The economy, free trade, challenges with China as the CE manufacturing hub, the DTV transition and recycling are just some of the issue on the mind of Gary Shapiro, president/CEO of the Consumer Electronics Association (CEA).
Shapiro sat down with TWICE last week during CEA's two-day Washington Forum, which focused the first day on free trade and the second on issues surrounding the HDTV transition in February 2009. (See www.TWICE.com for coverage of the sessions.)
TWICE: What are the biggest challenges facing the industry this year?
Shapiro: Obviously the general economy is a big challenge. There is consumer uncertainty, stock market gyrations, the credit crunch and higher energy costs. On the demand side of the equation there are lots of questions and challenges in China.
TWICE: What about China? There have been rumors of higher costs hitting Chinese manufacturing plants for a variety of reasons. What are the industry's concerns?
Shapiro: Many Chinese workers want to live closer to their homes, which has driven up labor prices. The huge snow storm that hit this winter has devastated many people and companies. We have heard that many factories will close in June due to concerns about air quality during the Summer Olympics. Their stock market seems strong but many wonder how healthy some of their companies really are. I've said in the past [the industry] has put a lot of our eggs in the China basket, which could be a problem, and we are seeing it now. And raw-material prices are going up.
Vietnam, India, Malaysia look better to some manufacturers, but that is in the long term. Obviously with the U.S. dollar being weaker, U.S. manufacturing looks better and better.
TWICE: We are closing in on the HDTV transition deadline of February 2009. What else needs to be done and what potholes do you see in the road ahead?
Shapiro: All of the industries have done well in working together agreed on the message and invested heavily in it. Government has done a good job. The challenge will be that politicians are getting nervous about any constituent who does not get TV the day after the deadline and blames them for no service. We will be facing panicky politicians.
A year from now the transition will be done. There may be a couple of days of pain ... but will it be the pain of 2 million [homeowners] facing foreclosure? We want every American to know will make a choice.
TWICE: Why has free trade been such a focus of CEA in the past few months, especially at the Washington Forum?
Shapiro: [Last year] a Wall Street Journal poll on free trade showed that most Republicans do not support free trade. [Democrats have been decidedly negative about it.] Free trade is air for our industry. Our members assume it will always be there. We have had four presidents in a row who have been pro free trade. That's how we operated. To say that free trade is not good, our industry has everything to lose. Our industry has been much too complacent about this. We have to let our executives, our employees, our nation know how important free trade is not just for our industry, but for our nation's economy.
TWICE: The CE industry has often been perceived as a "foreign business." What has CEA done to show the economic impact of the industry in the U.S.?
Shapiro: We released a study that the CE industry generates $1.4 trillion in direct business activity in 2008, while directly employing more than 4.4 million Americans. Free trade is helping grow the sector, driving 14 percent of the CE industry's total output and 16 percent of its total employment. The study was done by PricewaterhouseCoopers. It shows that the CE industry will directly and indirectly produce $2.6 trillion in output, contributing $1.3 trillion to the economy in 2008 and supporting 15.4 million related jobs.
TWICE: The disposal of analog TVs seems to be the focus of electronics recycling in the U.S. this year. How concerned is the industry that we may have 50 different recycling standards by the end of the year?
Shapiro: Our goal is to have a federal law passed on the recycling of TVs. We can't have 50 states and 50 standards. Circuit City's Phil Schoonover said at CES that it has to be as easy to buy a TV as it is to recycle it. We agree.
Energy efficiency is another issue that we are focused on that is as important as recycling. Two billion products have been U.S. Energy Star certified, with 1.2 billion being CE products. That program works for the consumer and works for the manufacturer in saving energy.