 n.a. 286, 211 n.a. 324, 168 n.a. $343, 891 Total units . n.a. Household refrigerators (compressor type) Algeria. $188, 848 77, 379 21, 336 29, 793 $192, 244 $408, 206 6, 269 33, 791 49, 196 18, 881 16, 238 16,017 Belgium-Luxembourg . . . Brazil 23, 433 French West Africa. _ . .... Morocco. Thailand __ .._. Tunisia _ ._.. __ ... 41, 786 7,465 20, 896 83, 795 Yugoslavia. _. . ... Other 102, 164 128, 182 Total value. _____ 461, 306 n.a. 327, 833 n.a. 676, 780 n.a. $1, 363, 867 Total units n.a. Household refrigerators (absorption and others) Algeria _ ... $47, 532 $54, 766 17, 657 $104, 481 12, 755 13, 143 31, 886 French West Africa Indonesia ._ Other 49, 560 30, 603 Total value ._ _. 97, 092 n.a. 103, 026 n.a. 162, 265 n.a. $108, 723 Total units. _ _ _ n.a. n. a. — Not available. 1 Country breakdown not available. 2 Dry linen capacity not exceeding 6 kilograms (13.2 lbs.). s Includes other heating devices for household use but not hotplates, grills, or dryers. Source: 1956-58 — Tableau General du Commerce ExUrieur, Commerce de la France avec la Zone Franc et les Pays Etrangers; 1959 — Statistique Mensuelle du Commerce ExUrieur de la France. 77 Market Potential Despite the December 1958 devaluation of the franc, French prices are higher than those in other Common Market countries. The success of the measures taken to enhance France's com- petitive position •will depend largely on the ability of the industry to hold down prices, which are be- coming more vulnerable to competition from other Common Market countries. By causing pres- sure to be exerted on the distribution system and production methods that have made some French appliances higher priced than similar products manufactured elsewhere in Europe, the Common Market should benefit the industry. The prospect of the Common Market competi- tion is said to have hastened mergers and agree- ments in the electrical equipment industry, which may result in product standardization and reduc- tion in the number of models produced. In addi- tion, a large number of companies have pooled efforts in the field of research, procurement, and commercial services in an effort to cut costs. The French industry is optimistic about its ability to adapt to new conditions imposed by the Common Market. Factors in addition to the emergence of the Common Market that have reduced the possible market for American products are increased productive capacity in France and neighboring countries and the development of price and quality competition. Elimination of the licensing requirement for most major household appliances should result in increased U.S. exports to France, but will by the same token make German and British products more competitive. Some appliances are being produced in France under U.S. licensing arrangements and by French affiliates of U.S. firms. Equipment exported from the United States has earned a good reputation for quality, although it is not technically adapted to use in French households; the cost of modifica- tion has influenced the consumer's choice in favor of equipment that more closely meets his require- ments. In areas where electric power is 220 volts T converters must be used with 110-115-volt U.S. appliances. Moreover, French wall sockets re- quire round-pronged plugs rather than the flat parallel type used in the United States. Import- ers also say that domestically manufactured equip- ment as well as that originating in other European countries, notably Germany, includes features that eliminate interference with radio and television reception. Conformity to French market require- ments would increase the salability of U.S. ap- pliances. ITALY Production In recent years Italy has become a major pro- ducer of electrical household appliances, the larg- est gains occurring in refrigerators and washing machines (table 42). No data are available on absorption-type re- frigerators, but trade sources report production and sale to be insignificant. In 1959, approxi- mately 55 firms, having a total employment of 10,153, produced washing machines, refrigerators, Table 42. — Italy: Estimated Production of Major Household Appliances, 1955-59 [Units] Appliance Washing machines.. Vacuum cleaners '__. Electric ranges 2 Electric refrigerators 1955 35, 000 60, 000 50, 000 140, 000 1956 60, 000 60, 000 60, 000 2(10, 000 1957 76, 000 60, 000 65, 000 300, 000 1958 100, 000 65, 000 55, 000 500, 000 1959 164, 000 55, 000 83, 000 750, 000 ' Excluding combination floor polisher-vacuum cleaners. ' About 50 percent are electric-gas combinations. Source: National Association of Electroteehnical Industries, Milan. 78 ranges, vacuum cleaners, floor polishers, hot water heaters, as well as many other household appli- ances. The value of production by these firms in- creased from $24 million in 1955 to $91.2 million in 1958. Some well-established manufacturers have recently branched out into production and marketing of an entire line of household appli- ances and, in some cases, are marketing two lines under separate brand names. Electric washing machines are rapidly gaining in popularity. Of total 1958 production of 100,000 units valued at $12.8 million, 90 percent were esti- mated to be of the nonautomatic or semiautomatic type and only 10 percent fully automatic. In 1958 the industry produced 65,000 vacuum cleaners having a manufacturers' value of $1.84 million, and 85,000 floor polishers and polisher- vacuum cleaner combinations having a total manu- facturers' value of $3.84 million. In addition to 55,000 electric ranges, the industry produced 20,000 hotplates and 3,000 broilers. The household refrigerator sector has grown the fastest in the industry. Almost half of the 1958 output were of 4.41- to 5.65 -cubic-foot ca- pacity, as indicated below : Percent of 1958 production 4.41 and smaller 9 Above 4.41 to 5.65 49 Above 5.65 to 7.06 30 Above 7.06 12 Italy is now virtually self-sufficient with re- spect to sealed compressor units for household re- frigerators. Compressors are being manufac- tured under American and European license, 70 percent of total production being one-eighth horsepower; 20 percent, one-tenth horsepower; and 10 percent, one-sixth horsepower. A very small number of freezers are produced in Italy, using compressor units imported from the United States. Raw materials for the most part are imported. The availability of power is increasing rapidly, although it remains relatively expensive. Labor is abundant despite shortages of some types of skilled workers. Although basic wages in Italy are lower than in other European countries, the total cost to an employer is raised almost 75 per- cent by social security contributions and statutory bonuses. Manufacturers tend to produce as many of their own components as possible, partly on account of the 3-percent tax on every invoiced sale, which inhibits a more efficient procurement policy. Lack of standardization of parts and manufacture of too large a range of models also impede efficient production in a number of cases. Channels of Distribution Distribution is through retail stores, and some leading manufacturers operate their own retail outlets. Wholesale distribution by manufactur- ers, or exclusive agents for imported products, is direct to authorized retail stores. Authorized sales agents and local manufacturers offer com- plete servicing facilities. Consumption Of a total of 12 million households in Italy, no more than 14 percent, 1.68 million, own electric refrigerators. A local market research survey in October 1959 reportedly estimated saturation at only 12 percent, 1.44 million. The market is far from saturated even in northern Italy, which ac- counts for about 60 percent of all the refrigerators owned in Italy. Ownership of a refrigerator is re- portedly becoming a matter of social prestige, and sales have been spurred by the growth of install- ment buying and by retail price decreases in the past 2 years. The most popular models are 5.47- to 6.35-cubic-foot capacity, the size most suitable for the average Italian kitchen and the purchas- ing power of the average family. Freezers are not used because of an almost complete lack of frozen foods, but some progress may be expected in this area. Frozen foods are beginning to be sold by the few supermarkets in Milan and Rome, and an extensive campaign is being conducted to stimu- late their production and consumption. No more than an estimated 5 percent, 600,000, of Italian households own electric washing ma- chines, and industry sources look for a rapid ex- pansion in demand similar to that experienced for refrigerators in the past 2 years. The most popu- lar washing machines are the semiautomatic mod- els with separate spin-rinse, many of which are equipped with built-in water heaters. The growth of demand for other household ap- pliances has been modest, but the industry believes that in time domestic sales in Italy will parallel the development in France, West Germany, and the United Kingdom. 79 Representative retail prices in October 1959 for washing machines, refrigerators, and freezers were as follows : Washing machines: Semiautomatic, with separate spin-rinse. . $160-$208 Fully automatic 288-480 Refrigerators, by cubic-foot capacity: 1.77 80 4.24 110 5.47 120-135 6.35 143-155 8.47 184-240 13 to 14 (usually imported) 550-650 Freezers 435-1, 250 Throughout Italy, 50-cycle electric current has become fairly well standardized. Voltages vary considerably, and apartment houses in some cities may have 125-, 160-, 220-, or 280-volt power. An attempt is being made toward standardization at 125 and 220 volts. Imports In most cases, Italian foreign trade statistics are not segregated for individual electrical house- hold appliances, a situation further complicated by a regrouping of statistical categories in 1959. Combined imports of clotheswashing and dish- washing machines totaled $1,779,550 in 1958 and clotheswashing and drying machines $1,351,462 for the first 10 months of 1959. Of the latter amount, the United Kingdom supplied $842,350, or 62 percent, and West Germany $370,989, or 27 percent. Total imports of vacuum cleaners and floor and shoe polishers amounted to $821,462 in 1958 and $677,248 in January-October 1959. West Ger- many furnished $477,957, or 58 percent, in 1958 and $469,016, or 69 percent, in the 1959 period. Although household refrigerators are not shown as a separate item, the category comprising units weighing 250 kilograms (550 lbs.) or less may be presumed to include most household units. This group totaled $996,727 in 1958, almost 82 percent, or $816,849, coming from West Germany. The United States supplied $74,635, 7 1 / 2 percent, and the United Kingdom $59,370, 6 percent. Imports of other refrigerators of 500 kilograms (1,100 lbs.) and less totaled $3,054,448, of which West Ger- many supplied $2,280,397, almost 75 percent. Sta- tistics for the first 10 months of 1959 show a total of $654,763 of self-contained refrigerator units, although no breakdown is given as yet for those above or below 250 kilograms (550 lbs.). West Germany accounted for $339,181, 52 percent of the total, and the United States $251,797, 40 per- cent. Electric ranges are included in a category con- taining so many unrelated items that the statistics have little value in this survey. Table 43 shows U.S. exports of major house- hold appliances to Italy for 1955, 1958, and 1959. As a result of liberalization, import licenses are no longer necessary for household refrigerators, washing machines, and electric ranges. Vacuum cleaners are liberalized except for parts, which still require import licenses. Exports Italian exports of clotheswashing and drying machines in 1959 will probably treble the 1958 volume, having increased from $666,720 in 1958 (including dishwashers) to $1,940,637 in Janu- ary-October 1959. The United Kingdom is the principal purchaser, accounting for $117,037 in 1958 and $1,142,435 in the 1959 months, and Aus- tria purchased $115,517 and $247,880, respectively. Other important markets in 1958 were the Nether- lands, $91,483 ; Switzerland, $88,736 ; Yugoslavia, $58,523 ; and Belgium-Luxembourg, $45,723. Of the vacuum cleaner and floor and shoe pol- isher exports totaling $130,403 in 1958, major pur- chasers were Yugoslavia, $34,117; the United States, $30,827; the Union of South Africa, $22,482; and Belgium-Luxembourg, $15,037. However, in the first 10 months of 1959, West Germany took $58,411 of total exports of $118,648. Exports of refrigerators of 250 kilograms (550 lbs.) or less amounted to $172,037 in 1958, the principal countries of destination being Belgium- Luxembourg, $35,125; Turkey, $26,611; Yugo- slavia, $25,907; and West Germany, $15,803. Other refrigerators of 500 kilograms (1,100 lbs.) and less amounted to $6,791,344, of which $1,199,- 930 went to the Union of South Africa, $850,538 to Belgium-Luxembourg, and $846,054 to West Germany. Statistics for January-October 1959 show total exports of $878,814 of self-contained refrigerator units of various weights, even those exceeding 250 kilograms (550 lbs.). 80 Table 43. — b.S. Exports of Major Household Appliances to Italy, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic Semi- and fully automatic . Vacuum cleaners 900 44 2 1,622 142, 039 1,973 532 271, 268 245 110 10 851 39, 722 3,574 1, 987 158, 451 416 68, 493 Electric ranges 17 925 2,829 Electric refrigerators. . . 170, 507 Other mechanical refrigerators and freezers Electric freezers . 37 6,626 38 8,463 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Italian import duties and other taxes on household appliances are as follows : Tariff No. Description Ad valorem duty, tempo- rary rate (percent) Sales or turnover tax 1 (percent of duty-paid value) Compensatory import tax (per- cent of duty- and-sales-tax- paid value) ex 84.15 a. Refrigerating units with constituent elements mounted on a common base or in the form of self-contained units: 1 (b) Compressor type weighing 250 18.0 kilograms (550 lbs.) or less per unit. 2. Other types (including absorption, 18.0 etc.). d. Parts: 1. Furniture and similar appliances not 18. 9 incorporating a refrigerating unit. 2. Other ... . ... 22. 27. 9 ex 84.40.. . __ a. Electric domestic washing machines and dryers. h. 2 (a). Parts.. ... _ 27. 9 3. 3 3 ex 85.06 Electromechanical domestic appliances with self-contained motor : a. Vacuum cleaners and floor polishers: I. Vacuum cleaners __ 34. 2 34. 2 III. Parts ex 85.12 . Electrothermic appliances, etc.: f. 1. Ranges, cookers, and ovens for do- 25. 2 mestic use. g. Parts: 1. Heating elements and heating resistors: (a) Made of clad tubes .. 27.9 (b) Of other kinds. . . 19.8 2. Other 27. 9 1 Also applies to domestically produced goods. However, in the case of exports of domestically produced appliances, Italian manufacturers receive a refund of the 3.3-percent turnover tax; in addition, they receive lire subsidizations for ferrous materials incorporated in products at the following rates: ovens and stoves, 20 lire per kilogram (US$0,032 per 2.2 lbs.); vacuum cleaners and polishers, 35 lire per kilogram ($0,056 per 2.2 lbs.); and washers, dryers, and refrigerators, 45 lire per kilogram ($0,072 per 2.2 lbs.). 81 Market Potential Industry spokesmen are confident about the fu- ture, and they foresee several years of steadily ex- panding production and sales. This optimism is based partly on the low saturation of the domes- tic market, as well as anticipation of increased ex- port sales, both to traditional markets and to other Common Market countries. Particularly because of Italy's geographical location, possibili- ties for expanded markets also exist in the Near East and Africa. Italian-made refrigerators are well liked in export markets such as West Ger- many and the Low Countries for their quality and superior styling, and they are now highly com- petitive in price. Italian washing machines are also gaining favor in the export market. West German producers offer the greatest com- petition on the domestic market. However, many of the leading Italian appliance producers have invested in new plant and equipment in an effort to reduce costs, and they consider that their pro- duction costs in most sectors now closely approxi- mate those in West Germany. The industry as a whole is considered able to adjust to Common Market conditions, but the many existing small- and medium-sized firms may have to specialize or consolidate their production facilities in order to survive. After payment of ocean freight and custom du- ties, imported American appliances cannot com- pete in price with locally produced units. More- over, American refrigerators and washing ma- chines are too large according to current Italian standards, and are therefore losing out. Most of the well-known U.S. makes are being produced in Italy under license or by subsidiary corpora- tions, and U.S. firms represented in the Italian market are fabricating almost all components locally. LUXEMBOURG Production The only household appliances manufactured in the Grand Duchy of Luxembourg are household refrigerators. These are assembled by only 1 firm, established in June 1957, which employs ap- proximately 100 workers. In 1959, a U.S. manu- facturer of a nonrelated product purchased this plant for operation as a wholly owned subsidiary. Production in 1959 was estimated at 20,000 units. Plastic refrigerator boxes and thermostats are purchased from Germany, insulation materials from Belgium, and interiors from a Luxembourg supplier. The refrigerator manufactured for the Euro- pean market is a portable 1.3-cubic-foot electric model operating on the absorption principle and using voltages ranging from 6 to 220. Its retail price in Europe is approximately $50. Export models for the U.S. market were expected to re- tail between $60 and $70 for a 1.2-cubic-foot model, offered with gas or electric power supply. Channels of Distribution A few wholesalers supply retail stores han- dling household equipment. The stores are lo- cated in the main cities — Luxembourg City, Esch/ Alzette, Dudelange, Differdange, Ettelbriick, and Diekirch. Consumption Washing machine sales fluctuate between 500 and 1,000 units annually. Vacuum cleaners are popular, but no estimates on annual sales are available. Because electricity is still compara- tively expensive, gas ranges continue to be pre- ferred. Consumption of household refrigerators in Luxembourg is 500 to 1,000 units annually and is expected to expand. Service facilities are satisfactory. Although detailed information on prices is not available, refrigerators of U.S. manufacture re- portedly retail for as much as 100 percent higher than similar models in the United States. Luxembourg has a relatively stable population of 315,000. Although many families have refrig- erators and sales are increasing, refrigerators are not as essential there as in the United States. Frozen foods are not available, and housewives prefer to market daily. 82 Imports Imports come from the United States, England, Germany, France, and a few from Sweden. Luxembourg import duties on electrical household appliances are as follows : Tariff No. Description Ad valorem import duty ' (percent) Import tax on value f .o.b. Luxembourg (percent) Turnover tax 2 (percent) 84.15 ex 84.40 ex 85.06 ex 85.12 Refrigerating equipment: (a) Complete refrigerators: 1. With external volume not exceeding 2 cubic meters (approximately 70.7 cu. ft.) (b) Other refrigerating apparatus and equipment B. Electrical household washing machines Electromechanical apparatus: Vacuum cleaners for household use _ _ Electric ovens 12 6 6 12 15 o 2 2 2 2 2 2 2 2 2 1 Import duties on these commodities have been reduced by 20 percent for member countries of the European Economic Community. 1 Levied on both domestic and imported goods. Exports Only small portable refrigerators are exported.* Market Potential and Investment Opportunities Inasmuch as Luxembourg is a member of the Common Market, it will naturally look toward its nearby partners, Belgium, France, West Ger- many, and the Netherlands, to satisfy its import requirements. U.S. firms might effect sales through subsidiaries or licensees located in the Common Market area. Luxembourg is interested in attracting foreign capital to strengthen existing enterprises and es- tablish new firms. However, the size of the coun- try definitely limits the market potential for all appliances, and strong competition may be ex- pected from West Germany and other Common Market countries having low-cost labor. NETHERLANDS Production Manufacturers' sales of washing machines and vacuum cleaners in the Netherlands during the period 1955-59 were as follows, according to the Centraal Bureau voor de Statistieh (in units) : Washing Vacuum machines 1 cleaners 1955 150, 000 364, 900 1956 140, 100 370, 800 1957 158, 000 398, 600 1958 143, 700 382, 100 1959 207, 200 482, 900 1 Excluding those of wood. The eight vacuum cleaner producers, most of whom are located in The Hague and Kotterdam, * Data on imports and exports, which are merged with those of Belgium under the Belgium-Luxembourg Economic Union, are shown in the section on Belgium, where U.S. export figures on major appliances to Belgium and Luxembourg are also furnished. manufacture all the component parts. Informa- tion on production of electric ranges is not di- vulged because there are only three producers, located in Breda, Hattem, and Enschede. Out- put is said to be negligible and represents only a small and unimportant sideline of these manu- facturers. Household refrigerators are report- edly produced by three manufacturers. However, output is confined to very small units and prob- ably does not greatly exceed 4,000 units annually. Adequate supplies of raw materials are avail- able, though most of them must be imported. Small sealed compressors for refrigerators are all imported, mainly from the United States but also from Great Britain, West Germany, Sweden, and Denmark. Power and labor are available, al- though shortages of skilled workers sometimes occur. 83 No foreign capital is invested in the appliance industry, and no Government subsidies are offered. Maximum and minimum wages are regulated by the Government and are approximately at the October 1957 level. A 5-percent increase was ex- pected in 1959. The following average weekly wages for workers over 25 years of age include fringe benefits such as holiday allowances, over- time pay, and allotments for children : Men Women Skilled $24.80 $15.51 Trained 22.45 14.75 Unskilled 20.98 14.50 Employers pay approximately 31 percent of these wages for social security coverage of employees. Channels of Distribution Distribution follows the normal pattern for durable consumer goods. Manufacturers and im- porters sell to wholesalers, who in turn sell to re- tailers. The larger retailers sometimes buy direct from manufacturers and importers, but such di- rect sales are reportedly declining. Centers of distribution are in all large cities throughout the country. Consumption Domestic consumption of washing machines and vacuum cleaners in recent years is shown in table 44. Table 44. — Netherlands: Consumption of Washing Ma- chines and Vacuum Cleaners, 1955-59 Washing machines ' Vacuum cleaners Year Units Percent from do- mestic manu- facture Units Percent from do- mestic manu- facture 1955 1956 1957 1958 1959 182, 600 190, 700 205, 800 170, 300 187, 200 68.3 60.0 58. 5 63.4 66. 1 278, 000 264, 200 263, 400 2 245, 100 2 270, 100 84. 7 81. 3 80. 7 82. 7 82.6 1 Excluding those of wood. 'Adjusted to omit imports from Japan valued at approximately $1 per unit, presumably small battery-powered models. Source: Centraal Bureau voor de Statistiek. The great majority of washing machine sales are of the nonautomatic type. The lowest retail price of an automatic washing machine is $310, above the means of low-income families. Retail prices of nonautomatics are not available, but are believed to be considerably less. A high percentage of households have vacuum cleaners, the number in use being between 1.7-1.9 million. Retail prices range from $30-$50 de- pending on make, quality, and number of attach- ments, and average $39. Manufacturers' prices to wholesalers are 60-65 percent of list price. Prices to retailers are from 77-82 percent of list. Manu- facturers perform small repairs free, or at a mini- mum charge, and keep an ample stock of replace- ment parts for dealers. An important sales pro- motion device is the organization of free tours of vacuum cleaner factories, during which the ad- vantages of the particular brand are emphasized to housewives. Owing to the limited production, imports ac- count for nearly all refrigerator sales. The Neth- erlands people are becoming more, appreciative of refrigeration, and the sales trend is upward. Sat- uration of the market is between 15 and 20 percent. Service for household refrigerators is available throughout the Netherlands. In 1959, retail prices for 3.85-cubic-foot West German and French units ranged from $140 to $186. The high prices of im- ported units of under 7.1-cubic-foot capacities in comparison to domestic models is attributable to the applicable import duty and the method of com- putation of the turnover tax. High electricity rates and inadequate household and commercial wiring systems preclude even a moderate use of electric ranges. Imports In 1959, the Netherlands imported 63,417 wash- ing machines and 46,939 vacuum cleaners, repre- senting a drop in each case from 1957 totals. Refrigerator imports rose in 1959 to a total of 66,733 units. Imports of electric ranges are neg- ligible. West Germany is the principal supplier to the Netherlands market. Belgium and the United Kingdom are less important sources for washing machines and vacuum cleaners. Sweden, Italy, and Belgium trail West Germany as sup- pliers of refrigerators. Details on imports for 1956-59 are shown in table 45. 84 Table 45. — Netherlands: Imports of Selected Household Appliances, 1956-59 [Quantity In units; value in $1,000] Country of origin 1956 1957 1958 1959 Quantity Value Quantity Value Quantity Value Quantity Value Washing machines Belgium-Luxembourg . 4, 681 226 5,808 297 6, 015 584 4,345 50, 297 685 411 311 71 470 3,677 105 33 6, 324 2, 196 5, 147 48, 658 518 574 312 Italy . . 237 United Kingdom __ 5, 127 63, 876 1,018 1,641 390 3,634 142 103 5, 795 71, 438 1, 138 1, 220 436 4, 665 179 79 513 West Germany 3, 539 United States - 84 Other . . 52 Total _ 76, 343 4,495 85, 399 5,656 62, 337 4, 667 63, 417 4, 737 Vacuum cleaners Belgium- Luxembourg 4, 474 805 1,812 8,241 32, 385 1, 852 115 34 49 249 764 6 9,363 1,055 8,872 5,303 24, 490 1,674 276 47 295 148 450 5 13, 004 1, 035 8,350 3,735 15, 613 582 445 43 289 110 237 4 12, 690 1,089 4.429 7,068 20, 832 831 438 Denmark 46 Sweden _____ ___ 155 United Kingdom 206 West Germany _ 412 Other _ 17 Total » 49, 569 1.217 50, 757 1,221 42, 319 1, 128 46, 939 1, 274 Refrigerators 2 and parts Belgium-Luxembourg 829 549 77 147 1,501 932 212 197 2, 694 1,479 321 1, 700 6,286 416 2, 198 22, 066 1,033 512 295 285 26 196 484 23 291 1,709 199 61 4, 772 2, 466 2,278 5,080 4,906 1,871 1,975 40, 156 2, 105 1, 124 452 Denmark.. 314 France _ . 185 Italy . 799 8, 142 235 3,074 25, 106 1, 724 323 84 610 16 399 1,991 355 92 478 Sweden 4,877 61 4,848 18,214 1, 801 217 372 7 697 1,400 332 51 585 Switzerland 90 United Kingdom 226 West Germany - 3, 168 United States 446 Other 89 Total 31, 396 3,083 41, 836 3,956 38, 705 3,569 66, 733 6, 033 i Imports from Japan have been subtracted from totals for 1958 and 1959 because value of approximately $1 per unit makes it apparent they are not con- ventional electric vacuum cleaners (1958-5,300 units valued at $6,838; 1959—4,865 units valued at $4,471). 2 Category covers refrigerators not exceeding 2 cubic meters (70.7 cu. ft.) of external volume. Units indicated are complete refrigerators, but values include parts. Source: Centraal Bureau voor de Statistiek. 85 U.S. exports of major household appliances to the Netherlands for 1955, 1958, and 1959 are shown in table -16. Table 46. — U.S. Exports of Major Household Appliances to the Netherlands, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic _ 344 152 29, 620 20, 252 138 1,029 13 62 828 16, 257 157, 514 2, 115 7,417 124, 895 6 1, 402 50 16 569 2 1, 474 505 Semi- and fullv automatic. Vacuum cleaners. _ 214, 321 4, 874 Electric ranges . _ ...... 20 1,055 29 275 3, 610 173, 997 6,437 45, 545 2, 781 Electric refrigerators _ . . . 94, 044 Other mechanical refrigerators and freezers 530 Electric freezers _ _ 545 107, 332 284, 122 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. The Netherlands import duties on household electrical appliances are : Ad valorem Tariff No. Description import duty J Turnover tax 2 (percent of (percent) duty-paid value) 84.15 Refrigerating equipment: (a) Complete refrigerators: 1. With external volume not exceeding 12 18. for units with capacity of 2 cubic meters (approximately 200 cubic decimeters (7.1 70.7 cu. ft.) cu. ft.) or less; 8 for others. (b) Other refrigerating apparatus and equipment. 6 8. ex 84.40b Electrical household washing machines 6 11. ex 85.06 Electromechanical apparatus : Vacuum cleaners for household use- 12 8. ex 85.12b Electric ovens .... ... 15 sy 2 . 1 Duties on these commodities have been reduced by 20 percent for member countries of the European Economic Community. 2 Turnover tax also applies to domestic goods. Exports The Netherlands in 1959 exported 83,333 wash- ing machines and 259,686 vacuum cleaners, the former going mostly to the United Kingdom, fol- lowed by Austria, and the latter to West Germany, followed by Belgium-Luxembourg and the United Kingdom. A small volume of refrigerators and parts went chiefly to the United Kingdom and Belgium-Luxembourg. Table 47 gives detailed information on Nether- lands exports of selected appliances for 1956-59. Market Potential and Investment Opportunities Higher sales taxes and other Government measures, introduced in 1958 to reduce public and private expenditures and balance the country's economy, caused a downward trend in consumer buying. Some of the economy measures have been rescinded, and relief is now in sight. Consump- tion is expected to rise again, apace with the country's rising population. Direct investment by U.S. industry is welcomed by the Netherlands as an aid to the growth of the 86 Table 47. — Netherlands: Exports of Selected Household Appliances, 1956-69 [Quantity in units; value in $1,000] Country of destination 1956 1957 1958 1959 Quantity Value Quantity Value Quantity Value Quantity Value Washing machines Austria ... __ 4, 334 8, 139 128 265 7,311 7, 146 10, 162 1,086 672 972 2,005 1,077 7,097 285 255 344 27 36 50 69 74 326 9, 488 4,264 400 157 21, 125 3, 670 2, 622 3, 532 1,632 392 38, 314 5,376 6, 670 795 Belgium-Luxembourg 134 Hungary - _ _ __ - 77 Ireland _ - — Lebanon _ _ - - 1,525 679 854 910 1, 353 8, 023 38 31 42 34 52 314 630 617 1,098 10, 133 2, 921 6, 564 13 28 60 413 192 335 75 82 Switzerland - United Kingdom 21 2 175 West Germany - _ 293 387 Other ._ __ _____ Total _ 25, 817 904 37, 528 1, 466 35, 715 1,598 83, 333 4 039 Vacuum cleaners Austria - 9,897 29, 749 7, 956 221 679 193 16, 558 32, 962 12, 043 161 14, 845 22, 076 26, 814 13, 137 18, 128 15, 492 116 13, 710 362 735 288 5 310 444 609 279 405 314 3 376 13, 743 25, 215 9, 401 5,399 9, 973 15, 861 21, 626 12, 894 27, 807 26, 286 462 10, 646 300 526 221 129 199 316 468 276 575 521 11 257 13, 881 32, 922 15, 050 7, 988 6, 067 20, 363 19, 993 21, 300 28, 793 79, 600 317 13, 412 268 644 335 186 123 371 410 416 609 1, 186 Belgium-Luxembourg. Canada - _______ Finland France- ______ 14, 363 23, 721 22, 896 9,703 14, 375 11,070 300 479 526 212 309 227 Norway _ _ _ _ _ Sweden _ _ Switzerland United Kingdom _ West Germany United States Other_._ _ 12, 440 315 303 Total 156, 170 3, 461 186, 042 4, 130 179, 313 3, 799 259, 686 4, 858 Refrigerators ' and parts Belgium-Luxembourg 212 14 25 29 5 7 248 13 85 61 5 24 180 23 39 6 497 25 79 6 New Guinea Saudi Arabia. _ _ _ _ _ Sweden _ 655 68 1,292 24 Switzerland _ _ ______ 5 43 L T nited Kingdom _ _ __ Venezuela _ 158 504 247 7 43 29 West Germany. _ _ _____ 453 103 33 22 137 97 21 24 342 377 41 36 Other. ___ Total _ _ ... ... 807 96 580 135 1, 112 124 3, 256 234 1 Category covers refrigerators not exceeding 2 cubic meters (70.7 cu. ft.) of external volume. Units indicated are complete refrigerators, but values include parts. Source: Centraal Bureau voor de Statistiek. 87 country. Though not required, local capital par- ticipation is practicable. The potential market for household refrigera- tors is large. A relatively large number of absorp- tion units are in use, but compressor machines are growing in popularity. Opportunities exist for U.S. firms to establish one or more factories to manufacture American-type household refrigera- tors. American mass-production methods and manufacturing experience are desired in the Netherlands. The possibility of increasing trade in vacuum cleaners between the United States and the Netherlands is considered poor. Factors causing the low level of the last few years are not expected to change in the near future. Price is an impor- tant consideration. Although American vacuum cleaners are appreciated for their design, they are considered too expensive in view of the large selec- tion of domestic and other European cleaners offered at reasonable prices. In this highly com- petitive market, one American vacuum cleaner manufacturer does compete successfully through import of his product from subsidiaries in Bel- gium and Great Britain and because of an ex- cellent reputation built up through long effort during the prewar period. This manufacturer re- portedly now accounts for 20 to 25 percent of total Netherlands imports, and his imports from Bel- gium, within the Common Market, are rising. Although licensing arrangements or importa- tion through subsidiaries in third countries is con- sidered more promising than direct imports from the United States, competitive difficulties for U.S. vacuum cleaners are formidable. The experience of the above-mentioned American manufacturer shows that entry into the Netherlands market can be achieved through subsidiaries in a third country, but insofar as vacuum cleaners are con- cerned the market is fairly saturated. Even local manufacturers have for the past few years found an outlet for 45 percent of their output through exports. Because availability and cost of electricity are not likely to improve appreciably in the Nether- lands in the foreseeable future, the outlook for increased sales of electric ranges is poor. Gas is by far the most popular cooking fuel because it is universally available, and the housewife sees no reason to change to an electric stove. PORTUGAL Production Washing machines, vacuum cleaners, refrig- erators, and freezers are not produced in Portugal, and no appliances are exported. A subsidiary of a large U.S. manufacturer reportedly has been authorized to construct a factory near Lisbon for the production of appliances and may begin opera- tions within 4 years. Production of electric ranges is estimated at 2,700 units in 1957 and 2,950 units in 1958. Sev- eral firms in the Oporto area account for most of the output. The largest company offers 18 models. Few domestic raw materials are utilized in this modest production. Steel sheets, resistors, and other components are imported, principally from West Germany and Great Britain. Foreign capi- tal reportedly is not invested in the manufacture of ranges, nor are Government subsidies granted. Electricity is furnished at special industrial rates. Labor is available in sufficient quantities. The average daily rate for skilled labor is $1.75, and for unskilled labor, $0.98. Some minor fringe benefits are provided. Channels of Distribution Lisbon and Oporto are the principal distribu- tion centers. The importers usually act as whole- salers and also distribute through retail outlets. Local producers of electric ranges sell direct to consumers or through distributors. Retail sales are mostly on the installment plan, payment terms extending for as long as 3G months. Retail prices of imported electrical appliances are sufficiently high to permit substantial discounts for cash pur- chases. Service facilities are adequate, and competent technicians are available. 88 Consumption Estimated 1957-58 consumption of appliances in Portugal was as follows (in units) : 1957 195S Washing machines 1,900 2,000 Vacuum cleaners 6, 700 7, 500 Electric ranges 3,000 3,300 Refrigerators 11,000 13,000 The consumption trend in 1959-60 appears to be upward but is influenced by the cost of electricity and of the appliances, both of which are high. Average 1959 prices of appliances in Lisbon were as follows : Appliance Retail price (dollars) Wholesaler per- centage discount to retailers, plus 3 percent for cash Washing machines (United Kingdom) _ 192 84 114 80 244 25 Vacuum cleaners (United Kingdom) 25 Ranges: German 30 Domestic 20 Refrigerators (German) 25 Imports Until recently a serious obstacle to the import of household electrical appliances from the United States has been the difficulty in obtaining dollar area import licenses, which were granted only when similar products were not available else- where. Although licenses are still required for all imports, in the case of electrical household ap- pliances they are now issued freely, and no special restrictions apply to imports from dollar areas. Mainly because of price factors, the following- countries lead in export of domestic electric ap- pliances to Portugal : United Kingdom and West Germany, washing machines; West Germany, Sweden, and the Netherlands, vacuum cleaners; and United Kingdom, Sweden, and West Ger- many, electric ranges. The United States, despite its higher prices, and West Germany are the prin- cipal suppliers of refrigerators. Portuguese im- port statistics do not separately identify electric ranges. Table 48 shows 1958 imports of washing ma- chines, refrigerators, and vacuum cleaners. Table 48. — -Portugal: Imports of Selected Household Appliances, by Country of Origin, 1958 [Quantity in units; value in dollars] Country of origin Washing machines: Germany Italy Netherlands United Kingdom- United States Other Total- Vacuum cleaners: Denmark Germany Italy Netherlands Sweden Switzerland United Kingdom- United States Other Quantity 324 90 244 977 178 187 2,000 Total- Refrigerators weighing up to 200 kilograms (440 lbs.): France Germany Italy Sweden United Kingdom United States Other Total . 368 3,330 104 1,518 2, 176 283 865 405 119 9, 168 754 4, 107 2,060 917 2,457 3,945 60 Value 33, 316 14, 029 17, 489 69, 095 31, 704 32, 832 198, 465 12, 500 89, 796 1,516 41, 196 85, 708 10, 070 26, 921 16, 097 3,107 286, 911 14, 300 79, 149 492, 820 248, 706 105, 367 334, 990 654, 302 6,678 1, 922, 012 Source: Comercio Extenio, Comfircio por Mercadorias e Paises. U.S. exports of major household appliances to Portugal in 1955, 1958, and 1959, appear in table 49. Market Potential In the past, the greatest impediment to U.S. ex- ports of household electrical appliances to the Portuguese market has been the import licensing preference granted to nondollar imports. Expan- sion of such trade should result from the recent liberalization of licensing that permits the entry of dollar area goods on the same basis as nondollar imports. All appliances from the United States 89 Table 49. — U.S. Exports of Major Household Appliances to Portugal, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic _ 30 44 36 43 3, 100 10 6 4, 010 8, 497 1, 621 6, 657 495, 516 1, 813 981 65 156 402 92 4, 109 2 3 7, 795 23, 654 14, 511 10, 833 627, 555 586 692 Semi- and fullv automatic Vacuum cleaners - . Electric ranges . Electric refrigerators _ Other mechanical refrigerators and freezers _ _ 185 356 10 4,634 31,214 12, 636 3, 130 660, 193 Electric freezers. . _ 10 2, 510 Source: Report No. FT-410, U.S. Fxports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Portuguese import duties on household electrical appliances are as follows : Tariff No. Description Duty per kilogram net Maximum Minimum ' 84. 15 -02 -03 -05 84. 40 -03 85 06-01 85. 12 -03 84. 65 -01 -02 -03 -08 -09 85. 28 -01 -02 -03 -08 -09 Material, machines, and apparatus for the production of cold, even elec- trically equipped: Cabinets and refrigerators: Up to 200 kilograms (440 lbs.) Over 200 kilograms (440 lbs.) Parts: Cabinets Washing machines of all kinds: Clotheswashing machines Vacuum cleaners Waterheaters, irons, thermoelectrical apparatus for domestic use, etc.: Hairdryers, haircurling irons, and those for domestic use (includes electric ranges) Parts for refrigerators, washing machines, etc.: Metal parts, up to 500 grams (about 1.1 lbs.) Metal parts, 500 grams to 10 kilograms (1.1 to 22 lbs.) Metal parts, 10 to 100 kilograms (22 to 220 lbs.) Wooden parts Other, not specified Parts for vacuum cleaners, electric ranges, etc.: Metal parts, up to 500 grams (about 1.1 lbs.) Metal parts, 500 grams to 10 kilograms (1.1 to 22 lbs.) Metal parts, 10 to 100 kilograms (22 to 220 lbs.) Wooden parts Other, not specified $0. 56 . 70 2. 10 . 84 1. 75 1. 96 $0. 28 . 35 1. 05 . 42 .98 2.24 1. 12 1.68 . 84 1. 26 .53 1. 12 .56 4.20 2. 10 2. 24 1. 12 1.68 .84 1. 26 .53 1. 12 .56 4. 20 2. 10 Applicable to the United States and other treaty countries. 90 were previously imported under compensation agreements, whereby the importer made arrange- ments with an exporter shipping to the United States goods whose value approximated that of the imported appliances, and paid the exporter a commission of 5-6 percent. An additional deterrent to expansion of U.S. appliance exports to Portugal has been the higher prices of American electrical appliances compared with those from other countries. Sales by third countries through subsidiaries or licensees of U.S. manufacturers would be feasible if prices were competitive and the quality of the product the same as in the United States. SPAIN Production Official Spanish statistics on the production of household electrical appliances are not available. Production is carried on by approximately 60 small firms, each making only one major product. No appliances are exported. Estimated domestic production of electrical ap- pliances in 1958 was as follows : Manufacturers' Units value Washing machines 100,000 $6,034,400 Vacuum cleaners 18,000 603, 500 Electric ranges 35 ,000 2, 068, 900 Refrigerators 15, 000 2, 070, 000 Freezers are not manufactured in Spain. Production is concentrated in three major zones— Barcelona and environs, the Basque coastal provinces of Vizcaya and Guipuzcoa, and Madrid and environs. Madrid has recently become an industrial center for this type of manufacturing, and many of the larger, newly established fac- tories have located there. Most manufacturers of refrigerators and vacu- um cleaners make all parts and assemble the fin- ished product. On the other hand, most of the washing machine manufacturers produce the metalwork and buy the motors. Assemblers of electric ranges usually purchase all parts. Be- cause of their small size, typical Spanish appliance manufacturers are unable to use mass-production methods. At the present time, the industry is not suffering from shortages of labor, raw materials, compo- nents, or electric power. Magnets for cores of electric motors are supplied by Spanish produc- tion, which provides a fairly steady supply for the appliance and other industries. Good quality, thin-gage sheet steel for use in making refrigerators and electric ranges is in short supply. The available sheet steel does not lend itself well to welding and requires many buffings, and its poor quality is seen in the finished product, even after enameling. Chrome-plated work often has a poor appearance. One producer of refrigerators has reportedly limited his produc- tion to the quantity that can be produced with available imported sheet steel. However, this situ- ation should improve shortly, when a new cold- rolling mill is put into operation. All appliance producers are believed to be pri- vate concerns, and do not receive any form of direct governmental aid or subsidy. The Govern- ment policy of rigidly restricting imports, espe- cially of consumer goods, because of the extreme scarcity of foreign exchange has made the local market among the best protected in the world and has been the primary factor in the growth of the industry in the past few years. The ma- jority of the manufacturers would probably not be able to survive under conditions of free com- petition with other European manufacturers. Participation of foreign interests has usually taken the form of licensing arrangements rather than direct capital investment, formerly limited by law to 25 percent. However, since July 28, 1959, foreign interests are permitted to hold 50 percent of the total capital of an industrial enter- prise and a larger percentage if approved by the Council of Ministers. In obtaining foreign li- censes, Spanish firms have favored American ap- pliances. Channels of Distribution Appliances are distributed by wholesalers on the basis of territorial concessions. 555532—60 7 91 Consumption Inasmuch as imports are negligible, consump- tion is practically equal to production. Demand declined in 1959 owing to a rise in cost of living unaccompanied by wage increases and to the uncertainty about Spain's economic future pending the outcome of economic reform measures adopted in July 1959. Stocks accumulated in the hands of retailers, who resorted to persuasive sales methods. Significant decreases in appliance prices are unlikely because of the small size of the man- ufacturers, the high cost of materials and parts, and the lack of skill and imagination in merchan- dising. The most popular household appliance appears to be the washing machine, especially among mid- dle-class white-collar workers, Government em- ployees, and young married couples. The wide use of expensive laborsaving appliances has been re- tarded considerably by the fact that the majority of Spanish people above the laboring class em- ploy servants. But a gradual decline in both qual- ity and availability of servants is anticipated, which should result in a rise in demand for elec- trical appliances. Electric ranges are becoming popular, but they meet strong competition from gas stoves. Recent restrictions on, and the rising price of, electricity are obstacles to increased demand. Electricity rates are higher for users of major electrical appli- ances than for users of electricity only for lighting, unless the household is near a 220-volt "industrial current" line. Many dwellings in the cities and al- most all in smaller towns and rural areas use the traditional Spanish coal oven, which also provides the hot-water supply. Even in the cities, many of the newly built nonluxury apartments are pro- vided with coal ovens, sometimes equipped with an auxiliary gas or electric hotplate. Butane gas is steadily gaining acceptance and will provide seri- ous competition for electricity if a lower schedule of electric rates is not established. Estimates of appliances in use in Spain in 1959 are (in units) : Washing machines 500,000 Vacuum cleaners 100,000 Electric ovens 250,000 Refrigerators 150,000 Representative 1959 retail prices of appliances made in Spain under U.S. licenses were washing machines, $290 ; vacuum cleaners, $85 ; and refrig- erators, $400. Imports Imports of appliances are negligible, being per- mitted only for the specially privileged, such as Spanish citizens returning from abroad, foreign diplomats, and U.S. military personnel. Table 50 shows U.S. exports of major household appliances to Spain for 1955, 1958, and 1959. Table 50. — U.S. Exports of Major Household Appliances to Spain, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic 11 10 1,301 3,520 Semi- and fully automatic _____ 3 547 14 3,910 Vacuum cleaners - . _ _ Electric ranges. _ _ _. 20 79 5,250 20, 897 516 963 65, 018 124, 119 Electric refrigerators. . _ _ . . . 181 31, 186 Other mechanical refrigerators and freezers Electric freezers 10 2,400 4 1,327 Source: Report No. FT-410, U.S. Experts of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 92 Spanish import duties and other taxes on household electrical appliances are as follows : Tariff No. Description Import duty (percent) Equalization tax 1 (percent) 84.15 Refrigerating equipment, electrical or other. A. Domestic refrigerators weighing up to 200 kilograms (440 lbs.), including refrigerating equipment of a weight not more than 50 kilograms (110 lbs.) and parts. B. Refrigerators and parts not elsewhere specified _ 45 40 40 35 45 45 50 35 40 45 6 8 ex 84.40 ex 85.06 _ A. Domestic washing machines G. Parts and accessories A. Electric vacuum cleaners and floor waxers for domestic use . E. Parts and accessories 8 8 6 6 ex 85.12. E. Other electrothermic apparatus for domestic use (includes electric ranges). F. Heating elements. 1. Unmounted 2. Mounted 8 12 10 G. Parts and accessories 8 1 Comparable taxes apply to domestic products. Note. — Imports are subject to license. Market Potential The recent prosperity of the electrical appliance industry is directly related to Spain's economic isolation and the consequent lack of foreign com- petition. Current economic reforms will deter- mine the future of the domestic industry and the possibility of further market penetration. U.S. manufacturers are advised to watch for any fur- ther liberalization of Spain's present rigorous con- trol on most imports. Demand is expected to be greatest for washing machines, followed by refrigerators, electric stoves, and vacuum cleaners. No significant de- mand for household freezers is foreseen for some years. SWEDEN Production Official Swedish production statistics group household refrigerators with freezers, and house- hold electric ranges with ovens. The manufac- turers' value of 1955-58 production was as fol- lows, according to Sveriges Offtciella Statistik (in dollars) : Appliance 1955 1956 1957 Preliminary 1958 Washing machines Vacuum cleaners Electric ranges and ovens Refrigerators and freezers 8, 295, 719 7, 815, 535 11, 539, 660 19, 452, 470 7, 014, 585 7, 641, 255 10, 997, 140 19, 488, 755 7, 396, 532 7, 515, 034 10, 969, 734 20, 388, 520 6, 329, 628 1 10, 349, 239 11,412,862 21, 099, 725 1 Includes floor polishers. 93 Table 51. — Sweden: Percentage Distribution of Sales, by Type of Outlet Product Whole- salers Retailers Company stores Company agents Large consumers Others Domestic: Washing machines 25 15 34 9 58 14 14 56 79 38 15 48 57 31 52 40 15 12 1 17 3 1 2 9 30 50 13 7 27 42 13 3 5 1 17 17 3 1 1 2 6 1 Vacuum cleaners 2 Ranges . _ 1 Refrigerators _ . Freezers _ 1 1 Imported: Washing machines - . 5 Vacuum cleaners _ 1 Refrigerators _ _ 5 Freezers _ _. - Source: Statens Pris och Kartell)) amnd. Washing machines, vacuum cleaners, electric ranges, refrigerators, and freezers are manufac- tured mostly in central and southern Sweden, Stockholm being the center of production. Sev- eral of the firms produce a complete line of major household appliances. Of 16 manufacturers of washing machines, only 2 produce fully automatic units. Few raw materials and components, except compressors for refrigerators and freezers, are im- ported. Little foreign capital is invested in domestic ap- pliance companies. Channels of Distribution Table 51 gives the distribution pattern of se- lected appliances. Retailing in Sweden is unique in that, because of expenses involved in maintaining stocks of dif- ferent makes, only one brand of each appliance is usually handled by retailers. Consumption No recent data are available on consumption. However, in 1958 the Government Price and Cartel Board conducted a survey of retail pur- chases of selected consumer durables in 1956 (table 52). In that year, the market was domi- nated by domestic products, although 12 foreign refrigerator models were offered against 6 domes- tic brands, and 14 foreign vacuum cleaners against 4 domestic. On the other hand, 13 foreign makes of washing machines competed against 17 Swedish brands, 3 foreign makes of freezers competed with 6 domestic brands, and only 1 electric range of foreign manufacture competed with a total of 8 Swedish models. Table 52. — Sweden: Retail Sales of Selected Household Appliances and Share of Market Represented by Domestic Products and Imports, 1956 [Value in $1,000] Domestic products Imports Total value Appliance Value Percent of total Value Percent of total retail sales Washing machines _ ____________ 7,947 4,818 9,842 13, 292 5,605 67 71 98 74 85 3,871 2,015 216 4,628 976 33 29 2 26 15 11,818 Vacuum cleaners - _ 6, 833 Electric ranges. -- _ - - 10, 058 Refrigerators - ___ ___ 17, 920 Freezers -_ - - -- -- ______ 6, 581 Source: Slattnt Pris och Kartellnimnd. 94 In 1956, six distributors accounted for approxi- mately 50 percent of total washing machine sales, whereas only 2 distributors in each of the other categories accounted for 50 percent of the respec- tive markets for vacuum cleaners, electric ranges, and refrigerators — according to Statens Pris och KarteUndmnd : Electric ranges are listed in a basket category which includes all electric cooking apparatus and parts, as well as space heaters. West Germany accounted for approximately 75 percent of the total value of such imports in both years. Detailed statistics on 1957-58 imports of se- lected household appliances are shown in table 53. Appliance Number of firms ac- counting for 50 percent of the market Number of firms ac- counting for 75 percent of the market Washing machines Vacuum cleaners 6 2 2 2 1 11 3 Electric ranges . Refrigerators _ Freezers - _ . 3 4 3 Table 53. — Sweden: Value of Import* of Selected Household Appliances, 1957-58 In 1952, about 93 percent of the Swedish homes were electrified, but the percentage is probably higher now. Refrigerators manufactured domes- tically are mainly of the absorption type, ranging in size up to 3.5 cubic foot. Compressor-type re- frigerators ranging from 3.5- to 7-cubic-foot ca- pacity are imported exclusively from the United States. Each year increasing quantities of freez- ers are also imported from the United States. The 4.2-cubic-foot unit is popular. The cool cli- mate, space limitations in kitchens, and day-to- day buying of perishables all tend to reduce the demand for large units. Imports Official Swedish trade statistics, which in 1957- 58 combine clotheswashing machines and dish- washers, indicate that the United Kingdom sup- plied 64 percent of the total value of imports in 1957 and 69 percent in 1958. In both years, the Netherlands was the leading supplier of vacuum cleaners. West Germany ranked first in supply- ing household refrigerators, freezers, and parts, accounting for almost 48 percent of the total value of such imports in 1957 and 38 percent in 1958. The United States was the second- ranking sup- slier of household refrigerating equipment in X)th years. Country of origin 1957 1958 Washing machines and dishwashers Norway. . United Kingdom West Germany United States i . Other countries $93, 219 939, 524 327, 907 83, 569 22, 002 $62, 725 1, 280, 555 369, 788 128, 924 11,387 Total 1, 466, 221 1, 853, 379 Vacuum cleaners Denmark $328, 679 660, 832 165, 208 239, 706 2, 509 16, 984 $362, 261 Netherlands _ 484, 237 United Kingdom 123, 520 West Germany _ 376, 157 United States 6, 948 Other countries . . . 20, 265 Total.. ... ... 1, 413, 918 1, 373, 388 Household refrigerators, freezers, and parts Denmark . $601, 002 100, 746 210, 563 175, 244 2, 138, 826 1, 265, 501 ! 4,825 $818, 127 Italy. . . . . . 156, 523 Norway __ 439, 075 United Kingdom _ . 196, 667 West Germany 1, 913, 402 United States 1, 436, 113 Other countries ... 15, 633 Total . 4, 496, 707 4, 975, 540 1 Of total U.S. exports of washing machines and dishwashing machines, washing machines represented 85 percent in 1957 and 70 percent In 1958. Source: Sveriges OfficieUa Statistik — Imports. U.S. exports of major household appliances to Sweden for 1955, 1958, and 1959 are shown in table 54. 95 Table 54. — U.S. Exports of Major Household Appliances to Sweden, 1.955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic __ _ _ ______ Semi- and fully automatic 1,322 226, 081 421 77, 605 796 127, 700 Vacuum cleaners _ _ _ Electric ranges _____ 10 1, 506 10 3,240 1,670 274, 905 1,284 758, 952 3 568 1, 148 111, 596 13 897 1 5,468 5, 713 Electric refrigerators _ __ _ Other mechanical refrigerators and freezers Electric freezers _ _ _ 144, 610 550 3,329 565, 935 890, 146 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. The Swedish import duty is 10 percent ad valorem on the following household electrical ap- pliances : Tariff No. Description 84. 15- Refrigerators and refrigerating equipment, electrical and other: -110 Refrigerators for domestic use, with compressor. -190 Refrigerators for domestic use, other. -301 Freezers for domestic use, with com- pressor. -309 Freezers for domestic use, other. -910 Parts for compressor units. -920 Parts for absorption units. 84. 40-100 Machines and apparatus for washing, dry- ing, bleaching, etc., of textile goods, electric domestic type: -910 Parts. 85. 06-100 Electromechanical household apparatus with built-in electric motor, including vacuum cleaners: -910 Parts. 85. 12-600 Electric cookers, including ranges. -910 Parts. Exports Sweden's chief export markets for household appliances in 1957-58 were : the United Kingdom for washing machines and dishwashers; Switzer- land and Norway for vacuum cleaners ; the Union of South Africa and Venezuela for household re- frigerators, freezers, and parts ; and Denmark and Norway for electric cooking apparatus and heat- ers. U.S. purchases of household refrigerating equipment rose from slightly more than $4,000 in 1957 to $157,295 in 1958. Detailed statistics on Sweden's exports of selected household appliances in 1957-58 are given in table 55. Table 55. — Sweden: Value of Exports of Selected Household Appliances, 1957-58 Country of destination Belgium-Luxembourg . Italy Netherlands New Zealand Norway Portugal Union of South Africa- United Kingdom Venezuela Other countries Total. 1957 1958 Washing machines and dishwashers $5, 790 32, 038 2, 123 11, 773 31, 266 21, 616 52, 882 28, 950 112, 712 299, 150 $13, 510 16, 791 25, 090 13, 124 46, 127 13,317 14, 475 85, 499 36, 670 114, 449 379, 052 96 Table 55. — Sweden: Value of Exports of Selected Household Appliances, 1957—58 — Continued Country of destination Austria Belgium-Luxembourg _ Denmark France Italy Mexico Netherlands Norway Portugal Switzerland Union of South Africa.. United Kingdom Venezuela West Germany United States Other countries Total. 1957 1958 Vacuum cleaners Austria Belgium-Luxembourg . Denmark Finland France French East Africa French West Africa Guatemala Iran Italy Madagascar, etc Netherlands Norway Peru Portugal Portuguese East Africa Switzerland Union of South Africa. United Kingdom Venezuela West Germany United States Other countries Total $302, 238 169, 454 131, 626 85, 113 142, 434 144, 557 335, 434 413, 792 99, 588 502, 765 163, 085 34, 933 123, 520 323, 468 3, 667 333, 504 3, 309, 178 $402, 019 215, 774 130, 854 102, 676 157, 874 165, 594 332, 346 403, 177 92, 447 638, 444 108, 659 72, 568 249, 549 68, 901 332, 153 3, 473, 035 Household refrigerators, freezers, and parts 391, 018 466, 674 89, 552 117,537 209, 598 47, 092 112, 712 71,217 143, 978 213, 458 63, 497 516, 661 495, 045 387, 544 56, 549 263, 638 270, 200 648, 480 20, 458 522, 837 172, 349 4,053 521, 226 6, 805, 373 314, 590 511,064 150, 347 128, 731 148, 417 126, 994 181, 806 95, 535 225, 424 346, 242 107, 115 444, 865 572, 631 435, 601 113, 484 419, 196 250, 128 1, 014, 408 149, 382 665, 657 501, 221 157, 295 1, 585, 302 8, 645, 435 Source: Sveriges Officiella Statislik— Exports. Market Potential The Swedish market for household washing ma- chines can be expected to expand gradually over the next 10 years as an increasing number of in- dividual private houses are built, even though laundry facilities are not included as basic equip- ment in new houses, except for the luxury type. No sharp upsurge of sales is anticipated because apartment dwellers, who comprise the major part of the population, ordinarily use the laundry facilities supplied them. The machines used in individual apartments are usually small, nonau- tomatic models. Another limiting factor is the high retail prices, which are well above those quoted in the United States for comparable makes and models. High costs are attributed in part to Swedish safety regulations requiring special wir- ing for all electrical household appliances. About 70 percent of the households have vacu- um cleaners, and growth of sales will probably be moderate. Some 1.1 million electric ranges are now in use, and annual sales are estimated at 100,000 units. Approximately 40 percent of Swedish households are equipped with electric ranges; 17 percent, gas; 41 percent, wood burn- ing ; and 2 percent, coke burning. Electric ranges are encroaching on the large wood-burning range share of the market, suggesting strong expansion of electric range sales. In 1957, the Swedish Institute for Market Ke- search estimated that half of the country's house- holds had refrigerators, a total of about 1.4 mil- lion units, and that annual demand was 150,000 to 200,000. The construction of approximately 60,000 new apartments annually during recent years, and anticipation of an increase, should as- sure a stable demand for small- and medium-sized refrigerators. A continued increase in appliance demand is expected through 1965, although not as marked as in recent years. Currently, freezers appear to offer the best prospects for U.S. manufacturers. Exports to Sweden in 1959 amounted to 5,468 units valued at $890,146, representing an increase of 69 percent in units and 17 percent in value over the 1955 level. 97 SWITZERLAND Production No official statistics are available on Swiss pro- duction of electrical household appliances. Out- put expanded after World War II and until 1957, when the market for household refrigerators, washing machines, and vacuum cleaners reached saturation. Refrigerators are produced by four manufac- turers, whose combined annual production is esti- mated to be 50,000-60,000 units, chiefly of the absorption type and ranging from 1.4- to 2.5- cubic-foot capacity. The complete refrigerator, including condensing unit, is made locally. Do- mestic demand for small absorption refrigerators is met principally by Swiss production. Few compressor-type refrigerators are made. No pro- duction information is available on other ap- pliances. Serious overproduction of electric household ap- pliances by both large and small manufacturers has been reported, and sharp competition from West Germany, the Netherlands, the United King- dom, and Sweden necessitated a reduction of profit margins to a minimum. This situation forced a domestic manufacturer of small refrigerators out of business in early 1959 and required an electric range manufacturer to dismiss a large number of employees. Consumption The Swiss Federal Statistical Office in Bern publishes a yearbook showing the number of elec- trical household "apparatus" in use, but it does not list them separately. Swiss foreign trade statistics likewise group a number of appliances in one category. Over the years, various trade associations and private market research organi- zations have attempted to ascertain the number of appliances sold and in use. However, such surveys have met with resistance from both domestic man- ufacturers and importers, who are in keen compe- tition with each other and are therefore unwilling to disclose information as to volume of sales or share of the domestic market. Population as of the end of 1958 was about 5,210,000, and households, 1,440,000. Although the country is prosperous and has no unemploy- ment, the average per capita net spendable income in 1958 was only $1,000. Household consumption of electricity is the highest in Europe, averaging 2,740 kilowatt-hours per household in 1956, the latest year when figures were available. Electric current is principally 220 volt, 50 cycle. Local safety regulations for electrical appliances are strict, and no article can be sold until it has been adjusted to comply with them. Estimated appliances in use are shown in table 56. Surveys of appliance usage conducted in 1950 and 1959 by the Society for Market Research, Zurich, among 375,000 families in German-speak- ing Switzerland, are significant because about 75 percent of the population lives in that area. The survey results may be of general interest, although they are not an accurate index of use, one reason being that they cover families using communal Table 56. — Switzerland: Estimated Appliances in Use, 1956-58 [Units] Appliance Washing machines Cooking ranges having 2 or more top units Refrigerators, household and other J Household appliances activated by small motors, including vacuum cleaners, floor polishers, mixers, etc 1956 n.a. 685, 000 236, 500 730, 000 1957 n.a. 725, 000 264, 000 800, 000 1958 180, 000 770, 000 287, 000 855, 000 n.a. — Not available. 1 These figures, obtained from tbo Swiss Electricity Board, are believed to be considerably lower tban tho number In actual use because no report to the board is required for refrigerators that are purchased after construction of a house and installed merely by plugging into a wall socket. Source: Washing machines — Schweizerische Geschttftsstelle fur Electro-Wlrtschaft, Zurich (Swiss Business Office for Electric Economy); all other appli- ances — Statisches Jahrbuch der Schwciz, 1958. 98 laundry facilities, resulting in multiple reporting of the same item. The percentages of families us- ing appliances, as shown by these surveys, were : I960 1969 Washing machines 36 55 Vacuum cleaners 63 80 Refrigerators 10 50 Electric ranges n.a. n.a. n.a. — Not available. A measure of the demand for household appli- ances, particularly refrigerators and washing ma- chines, created by construction programs may be derived from the number of new dwelling units — individual apartments or one- family houses — built and construction permits issued in a recent 32- month period : January- August 1957 1958 1959 Built 18,384 12,423 7,758 New construction permits issued 14,468 17,674 15,798 Many communal laundry facilities are used. Usually one electric washing machine is installed in a basement in each city block, the number of apartments per block ranging from 4 to 15. Use of the machine is customarily regulated by a strict time schedule, a situation aggravated by the fact that some leases preclude installation of machines in apartments. Laundry is customarily boiled in Switzerland, and domestic machines are equipped with a heating unit for the purpose. In its 1957 annual report, the Swiss Union of Commerce and Industry mentioned the weak do- mestic market for household washing machines, although it said that demand by hospitals, hotels, commercial laundries, and institutions was ap- parently good. Most of the 1957 output was con- sumed domestically. The report also noted a decrease in demand for household refrigerators, implying market saturation, although sales of nonhousehold refrigerators and community freezers were considered to be good. The 1958 re- port shows a continuation of the slowdown, most sales, as in 1957, arising from new housing and re- placements. Most new apartments now include a small re- frigerator. Of the 2,637 apartment units built in Zurich in 1957, 2,259, or 86 percent, were so equipped, and in 1958, 2,795 out of 3,132, or 89 percent. Absorption refrigerator sales are mostly of the smaller sizes, under 2.5-cubic-foot capacity. De- mand for absorption refrigerators has declined steadily as compressor-type units have become more competitive, particularly the medium and larger sizes, which are less expensive to operate than absorption models of comparable capacity. The smallest sizes imported from the United States are 6-cubic-foot compressor and 4-cubic- foot absorption refrigerators. The demand for refrigerators of 10-cubic-foot capacity and larger is very small. Demand for American refrigerators has decreased sharply in favor of high-quality Swiss and German products that are selling at lower prices. Competition among Swiss manufacturers is also very keen, particularly in the small apart- ment-size models. Household freezers are not in demand in urban areas because of their expense and the custom of daily marketing. However, in rural areas, where people grow their own produce, a substantial market has developed because of in- creased purchasing power of farmers. Com- munity freezers are popular and are often organ- ized as cooperative enterprises. Annual surveys of more than 90 manufacturers were conducted until 1954 by the Swiss Water- works Association to determine domestic sales of electric heating appliances. The results showed 38,633 electric ranges sold in 1950; 48,415 in 1951 ; 40,945 in 1952; 39,820 in 1953; and 47,107 in 1954. No reliable estimate can be made of the number of vacuum cleaners in use. According to the Society for Market Research survey, the total would seem to be as high as 1,152,000, or 80 percent of an esti- mated 1,440,000 households, whereas the Swiss Statistical Yearbook for 1958 shows a total of 855,000 household appliances activated by small motors, including not only vacuum cleaners but also floor polishers and mixers. Representative 1959 retail prices of appliances in Switzerland were as follows : Washing machines: Semiautomatic, drum type, 8.8-lb.-dry wash capacity $240-$300 Fully automatic, by pounds dry-wash capacity : 7.7 390- 525 8.8 565- 700 9.9 705 11 650- 750 Vacuum cleaners, with attachments 137 Electric ranges: With 2 cooking units 80- 114 With 3 cooking units 100- 140 Deluxe model, 3 cooking units 200 Deluxe model, 4 cooking units 220- 300 5.55532 — 6C 99 Refrigerators: Absorption-type, 1.6 to 3.2 cu. ft. capacity. Compressor type, by cubic-foot capacity: 3.9 61- 92 130 4.8.. 185 5.7 250 7.1 278 9.2 3?5 Freezers, by cubic-foot capacity: 2.5 230 4.9. .. . 315 10.6 548 Imports The lack of detailed statistics on household ap- pliances prior to 1960 makes it impossible to deter- mine the number or value of appliances imported into Switzerland. Competition from West Ger- many, the Netherlands, the United Kingdom, and Sweden is exceptionally keen in the domestic mar- ket. West German manufacturers are not only able to furnish good products at low prices but their proximity to Switzerland makes it possible to order spare and replacement parts by telephone for immediate shipment. West Germany is the principal source of small- and medium-size washing machines, the United States and Canada furnishing most of the larger size units. Vacuum cleaners are imported chiefly from the Netherlands, West Germany, and Sweden. West Germany accounted for 45.8 per- cent of all imports of refrigerators and parts in 1959 and 50.3 percent in 1958 ; the United States supplied 30.5 percent in 1959 and 29 percent in 1958. Sweden was the third most important sup- plier in this category in 1958 but was replaced in 1959 by Italy. Table 57 shows the approximate size of the mar- ket. Household refrigerators comprise most of the category "Less than 100 kilograms." Table 57. — Switzerland: Value of Imports of Refrigerating Machinery and Parts, 1958-59 Country of origin 1958 100 to 500 kilograms Less than 100 kilo- grams Total 1959 100 to 500 kilograms Less than 100 kilo- grams Total Austria Belgium-Luxembourg . Denmark France Great Britain Italy.... Japan Netherlands Norway Sweden West Germany United States Other Total. $817 1,868 2, 114 23, 363 60, 398 612 12, 357 46, 377 234, 653 251,913 631, 849 922 $902 243 55, 610 26, 756 103, 334 89, 495 1, 510 1,373 105, 432 1, 621, 366 448, 105 520 $1, 719 243 57, 478 28, 870 126, 697 149, 893 612 13, 867 47, 750 340, 085 1, 873, 279 1, 079, 954 1, 442 $2, 499 7,885 12, 472 22, 116 146, 385 4, 103 15, 801 55, 041 198, 017 269, 296 903, 146 $458 8,033 113,975 136, 662 105, 302 223, 235 19 1,363 4,638 49, 291 867, 640 522, 394 59 1, 267, 243 2, 454, 646 3, 721, 889 1, 636, 761 3, 033, 069 $2, 957 8,033 121, 860 149, 134 127, 418 369, 620 4, 122 17, 164 59, 679 247, 308 2, 136, 936 1 1, 425, 540 59 4, 669, 830 i Official U.S. statistics show exports to Switzerland of household refrigerators, freezers, and parts totaling $511,821 in 1958 and $402,817 in 1959, 47 and 28 percent, respectively, of the above figures. Source: Statistique Annuelle dv. Commerce Eitirieur de la Suisse. In January 1960, Switzerland imported $1,082,- 557 of washing machines of 100 kilograms and smaller, and $1,230,200 of larger machines up to 500 kilograms; $3,559,161 of completely equipped refrigerators; $150,118 of electric ranges up to 100 kilograms and $12,979 of larger sizes. West Germany was the principal source of all categories. 100 U.S. exports of major household appliances and parts to Switzerland for 1954-59 are shown in table 58. Table 58. — U.S. Exports of Major Household Appliances and Parts to Switzerland, 1954-59 [Quantity in units; value in dollars] Item Washing machines: Nonautomatic Semi- and fully automatic Washing machine parts Vacuum cleaners Vacuum cleaner parts Electric ranges Electric range parts Electric refrigerators Electric freezers Electric refrigerator and freezer parts ' Other mechanical refrigerators and freezers Other mechanical refrigerator and freezer parts. Washing machines: Nonautomatic Semi- and fully automatic Washing machine parts Vacuum cleaners Vacuum cleaner parts Electric ranges Electric range parts Electric refrigerators Electric freezers Electric refrigerator and freezer parts ' Other mechanical refrigerators and freezers Other mechanical refrigerator and freezer parts. Quantity Value 1954 883 185 2, 827 301 76, 534 127, 394 19, 029 11,078 15, 741 425, 586 64, 181 30, 724 1957 140 2, 108 971 16 1, 664 589 14, 730 321, 873 50, 993 70, 223 3,481 2,981 11, 661 303, 355 137, 203 48, 044 Quantity Value 1955 210 966 211 2,500 674 21, 063 156, 790 18, 357 13, 500 1,988 1,790 24, 447 415, 245 137, 623 10, 010 1, 138 1958 110 798 955 1,607 735 11,091 128, 107 61, 640 55, 913 7,439 281, 885 192, 198 37, 738 Quantity Value 1956 252 2,315 583 9 2,370 727 27, 377 354, 558 45, 463 37, 948 3,400 1,786 35, 843 52, 102 148, 863 87, 022 1,393 1959 60 941 317 10 1, 150 554 19 6,746 171, 922 51, 986 19, 157 13, 501 1,930 213, 438 144, 319 41, 212 1,974 1,874 1 Includes mechanical refrigerating systems for household refrigerators and freezers. Source: Report No. FT-410, U.S. Exports of Domestic and FtTeign Merchandise, Bureau of the Census, U.S. Department of Commerce. 101 Swiss import duties on electric household appliances are as follows : Tariff No. Description Duty per 100 gross kilograms Sales tax 1 (percent of duty and tax-paid value) 84.15-.. - Refrigerators and refrigerating equipment (electrical and other) : Refrigerating cabinets, without apparatus- _ __- $1.87 2.57 3.50 4.67 1.05 1. 17 1. 87 1. 40 1. 63 84.15.10_-- 84.15.20 . . -_ Refrigerators, furnished, ready for use _ _ 84.15.34 -. Other refrigerating machinery of a weight of more than 100 and up to 500 kilograms (220 to 1,100 lbs.) — for electrical equipment, including complete units and parts. Other refrigerating machinery of a weight of 100 kilograms (220 lbs.) or less, for electrical equipment, including complete units and parts. Clotheswashing machines, etc.: More than 100 and up to 500 kilograms (220 to 1,100 lbs.) 100 kilograms (220 lbs.) or less. . 84.15.36 84.40 5. 4 84.40.12 84.40.14 85.06.01 85.12 85.12.24 85.12.26 Electromechanical apparatus, with motor incorporated, for domestic use (includes vacuum cleaners). Electric waterheaters, electrothermic apparatus for domestic use: Ovens, kitchen stoves, baking ovens, etc., more than 100 and up to 1,000 kilograms (220 to 2,200 lbs.). Same, more than 20 and up to 100 kilograms (44 to 220 lbs.) i Sales tax also applies to products of domestic manufacture. Note.— Import licenses are not required. Exports Competition in the domestic market from other European appliances has made it necessary for manufacturers to increase their exports, although this is made difficult by high import duties and other protectionist measures of importing coun- tries. Other than the data in table 59 on refrig- erating machinery and parts, no official Swiss trade statistics are available on appliance exports prior to 1960. In January-June 1960, Switzerland exported $37,390 of washing machines of 100 kilograms and smaller and $64,685 of the larger machines; $622,750 of completely equipped refrigerators; $230,065 of electric ranges up to 100 kilograms and $47,802 of larger sizes. The principal mar- kets were Italy for washing machines and the United Kingdom for refrigerators and ranges. Market Potential Except for equipment needed for new housing, the Swiss market for washing machines, vacuum cleaners, and refrigerators has reached satura- tion, as it has also for miscellaneous small house- hold electrical appliances. A good demand could probably be stimulated for small electric spin- dryers for use in individual apartment units, and interest has been shown in a small, table ironing machine. Some demand may also develop for combination refrigerator-freezers equipped with two doors. The naturally frugal and security-minded aver- age Swiss family, despite its desire for timesaving and laborsaving household aids, cannot afford to buy expensive electrical appliances. In view of the higher cost of American appliances and the apparent high degree of market saturation, Swit- zerland cannot be regarded as a promising market for U.S. exports. 102 Table 59. — Switzerland: Value of Exports of Refrigerating Machinery and Parts, 1958-59 Country of destination 1958 100 to 500 kilograms Less than 100 kilo- grams Total 1959 100 to 500 kilograms Less than 100 kilo- grams Total Algeria Argentina Austria Belgium-Luxembourg _ Brazil China Congo Denmark Egypt Finland France French West Africa Great Britain Greece India Israel Italy Netherlands Norway Peru Philippines Poland Rumania Spain Sweden Turkey Union of South Africa. Uruguay Venezuela West Germany Yugoslavia United States Other Total. 513, 031 8, 536 4, 667 1,487 4,440 7,698 2,989 5, 150 112 10, 700 5,508 467 1,998 1, 120 20, 720 7,002 21,561 1,910 470 119, 566 $10, 701 36, 898 169, 813 17, 764 15, 489 10, 825 12, 350 2,775 1,372 77, 784 11,514 25, 784 4,307 1,292 5,345 45, 604 32, 509 6,551 881 5,798 29, 180 21, 550 4, 156 5,889 1,097 1,982 1,937 8,886 234, 498 7,406 5,476 22, 544 $10, 701 36, 898 182, 844 26, 300 20, 156 1,487 15, 265 12, 350 2,775 1, 372 85, 482 11,514 25, 784 7,296 6, 442 5,457 56, 304 32, 509 6,551 6,389 5,798 29, 647 21, 550 6, 154 5,889 2,217 22, 702 8,939 8,886 256, 059 9,316 5,476 23, 014 $410 26, 111 639 8, 709 3,944 823 19, 894 $5 12 239 11 6 1 5 o 11 28 49 992 945 2,052 14, 178 5,615 923 18, 248 315 327 1,490 43, 607 489 839, 957 959, 523 149, 711 880 7 1 14 17 91 5 11 5 39 10 10 4 4. 23 1 14 178 4 22 20 174 133 613 478 401 289 837 937 953 772 851 741 295 572 886 150 721 326 495 565 322 659 325 543 802 892 330 763 561 699 467 547 1, 747, 094 $5 12 265 12 6 9 5 2 15 29 69 881 7 2 16 31 97 6 11 5 57 10 10 : 4. 6 23 1 14 222. 4 22 21 174 543 724 117 401 998 837 937 897 595 745 733 295 517 938 328 336 249 495 565 570 659 640 870 292 892 330 763 168 699 467 031 1, 896, 805 Source: StatUtique Annucllt du Commerce ExtMcur de la Suisse. UNITED KINGDOM Production United Kingdom production of household ap- pliances in 1959 exceeded all previous records. However, 1960 output may be adversely affected by reimposition of consumer credit controls. Pro- duction of selected appliances in 1950-59 and per- centage increase in 1959 over 1958 are shown in table 60. Approximately 90 percent of total refrigerator production is reported to be electric and 10 percent gas. The average size of refrigerator produced is less than 5-cubic-foot capacity, and few units exceed 10% cubic feet. No information is avail- able on production of freezers, but it is believed that none are manufactured. 103 Table 60. — United Kingdom: Production of Selected Household Appliances, 1950-59 {xtnits); Percent Increase 1959 Over 1958 Year Washing machines Vacuum cleaners Electric ranges Refrigerators 1950 ... --. _. .. _.. _ 537, 000 715,000 496, 000 592, 000 841, 000 918, 000 614, 000 667, 000 876, 000 1, 230, 300 1, 056, 000 1, 108, 000 632, 000 808, 000 1, 219, 000 1, 238, 000 1, 026, 000 1, 245, 000 1, 340, 000 1, 650, 800 275, 000 318, 000 178, 000 238, 000 405, 000 337, 000 258, 000 332, 000 340, 000 491, 000 283, 200 1951 __ ... .'. .. . . ... 272, 600 1952 . ... . . . 195, 500 1953 . . .. .. ... 227, 100 1954 ... 308, 200 1955.. ... _ - ... 324, 800 1956- . --. __. -. -. -. - 305, 200 1957 358, 800 1958. -.- -__ .-- -. - - 562, 200 1959. -- ------- -._ . - 994, 300 1959 increase over 1958 (percent) _. _ _ 40 23 44 77 Source: Refrigerators — British Refrigeration Association; other appliances— Annual Abstract of Statistics, Central Statistical Office, London. Refrigerator manufacturers are located throughout the country. Principal production areas for other major appliances are Yorkshire, Lancashire, the industrial Midlands, and more recently Plymouth and Wales. Appliance pro- duction is mainly an assembly operation, although some of the larger firms manufacture complete units, a trend that is becoming more pronounced. In the past, production of electrical household appliances was often a sideline of large electrical companies, but since 1955 some of these firms have organized special divisions for mass-production operations. Trade reports indicate that prac- tically every manufacturer of large household ap- pliances plans to increase production capacity in 1960, and many additional firms are preparing to enter the field. One manufacturer of refrigerators expects to more than double 1959 output. A number of appliance producers are subsid- iaries of or have licensing arrangements with American and other foreign firms. Raw materials and high-quality sheet steel and components are readily available from domestic sources. The supply of labor is adequate, sur- pluses existing in some areas and temporary short- ages of skilled workers occasionally occurring in others. In the latter part of 1958, 47 hours was the average workweek. Average hourly wages for men were 79 cents; women, 49 cents; boys under 21 years of age, 34 cents; and girls under 18, 30 cents. Channels of Distribution Household appliances are distributed through authorized dealers of manufacturers or assemblers and through wholesalers to the retail trade. In addition, the Central Electric Generating Board, a Government agency, retails household appli- ances through area electricity boards located throughout the country. Considered to be the largest single appliance distributor, the board operates its own financing system and adds in- stallment charges to customers' electricity bills. Some appliance producers sell direct to the con- sumer, a practice likely to increase. Authorized dealers provide adequate servicing. A number of the larger appliance producers also emplojr service engineers, who operate on an area basis. Consumption Ten years ago, washing machines and refrig- erators were used in relatively few homes. Vac- uum cleaners were in more widespread use. Dur- ing the period 1955-58, consumption of household appliances was curbed by governmental restric- tions on installment sales and high jmrchase taxes levied at the wholesale level. Purchase taxes on some appliances ranged as high as 60 percent. Electric ranges were exempt. After several re- visions, the tax was reduced in April 1959 to 25 percent for washing machines, vacuum cleaners, and refrigerators. Provisions of the hire-purchase 104 plan which required minimum downpayments of 33!/3 percent in 1955, were made even more strin- gent in February 1956, when a minimum deposit of 50 percent was required. Improved economic conditions, the 1959 reduc- tion in the purchase tax, and elimination of hire- purchase control on installment credit in October 1958 resulted in unprecedented sales of household appliances. Manufacturers' sales of household re- frigerators on the domestic market reportedly totaled 849,362 units in 1959, compared with 448,646 in 1958 and 256,414 in 1957. An estimated 700,000 refrigerators were retailed in 1959, the re- mainder being retained as inventory. After the phenomenal increase in appliance sales in 1959 to satisfy pent-up demand, 1960 sales are expected to return to a more normal level, al- though they will undoubtedly be affected by rein- stitution of hire-purchase control in late April 1960, requiring a minimum downpayment of 20 percent and the balance within 2 years. Of the 15.5 million households in the United Kingdom in 1959, 30 to 40 percent had washing machines ; 67 percent had vacuum cleaners ; 25 to 28 percent, electric ranges ; and almost 20 percent, refrigerators. About 40 percent of present vac- uum cleaner sales are replacements. Considering the 5 million homes having no vacuum cleaners, the market is still far from saturated. Electric ranges appear to find favor mostly with apartment dwellers in large urban centers. Their use has been limited to a considerable extent by the rela- tively high cost of electricity compared with gas or coal. Until recently household refrigerators were con- sidered a luxury because of the cool climate and the housewife's habit of shopping daily for food requirements. However, the unusually warm summer of 1959 played a part in boosting sales. The experience of new owners will probably help to convince others of the benefits of household re- frigerators. Additional factors contributing to the demand for household appliances have been the increased number of working wives since World War II and the scarcity of domestic help. The Manches- ter Guardian has stated : "An analysis of consumer expenditures in this country shows that the extra money people are earning is being spent on goods associated with the concept of a higher standard of living. . . . Expenditure on electrical goods other than those bought for entertainment or in- struction reflects the postwar difficulty in obtain- ing domestic help and the improvement brought about in the housewife's conditions — in many cases because she herself has gone out to work to earn the extra money needed to pay for the appliances that make her domestic chores lighter." Some representative retail prices in 1959 were: Washing machines: Domestic make $347 Fully automatic (dollar area import) 503 Vacuum cleaners n.a. Electric ranges: 22 inch (domestic make) 221 30 inch (Canadian) 431 Refrigerators (cubic-foot capacity) : 5.6 (domestic make) 276 6.0 (American) 294 10.0 with freezer (domestic make) 462 10.0 without freezer (dollar area import) 437 n.a. — Not available. Imports From 1946 until mid-1959, importation of household appliances was severely restricted. Im- ports from the dollar area were limited under the token import plan by quotas based on 30 percent of annual average prewar U.S. exports to the United Kingdom in 1936-38. Import restrictions were removed in June 1959 from household re- frigerators and subsequently from other ap- pliances. To meet the unprecedented demand for ap- pliances resulting from elimination of credit re- strictions, wholesalers turned to manufacturers on the continent, particularly in West Germany, able to supply equipment at competitive prices. Although no statistics for 1959 are available for individual appliances, the quantity of imports in 1959 has been estimated at well over 10 percent of domestic production. Foreign models of refrig- erators on the market outnumbered domestic models. In 1958, the most recent year for which statistics are available by country of origin, the chief sup- pliers to the British market were West Germany and the Netherlands for washing machines and related equipment and vacuum cleaners, and West Germany and the United States for refrigerators. Separate statistics are not shown for electric ranges. Detailed statistics for 1956-58 are shown in table 61. 105 Table 61. — United Kingdom: Imports of Major Household Appliances, 1956-58 [Quantity in units; value in dollars] Country of origin 1956 1957 1958 Quantity Value Quantity Value Quantity Value Washing machines, dryers, ironing machines, etc. Belgium-Luxembourg . . _ _ 1,862 4 87 3,399 735 441 119 300 133, 848 935 40, 309 143, 508 421, 954 305, 701 50, 585 57, 214 7,761 10 107 7,641 249 2,675 140 823 314, 028 2,576 38, 646 340, 046 204, 767 489, 331 52, 609 94, 139 727 188 94 11, 808 339 13, 749 159 5,517 277 850 Canada. ._ .. 30, 912 Denmark. _ __ _ _ _ 86 013 Netherlands .. _ ... . . 774, 253 Sweden . _ . . _ _ - _ . _ _ _ 303 724 West Germany- __ __ _ . _ __ __ 1, 677, 514 United States - _ - _ _ 87 458 Other . _ _ _____ ___ 307, 084 Total 6,947 1, 154,054 19, 406 1, 536, 142 32, 581 3, 544, 808 Vacuum cleaners Belgium-Luxembourg _ _ - 2, 531 809 14, 619 678 14, 031 24 422 35, 286 44, 321 328, 964 64, 296 403, 334 2,677 7,336 5,347 1, 133 18, 120 402 25, 786 5,444 3,588 73, 338 70, 101 423, 072 38, 046 741, 429 148, 840 57, 525 5,595 1,390 27, 096 837 36, 337 11, 153 6,374 74, 200 Denmark . . . 77, 277 Netherlands ._ _ _____ 588, 703 Sweden __ - _ 79, 789 West Germany _ ___ 822, 724 United States --. 80, 822 Other. ... __- 122, 161 Total. _ __- -__ 33, 114 886, 214 59, 820 1, 552, 351 88, 782 1, 845, 676 Electric domestic refrigerators Italy _ __.---_. 256 1,238 392 406 32, 054 West Germany _. 121, 153 United States. . - 90, 012 Other.. . ... _ __ __ _ 40, 877 Total.. _ . __ n.a. n.a. n.a. n.a. 2, 292 284, 096 Other domestic refrigerators and refrigerating equipment West Germany - _ 97, 188 Other .._.---. .___ 4,458 Total _ _ _ n.a. n.a. n.a. n.a. 101, 646 Complete mechanical units for domestic refrigerators and refrigerating equipment Canada __ 19, 692 Other ._ _ _ - 94, 691 Total _ . __ n.a. n.a. n.a. n.a. 114,383 Other parts for domestic refrigerators and refrigerating equipment 133, 062 West Germany 81, 189 United States _ . _ 78, 117 Other ..._ _ _ 20, 017 Total n.a. n.a. n.a. n.a. 312, 385 n.a. — Not available. Source: Trade of the United Kingdom with Commonwealth Countries and Foreign Countries— Imports. 106 Table 62 shows U.S. exports of major household appliances to the United Kingdom in recent years. Table 62. — U.S. Exports of Major Household Appliances to the United Kingdom, 1955, 1958, and 1959 [Quantity In units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic. 20 160 52 238 401 721 Semi- and fully automatic. 74 202 21 675 18, 661 5,040 4,066 148, 256 59 29 106 415 9,855 1,455 20, 393 77, 318 27, 176 Vacuum cleaners. . _ Electric ranges _ 5,468 36, 143 Electric refrigerators _ . 72, 040 Other mechanical refrigerators and freezers . Electric freezers . . 88 21, 025 42 10, 118 83 19, 886 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Import duties and other taxes on household appliances are as follows : Tariff No. Description Rate of duty (percent) Purchase tax 2 (percent of Full 1 Preferential wholesale price) 84.15 Refrigerators and refrigerating equipment (electrical and other) : (A) Electrically operated refrigerators 15 17# 15 17/ 2 15 17/2 15 20 10 Free . Free (B) Other refrigerators and refrigerating equipment (C) Parts of refrigerators and refrigerating equipment: (1) Complete mechanical units . 84.40 (2) Other Machinery for washing, cleaning, drying, bleaching, etc., of fabrics or made-up textile articles (including laundry and drycleaning machinery), etc.: (A) Drycleaning and laundering machines (other than hand-operated machines of the types used for domestic purposes), including cleaners and washers, dryers, wringers, and ironing machines. (B) Parts of above 25. 85.06 Electromechanical domestic appliances, with self-contained electric motors: (A) Vacuum cleaners .. .. 85.12 Electrothermic domestic appliances, electric water heaters, etc.: (A) Heating and cooking apparatus: (1) High frequency induction and dielectric apparatus. (2) Other Exempt. i Applies to Imports from the United States. > Applies to domestic as well as Imported products. 107 Exports Principal export markets in 1957 were West Germany, Norway, and Belgium-Luxembourg for washing machines; Australia, Canada, and Bel- gium-Luxembourg for vacuum cleaners; and New Zealand, Union of South Africa and Southwest Africa Territory, and West Germany for refriger- ators of 12-cubic-foot capacity and less. Table 63 shows 1956-57 exports by country of destination. Exports for 1958 and 1959 in total value were $13.5 and $12.4 millions, respectively, for washing machines and $4.2 and $4.8 millions, respectively, for vacuum cleaners. Table 63. — United Kingdom: Exports of Major Househol i Appliances, 1956-57 [Quantity in units; value in dollars] Country of destination 1956 Quantity Value 1957 Quantity Value Belgium- Luxembourg. Italy Netherlands New Zealand Norway Peru Sweden Switzerland Union of South Africa and Southwest Africa. West Germany Other Washing machines Total 196, 377 Australia Belgium-Luxembourg Canada Finland France Italy Netherlands New Zealand Norway Sweden Switzerland Union of South Africa and Southwest Africa West Germany United States Other Total See footnotes at end of table. 19, 398 1, 101, 808 18,617 1, 019, 707 12, 562 802, 124 13, 006 810, 897 5,402 368, 718 6,063 401, 344 7,608 858, 010 7,756 944, 258 16, 584 1, 607, 152 18, 389 1, 718, 693 10, 141 490, 888 3, 665 255, 041 12, 391 816, 995 15,716 987, 249 8,468 554, 999 9,770 648, 158 14, 148 866, 127 10, 358 700, 440 44, 875 2, 648, 940 42, 116 2, 584, 652 44, 800 3, 135, 617 33, 612 2, 686, 297 196, 377 13, 251, 378 179, 068 12, 756, 736 Vacuum cleaners 17, 377 532, 627 29, 012 591, 324 25, 665 511,972 20, 472 501, 651 20, 734 489, 616 26, 550 566, 104 16, 318 490, 182 6,891 203, 003 11, 199 250, 701 14, 113 320, 443 5, 705 126, 389 4,202 87, 352 9, 284 214, 435 4,515 111,269 6,338 154, 370 13, 625 326, 194 4,049 116,060 2,364 56, 311 4,687 124, 690 6, 175 128, 089 7,006 172, 052 9, 155 214, 964 7,228 280, 700 11,776 372, 714 9, 947 250, 208 13, 149 347, 903 34, 617 226, 960 52, 248 385, 204 23, 437 810, 084 21, 569 741, 386 203, 591 4, 751, 046 235, 816 4, 953, 911 108 Table 63. — United Kingdom: Exports of Major Household Appliances, 1956-57 — Continued Country of destination 1956 Quantity Value 1957 Quantity Value Automatic power operated refrigerators 2 Belgium Canada Cyprus Finland France India Iran Italy Jamaica Kenya Kuwait Malaya (Federation) Morocco (Northern and Southern) Netherlands New Zealand Nigeria Norway Rhodesia and Nyasaland Singapore Sweden Union of South Africa and Southwest Africa West Germany United States Other Total... British East Africa British West Africa Rhodesia and Nyasaland Union of South Africa and Southwest Africa United States Other Total 6,621 2,990 3,606 6,314 2,307 4,412 1,946 20, 495 1,695 2,340 1,370 3, 458 2,991 5,387 32, 949 2,984 2,576 4,080 6,751 6,372 8,414 5,469 218 35, 755 171, 500 625, 190 234, 536 551, 258 392, 347 271, 340 608, 670 327, 421 1, 044, 086 285, 342 340, 584 223, 174 431, 827 457, 923 605, 228 1, 804, 597 463, 898 260, 873 558, 855 862, 666 661, 525 964, 729 661, 587 13, 261 4, 893, 040 17, 543, 957 6, 579 4, 362 4,878 6, 189 2,405 2,874 771 11,061 1,674 1,300 1,548 2,921 2,364 2,202 31, 477 2,446 5, 333 3,480 3,514 2,983 9,300 8, 384 530 30, 507 149, 082 726, 144 375, 934 800, 332 336, 025 293, 619 326, 578 147, 605 501, 432 285, 586 197, 039 279, 644 349, 059 391, 706 296. 990 1,722, 115 427, 146 414, 047 419, 723 454, 656 338, 831 1, 014, 502 987, 179 41, 664 4, 347, 067 15, 474, 623 Automatic heat operated refrigerators 2 1, 864 2, 122 1,306 501 2,470 4, 406 12, 669 243, 180 329, 986 147, 185 44, 839 128, 943 549, 477 1, 443, 610 672 2,376 454 1, 179 3,627 5,737 14, 045 81, 892 335, 796 72, 276 112, 731 181, 602 591, 813 1, 376, 110 1 Not exceeding 250 lbs. unit weight. 2 Not exceeding 12-cu.-ft. capacity and complete mechanical units therefor. Source: 1956-57— Trade of the United Kingdom with Commonwealth Countries and Foreign Countries— Exports: 1958-59— Trade and Navigation Accounts of the United Kingdom. Market Potential The elimination of import restrictions should result in greater expansion of U.S. exports of ap- pliances to the United Kingdom, although com- petitive difficulties still exist. European producers can effect savings in cost of manufacture and ship- ping, and Canadian products enter duty free. U.S. appliances, on the other hand, must overcome price and size obstacles. The smallest U.S. refrig- erator is approximately the size of the largest U.K. refrigerator. Moreover, the cost of ocean freight represents almost 15 percent of the retail price of a U.S. appliance. Adequate servicing is also neces- sary for successful merchandising. For these rea- sons, licensing arrangements may be the best means of competing in the British market. 109 WEST GERMANY Production Growth of the West German electrical house- hold aj^pliance industry has been most phenome- nal in the refrigerator sector, which began a sig- nificant uptrend in 1950, when output totaled 118,300 units. In 1957-58, production of re- frigerators of 8.83-cubic-foot capacity and less in- creased 70 percent, from 923,500 to 1.6 million units, and growth continued in 1959, although at a slower rate. First-6-month output, according to the refrigeration division of the West German Machinery Manufacturers' Association, totaled 953,000 units, compared with 704,000 units in 1958. Output for the year 1959 probably reached 1.9 mil- lion. Household refrigerators of 3.53- to 5.65- cubic-foot capacity represented 76 percent of pro- duction in the first half of 1959, compared with 64 percent for the same period in 1958. Output of compressor-type refrigerators has increased stead- ily, accounting for about 85 percent by weight in 1957 and about 90 percent in 1959. Production of household refrigerators exceeding 8.83-cubic-foot capacity averaged $4 million annually for 1957- 59 in the Federal Republic (not including West Berlin). Washing machine production, after declining from 730,000 units in 1957 to about 700,000 in 1958, rose in 1959 to an estimated 785,000 units. A trend is evident toward sales of fully automatic, high-quality machines. About 88,000 fully auto- matic machines were produced in 1958, and a 100- percent increase was expected in 1959. Manufacture of electric ranges in West Ger- many, which has increased steadily, was an esti- mated 594,000 units in 1958 and 665,000 in 1959. Vacuum cleaner production, on the other hand, has declined, output approximating 1,420,000 units in 1958 and 1,260,000 in 1959. Official production statistics, available only for the Federal Republic of Germany, not including West Berlin, are shown in table 64. Adequate supplies of essential raw materials and power are available for manufacture. How- ever, the demand for trained engineers cannot be filled, and the shortage is expected to continue for a number of years. Table 64. — Federal Republic of Germany: Production of Selected Household Appliances, 1956-59 [Long tons in thousands; value In $1,000] 1956 1957 1958 1959 Appliance Long tons Value Long tons Value Long tons Value Units ' Long tons Value Washing machines 36. 9 2. 2 5. 6 62, 915 7, 195 26, 875 41. 2. 2 5.3 90, 653 6,902 26, 167 49. 7 1. 9 4. 9 82, 804 6,693 23, 080 761, 286 225, 961 920, 271 60. 2 1.8 3. 9 101, 100 Vacuum cleaners: Floor Hand portable _ 6,304 18, 420 Total Electric ranges Electric refrigerators and freez- ers, 8.83-cu.-ft. capacity and less 2 - ___ Accessories and parts for above -- Household refrigerators, elec- tric compressor-type, over 8.83-cu.-ft. capacity 7. 8 29. 4 44. 8 5. 9 n.a. 34, 070 24, 707 73, 442 6, 131 n.a. 7. 5 33. 56. 6 12. 2. 2 33, 069 32, 659 87, 025 21, 277 4, 236 6. 8 34. 7 90. 16. 1 2. 1 29, 773 34, 350 135, 097 26, 145 4, 303 1, 146, 232 655, 787 n.a n.a. n.a. 5. 7 38. 2 104. 7 20.0 2.3 24, 724 37, 782 160, 854 30, 739 3, 926 n.a.— Not available. 1 Not available for prior yoars. > Oas absorption refrigerators, Included in basket categories, estimated by trade sources at 32,200 units in 1958 and 17,968 in 1969. Source: Federal Statistical Office (Statistisches Bundesamt). 110 The average hourly wage in the West German electrical equipment industry increased from 46 cents in 1957 to 50 cents in 1958, although the average workweek continued to be 45.2 hours. Hourly wages for female workers, who in 1958 represented more than 35 percent of the total labor force in the industry, increased in 1957-58 from 36 to 39 cents. Channels of Distribution Distribution and servicing of electrical house- hold appliances is usually undertaken by ap- pointed regional and district wholesalers or inde- pendent distributors. Service facilities are con- sidered adequate. Consumption Although no figures are available, washing ma- chine, electric range, and refrigerator sales were thought to be slightly higher in 1958 than in 1957. An estimated 80 percent of German production of household refrigerators is for domestic consump- tion. Domestic demand for all types of vacuum cleaners declined in 1958, apparently as a result of growing market saturation. Of the approximately 17 million households in West Germany in 1959, 23-28 percent reportedly had washing machines and 25 percent had refrig- erators. Recent figures on use of vacuum cleaners and electric ranges are not available; in 1955, the German press reported use by an estimated 30 percent and 9 percent, respectively. According to a 1950 census, approximately 98 percent of West German homes were wired for electricity. In the last few years, consumers have shown a marked preference for compressor-type refrigera- tors, and are leaning toward slightly larger units. In 1957, most of the household refrigerators sold were of 2.2- to 3.5-cubic-foot capacity. In mid- 1959, refrigerators of 3.53- to 5.65-cubic-foot ca- pacity were the most popular. Increased competition and more efficient manu- facturing techniques caused retail prices to de- cline in 1958 and again in 1959. In 1958, prices of German-made household refrigerators ranged from $95 to $286, and imported refrigerators from $304 to $714. In 1959, refrigerator prices were reported to be 6-12 percent lower. Three large re- frigerator manufacturers introduced a standard, 110-liter (3.88-cubic-foot) compressor model priced at $90.50 and designed to compete with a similar model selling for $85.70 by department stores and mail-order houses. This price reduc- tion was made possible by the lowering of profit margins in the wholesale and retail trade to 22-24 and 15-19 percent, respectively. Price reductions in 1958 of 10 to 20 percent oc- curred in washing machines, and prices were also lower for electric ranges. A catalog issued by a leading mail-order firm in late 1959 showed the following household appli- ance prices : Washing machines, by pounds dry-wash capacity: Small pulsator-type, 6.6 $65 Agitator-type, 8.8 113 Drum-type, 8.8 166 Combination washer and spinner, 8.8 190 Vacuum cleaners, canister-type 31-35 Electric ranges: 2 top cooking units 48 3 top cooking units 69 Refrigerators, by cubic-foot capacity: Absorption-type, small unit without stand, 1.4. 52 Absorption-type, 3.18 71 Compressor-type : 4.06 86 4.59 95 5.30 115 7.40 173 Freezers, chest-type, by cubic-foot capacity: 2.8 173 4.24 202 The above-advertised equipment carried guaran- tees of 1 year for washing machines and electric ranges, 3 years for canister-type vacuum cleaners, and 5 years for refrigerators. Installment terms were 20 percent down on vacuum cleaners, ranges, and washing machines; the balance payable in 6, 18, and 24 months, respectively. For more expen- sive refrigerators and freezers, the terms were 10 percent down and 24 months for payment of the balance. Foreign Trade West German import and export statistics on electrical appliances generally include parts and they often group household with industrial and commercial equipment. They combine household with commercial washing machines, vacuum cleaners with floor polishers, and electric ranges with broilers and hotplates. Prior to 1959, re- Ill Table 65. — West Germany: Imports and Exports of Selected Appliances, 1956-58, and January-October 1959 [Quantity in long tons; value in $1,000] Appliance Quantity 1956 Value Quantity 1957 Value Quantity 1958 Value Jan.-Oct. 1959 Quantity Value Household and commercial washing machines and parts: Imports Exports Household vacuum cleaners, floor pol- ishers, and parts: Imports Exports Household electric ranges, broilers, and hotplates: Imports Exports Household refrigerators: Imports Exports n.a. n.a. 232 2,008 n.a. n.a. n.a. n.a. n.a. n.a. 639 6,367 n.a. n.a. 3 981 3 17, 046 n.a. n.a. !363 2 2, 297 n.a. n.a. n.a. n.a. n.a. n.a. 1 945 7,648 n.a. n.a. 3 1, 487 3 21, 505 2,068 10, 434 391 2, 365 39 4,325 n.a. n.a. 3,849 17, 522 1,081 7,806 40 4,463 n.a. n.a. 1, 665 11, 507 590 2, 282 177 3,061 1, 709 19, 620 2, 631 19, 033 1, 659 7,479 180 3, 204 2,257 27, 608 n.a.— Not available. 1 Includes estimated 303 long tons of vacuum cleaners valued at $739,466. 3 Includes estimated 1,366 long tons of vacuum cleaners valued at $4,447,268. 3 Estimate by Central Association of Electrical Equipment Industry (ZVEI) of all household refrigerators up to a capacity of 250 liters (8.83 cubic feet). Source: Der Aussenhandel der Bundesrepublik, Deutschland, except 1956 and 1957 figures on refrigerators (ZVEI). frigerators up to a capacity of 250 liters (8.83 cubic feet) were combined regardless of type, but in 1959 a separate category was provided for household refrigerators. Table 65 shows avail- able data on imports and exports for 1956-58 and the first 10 months of 1959. The United Kingdom supplied more than 50 percent of the total value of washing machines imported into West Germany in 1958 and the first 10 months of 1959. The Netherlands accounted for more than 50 percent of the total value of vacuum cleaner and floor polisher imports in the same periods. In January-October 1959, approxi- mately 65 percent of the total value of all imports of household refrigerators and electric ranges, broilers, and hotplates came from Italy. In terms of value, the United States supplied 6-8 percent of washing machine imports, about 6 percent of household refrigerators and, prior to 1959, about 17 percent of electric ranges, broilers, and hot- plates. Imports by country of origin are shown in table 66. 112 Table 66. — West Germany: Imports of Selected Household Appliances, 1958 and January-October 1959 [Quantity in long tons; value in dollars] 1958 Jan.-Oct. 1959 Country of origin Quantity Value Quantity Value Household and commercial washing machines and parts Belgium-Luxembourg _ _ 138 444 151 1, 131 138 66 237, 524 643, 076 256, 326 2, 272, 900 305, 592 133, 280 96 569 143 684 92 81 182, 308 France _ 590, 716 Netherlands- . ... 233, 240 United Kingdom. _ _ 1, 326, 850 United States ... 153, 272 Other. . ... 144, 704 Total 2,068 3, 848, 698 1,665 2, 631, 090 Household vacuum cleaners, floor polishers, and parts Italy ._ 2 227 61 67 12 22 10, 472 544, 068 175, 406 235, 620 55, 454 59, 500 17 368 127 28 16 34 55, 454 Netherlands 950, 810 United Kingdom _ _ 374, 136 Sweden . 100, 198 Switzerland .--... 82, 348 Other 95, 676 Total _ 391 1, 080, 520 590 1, 658, 622 Household electric ranges, broilers, and hotplates Austria _ . 15 6 5, 474 5,236 Belgium-Luxembourg Italy . 117 117, 810 Netherlands . _ 3 8 2 5 6,664 8,806 7,378 6,664 Norway United States _ . Other . 60 62, 594 Total 39 40, 222 177 180, 404 Household refrigerators Austria . . 30 57 171 1, 110 141 62 77 61 43, 078 Belgium-Luxembourg . . 61, 880 France 208, 488 Italy 1, 479, 646 Sweden _ ... 154, 938 Switzerland. 95, 438 United States. 130, 424 Other . 83, 062 Total n.a. n.a. 1,709 2, 256, 954 n.a. — Not available. Source: Der Aussenhandel der Bundesrepublik, Deutsehland. 113 Table 67 shows U.S. exports of major household appliances to West Germany for 1955, 1958, and 1959. Table 67. — U.S. Exports of Major Household Appliances to West Germany, 1955, 1958, and 1959 [Quantity In units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic _ 48 680 6,487 101, 469 60 593 22 45 524 158 436 1, 770 Semi- and fully automatic 517 264 23 790 112, 663 8, 963 5, 130 130, 550 145, 109 Vacuum cleaners _ _ -- 2, 044 Electric ranges __ _ _ _____ 35 200 6,998 44, 892 5, 650 Electric refrigerators 125, 474 Other mechanical refrigerators and freezers 19, 975 Electric freezers _____ 295 60, 495 1,233 221, 955 95, 307 Source: Report No. FTMlO, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. The United Kingdom, Austria, Switzerland, and the Netherlands accounted for 74 percent of the total value of all West German exports of washing machines in the first 10 months of 1959, as compared with 69 percent in 1958. In terms of value, about 43 percent of vacuum cleaner and floor polisher exports in the first 10 months of 1959 went to the United Kingdom, the Nether- lands, and Austria, compared with 38 percent in 1958. Sweden and Greece together accounted for about 29 percent of total value of exports of elec- tric ranges, broilers, and hotplates during the January-October 1959 period, and 27 percent in 1958. In the first 10 months of 1959, the principal purchaser of household refrigerators was Austria, accounting for more than 19 percent of the total value, followed by Belgium-Luxembourg and the United Kingdom, about 13 percent each. West Germany has reportedly begun to ship to the United States substantial numbers of small li/^i/o-cubic-foot absorption refrigerators, which are not manufactured by U.S. firms. The units are designed for use in trailers, motels, and play- rooms. In the first 10 months of 1959, exports of household refrigerators to the United States amounted to $231,812 in value. 114 Table 68 gives more details about exports of selected household appliances in 1958 and January- October 1959: Table 68. — West Germany: Exports of Selected Household Appliances, 1958 and January-October 1959 [Quantity in long tons; value In dollars] Country of destination 1958 Jan.-Oct. 1959 Quantity Value Quantity Value Household and commercial washing machines and parts Austria _ _ _ _ _ . . _ . . 2,384 784 486 3, 106 1, 213 731 1,730 4, 069, 086 1,419,670 636, 888 4, 406, 808 2, 431, 408 1, 177, 862 3, 380, 076 2,096 603 473 2,237 1, 654 2,807 1,637 3, 636, 640 Belgium-Luxembourg ______ ___ 1,065,764 Italy... . ___ ... 666, 638 Netherlands ._ _ __ 3, 190, 152 Switzerland __ _ _ _ _ 3, 350, 326 United Kingdom ____ __ _ 3, 908, 674 Other 3, 214, 666 Total.. _ ___ __ . 10, 434 17, 521,798 11, 507 19,032, 860 Household vacuum cleaners, floor polishers, and parts Austria _ _ __. __ _____ 310 182 180 295 404 31 963 1, 096, 704 656, 642 623, 322 852, 516 1, 026, 256 96, 628 3, 454, 332 262 198 190 341 479 19 793 917, 252 Belgium-Luxembourg _ __ _____ 690, 914 Italy ___ __ 610, 232 Netherlands _ _ 952, 000 United Kingdom __ _ 1, 339, 226 United States _ _ _ 59, 024 Other__ _ _ __ _ ___ 2, 910, 502 Total 2,365 7, 806, 400 2,282 7, 479, 150 Household electric ranges, broilers, and hotplates Austria 355 403 676 158 467 439 590 1,237 365, 092 364, 140 660, 450 146, 132 530, 502 415, 548 604, 044 1,377,068 309 256 428 161 468 313 684 Belgium-Luxembourg __ _ __ 248, 234 Greece _ _ 420, 784 Netherlands __ _.__ 148, 988 Sweden _ ___ __ __ 499, 562 Switzerland ______ ___ _ __ Yugoslavia _. _ _ 252 1, 187 262, 038 Other __ 1, 310, 904 Total 4,325 4, 462, 976 3,061 3, 204, 194 Household refrigerators Austria __ _ _ ... 3, 842 2,649 1,283 1,885 1,642 2,742 148 5,429 5, 345, 718 Belgium-Luxembourg __ __ ____ 3, 679, 480 Italy 1, 481, 788 Netherlands ___ 2, 682, 498 Switzerland __ 2 404 752 United Kingdom _ _ _ 3, 570, 714 United States. _ _ . __ _ _ 231, 812 Other 8 210 762 Total n.a. n a. 19, 620 27, 607, 524 n.a.— Not available. Source: Der Aussenhandel der Bundesrepublik Deutschland. 115 German import duties on major household appliances are as follows : Tariff No. Description Ad valorem import duty (percent) Turnover equal- ization tax 1 (percent) 84.15 A B Refrigerators and refrigerating equipment (electrical and other): Refrigerating cabinets and other refrigerating furniture, in- corporating a refrigerating unit, of an effective capacity of more than 250 liters (approximately 8.83 cu. ft.). Other . . _________________ . ..__. 2 4 7 7 4 6 6 84.40 A 85.06 85.12 A Electric clothes washing machines for household use, combined electric washing and drying machines, also roller type wringers. Electromechanical domestic appliances with self-contained electric motor (includes vacuum cleaners). Electrothermic domestic appliances, etc.: Ovens, stoves, hotplates, etc _ . _____ 6 6 6 1 Assessed on the duty-paid value. Comparable taxes apply to domestic goods. Note. — The above-listed import duty rates and taxes apply to imports from the United States, cleaners was lowered to 6 percent for members of the European Economic Community. In July 1960, the duty on washing machines and vacuum Market Potential Sales of electrical household appliances are expected to show moderate gains in the future, particularly in view of the growing shortage of domestic help. Quality is an important considera- tion in appliance purchases. Sales of American appliances might increase if prices were more attractive. At the Cologne Fair in September 1959, a dis- tributor of American-made household appliances reported successful sales of an 11-cycle washing machine, but stated that prospects for continued success were limited. German manufacturers are reportedly quick to recognize the advantages of- fered by imported models and are able to produce comparable items at lower costs, being less con- strained by mass-production techniques and there- fore able to retool faster. Suggested measures for increasing participa- tion in the German market include local produc- tion or assembly of American models; provision for prompt servicing ; and intensified advertising. German manuf acturers reportedly would welcome exchange of licenses and patents with U.S. firms. 116 Africa REPUBLIC OF THE CONGO (formerly BELGIAN CONGO)* Channels of Distribution The majority of electric washing machines, vac- uum cleaners, ranges, and refrigerators are sold in the two big centers of European population, Leo- poldville and Elizabethville. Leopoldville ac- counts for approximately 50 percent of all refrig- erator sales. The four other provincial capitals, Luluabourg, Stanleyville, Bukavu, and Coquilhat- ville account for most of the remaining appliance sales. Most household appliances are imported by wholesalers who have their own retail outlets. Re- frigerators of American make are imported di- rectly from the manufacturers and distributed through exclusive agencies. Consumption and Imports Because household electrical appliances are not produced in the Belgian Congo, imports are an ac- curate gage of consumption (tables 69, 70, 71). Table 69. — Belgian Congo: Imports of Washing Machines, 1956-58 [Quantity in units; value in dollars] Country of origin 1956 1957 1958 Quantity Value Quantity Value Quantity Value Belgium 735 231 893 207 210 111,200 18, 000 38, 000 32, 000 12, 800 997 615 369 251 64 142, 000 54, 000 38, 000 47, 000 7,000 402 368 95 292 74 71, 753 United Kingdom _ 34, 969 West Germany 14, 921 United States 58, 279 Other 7, 132 Total 2,276 212, 000 2, 296 288, 000 1,231 187, 054 Source: Bulletin Mensuel du Commerce Extirieur du Congo Beige et du Buanda-Urundi. Table 70. — Belgian Congo: Imports of Electric Ranges, 1 1956-58 [Quantity in units; value in dollars] Country of origin 1956 1957 1958 Quantity Value Quantity Value Quantity Value Belgium _ __ _ 460 150 4,414 331 208 26, 000 4,000 110,000 16, 000 12, 000 888 99 2,649 227 338 22, 000 6,000 110, 000 24, 000 21, 200 213 196 2,030 176 70 11, 898 United Kingdom. 4, 461 West Germany _. 49, 551 United States _ 27, 018 Other 3, 980 Total 5,563 168, 000 4,201 183, 200 2,685 96, 908 1 Includes ovens and grills. Source: Bulletin Mensuel du Commerce Extirieur du Congo B 'Ige et du Fuana a- Urundi. •Based on conditions in the Belgian Congo, in 1959. 117 Table 71. — Belgian Congo: Imports of Refrigerators, 1956-58 [Quantity In units; value in dollars] 1956 1957 1958 Country of Compressor Absorption Compressor Absorption Compressor Absorption origin Quan- Value Quan- Value Quan- Value Quan- Value Quan- Value Quan- Value tity tity tity tity tity tity Belgium 160 7,774 45 9,003 114 10, 371 36 6,747 64 11,068 74 12, 262 Sweden 20 5,277 25 5,632 7 1,369 146 27, 174 17 3,003 312 53, 019 United Kingdom. . 180 31,350 1, 724 279, 666 311 49, 309 796 112, 981 301 51, 643 960 149, 808 West Germany 424 61, 176 145 20, 909 404 57,411 75 8,718 138 23, 802 50 7,836 United States 3,879 503, 974 444 118,052 2, 507 413, 997 488 139, 962 1,321 282, 997 148 34, 367 Other ... 47 13, 998 74 18, 477 50 8, 338 4 877 63 18, 433 53 6,838 Total 4, 710 623, 549 2,457 451, 739 3,393 540, 795 1,545 296, 459 1,904 390, 946 1, 597 264, 130 Source: Bulletin Mensuel du Commerce Eztirieur du Congo Beige el da Buanda-Urnndi. Table 72 shows exports from the United States in the years 1955, 1958, and 1959. Table 72. — U.S. Exports of Major Household Appliances to the Belgian Congo, 1955, 1958, and 1959 [Quantity in units; value In dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatie , _ - . Semi- and fullv automatic. 39 67 3,328 11,493 8 274 142 105 1,626 10 108 585 46, 198 5,072 13, 378 279, 803 2, 650 23, 886 14 161 15 51 1, 194 12 139 2,350 26, 339 Vacuum cleaners _ . 611 Electric ranges, _ - _ . Electric refrigerators - Other mechanical refrigerators and freezers Electric freezers 106 2,877 415 162 11,731 462, 137 87, 301 35, 799 6,457 201,492 3,060 34, 271 Source: Report No. FT-410, U.S. Exports o] Domestic and Foreign Merchandise, Bureau of the CeDSus, U.S. Department of Commerce. 118 Import duties on electrical household appliances are as follows: Ad valorem Tariff No. Description rate of duty (percen t) 84.15 Refrigerators and refrigerating equipment (electrical and other) : 84.15.2 Domestic refrigerator cab- inets, compressor-type. 6 84.15.22 Domestic refrigerator cab- inets, absorption-type. 6 84.15.31 and Other domestic refrigerat- 6 84.15.32. ing furniture fitted with a cold-producing appa- ratus. 84 15 90 Parts 6 84.40.20 Clotheswashing machines and appliances, electric or not. 20 84.40.90 Parts 10 85.06.20 Vacuum cleaners 20 85.06.91 Parts _ - 10 85.12.61 Ovens, stoves, and boiling plates (electrothermic for domestic use). 20 85.12.91 Parts 10 Service facilities are important, particularly in the sale of washing machines. No specialized serv- ice agencies exist for vacuum cleaners or electric ranges, and general repair facilities are few. Each distributor or retailer must provide his own servic- ing, which is expensive and is performed by high- salaried European labor. Advertising for U.S. products should be in French, the language most universally read in the Congo, and should be distributed free with the product, at no extra expense to the wholesaler or retailer. More frequent visits by company repre- sentatives, particularly technicians, would be helpful. Washing Machines. — About 1,200 washing ma- chines were sold in 1958 — 292 of U.S. manufacture. Others came from Belgium, West Germany, and the United Kingdom. A sharp decline in 1958 construction caused about a 50-percent drop in consumption from 1957 levels. Most of the wash- ers sold have been semiautomatic or small, apart- ment-type washers. However, owing to increases in minimum wages and social security benefits, some European households cut back or eliminated their African help. European women who are doing the family laundry prefer the fully automatic xlmerican models. Although these mod- els are expensive, retailing from $320-$390, sales are slowly expanding. Consumption of washing machines should in- crease moderately. The cost of servants will prob- ably continue to rise, and more European house- wives will do the family wash. Electrical power is being slowly extended, also expanding consump- tion possibilities. No purchases by native Afri- cans are reported. A potential market exists among Africans, but it cannot develop until wage scales have substantially increased, modern hous- ing is provided, and the position of women is raised from its tribal pattern of manual labor. Replacement sales are negligible. Based on im- port figures for the last 5 years, and a machine life of 5 years, about 10,000 washing machines are now in use. Most householders either take their wash- ers back to Europe, or sell them to persons newly arrived in the Congo or to those who are buying their first washing machine. Vacuum Cleaners. — No statistics are available on the importation or consumption of vacuum cleaners. About 175 vacuum cleaners were sold in 1958 in Leopoldville, and perhaps 250 in the rest of the country. Approximately 140 of these were of U.S. manufacture. The domestic consumption potential is reportedly less than 50 machines a month. Electric Ranges. — The import classification for electric stoves includes ovens and grills, most grills being imported from West Germany, Great Brit- ain, and Belgium. No statistics are available on consumption, but it is estimated at approximately 850 in 1956, 900 in 1957, and 500 in the first 11 months of 1958. The outlook for any increase, particularly in American brands, appears limited. Electricity costs 3-9 cents a kilowatt-hour, making an electric stove a luxury, and the use of gas stoves is increasing. Refrigerators and Freezers. — American-made refrigerators and freezers dominate the market be- cause of their large size and reliability. The mar- ket is limited to the European population. Re- frigerator sales appear to be principally for replacement. Freezer sales are negligible, con- sumers being content with the freezer space avail- able in home refrigerators. Frozen products are not in demand and frozen food processing is still to be developed. 119 Sales to the native population are small because the people lack purchasing power. Few Afri- cans have adopted Western eating habits, and re- frigerators are used almost exclusively for cooling drinks. Refrigerator sales to the 375,000 native population in Leopoldville, for example, amount to only about 50 units a year. Market Potential The market for household appliances is present- ly limited to the European population of 20,000 households, or approximately 107,000 people. However, the possibility of a rapidly rising standard of living among the African population points to a promising future market. European businessmen are reportedly establishing contacts for this expanded market now. Electricity is expensive, virtually prohibiting the use of electric stoves. Most U.S. appliances are not engineered to operate on 220 volts, 50 cycles. Adaptation of refrigerators and freezers to the local current reportedly results in a 15-per- cent decrease in refrigerating capacity. Exports of equipment designed to operate on 220/50 would undoubtedly enhance sales possibilities. Several distributors in the Congo have suggested that American-designed equipment be made in Europe for this current and shipped from there to the Congo. The extension of electrical power will create some new demand for electric compressor-type refrigerators and probably diminish absorption refrigerator sales, which are hampered by higher initial costs and a lack of adequate service facili- ties. American appliances face strong price competi- tion from European models ; aside from refrigera- tors, the outlook for American washing machines is the best. Because water heaters are not stand- ard equipment in European households in the Congo, washing machines from Europe usually have built-in, adjustable heating elements. Sales of American machines would improve if water- heating mechanisms were also included. American electric range manufacturers face a narrow and competitive market. American ranges are 30-50 percent more expensive than West Ger- man makes, the bestselling European models. Local demand is strongest for compact, four- burner stoves. UNION OF SOUTH AFRICA Production The Union of South Africa's annual production of household electrical appliances in 1957-58 was estimated as follows (in units) : Nonautomatic washing ma- chines 34,000 Electric ranges 36, 000 15-ampere hotplates with ovens (plug-in type) 10, 000 Refrigerators: Compressor-type 23, 500 Absorption-type 6, 500 ($3,920,000 value) ($1,680,000 value) No vacuum cleaners, automatic washers, or freezers were produced in 1958, although the largest assemblers of refrigerators were planning to make freezers. Refrigerator output reportedly dropped in 1959 to an estimated 18,000 units, partly because of competition from an inexpensive Italian import. Washing machine production increased, but elec- tric range production dropped slightly. Washing machines, electric ranges, and refrig- erators are produced in Johannesburg and vicinity and at Port Elizabeth and Jacobs (a suburb of Durban). Two brands of washing machines are made under U.S. licenses. Several companies assemble appliances from imported motors, gear boxes, and domestically made parts. Electric range manu- facturers import nickel-chrome resistance wire and switches. Household electric refrigerators are assembled principally by two large manufacturers, one self- sufficient except for U.S.-imported motors, which the company plans to manufacture locally. This firm also produces refrigerators under U.S. license and makes cabinets for Swedish-manufactured absorption units. The other company, a sub- sidiary of a U.S. firm, assembles refrigerators 120 from locally produced cabinets and U.S. -imported components. Production of refrigerators by these two firms accounts for a minor part of their total factory output, due to the limited market for household refrigerators and other appliances. One producer, for example, also manufactures electric ranges and electric water heaters, as well as kitchen furniture, pots, pans, beverage coolers, and sundry sheet metal products. A U.S. -licensed firm attempted mass production and soon met with a saturated market. Several small firms make cabinets for absorp- tion refrigerators, using imported refrigerating units. The absorption market is dominated by a Swedish brand. Late in 1958 one firm began the production of a 1 y 2 -cubic- foot capacity refrigera- tor, to be retailed to the native population at about $80. The refrigerating units for these are im- ported from Europe. Raw materials and power are readily available. Although imported parts must be licensed under current import regulations, manufacturers have little difficulty in obtaining permits. Manufac- turers employing a permanent work force have few labor problems. However, native labor is usually unskilled and inefficient by American standards. Skilled labor is in short supply, but wage rates are nevertheless reasonable — approxi- mately $50 a week. Earnings of semiskilled fac- tory workers range from $20 to $25 weekly for women and $30-$42 for men. Unskilled native workers earn $8.30-$20 a week. Most producers and major importers do their own servicing. No Government subsidies are granted. Channels of Distribution Distribution centers are Johannesburg, Cape Town, Durban, Pretoria, Port Elizabeth, Germis- ton, Bloemfontein, and East London. Locally manufactured washing machines are sold at wholesale to retailers. Almost all electric ranges are sold to the trade by manufacturers. Many importers of washing machines and vacuum cleaners operate both as wholesalers and retailers. The largest local refrigerator manu- facturer maintains wholesale and retail outlets in all major centers of population. The U.S. sub- sidiary sells refrigerators through appointed fran- chise agents. Imported refrigerators are marketed through distributors, who sell to wholesale and retail outlets. Consumption Apparent consumption of selected appliances in 1957 and 1958 is estimated in table 73. Table 73. — Union of South Africa: Estimated Consumption of Selected Household Appliances, 1957-58 Appliance 1957 Apparent consumption (units) Local produc- tion (percent of consumption) 1958 Apparent consumption (units) Local produc- tion (percent of consumption) Washing machines Vacuum cleaners and floor polishers Electric ranges (including 10,000 hotplate and oven combinations) Refrigerators 43, 064 24, 008 41,731 i 47, 000 70 96 64 47, 421 13, 568 47, 947 n.a. 63 94 n.a. n.a. — Not available. 1 Includes 6,500 absorption refrigerators. 121 Estimates of the total number of electrical ap- pliances in use are : Washing machines 75, 000 Vacuum cleaners and floor pol- ishers 100,000 Electric ranges (including hotplate and oven combinations) 250,000 Refrigerators 450, 000-500, 000 Consumption of household electrical appliances declined in the latter half of 1958, reflecting an overall slowdown in the economy. Construction of new housing units decreased from 13,113 in 1957 to 11,378 in 1958 and 10,075 in 1959. Heavy 1957 imports and resultant carryover of dealers' stocks caused saturation of the domestic refrig- erator market. However, local manufacturers expect consumption to increase about 10 percent per year, along with the natural increase of the European population. Vacuum cleaners are con- sidered a luxury because native labor is abundant and inexpensive. The saturation point for washing machines is estimated at 250,000-300,000 units. Sales in- creased in 1959, in the case of one firm by 40-50 percent. Consumption of ranges will increase slowly, correlated with the availability of electric powei\ The Electricity Supply Commission, which supplies about 75 percent of the electric power in the Union, is expanding facilities about 10 percent per year. About 25 percent of rural homes now have electricity, although the rural population must increase before electricity can be supplied at reasonable rates. In the Johan- nesburg and Benoni areas, electric wiring is being installed in homes of natives who work in the cities, and other municipalities are expected to follow suit. Metering is a problem in houses occupied by more than one family. The domestic market is exceedingly price con- scious. In order to increase sales, many munici- palities grant loans at 6-7 percent interest. Man- ufacturers give distributors 25 to 33% percent dis- counts on published retail prices, depending upon the quantity ordered. Distributors' margin on imported refrigerators is about 16 percent of list price; retailers' margin is 25-30 percent. The range of retail prices is : Washing machines: Hand wringer $145-$275 Power wringer 190- 250 Completely automatic 250- 500 Vacuum cleaners 50- 105 Electric ranges: Standard, 3-plate 155- 200 Standard, 4-plate 300- 415 Standard, 4-plate, 2 ovens 425 Standard, 4-plate, 2 ovens with timer 445 Deluxe, 6-plate 470 Plug-in, 15-ampere (hotplate and oven combi- nations) : Table model 47 Floor model 90- 140 Refrigerators, by cubic-foot capacity: 6 (local manufacture) 280 6 (imported) 280- 294 8 (local manufacture) 355 8 (imported) 378 Imports Table 74 shows imports of major household ap- pliances into the Union of South Africa in 1957 and 1958. Because freight rates as well as tariff prefer- ences for U.K. goods influence imports, the follow- ing rates for ocean freight per long ton or 40 cubic feet (whichever is greater) are presented: From U.S. Atlantic From U.K. ports ports Washing machines $47. 50 $26. 04 Vacuum cleaners 61. 25 29. 82 Electric ranges 47. 50 17. 64 Freight costs of refrigerators from the United States have in the past amounted to as much as 40 percent of the retail price. U.S. exports of appliances to South Africa in recent years are shown in table 75. 122 Table 74. — Union of South Africa: Imports of Major Household Appliances, 1957-58 [Quantity in units; value in dollars] Country of origin 1957 Quantity Value 1958 Quantity Value Canada Germany Netherlands United Kingdom United States Other Total Germany Italy Netherlands Sweden United Kingdom United States Other Total Germany United Kingdom United States Other Total Austria Germany Italy Sweden United Kingdom United States Other Total Washing machines 421 526 271 10, 831 895 120 13, 064 50, 492 49, 092 8,428 761, 807 95, 796 11,028 976, 643 407 444 639 14, 439 657 841 17, 427 42, 059 41,012 30, 008 1, 256, 900 75, 592 73, 717 1, 519, 288 Vacuum cleaners and floor polishers 10, 148 5 309 4,366 27, 054 598 63 42, 543 334, 569 311 9,288 170, 470 912, 498 25, 525 3,235 1, 455, 896 13, 292 514 628 1,669 1 18, 441 2 87 129 34, 760 Electric stoves 488 959 263 21 1,731 21, 582 73, 816 25, 172 2, 160 122, 730 583 1,460 57 43 2, 143 Refrigerators 3 600 2,020 3, 193 6,380 10, 805 8,819 1,544 33, 361 32, 766 177, 198 317,215 581, 927 1, 267, 412 1, 551, 278 121, 522 4, 049, 318 1,994 3,315 10, 586 6, 195 10, 431 8, 194 599 41,314 521,321 30, 965 14, 832 62, 555 615, 770 11, 113 12, 116 1, 268, 672 19, 961 112, 406 7,381 3,506 143, 254 105, 375 273, 104 1, 113, 148 618, 484 1, 314, 681 1, 433, 037 75, 583 4, 933, 412 i Includes 8,463 vacuum cleaners having a value of $281,809. 2 Includes 53 vacuum cleaners having a value of $5,314. 1 Household and commercial, including mechanically and chemically cooled units. Source: Foreign Trade Statistics, Union of South Africa. 555532—60 9 123 Table 75. — U.S. Exports of Major Household Appliances to the Union of South Africa, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 Quantity Value 1958 Quantity Value 1959 Quantity Value Washing machines: Nonautomatic Semi- and fully automatic Vacuum cleaners Electric ranges Electric refrigerators Other mechanical refrigerators and freezers Electric freezers 1,438 447 1, 103 607 9,608 477 189 $126, 583 58, 524 57, 236 75, 822 1, 558, 372 100, 959 37, 377 156 194 $15, 057 23, 630 92 6, 364 11,320 1, 016, 307 447 95, 180 178 257 72 5 4,402 21 585 $15,654 32, 586 2,905 515 742, 758 5,385 131, 243 Source: Report No. FTM10, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Import duties are as follows: Tariff No. Description Ad valorem rate of duty 113(3) -- - Vacuum cleaners.- - . Laundry washing machines, domestic. Free to United Kingdom and Canada; 5 per- cent to United States and all other coun- tries. 15 percent to all countries. 15 percent to all countries. Free to all countries. 113(7) (a) 139 (a), (b) Household refrigerators and cabinets for house- hold refrigerators (without fittings or com- pletely fitted out) : (i) Of a storage capacity of not less than 4 and not more than 12 cubic feet, (ii) Other . . .. ... .. 139(c) Household refrigeration units and parts there- for: (i) Sealed compressor tvpe . . . . 15 percent to all countries. (ii) Absorption type . . Free to all countries. 139(d) 143(b) (i) Household refrigerator parts (other than cabi- nets, refrigeration units, and parts of refrigera- tion units). Electrical cooking appliances. - _ . 15 percent to all countries. 15 percent to United Kingdom and Canada; 20 percent to United States and all other countries. Note. — All the above items are subject to the import license requirements applicable to most consumer goods. The licenses are issuable on the basis of exchange allocation to registered importers according to commodity quotas announced periodically. Each Importer receives a quota proportionate to what his trade in the commodity was during 1948. Import licenses or permits are valid for purchases in any country or currency area. Exports The Union of South Africa exports predomi- nantly to other African markets. Combined ex- ports of household and commercial refrigerators totaled 2,796 units valued at $790,762 in 1957 and 1,864 units valued at $509,981 in 1958. Rhodesia and Nyasaland received 90 percent of total exports in 1957 and 85 percent in 1958. A total of 4,695 electric stoves valued at $517,972 were exported in 1957, and 2,806 units valued at $328,628 in 1958. Rhodesia and Nyasaland accounted for over 94 percent in each year. Market Potential The population of South Africa in mid-1957 was 14,167,000. Of this number, 2,957,000 were white; of these, 1,529,000 lived in larger urban areas. Approximately 700,000 homes have elec- tricity. Only a few native homes are wired. 124 Therefore, European residents are the principal users of electrical appliances. An expanding market will depend upon prog- ress in wiring more dwellings and upon the pur- chasing power of the native consumer. Annual native income is approximately 20 percent of the national income, or an average annual per capita native income of $100. Natives reportedly buy ap- proximately 37 percent of all consumer goods sold in the Union. Although American refrigerators and other ap- pliances have a good reputation, increased im- ports from the United States are not anticipated. Local manufacturers can supply the entire refrig- erator market, except for the larger and deluxe models, which will probably continue to be im- ported from the United States. The competitive price position of U.S. appli- ances and the existing import quotas are two seri- ous drawbacks to expanding U.S. exports to the Union. An American firm that had no exports to South Africa in 1948, the base year for determin- ing quotas, would have to export through a South African firm which imported merchandise in that year. The best means of expanding the U.S. share of the appliance market appears to be either by manufacture in a third country located closer to the Union than the United States or through the extension of present licensing agreements. WEST AFRICAN COUNTRIES (FRENCH-SPEAKING) Imports and Consumption Electrical household appliances are not pro- duced in the French-speaking countries of West Africa. No trade estimates are available on consump- tion, and import statistics do not list household appliances individually. U.S. exports of major household appliances to the country for the period 1952-59 are shown in table 76. Table 76. — U.S. Exports of Major Household Appliances to West African Countries (French-Speaking) , 1952-59 x [Quantity in units; value in dollars] Washing machines Electric Year Nonautomatic Semi- and fully automatic Vacuum cleaners ranges Quantity Value Quantity Value Quantity Value Quantity Value 1952 25 71 86 272 358 645 770 21 3,990 12, 228 14,911 45, 766 52, 704 103, 152 123, 586 2,835 1953 1954 48 50 8,020 1955 ... 118 200 90 4,260 1,840 1,860 7, 476 1956 . 26 19 2,871 4, 126 1957 1958- . . 1959 1 225 See footnote at end of table. *Republics of Dahomey, Guinea, Ivory Coast, Mali, Niger, Senegal, and Upper Volta, and the Islamic Republic of Mauritania. 125 Table 76. — U.S. Exports of Major Household Appliances to West African Countries (French-Speaking) , 1952-59 ' — Continued Year Electric refrigerators Mechanical refriger- ators and freezers Electric freezers Quantity Value Quantity Value Quantity Value 1952 .. . .. ._ . 493 1,343 3,788 3,231 3,565 4,660 4,004 2,070 82, 532 227, 276 642, 769 562, 888 576, 617 789, 209 681,313 367, 468 783 36 167 345 241 79 10 13 174, 944 9,416 33, 053 79, 099 47, 312 17, 594 2,650 3,825 6 1, 545 1953..- 1954. . .. . 12 28 6 46 57 18 2, 997 1955 -.- ._ 6 134 1956 -_._._-_. ... - 883 1957..- - . . _-- 10, 168 1958-.- -.- .- - 12, 509 1959 ----- . . 5, 153 1 Including Togo. Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Facilities for servicing are inadequate because of a shortage of qualified technicians, and service charges are reportedly excessive. Spare parts are usually imported after the failure of equipment. Wholesale and retail prices are high because of custom duties, local taxes, relatively slow turn- over, large profit margins, and distance from source of supply. Although prices on other ap- pliances are not available, 9-cubic-foot refrigera- tors reportedly retailed for about $600 in 1959. Current import duties on household appliances are as follows (in percent) : Tariff No. Description Fiscal duty Custom duty 84.15- --. Refrigerators and refrigerating equipment (electrical and other). Refrigerating equipment: Compressor-type, of which the power of the compressor is not less than 10 hp. Other - Free 10 10 5 10 10 10 C C-l 5 C-2 5 D Parts -_ - __-_ __ 5 84.40... . Machinery (including laundry and drycleaning machinery) : Machinery for laundries (other than that falling within subheading C below), drycleaning and ironing (including clothing presses): Other _-. . -. - - . B Bb_- 5 C Clotheswashing machines, with a dry linen capacity not exceeding 6 kilograms (13.2 lbs.); wringers and mangles: Electric. Ca 7 85.06 Electromechanical domestic appliances, with self-contained electric motor (including vacuum cleaners). Electrothermic domestic appliances (includes ranges).. 7 85.12 7 Note. — With a few exceptions, all imports are subject to a fiscal import duty and a custom duty. Although the Republic of Guinea grants no preference to France, the other countries exempt French goods from the custom duty. Channels of Distribution Appliances are usually imported by large firms, whose operations include wholesale and retail out- lets. Some importers sell direct to retailers and consumers. Market Potential The domestic market for refrigerators and washing machines has expanded considerably in the last 10 years. The improved standard of liv- ing of the European residents, mostly Government officials and others assigned to the area for periods of years, has been partly responsible for the ex- pansion. Another factor influencing growth of the refrigerator market is the warm climate throughout the year and the extremely high hu- midity from June through October. Expanded purchasing power will only come with develop- ment of the economy, increased availability of electrical power, and improvements in income and living: conditions. 126 Middle and Far East AUSTRALIA Production Australian production of washing machines and electric ranges in 1959 exceeded the 1958 peak. Vacuum cleaner and refrigerator production re- covered after declining in 1958, although refrig- erator output did not reach the levels attained in the 1954-56 period— 280,577 in the period July 1954 to June 1955 and 247,360 from July 1955 to June 1956. Freezer production is limited. In the 5-year period ending June 30, 1958, output of all types (household and commercial) ranged be- tween 676 and 2,749 units annually, or an average of 1,772 units. Australian exports of household appliances are negligible. According to Government statistics, production of major appliances in 1957-59 was (in units) : 1957 1958 1959 Clotheswashing machines 157,000 173,000 185,100 Vacuum cleaners 93, 000 81, 000 90, 200 Electric ranges 1 52,000 59,000 71,180 Refrigerators 182,400 219,800 231,000 1 Having at least 1 hotplate and at least 1 oven separately heated, and a total rating in excess of 10 amperes, but no more than 15 kw. Several major firms produce both washing ma- chines and refrigerators, as well as other appli- ances. Therefore, output of any one product fluc- tuates seasonally. In 1959, for example, monthly output of vacuum cleaners varied from 4,820 to 9,040; washing machines from 10,400 to 18,300; electric ranges from 3,340 to 6,958; and refrig- erators from 12,400 to 30,900. Production centers are in Sydney, Melbourne, and more recently Adelaide. Several companies are subsidiaries of English firms, but licensing ar- rangements with U.S. and other foreign com- panies prevail. Most refrigerator companies are locally owned ; 4 firms produce about half the total output, and 12 produce 85 percent. Although few firms produce complete units, the majority make cabinets and assemble components. Raw materials, components, and labor are freely available, semiskilled and unskilled labor compris- ing the bulk of the labor force. Approximately 1,500 persons are employed in washing machine production. The average weekly wage of skilled workers is $41.62; semiskilled, $36; and unskilled, $31.50. Fewer than 1,000 are employed in the manufacture of electric ranges and vacuum clean- ers. Wage rates for these factory workers are slightly higher than in the washing machine in- dustry, skilled labor earning approximately $49.50 per week ; semiskilled, $42.75 ; and unskilled, $36. Channels of Distribution Vacuum cleaners are sold to the consumer by door-to-door salesmen on a commission basis or by franchised retailers, and electric ranges are sold through governmental "county councils" or are stocked by some builders' suppliers. Washing machine distribution varies, but usually no mid- dlemen intervene between the manufacturer and the retailers. Most of the larger producers have sales branches and warehouses in the capital cities. Household refrigerators are distributed by whole- sale houses to retail outlets in all cities. Consumption Annual consumption of washing machines, elec- tric ranges, and vacuum cleaners is equivalent to domestic production plus imports. Stocks fluctu- ate seasonally at 1-3 months' production. Im- ports of washing machines are negligible and therefore do not affect the market. However, vacuum cleaners and electric ranges continue to be imported, 90 percent coming from the United Kingdom. The present supply of refrigerators exceeds de- mand. Over 300,000 domestic refrigerators were 127 sold in the peak fiscal year 1954-55, but demand declined thereafter and leveled off in the second half of 1958. Reportedly demand will not in- crease significantly for several years. Commonwealth statistics showing consumption of vacuum cleaners and ranges during fiscal years ending June 30, 1957, and June 30, 1958, are shown in table 77. Table 77. — Australia: Consumption of Vacuum Cleaners and Electric Ranges, Fiscal Years 1957-58 [Units] Vacuum cleaners Electric ranges Year Production Imports Apparent consumption Production Imports Apparent consumption 1957 83, 900 81, 800 17, 400 43, 600 101, 300 125, 400 51, 400 55, 400 4,200 4,000 55, 600 1958 59, 400 Present and future consumption of appliances is largely dependent upon replacement sales, which account for about 20 percent of washing machine sales and over 50 percent of total sales of vac- uum cleaners and electric ranges. However, a 50- percent increase in home construction, foreseen in the next 10 years, should stimulate the household appliance market. Of approximately 21/2 million families in the country, 71 percent have vacuum cleaners, 39 per- cent have electric washing machines, and over 75 percent have refrigerators. Only 48 percent of the kitchens have running hot water. The retail markup is usually 30 percent for washing machines, 33 percent for vacuum cleaners, and 25 percent for electric ranges. Sales prices for vacuum cleaners are set and strictly enforced by the manufacturer. Manufacturers suggest prices for the other products, but actual pricing is usually up to the individual retailer. Retail prices for washing machines in 1959 ranged from $169-$472; for vacuum cleaners, $79-101; and for electric ranges, $169-$450. Imports Importation of appliances was liberalized for countries outside the dollar area in April 1957, but goods from dollar areas were virtually barred from the markets. On February 23, 1960, all li- censing requirements on major electrical house- hold appliances were removed. However, U.S. trade will still have to overcome the duty advan- tage granted to products of the United Kingdom. U.S. exports of major household appliances to Australia for 1955, 1958, and 1959 are shown in table 78. Table 78. — U.S. Exports of Major Household Appliances to Australia, 1955, 1958, and 1959 [Q.uantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Semi- and fully automatic. __ Vacuum cleaners 10 2,600 22 48 4 15 10 10 2,996 1,912 610 2,851 2,400 1,780 7 1,893 Electric ranges . . . . Electric refrigerators Other mechanical refrigerators and freezers 3 23 645 5, 334 12 11 3 8 2, 670 2, 820 1,084 Electric freezers _ __ __ .-- 16 3, 826 2,679 Source: Report No. FT-410, U.S. Fiports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 128 Import duties on household electrical appliances are as follows : Tariff No. Description British preferential Most-favored nation (United States) General 172(A)(1) Clotheswashing machines for household use, electrically or power driven, each. Or ad valorem $6.75 Percent 22y 2 20 30 22^ 25 $13. 50 Percent 47^ 37M 47^ 40 42J^ $13. 50 Percent 47J^ 175(B)(1) (C) ex 179(A) 380(B)(1) (Whichever rate returns the higher duty) Refrigerating appliances of the types used for food storage, up to and including 16-cubic-foot gross in- ternal capacity, including mechanical driving units when incorporated therein. Parts for refrigerating appliances Electric stoves and ranges, household _ Household electric vacuum cleaners 37^ 47^ 50 52^ Market Potential Prior to March 1960, U.S. opportunities for ex- port of appliances to Australia were usually lim- ited to items unobtainable at better terms from other sources. Removal of licensing requirements may result in some increase, but products of the United Kingdom still have an advantage. The only effective way for U.S. producers to compete is through subsidiary plants within the United Kingdom or through licensing arrangements with domestic manufacturers. FEDERATION OF MALAYA Production As of June 1959, no household electrical ap- pliances were being manufactured or assembled in the Federation of Malaya. However, in 1959 "pioneer industry" status was granted for domes- tic refrigerators and some other appliances under the provisions of the pioneer industry ordinance. The designation entitles local manufacturers to some relief from income taxes. No information is available on any actual plans for production, but several established firms were reportedly in- terested in producing refrigerators. Channels of Distribution Distribution is centered in Singapore for the south, in Kuala Lumpur for central Malaya, and in Penang for the north. Appliances are im- ported almost exclusively by large agency houses, which distribute to retailers or sell part of the imports direct from their display rooms. Consumption No statistics are available on sales of appliances. However, some estimate of total consumption in both Singapore and the Federation of Malaya may be obtained from the following official statis- tics taken from External Trade of Malaya, State of Singapore and Federation of Malaya, showing net imports (total imports minus reexports) of major household appliances (in units) : 1956 1957 Washing machines 1, 223 866 Vacuum cleaners and floor polishers 3, 374 3, 086 Electric cooking apparatus 26, 826 13, 938 Electric refrigerators 12, 769 9, 096 Nonelectric refrigerators 756 483 Freezers 69 82 1958 1959 946 558 2,833 2,066 18, 812 14, 602 13, 750 10, 419 731 457 239 225 129 Official statistics covering only trade of the Federation of Malaya indicate net imports (total imports minus reexports) of household appliances as follows (in Units) : January- September 195S 1959 Washing machines 415 2S0 Vacuum cleaners and floor polishers 967 567 Electric cooking apparatus 1, 967 2, 117 Electric refrigerators 7,653 4,278 Nonelectric refrigerators 220 208 Freezers 41 59 Consumption and importation of durable appli- ances are strongly affected by export sales of rub- ber and tin, the country's two major export com- modities. High world prices for rubber and tin should lead to stronger demands for appliances, especially ranges, refrigerators, and freezers. Imports The United Kingdom is the principal supplier of household appliances to Singapore and the Federation of Malaya, in the period 1956-58 ac- counting for 90 percent of the dollar value of washing machines, 75-90 percent of the vacuum cleaners and floor polishers, 65-75 percent of the electric cooking appliances, about 75 percent of the refrigerators, and 20-45 percent of the freezers. In 1959, the United Kingdom supplied 69 percent of the washing machines, 72 percent of the vacuum cleaners and floor polishers, 71 per- cent of electric cooking appliances, 46 percent of refrigerators, and 37 percent of freezers. Other major suppliers are the United States, West Germany, and Japan. In 1956-59, the United States ranked first in freezer imports into Malaya, although its share dropped from 85 per- cent to 50 percent in 1958 against rising British competition, and then rose to 61 percent in 1959. The United States ranks second in refrigerators, having supplied 20-25 percent of imports in 1956-59. In 1959, West Germany accounted for 15 per- cent of all refrigerator imports and 14 percent of electric cooking appliances. Japan supplied 8 percent of refrigerator imports. Italy also fur- nished a substantial volume of refrigerators in both 1958 and 1959. As a supplier of nonelectric refrigerators, Sweden has ranked second to the United Kingdom. U.S. exports of major appliances to Malaya in 1955, 1958, and 1959 are shown in table 79. Table 79. — U.S. Exports of Major Household Appliances to Malaya, 1955, 1958, and 1959 [Quantity in units; value in dollars] 1955 ' 1958 2 1959 2 Appliance Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic -. _ (including Singapore) ...__.___. 12 762 Semi- and fully automatic (including Singapore) 28 4,019 18 3,086 38 6,840 Vacuum cleaners, (including Singapore) . 12 527 Electric ranges - (including Singapore) 10 1,310 18 571 2,248 3, 105 95, 895 382, 165 68 203 1,392 12,512 Electric refrigerators. 36, 296 (including Singapore) .-_______ 3, 053 485, 569 241, 925 Other mechanical refrigerators and freezers (including Singapore) . . .. 9 5,793 15 4 79 3,975 1, 085 20, 662 10 34 119 530 Electric freezers . . - . 6,763 (including Singapore) ... 103 20, 421 25, 215 1 Exports to British Malaya. 2 For 1958 and 1959, the first line shows exports to Federation of Malaya; the second line shows combined exports to Federation of Malaya and Singapore. Source: Report No. FT-110, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 130 Import duties on appliances are as follows : Ad valorem Tariff No. Description duty rates (percent) 1- .. ... C. Complete refrigerators, refrigeration plant, or freezing apparatus 20 D. All component parts of refrigerators, not otherwise provided for _ 20 ex 18.. Electrical goods, component parts, and accessories thereof: (a) Electric motors and compressors not exceeding 2 hp. and components 20 thereof. (e) Electric cooking and heating appliances and parts thereof. . . 15 (h) Electric washing and electric drying machines and parts thereof.. 15 (k) Floor polishers, vacuum cleaners, and other domestic appliances not 15 otherwise provided for. Note.- duty free. -The duty rate is uniform for imports from all origins, including the United States. All appliances, components, and parts may enter Singapore Since August 1, 1959, the Federation of Malaya and the State of Singapore have permitted direct importation of all commodities from the United States. Before that time, special licenses were re- quired for all imports from the dollar area. Dollar exchange, previously available for only a few commodities, is now freely obtainable by Malayan importers for all U.S. goods. The im- port liberalization obviates the necessity of the detour of imports via Hong Kong and means a saving of the 5-7-percent additional cost former- ly incurred by U.S. exporters. It also will per- mit competition in the local market on equal terms with nondollar goods. importance of rubber and tin prices. The wide- spread employment of domestic servants among the upper classes makes large increases in sales of washing machines and vacuum cleaners unlikely, although the growing middle-income group is a potential market. American goods have in the past sold at slightly higher prices than those of British Common- wealth countries. However, now that import and dollar restrictions have been removed, sales of the highly regarded American appliances should expand. American manufacturers could also in- crease their share of the market by selling through subsidiaries or licensees in Malaya or British Commonwealth countries. Exports Exports of appliances are entirely reexports. Market Potential The country is a strong potential market for household electrical appliances, particularly for refrigerators. In the absence of inflation, rising incomes will bring increased sales, although the progression is likely to be cyclical because of the Investment and Licensing Opportunities Opportunities for investment are improved as a result of the investment guarantee agreement be- tween Malaya and the United States and the "pio- neer industry" status accorded to manufacture of household refrigerators and other appliances. Foreign investment is welcomed and, although local capital participation is not required, joint enterprises are encouraged, especially in applica- tions for "pioneer industry" status. 131 HONG KONG, BRITISH CROWN COLONY Production No major appliances are produced in Hong Kong, but some commercial soft drink coolers, and single hotplates consisting of an electric coil set in bakelite, are manufactured. American com- pressors are used in some of the coolers, and manu- facturers claim that if demand existed they could produce freezers by altering the compressors. Channels of Distribution Appliances are distributed through sole agents, in most cases retailers, though a few are both wholesalers and retailers. Several large firms acting as sales agencies do their own servicing and are equipped to handle all types of repair work. Consumption Average annual sales of appliances are estimated as follows (in units) : Washing machines 400-450 Vacuum cleaners 450-500 Electric ranges 300-400 Refrigerators 5,000-6,000 Freezers 50-60 Representative retail prices in 1959 of household appliances were as follows : Washing machines: Japanese (3- to 5-lb. load) $52-$87 European (unspecified capacity) 70-201 United States: Unspecified capacity 140-279 Combination 340-393 Vacuum cleaners: European 25- 87 United States 44- 59 Electric ranges: European ,_ 86-305 United States 168-483 Refrigerators (cubic feet): 1.5 to 2.3 (European) 87-122 2.8 to 3.3 (Japanese) 105 3.5 to 5.5 (European) 139-166 6.3 to 6.5 (European) 183-201 7.0 (European) 236 7.0 (United States) 272 8.0 to 8.5 (United States) 236-244 9 (European) 208 9 (United States) 244-332 9.2 (Japanese) 227 11 (European) 322 11 to 15 (all United States) 340-654 Freezers (all United States made) (cubic feet): 5 340 6 243 10 to 12.5 349-419 14 471-515 Washing Machines. — Consumption of washing machines is stable but limited. Those able to af- ford washing machines usually employ low-paid, unskilled servants to do the washing by hand. An additional adverse factor for automatic wash- ers is the extreme scarcity of the local water sup- ply. In the dry season, September-April, water is rationed and at times is available for only 3 hours a day. Water conservation is heavily stressed. Vacuum Cleaners. — Demand for vacuum clean- ers seems static. The market is dominated by the United Kingdom. Electric Ranges. — Consumption of electric ranges is declining. Until 3 years ago, the two electric power companies in Hong Kong pur- chased and rented them in order to encourage the consumption of electricity, despite high power rates. Then they stopped buying new electric ranges and started selling their used ranges. Purchasers are required to pay installation charges. The use of gas ranges is increasing. The cost of operating a gas range is estimated to be 15-25 percent less than for an electric range. The only gas company in Hong Kong purchases gas ranges, sells or rents them at about $1.30 per month, and provides free maintenance. Refrigerators. — The majority of refrigerators sold are electric, and the consumption trend is definitely up. Local dealers, especially those car- rying Japanese and Italian lines, are optimistic. American styling is well received by the Chinese. However, small refrigerators of 3.3-7.0 cubic feet are the best sellers, the 5.5-cubic-foot model being heavily favored. Officials of the local gas company state that conventional gas refrigerators have little chance in the local market. A few kerosene refrigerators are sold in outlying islands where there is no electricity. Freezers. — Sales of freezers will probably re- main limited because of high prices, the lack of 132 an emergency power supply for residential areas, and the Chinese preference for fresh meat and vegetables and for daily marketing. Most buyers are resident Americans. Following are estimated number of appliances in use in recent years (in units) : 1956 1957 1958 Washing machines 800 1, 000 1, 200 Vacuum cleaners 1, 000 1, 200 1, 500 Electric ranges 2,600 2,800 3,000 Freezers 100 150 200 Refrigerators 17,500 22,000 27,000 Imports No duties or restrictive regulations are imposed on imports of electrical appliances. Before 1959, imports other than refrigerators were included in basket categories. A summary of trade statistics for household appliances in the first 10 months of 1959 is presented in table 80. In the past, the leading suppliers of washing machines have been the United Kingdom, the United States, Italy, and Germany, but increased competition from Japan developed in 1959. Of a total of 1,451 units imported in January-Octo- ber 1959, Japan accounted for 970 units valued at $44,288 ; the United Kingdom, 321 units valued at $28,470; and the United States, 123 units valued at $19,019. A British-made vacuum cleaner dominates the market, although increasing competition from a Japanese-made line is expected. In the first 10 months of 1959, the United Kingdom supplied 655 units valued at $21,940 ; Japan, 164 units valued at $3,059; and Germany, 126 units valued at $2,444. The United Kingdom also leads in electric range imports, but German- and Italian-made ranges will share an increasing portion of the market. All these ranges sell at about half the price of the larger American-made ranges. American refrigerators are preferred because of styling and competitive pricing. The United Kingdom is the second largest supplier, producing the popular smaller sizes. West Germany was third until 1958, when Italy and Japan began manufacturing refrigerators featuring American styling and lower prices. Of the 8,941 electric re- frigerators imported during the first 10 months of 1959, the United States supplied 2,231 units hav- ing a value of $476,844; the United Kingdom, 2,150 units valued at $318,205 ; Italy, 2,349 units valued at $293,301; Japan, 1,067 units valued at $106,680; and Germany, 648 units valued at $76,969. American freezers are largely favored, and little competition from other countries is ex- pected. U.S. exports of major household appliances to Hong Kong in 1955, 1958, and 1959 are shown in table 81. No duties or restrictive regulations are imposed on the import of electrical household appliances. Exports Except for the export of locally produced hot- plates, Hong Kong's trade in appliances is com- prised of reexports. Electric ranges and hotplates are destined mainly for Southeast Asia. Reex- ports of refrigerators hi 1956 and 1957 were main- ly to Communist China, Southeast Asian coun- tries, and Macau. In 1958, reexports to Commu- nist China declined and those to Macau and South- east Asia (except Indonesia) maintained the 1957 level. Table 80. — Hong Kong: Imports and Reexports of Selected Household Appliances, January-October 1959 [Quantity in units; value in dollars] Appliance Imports Quantity Value Reexports Quantity Value Washing machines Vacuum cleaners Refrigerators, electric Refrigerators, nonelectric 1,451 1,004 8,941 7 97, 050 30,411 1, 358, 591 1,308 69 33 437 9, 119 4,072 104, 107 Source: Hong Kong Trade Statistics, Department of Commerce and Industry, Hong Kong. 133 Table 81. — U.S. Exports of Major Household Appliances to Hong Kong, 1955, 1958, and 1959 IQuantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic _- . .. 6 23 553 4, 231 11 58 958 9,218 Semi- and fully automatic . . 93 16, 669 Vacuum cleaners - - Electric ranges 15 2, 104 4 53 1,936 329, 195 1,039 11,355 64 2,514 11,267 400, 606 53 2, 507 3 48 9, 190 Electric refrigerators __ _ - _ 410,421 Other mechanical refrigerators and freezers 825 Electric freezers- _ - 28 8, 131 9,993 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Market Potential Hong Kong has a population of more than 3 million ; almost half are refugees from Communist China who cannot afford electrical appliances. Possibly not more than 50,000 of the total popu- lation are potential customers. American products are favored in terms of style and prestige among some Europeans and wealthy Chinese. However, most Chinese are extremely price conscious, preferring smaller, less-expensive models of refrigerators, washing machines, and electric ranges. British-made electric ranges sell- ing well are heavy and durable, appear to be 10-15 years behind American styles, and cost about half as much. Retailers capitalize on the fact that any British 6- or 8-inch heating unit will fit any Brit- ish electric range. American ranges are not adapted to the electri- cal standards in Hong Kong. The local power supply consists of 200/400 volts fed over a 2- or 4- line system, whereas the American range is wired for a 3-line system. Moreover, the wiring in most Hong Kong apartments cannot accommodate the high wattage required by American ranges. As a result, American ranges must be modified and houses rewired, at considerable expense to the consumer. The present outlook for increased im- ports of American ranges is dim unless products are modified for the Hong Kong market. Investment and Licensing Opportunities Hong Kong offers favorable possibilities for direct American investment with or without local capital, as well as American participation through licensing arrangements. Both methods have been successfully used by American participants in other industries. INDIA Production Until 1945, Indian production of household elec- trical appliances was confined principally to small workshops employing four to eight people and manufacturing low-quality portable electric stoves, electric irons, room heaters, washing ma- chines, immersion-type water heaters, and kettles. About 70 of these small manufacturing units are in operation, mainly in the States of West Bengal, Punjab, and Bombay. However, they are not reg- istered with the Government, and accurate pro- duction statistics are not available. Nine other manufacturers, each employing 50 or more persons, constitute the "organized" sector of the appliance industry. These are regulated by the Ministry of Commerce and Industry, which controls their production capacity and assists them in obtaining raw materials. In return, the 134 manufacturers periodically report on their pro- duction and on consumption of raw materials. Four of the nine principal appliance manufac- turers produce electric household refrigerators. The remaining produce mostly water heaters, broilers, portable stoves, toasters, kettles, irons, and fans. None of the nine firms produces electric washing machines. However, a few crudely finished, nonautomatic washing machines are pro- duced by the smaller manufacturers, for dryclean- ing and laundry establishments. Annual produc- tion was about 95 in 1957 and 120 in 1958. By 1959 no major firm had as yet applied to the Central Government for a license to manufac- ture washing machines. Previously, the only pro- posal was submitted in 1957 by a British firm, which anticipated the production of domestic washing machines of 8-10 pounds capacity and larger. However, the application was later with- drawn. Neither vacuum cleaners nor electric cooking ranges are manufactured. In 1957-58, a local firm undertook the manufacture of electric ranges but lacked proper production facilities and raw materials. Only 20 units were produced in 11 months of operation. A British firm and a Japa- nese firm conducted surveys in 1958 for the pos- sible manufacture of vacuum cleaners, household- and industrial-type cooking ranges, and other ap- pliances, but neither of these firms has submitted any manufacturing proposals to the Indian Gov- ernment. Household refrigerator production has devel- oped rapidly. Both installed capacity and actual production have risen steadily, but foreign ex- change difficulties, short supply of raw materials, and shortage of technical personnel have prevent- ed fuller utilization of capacity. Production of household refrigerators in 1955- 59 was as follows : Units Value 1955 525 $146,081 1956 750 208,687 1957 850 236,512 1958 1,922 n.a. 1959 (estimate) 3,835 n.a. n.a. — Not available. Foreign manufacturers have not until recently directly invested in the Indian refrigerator in- dustry, which is making an effort toward self- sufficiency. Domestic firms have technical know- how arrangements with foreign companies, principally American, for the fabrication of simple parts, and their inclusion in completed units with imported components such as com- pressors, controls, and cooling coils. In 1959, a local firm began manufacturing refrigeration coils in conjunction with an American company, and two other firms are licensed to manufacture small compressors. Domestically manufactured components have reportedly increased to 60-75 percent of total production. An Indian-Ameri- can firm organized in 1960 is constructing a plant scheduled for operation in early 1961. It is ex- pected to have an annual production capability of 4,000 refrigerators and 30,000 compressors. Necessary raw materials, such as soft copper tubing, deep drawing quality steel sheets, and fiberglass insulation, are imported. Manufactur- ers have substituted mineral wool and foam plas- tic as insulating material. For materials not available locally, "actual user" import licenses are granted by the Government. No appliances are exported by India. Basic salaries of workmen employed in industry are supplemented by fringe benefits such as cost- of-living payments, annual bonuses, housing, med- ical care, retirement, and leave. Wages range from 75 cents per day for unskilled labor to $1.60 per day for electricians and welders. Channels of Distribution Three methods of distribution are common: The manufacturer appoints a sole agent whose distributors and dealers retail the equipment ; the manufacturer sells through district agents or dis- tributors; or the manufacturer retails direct to the consumer. Under the first two methods, com- missions, or a combination of commissions and trade discounts, are paid by the manufacturers. Consumption The high cost of electricity in urban areas has restricted the wide use of electrical appliances. No official consumption figures are available. However, demand in 1960 is expected to be (in units) : Automatic washing machines 3, 000 Vacuum cleaners 4, 000 Electric ranges 7, 000 Electric refrigerators 16, 250-25, 000 Electric freezers 3, 000 135 Imports Because foreign exchange reserves are being conserved for economic development, no import licenses have been granted recently to established importers for complete washing machines, vacuum cleaners, electric ranges, or refrigerators. How- ever, import licenses under a quota system may be obtained for heating elements and repair parts for existing refrigerators, excluding complete cabinets, doors, shelves, and inner porcelain liners. Some household appliances enter the country as personal baggage. However, the decline re- sulting from the severe restrictions on imports is shown by comparison between 1957 and 1958 im- ports (table 82). U.S. exports to India have declined accordingly, particularly for electric re- frigerators (table 83). Market Potential A wide and sustained demand for electric house- hold appliances is assured because of rapid indus- trialization and the consequent improvement in the standard of living, and the expanded avail- ability of low-cost electricity as power projects are completed. Increased sales are also foreseen among the growing middle class because of con- stant demands of domestic help for higher wages and fringe benefits. Electrical appliances are be- Table 82. — India: Imports of Selected Household Appliances, 1957-58 [Quantity in units; value in dollars] Appliance 1957 Quantity Value 1958 Quantity Value Washing machines Vacuum cleaners Electric cooking ranges Electric ovens Electric household refrigerators Other domestic refrigerators Condensing units below }{ horsepower.. Parts for electric refrigerators Parts for other mechanical refrigerators. 309 487 1, 318 1,357 3,055 809 20 92, 578 60, 551 62, 168 71, 373 535, 430 134, 735 4,935 212, 824 9, 264 120 110 660 470 934 251 3 30, 942 8,277 14, 792 24, 871 164, 871 42, 721 275 224, 347 21, 628 Source: Monthly Statistics of the Foreign Trade of India, Department of Commercial Intelligence and Statistics, Government of India. Table 83.— U.S. Exports of Selected Household Appliances to India, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic 6 792 Semi- and fully automatic 35 6, 110 Vacuum cleaners Electric ranges . . ... 26 242 12 44 4,716 Electric refrigerators, _ _____ 703 121,418 556 103, 593 46, 182 Other mechanical refrigerators and freezers. 1,263 Electric freezers. _ .. __ 23 4,650 18 5, 171 14, 449 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 136 Indian import duties on electrical household appliances are as follows : Tariff No. Description Ad valorem standard rate ' (percent) Ad valorem British pref- erential rate (percent) 72(5) 73 Domestic refrigerators and parts (including all cabinet-type refrigerators) . Electrical instruments, apparatus, and appliances, not other- wise specified, excluding telegraphic and telephonic. 2 30 40 24 30 1 Imports from the United States enter under the standard rate. ' Includes washing machines, vacuum cleaners, electric ranges, etc. Note.— Except for heating elements and some refrigerator parts, no import licenses are being granted to established importers for any of the household appliances included in this survey. ing purchased in an effort to lighten the burden of household chores. Investment and Licensing Opportunities Excellent opportunities exist for United States- Indian collaboration in the local manufacture of U.S. lines of equipment. American manufactur- ers, whose products are popular among local con- sumers, can develop profitable export markets if they participate with reliable local firms in li- censing arrangements or joint manufacturing ventures. The Government favors U.S. proposals to join in the local manufacture of completed units and of components not now made in India, rather than in the further extension of mere assembly operations. In addition to reasonable tariff protection and Government assistance in obtaining necessary raw materials, joint manufacturing ventures or licens- ing would offer possible enhanced sales of prod- ucts in nearby Asiatic countries. No radical change in import policy is expected. Although the Government removed discrimina- tions against imports from the dollar area in De- cember 1959, controls and limitations on total levels of imports still remain. JAPAN Production Japanese production of household electrical ap- pliances has grown phenomenally since 1951. Comprising the industry are more than 300 firms, 10 of which are major producers. Production of electric washing machines and household refrig- erators has increased the most (table 84) . Strong domestic demand, especially for house- hold refrigerators, has caused the rise in output of appliances. Although the annual rate of in- crease in production of washing machines has started to level off, unit volume will probably con- tinue to rise for at least the next year or two. Production of household electrical appliances is concentrated in the metropolitan centers of Tokyo and Osaka, and to a lesser extent in Tochigi and Kanagawa Prefectures. Labor, raw materials, and power appear to be adequate. Establishments employing 30 or more regular laborers reported average monthly cash earnings of $57.34 per person in 1959. Large establish- ments of at least 500 regular workers reported average monthly earnings of $65.95 per person in July 1959. The employer's actual labor cost is increased by pensions as well as medical and other welfare benefits. Seven companies produce the bulk of the wash- ing machines — mostly small units (3.3-6.16-lb. dry-wash capacity) of the "turbine pulsator" type. Because motors of 100-350-watt capacity are taxed 20 percent of ex-factory value, all the ordinary washers have motors of 100 watts or less. Most 137 Table 84. — Japan: Production of Washing Machines and Household Refrigerators, 1951-59 [Quantit> in units; value in dollars] Year Washing machines Household refrigerators Quantity Value Quantity Value 1951 -- - - - 3,328 15, 117 104, 679 265, 552 461, 267 754, 458 854, 564 988, 309 1, 189, 034 n.a. n.a. n.a. 14, 538, 300 23, 642, 700 35, 551, 700 41, 496, 800 46, 255, 700 54, 316, 700 1,998 3,587 7,470 16, 990 30, 571 81, 202 231, 241 414, 772 549, 433 802, 000 1952 . - --- - - 1, 491, 000 1953 -- - - - 1, 616, 000 1954 - -_ - - -- - - - 4, 372, 000 1955 -- -- - - 6, 321, 000 1956 ------ 14,011,000 1957 . _ _ .__ - 32, 840, 000 1958 - - - - 52, 746, 500 67, 636, 300 n.a.— Not available. Source: Ministry of International Trade and Industry (MITT), Tokyo. have manual wringers and use cold water ; only a few have drain pumps, although some recent mod- els are equipped with an intake pump by which hot water can be pumped into the washing ma- chine. In February 1960 some manufacturers planned to produce a washing machine with a gas heating connection that boils water and automat- ically feeds it into the machine. The agitator-type washing machine, popular in the United States, represented only 1.7 percent of Japanese production in 1958. Agitator models range from 3.96-4.84-pound dry-wash capacity and are purchased by larger families. Electric household refrigerators — components and completed units — are produced by about 10 leading manufacturers, who give a 3-5-year guar- antee, during which time repairs are made free of charge. About 95.6 percent of all refrigerators produced have a capacity of less than 4.5 cubic feet, and those of 3-cubic-foot capacity are in overwhelming demand. A few refrigerators of 4.5-10-cubic-foot capacity are produced for com- mercial purposes or for export. Production fig- ures are not broken down between compressor and absorption-type refrigerators, but most are of the compressor-type. Until 1956, little demand existed for vacuum cleaners. However, production of all types (up- right, tank type, pot type, and portable) in 1958 amounted to 280,863 units valued at $8,774,300 and in 1959 increased to 421,942 units valued at $12,275,800. Tank-type and pot-type cleaners have recently challenged the upright model in popularity. No reliable statistics are available on produc- tion or consumption of electric ranges. The low figures shown for weight and value of exports probably mean that the statistics cover electric hotplates and grills rather than ranges. Channels of Distribution Household appliances are usually distributed by manufacturers through their own wholesalers and retailers, who are under special-agent contracts. Department stores also retail household appli- ances. The increase in production has resulted in in- tensified competition and an increase in the num- ber of appliance dealers, who numbered 1,500 in 1958. Expenditures by the electrical appliance industry for advertising in 1957 accounted for 17 percent of total industry advertising. Consumption Initial purchases account for an overwhelming majority of household appliance sales. In Decem- ber 1957, of the 17,475,000 households having 2 or more members, approximately 12.3 percent had washing machines, 1.8 percent refrigerators, and only 0.5 percent vacuum cleaners. In 1959, ap- 138 proximately 20 percent of the households were equipped with washing machines, 5 percent with refrigerators, and 2 percent with electric vacuum cleaners. In the Tokyo area, saturation was esti- mated at 41 percent for washing machines, 11 per- cent for refrigerators, and almost 7 percent for electric vacuum cleaners. Examples of representative 1959 retail prices in Japan for washing machines, vacuum cleaners, and refrigerators were as follows : Washing machines: Turbine pulsator type , $56-$75 Turbine pulsator type with centrifugal dehydration device, 3.3-lb. dry -wash capacity 83 Agitator type, 3.96- to 4.84-lb. dry-wash capacity 89_ 92 Vacuum cleaners ^~ " 9 Household refrigerators, by cubic-foot capacity: 1.3 110 2.3 150 33 162-175 4 ' " 212-225 eio--^"-"-"-----.-!--"---"------------- 370 The low income of the average family and the habit of shopping daily for food requirements have been mainly responsible for the low rate of consumption of refrigerators. Sales of washing machines have been somewhat limited by the lack of city water facilities in more than half the households. An improving income level and power situation, revival of the monthly installment purchase plan, and a reduction in prices due to mass production have contributed to increased consumption, par- ticularly by the upper-middle-income group. Although demand for washing machines has re- cently shown signs of leveling off, a considerable domestic market still remains untapped. Demand for small household refrigerators should continue at a high level. Vacuum cleaners should increase in popularity as the standard of living rises. Manufacturers' shipments of washing machines and refrigerators in recent years are shown in table 85. Imports The United States has consistently supplied more washing machines and household refrigera- tors to Japan than other countries, although total exports are small (table 86). The United King- dom, Sweden, and West Germany also export lim- ited quantities of refrigerators to Japan. The principal supplier of vacuum cleaners has been the United Kingdom. Table 85. — Japan: Manufacturers' Shipments of Washing Machines and Refrigerators, 1953-1958 and January-June 1959 Period Washing machines Refrigerators Value Index Value Index 1953 $5, 106, 700 13, 503, 400 23, 025, 300 34, 232, 800 42, 959, 800 46, 246, 500 24, 016, 800 100.0 264.4 450. 9 670.4 841. 2 905. 6 $1, 616, 000 3, 376, 000 5, 409, 600 11,766,000 29, 544, 000 (') 100. 1954 208. 9 1955 334. 7 1956 728. 1 1957 1, 828. 3 1958 January-June 1959 (tentative) . . ...__.. i January-June 1958 shipments totaled $33,756,000. Source: Ministry of International Trade and Industry (MITI), Tokyo. 555532—60 -10 139 Table 86. — U.S. Exports of Major Household Appliances to Japan, 1951-59 [Quantity in units; value in dollars] Washing machines Year Nonautomatic Semi- and fully automatic Quantity Value Quantity Value 1951 . -.. ... ... . 35 131 364 3, 908 12, 380 24, 111 68 186 75 10 14 20 67 73 102 10 265 1952 23 133 1953. -_. _. 13 398 1954 2 300 1955. .-. -. 227 8 26 17, 474 729 3, 289 1 822 1956 4 890 1957 11 834 1958 17 130 1959 --. -. - 10 1,000 17 588 Vacuum cleaners Electric ranges Quantity Value Quantity Value 1951 334 563 103 40 103 140 912 22 1 10, 843 19,519 4,394 2, 143 3, 221 3, 729 27, 064 1, 005 100 118 156 390 13 20 231 318 140 70 15 755 1952 ._ .. 20 478 1953 57 537 1954 2, 420 1955 _-_ 3 900 1956-. --. . 24 771 1957 49 592 1958 21, 983 1959 12, 529 Electric refrigerators Other mechanical refrigerators and freezers Electric freezers Quantity Value Quantity Value Quantity Value 1951 i 2, 153 1, 744 1,477 510 389 863 359 735 253 1 362, 447 295, 102 270, 753 93, 980 82, 552 136, 353 69, 473 152, 906 46. 869 8 34 21 1 4,916 10, 101 6, 530 3,002 1952 1953 . 32 49 7 6 11 41 19 30 8, 787 13, 279 1954 .- . 2, 454 1955 1, 607 1956 1957 i- 10 2, 430 2, 692 11, 840 1958 5, 787 1959-.- . -. .- 1 500 6, 140 1 Category includes electric freezers in 1951. Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. 140 Import duties on household electrical appliances are as follows (percent) : Tariff No. Description General rate of duty (ad valorem) Commodity tax (levied on landed price plus tariff) 1538 Electric stoves 20 30. 1686 Machinery, not otherwise provided for: Electric washing machines. - 15 20 (limited to those of which power is over 100 and not more than 350 watts) .' Vacuum cleaners 15 20 (as for those using electric motors, limited to those of which power is less than 1 hp.). Household refrigerators 15 40 ((a) 40 on electric or gas refrigerators and parts thereof, excluding those having a box of 49.14 or more cubic feet or those having a special apparatus for keeping tempera- ture at a constant level; (b) on freezing machines employed for the refrigerators enumerated in par. (a) — limited to the machines of less than }i hp.) . 1688 Parts of machinery, not otherwise provided for. 15 For electric dehydrators, limited to those of which power Is more than 350 watts. As for other imports, foreign exchange and im- port licenses must be obtained for electrical house- hold appliances. Due to balance-of -payment dif- ficulties, the use of dollar exchange has been lim- ited to the importation of essential goods; regu- lar import of household appliances has not been approved since 1957. Licenses are now to be is- sued automatically for electric stoves and wash- ing machines (those without dryers) until the fund allocation is exhausted. Foreign exchange allocations are to be made available for dollar- area refrigerators. However, the amount of funds allocated will probably be rather limited. Exports Exports of washing machines and household refrigerators in 1957 and 1958 represented less than 1 percent of domestic production. In the first 11 months of 1959, refrigerator exports were still only 1.8 percent of production and went main- ly to Southeast Asian countries. Exports of household refrigerators to Burma, the Ryukyu Islands (Okinawa), Korea, Hong Kong, Thai- land, Singapore, and the Philippine Islands are small but indicate Japan's ambition to penetrate the Asian market, Parts exports follow the pat- tern of refrigerator shipments, going also to Taiwan and the New Hebrides. Major markets for washing machines were the Middle East, Southeast Asia, Latin America, and Africa. Almost half the total washing machine exports in 1957 and 1958 went to Syria. In the same period, only three washing machines were exported to the United States — two in 1957 and one in 1958. The washing machines currently produced in Japan cannot compete in the U.S. market because the turbine pulsator construction and the small capacity would not be accepted by American consumers. The lack of Underwriters' Laboratories approval for Japanese electric mo- tors also inhibits possible U.S. sales. Moreover, washing machines of Japanese manufacture would probably not be competitive from a price stand- point. The amount of hand labor involved in manufacture is not significant enough to make low labor costs the determining factor in ultimate cost. Moreover, the electric motor in a washing machine, reported by industry sources to represent more than half the total production cost, is 20-30 per- cent higher in Japan than in the United States. Investment and Licensing Opportunities Despite recently announced changes in Japa- nese import policy, the possibilities of developing additional sales of completed U.S. household ap- pliances in Japan are slight. Foreign investments 141 in the past have been mostly technological assist- ance contracts, acquisition of securities and pro- prietary interests, and acquisition of claimable assets arising from loans. The Japanese Finance Ministry now approves foreign investments only in public utilities, key industries, or major export industries. Countries desiring to remit profits in foreign exchange must make advance application to the Japanese Government, which screens each request for foreign exchange validation. Introduction of overseas modern technology has caused domestic manufacturers to claim a level of technical competence equal to that of foreign pro- ducers. As a result, new technical assistance and licensing agreements have recently been severely curtailed. LEBANON Production Production of household electrical appliances in Lebanon is limited to the assembly of a few refrig- erators, freezers, and hand-wringer washing ma- chines. All other appliances are imported; none are exported. Appliance assembly plants are locally owned and are situated in and around the Beirut district. Reportedly, no more than 100 refrigerators and even fewer washing machines and farm and home freezers are assembled annually. Motors, com- pressors, and almost all other components and raw materials for manufacture are imported. No for- eign capital is thought to be invested in the do- mestic industry, and no Government subsidies are granted. The limited development of the industry is caused by local preference for imported ap- pliances, a lack of adequate capital and of organ- ized industrial effort, and labor problems. Local service facilities are inadequate. No fixed wage scale exists in the appliance in- dustry, weekly wages ranging from $31.75 to $47.60 for skilled labor and from $9.50 to $16 for unskilled labor. Channels of Distribution Household appliances are marketed through Beirut distributors and retailed through local dealers, who customarily obtain their supplies on a consignment basis. Consumption Consumption of washing machines and refrig- erators continues to increase wherever electric cur- rent is available. No significant demand exists for vacuum cleaners or freezers. Consumption of electric ranges is drastically curtailed because of high cost and inadequate supply of electric cur- rent. As a result, liquefied petroleum gas is used almost exclusively for cooking. Trade estimates of average annual sales of elec- trical household appliances and number in use are as follows (in units) : Appliance Average annual sales Approximate number in use Washing machines (automatic and nonautomatic) . - .- 8,000 200 (') 7,000 50 80, 000 Vacuum cleaners - . Electric ranges - Refrigerators .. . Freezers (farm and home) 2,000 300 60, 000 300 1 Very few. Imports Until about 1955, electric refrigerators were im- ported almost exclusively from the United States. Since then, units of 4-8-cubic-foot capacity have entered from Great Britain, Italy, and West Ger- many, and on a small scale from Japan. U.S.- made units now account for 70-80 percent of all refrigerator imports. Approximately 40 percent of the washing ma- chine imports originate in the United States, the remainder coming chiefly from Great Britain, the Netherlands, West Germany, and Italy. A few vacuum cleaners are imported from Denmark, the Netherlands, West Germany, and the United States. The United States also supplies the few freezers that enter the market. U.S. exports to Lebanon are shown in table 87. 142 Table 87. — Lebanon: U.S. Exports to Lebanon of Major Household Appliances, 1955, 1958, and 1959 [Quantity In units; value in dollars] Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic._ . _______ 1,549 245 51 53 10, 235 15 67 115, 111 32, 939 2, 138 8,399 1, 875, 797 3,370 14, 860 1,746 553 72 13 6,946 5 57 139, 275 58, 930 3,548 2,019 1, 208, 105 1,415 11,537 2,015 515 107 175, 521 Semi- and fully automatic 57, 501 Vacuum cleaners Electric ranges ... _ _ Electric refrigerators _ _ Other mechanical refrigerators and freezers Electric freezers ____ ____ 4,560 5,794 2 74 945, 529 530 15, 761 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Import duties on household appliances are as follows (in percent) : Description Ad valorem Tariff No. Normal duty Reconstruc- tion tax 839b Refrigerators _____ _ _ _ 25 25 25 25 5 862a, 875 A-5-c . Washing machines __ _ _ __ None 862b, 878A-5-C. Vacuum cleaners. None 865c Electric ranges _ __ None Market Potential Future sales will be greatly affected by price. Because of the higher shipping and handling ex- penses incurred in U.S. exports, as well as differ- ences in size, quality, and other features, American appliances are priced higher than those of foreign origin. The smaller sizes of European and Jap- anese appliances and the savings in shipping and handling expenses result in lower prices and grad- ually increasing competition to American brands. A remedy to this situation used by some manufac- turers is the establishment of European subsid- iaries or the use of licensing arrangements with European firms. • PAKISTAN Production No washing machines, vacuum cleaners, electric ranges, or refrigerators are now manufactured or assembled in Pakistan, and none are exported. Al- though two firms are reported to have obtained Government sanction to assemble refrigerators, they have not been issued the requisite import li- censes for plant machinery and components. Be- cause of balance-of-payment difficulties, the issu- ance of these licenses is unlikely. 143 Channels of Distribution The Karachi and Lahore areas (in West Paki- stan) constitute the most important markets for household appliances because of the concentration and higher purchasing power of the population in these areas. Approximately 85 percent of all im- ported household refrigerators are consumed in West Pakistan. Chittagong, in East Pakistan, represents the third major market. Dacca and Khulna, also in East Pakistan, are considered as other important distribution centers. With the exception of two firms that import and distribute houshold refrigerators, the wholesale trade is prac- tically nonexistent. About 40 other agents act as both importers and retailers. Consumption Consumption is measured by imports, which are negligible except for household refrigerators. No shop in Karachi stocks washing machines, vacuum cleaners, or electric ranges. Annual consumption and major household appliances in use are esti- mated as follows (in units) : Appliance Annual con- sumption Number in use Washing machines _ Vacuum cleaners 60 30 20 1,950 1,000 800 Electric ranges ._ Refrigerators 700 25, 000 Import trade has been slight because of strin- gent import licensing controls. However, per- sonal baggage belonging to members of diplomatic missions and foreign firms frequently includes washing machines, vacuum cleaners, and refrig- erators, and occasionally electric ranges. The above consumption figure for refrigerators in- cludes approximately 1,000 units imported an- nually by foreigners. Consumption figures for other appliances also include sales by foreigners leaving the country. Laundries are the principal buyers of household washing machines. Few machines are purchased by domestic householders. Lower class families cannot afford them ; most upper and middle class families rely heavily on dhobies (local washer- men) and will probably continue to do so. Clothes wear out more quickly by being hand laundered, but the dhobies' 1 wages are low. Relatively little demand exists for electric ranges, which are sold mostly to large hotels, res- taurants, tea gardens, and other large commercial and industrial organizations. In addition to im- port restrictions, other negative factors affect the Pakistani market for electric ranges. Special per- mission to use them must be obtained from the Central Engineering Authority of the Govern- ment, which controls the use of electrical appli- ances of high wattage. Other drawbacks are the high initial cost of electric ranges and of electricity and the fact that cooks, who are accustomed to working on inefficient ranges, can be obtained at low wages. Because natural gas is now available throughout the country, even present users of elec- tric ranges may switch to gas ranges. Most of the large hotels and some residential areas in Karachi have already been provided with gas con- nections by the Karachi Gas Co. However, with the growth in production of cheaper electricity and with gradual urbanization, demand for elec- tric ranges may increase among commercial users as well as householders. Demand is slight for household vacuum clean- ers, which are used principally by resident for- eigners. The local "sweeper" works for low wages and can apparently perform the desired functions of the vacuum cleaner to the satisfaction of the householders. Demand for household refrigerators is signifi- cantly greater than for other major appliances. Only about a quarter of the local demand is being satisfied at the present time. Because of wide fluctuations in voltages and the high humidity, breakdowns of electrical appli- ances are frequent. Service facilities are inade- quate, technical personnel are poorly trained, and spare parts are sometimes difficult to obtain. The margin of profit on household electrical appliances is usually 50 percent of the landed cost. Although no stocks were available in Karachi stores, some 1959 retail prices were quoted as fol- lows: 144 Washing machines: British: Nonautomatic $187 Automatic 325-495 Vacuum cleaners: British 100 United States 125 Electric ranges: British 512-545 Other European 630 Refrigerators, by cubic-foot capacity: Swedish: 5 440 7K2 590 British: 3 170 5 290 7 460 8 525 United States: 8 500 11 610 113 715 Imports Imports have been limited because of stringent foreign exchange and import licensing controls. However, effective July 1, 1960, import licenses based on a quota system were being granted for household washing machines, vacuum cleaners, electric ranges, and refrigerators. No restric- tions are specifically imposed on imports from dollar areas, and U.S. -made products are favored by consumers. Imports of refrigerators totaled 959, valued at $243,303, in 1957, not including about 1,000 units entering annually in personal baggage. The United States accounted for 41 percent of total units, or 46 percent of total value ; the United Kingdom furnished 33 percent of units and 25 percent of value; and Sweden supplied about 20 percent in both quantity and value. U.S. exports of major household appliances to Pakistan in recent years are shown in table 88. Table 88. — U.S. Exports of Selected Household Appliances [Quantity in units; value in dollars] to Pakistan, 1955, 1958, and 1959 Appliance 1955 1958 1959 Quantity Value Quantity Value Quantity Value Washing machines: Nonautomatic _ _ __ __ _. 50 15 10 41 1,333 1 91 5,310 2, 348 428 5,793 221, 543 203 21, 119 Semi- and fully automatic Vacuum cleaners _ _ ___ Electric ranges _ .. 10 559 28 11 1,500 94, 546 6,596 3,030 Electric refrigerators .. _. Other mechanical refrigerators and freezers 1, 121 209, 574 Electric freezers. . _ _ . . 48 12, 354 Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Import duties on household electrical appliances are as follows : Description Ad valorem duty Tariff No. Statutory rate ' U.K. prefer- ential rate Sales tax ex. 84.15.. Domestic refrigerators and parts 30 (GATT) 80 12# 80 80 24 80 12^ 70 70 84.40 Washing machines, etc.: A. Domestic electric appliances (under 1 horse- power) . B. Other Electromechanical domestic appliances with self-con- tained motors (includes vacuum cleaners). Electric water heaters, electrothermic domestic appli- ances, etc. (includes electric ranges). 85.06 . 20 85.12 ! Applies to imports from the United States. Note. — Import licenses are required. 145 Market Potential Although the population of the country is over 86 million, the low standard of living and the stringent import controls create a poor market potential for washing machines, vacuum cleaners, and electric ranges. Because demand for refrig- erators is unsatisfied, a relatively good market could develop if the balance-of-payment situation should change to permit importation of plant equipment and components for domestic assembly. About 70 percent of household refrigerators in use are U.S. manufactured. American appli- ances have earned a good reputation, and the out- look for expanded U.S. exports in the second half of 1960 is encouraging for U.S. refrigerators, in particular, but only slightly improved for other appliances. Except for the import licensing requirement, which applies to all countries, U.S. imports of household electrical appliances are not restricted. An American firm can effect sales from its foreign subsidiaries or licensees. Investment and Licensing Opportunities Pakistan earnestly desires foreign investments, but requires local capital participation and places heavy emphasis on investments that utilize indig- enous raw materials. At present, import of most items utilized in the manufacture of appliances would be required, and it is doubtful that the Gov- ernment would permit the establishment of an ap- pliance-manufacturing industry. Because of the limited demand for washing machines, vacuum cleaners, and electric ranges, local firms would not likely be interested in entering into licensing arrangements with foreign manufacturers. REPUBLIC OF THE PHILIPPINES Production Manufacture of household electrical appliances in the Philippines is currently limited to the as- sembly of electric refrigerators of 10 cubic feet and below, and electric ranges — mainly from im- ported parts. Production in recent years is shown in table 89. Table 89. — Philippines: Production of Electric Refrigera- tors and Ranges, 1956-58 [Quantity in units; value in dollars] Year Refrigerators Ranges Quantity Value Quantity Value 1956 1957 1958 1959 2,588 1,747 2,577 2 5, 000 1, 122, 930 776, 888 not available not available 1, 196 5, 814 > 2, 422 2 2, 500 104, 642 150, 100 196, 572 not available 1 Some 8,300 small electric stoves, having a total value of $206,359, were also produced. 'Estimated. Source: Bureau of the Census and Statistics, Republic of the Philippines. In 1958, four firms produced refrigerators under American license, and two firms produced electric ranges. Appliance production is con- centrated in Manila and nearby towns and cities. No foreign capitalization is involved, and the Government does not subsidize the industry. Production of electric refrigerators and ranges involves cutting and forming steel plates or fiber- glass panels and assembling imported finished or partly finished parts into completed units. Be- cause of the low foreign exchange reserves of the country, electric refrigerator and range manu- facture is limited to the amount of dollar alloca- tion granted for importation of the necessary parts. The amount is usually not sufficient to meet production requirements. Power and labor sources are more than adequate to meet the needs of the producers. Channels of Distribution The most effective manner of distribution is through merchandising firms located in Manila, having branches throughout the islands. The market for appliances is concentrated in a few major urban centers. Consumption Estimated sales of household electrical ap- pliances in recent years are shown in table 90. 146 Table 90. — Philippines: Estimated Sales of Household Electrical Appliances, 1956, 1957, and January-June 1958 [Units] Appliance 1956 1957 January- June 1958 Washing machines Vacuum cleaners 250 10 4,000 5,900 10 200 10 7,000 6,500 10 90 5 Ranges '_ .. . - 1,800 Refrigerators ' _ - 2,200 Freezers - 5 ' Includes those domestically produced. The availability of low-cost manual labor makes the use of washing machines and vacuum cleaners unnecessary. Refrigerators and ranges are more widely distributed and marketable than freezers. Home storage of frozen foodstuffs is uncommon, and lack of electrical power in rural areas pre- cludes the use of farm freezers. An estimated 8,000 refrigerators could be absorbed yearly — even more if medium-priced products were available. A ready market exists for used or reconditioned appliances. The number of household electrical appliances in use in recent years are shown in table 91. Existing conditions preclude the widespread use of electric household appliances: The tight money situation, low dollar reserves, inadequate electrical power supply outside centers of popula- tion, the exorbitant cost of electricity outside Manila, and high prices of appliances that limit purchases to families in the higher income bracket and put them beyond the reach of lower income families. Imports Because of the shortage of dollar exchange, im- ports of U.S. appliances into the country have been declining. However, parts for electric ranges and refrigerators continue to be imported in substantial quantities. Table 92 shows U.S. exports of major appliances and parts to the Philippines in recent years. Table 91. — Philippines: Household Electrical Appliances in Use, 1956, 1957, and June 1958 [Units] Appliance 1956 1957 June 1958 Washing machines Vacuum cleaners. - Ranges Refrigerators Freezers 450 50 9,000 55, 000 70 600 58 15, 000 61, 000 80 670 62 16, 800 63,300 85 147 Table 92. — U.S. Exports of Major Household Appliances and Parts to the Philippines, 1955, 1958, and 1959 [Quantity in units; value in dollars] Appliance 1955 Quantity Value 1958 Quantity Value 1959 Quantity Value Washing machines: Nonautomatic Semi- and fully automatic Washing machine parts Vacuum cleaners Vacuum cleaner parts Electric ranges Electric range parts Electric refrigerators Electric freezers Electric refrigerator and freezer parts ' Other mechanical refrigerators and freezers Other mechanical refrigerator and freezer parts. 10 1,280 10 49 1, 500 13, 140 341 30 1, 118 20 2,850 502 2,449 169 84 84, 967 77, 196 440, 151 39, 644 276, 974 18, 429 528 263 ] , 602 72 10 54,818 54, 395 313,350 19, 270 297, 050 3,940 1, 536 60 338 20, 410 3,067 1, 266 117 67, 853 107, 449 258, 177 30. 656 425, 792 1 Includes mechanical refrigerating systems (or household refrigerators and freezers. Source: Report No. FT-410, U.S. Exports of Domestic and Foreign Merchandise, Bureau of the Census, U.S. Department of Commerce. Import duties on major household appliances are as follows : Tariff No. Description Ad valorem rate of duty on U.S. articles ' Special import tax 2 Percentage sales tax (for appli- ances, calculated on basis of landed Percent of c.i.f . value plus 25 percent margin on sales of foreign exchange cost inflated by 50 percent) 8 84.15 Refrigerators and refrigerating equipment (electric and other) : A. Household freezers and beverage coolers: 1 . Compressor-type . . . 60 20 50 5 10 5 12. 5 20 10. 2 2. Absorption-type. . . . 3. Parts and accessories: a. Bodies or shells, doors, food com- partments, back and bottom plate assemblies. b. Other 84.40 B. Other Machinery for washing, bleaching, dyeing textile yarns, fabrics, or madeup articles; laundry and drycleaning machinery; etc. Electromechanical domestic appliances (including vacuum cleaners), with self-contained electric motor. Thermoelectric domestic appliances, electric heating resistances, other than those of carbon; etc.: A. Household appliances (e.g. flatirons, ovens, stoves, heaters, toasters). 30 85.06 85.12 1 U.S. articles (those containing not more than 20 percont by value of foreign — excluding Philippine— materials) are subject to only 50 percent of regular duty rates for the 3-yoar period 1959-61. ' The special Import tax was Initially 17 percent in 1956, and under revised trade agreement is to be reduced 1.7 percont annually until its complete elimina- tion by Jan. 1, I960. The drop in I960 represents a return to the normal schedule, after being temporarily raised in 1959. » Landed cost is invoice value of goods plus all applicable costs prior to delivory to importer, including the 25 percent margin on sales of foreign exchange, shipping and Insurance costs, duties, special import taxes, commissions, and other similar charges. 148 Products imported for consumption and not for sale (including gifts) are subject to applica- ble duty and import tax and a compensating tax levied in lieu of the sales tax but based only on total landed cost. The sales tax is also levied on the gross selling price or value of domestic prod- ucts, but it does not apply to imported commodi- ties used directly for manufacturing or preparing articles for export. All imports requiring allo- cation of foreign exchange are controlled by the Central Bank. The amount of exchange made available for the import of a given commodity is determined by its degree of essentiality to the economy. Washing machines, vacuum cleaners, and electric stoves and ranges (including those completely knocked down) are all specifically classified as nonessential consumer items, and only limited foreign exchange is made available. Electric household refrigerators, although not specifically listed, would probably be included among "other domestic appliances, n.e.s.," also classified as nonessential. Reportedly, the impor- tation of household refrigerators of 10 cubic feet or less is banned. Under authority of the exchange margin law passed in July 1959, a margin fee of 25 percent on foreign exchange sales was established for the first year of the law's operation and is still in effect. The charges applies not only to importers but to all dollar remittances of profits and dividends to foreign investors. Market Potential Until the cost of household appliances is low enough for middle-class Filipinos to afford them, or until improvement in economic conditions or the foreign exchange situation occurs, the Philip- pine sales potential should not increase substan- tially. 149 U.S. GOVERNMENT PRINTING OFFICE: I960 PENN STATE UNIVERSITY LIBRARIES ADDD071EbbEHD