Electra Consumer Products (TASE:ELEK) is ahead of the market, rushing to launch new air conditioners that use gas that does not harm the ozone layer. In January 2005, new regulations will come into effect that gradually ban the import and marketing of air conditioners using freon (R22) gas, which damages the environment and ozone layer.
It can be expected that the new regulation will help companies like Electra Consumer Products, which have seen their profits slump as consumers switch to cheaper imported low-quality air conditioners from China. The new regulation will ban the sale of air conditioners that do not use environmentally friendly gas. As a result, importers who hitherto sold cheap Chinese air conditioners, will find it very difficult to operate legally. Most unbranded, cheap Chinese air conditioner manufacturers cannot manufacture air conditioners using the new technology.
The regulatory change is likely to have far-reaching consequences on the air conditioner market. Many importers, who have thrived in recent years from the switch to cheap imported air conditioners, are liable to go out of business.
Electra Consumer Products will penetrate the market under the new "Elco High-Tech Titanium" brand of wall-mounted air conditioners, developed at a cost of $2 million. These air conditioners will cost NIS 3,000-4,000, 25% more than the company's corresponding air conditioners lacking the relevant features.
Electra Consumer Products believes that the switch to more efficient air conditioners in the long term will prevent the need for building a small 40-megawatt power station, saving the country $300 million.
Published by Globes [online], Israel business news - www.globes.co.il - on December 26, 2004