Airplanes and appliances are the last two things the United States does well, says Alex Cheimets, a former senior product manager at Thermador Appliances, in Huntington Beach, Calif., and now editor of www.applianceadvisor.com, a trade news Web site for appliance dealers and distributors. In recent years, however, things have gotten a little bit tight for domestic appliance companies as foreign competition nips at their heels. One executive from an American appliance company was overheard not long ago saying that Asian appliance giants such as Samsung and LG are making U.S. companies nervous.
Whether or not such fears are legitimate, U.S. companies are taking notice. “The appliance industry is highly competitive, and all competitors, including emerging Asian competitors, should be considered a threat,” Louisville, Ky.–based GE told BUILDER in a written statement. “As a practice, we do not discuss specific competitors, but we take all of them seriously.”
American appliance manufacturers have always looked abroad for inspiration. “The European market has long been the design and technical driver of the high-end cooking brands in the United States,” says Cheimets. Items such as front-load washers, ultra-quiet dishwashers, and cast-iron cooktop grates started in Europe and have been adopted by U.S. brands with varying levels of success, he says.
Domestic makers have even improved on the European examples. “The U.S. market has often left the European producers far behind in that the Europeans can't or won't redesign their products to [meet] the needs of the U.S. market,” Cheimets says.
Enter Asian giants LG and Samsung, two Korean conglomerates that are making inroads in the U.S. appliance market. LG's appliance division last year moved into third place globally behind Whirlpool and Electrolux.
The company started offering limited appliances to the U.S. market within the past five years and now offers everything except cooking products. Recently, LG inked a deal with The Home Depot to sell refrigerators, washers, and dishwashers starting in the second quarter of this year.
Samsung, says Cheimets, desperately wants to be a player in the North American appliance market as well. And the company is making a serious effort to that end. “They are willing to invest in the business,” Cheimets says. “In other words, they are willing to lose money to do it, and they have a lot of money globally and domestically.” Unlike LG, Samsung offers a full line of appliances, and the company says it can now offer builders one-stop shopping.
But Samsung isn't new to the game. It has been a major original equipment manufacturer (OEM) for U.S. companies for years, making products that were sold by U.S. manufacturers.
According to Karen Gaynin of HWH Public Relations, a New York–based firm that represents Samsung, the manufacturer has been in the non-branded home appliance business in the states for 20 years. “From a home appliance perspective, Samsung only started marketing [its own] refrigerators in the U.S. three years ago, although Samsung is one of the largest global manufacturers of refrigerators under OEM agreements with other brands.” Because of contractual agreements, the company can't name those other brands, but it supplies many major U.S. firms, Gaynin says.
American companies are looking abroad even more now than in the past. “American major brands have been outsourcing products for a long time,” Cheimets says. But now, some U.S. manufacturers are setting up offices in Asia to investigate partnerships with foreign manufacturing outfits, he notes.
Learn more about markets featured in this article: Los Angeles, CA.