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Costs and Unintended Impacts. James M. Lyons Sierra Research, Inc. July 2, 2003. Outline. Walk Behind Mower (WBM) Market Per Unit Costs for Engine Manufacturers for Engines used in Commercial and Residential Applications Impact on WBM Prices Overall Costs Unintended Impacts.

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costs and unintended impacts

Costs and Unintended Impacts

James M. Lyons

Sierra Research, Inc.

July 2, 2003

outline
Outline
  • Walk Behind Mower (WBM) Market
  • Per Unit Costs for Engine Manufacturers for Engines used in Commercial and Residential Applications
  • Impact on WBM Prices
  • Overall Costs
  • Unintended Impacts
walk behind mower market 2002
Walk-Behind Mower Market2002

Source: Briggs & Stratton

wbm market factors very important or somewhat important
WBM Market Factors(“Very important “or “Somewhat important”)

Source: Briggs & Stratton

wbm selection factors reasons cited for selecting a particular wbm
WBM Selection Factors(reasons cited for selecting a particular WBM)

Source: Briggs & Stratton

estimated costs for non handheld engines
Estimated Costs forNon-Handheld Engines
  • Engine Manufacturer Costs for Exhaust and Evap:
    • Commercial Engines = $128 per unit
    • Residential Engines = $79 per unit
  • Costs for complete units may be higher

Source: Briggs & Stratton

overall costs engine manufacturers only
Overall Costs(Engine Manufacturers Only)
  • Commercial Engines
    • CA Sales = 81,150 per year
    • Annual Cost = $10.4 million
  • Residential Engines
    • CA Sales = 731,000 per year
    • Annual Cost = $57.8 million
  • Overall CA Cost = $68.2 million per year

Source: Briggs & Stratton

cost to california businesses
Cost to California Businesses
  • Estimated Sales = 122,000 units per year
  • Average Cost = $112 per unit (engine manufacturer cost only)
  • Cost to CA Businesses = $13.6 million per year

Source: Briggs & Stratton

analysis of major regulations
Analysis of Major Regulations
  • H&SC Section 57005
    • …"major regulation" means any regulation that will have an economic impact on the state\'s business enterprises in an amount exceeding ten million dollars ($10,000,000)…
  • Requires consideration of alternatives following “guidelines”
  • Most recent guidelines dated 12/9/96
other cost factors include
Other Cost Factors Include
  • Equipment Manufacturer Costs
  • Financial Impacts of Reduced Sales in California
potential adverse impacts
Potential Adverse Impacts
  • Pre-buy of lower cost units
  • Slower population turnover
  • Shift from mowers to handheld equipment
  • Out of state purchases
summary
Summary
  • Regulations have Large Impacts on Retail Price
  • “Major” Regulation
  • Unintended Impacts Need to Be Addressed
regulatory price impact
Regulatory Price Impact
  • LEV II exhaust and evap for PCs to SULEV standard
    • $131 per vehicle for exhaust and $25 per vehicle for evap = 0.73 percent of vehicle cost ($21,440)
  • Aerosol Coatings, Antiperspirants and Deodorants, and Consumer Products
    • 10 cents per bottle = 3.3 percent of average can ($3 can)
  • Reformulated Gasoline (RFG III)
    • 5.5 cents mid-point estimate per gallon first year, lower costs afterwards = 3.7 percent of $1.50 gallon of gasoline
  • Hairspray Rule Amendments (55 % VOC limit)
    • 12.5 cents per bottle (mid-point estimate) = 12.5 percent of low cost product ($1 bottle)
  • Small off-road engine rule
    • $79 per WBM = 33.6 percent of median WBM price of $235.
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