ApplianceAdvisor
Nortek: the range hood monopoly and other
strange practices: 2000
Space will be made here for a Nortek corporate response
Who is Nortek
Nortek is a range hood conglomerate, it's subsidiaries are:
Broan:
cheap hoods, downdrafts, some more
expensive hoods, other home fixtures: based in Wisconsin
Rangaire: cheap, ugly hoods: based in Texas
Venmar: more expensive,
less ugly hoods, some more expensive hoods: based in Canada
Best:
beautiful and expensive hoods: based in Italy
Nutone: cheap hoods: based in Ohio.
Nortek's Market Size
Appliance Magazine estimated that in 1998, the year of their merger, Nortek and
Nutone had a combined U.S. unit market share of 89%. Nortek and Nutone made 2,631,730
units of a total of 2,957,000 sold that year. These numbers reflect Nutone
and both
Nortek subsidiary brand units and models sold to other OEM and retailed under
that brand.
Broan models are sold by:
Broan
Kenmore
Five Star
Frigidaire (and its brands of Tappan,
Westinghouse, Gibson, Kelvinator)
Maytag (and its brands Magic Chef,
and Jennair)
BEST models are sold by:
BEST
General Electric
Rangaire models are sold by:
Rangaire
Patton
Where was the Federal Trade Commission?
There has been a question as to how the merger of Nutone and Nortek was allowed
by regulators. There may be several reasons that the Feds
considered:
-availability of substitutes such as "Windows", or
"Wall Fans".
-barriers to market entry. Anyone with a pair of pliers
can build a hood, but there aren't so many customers who buy in truckload
quantities.
What actually tipped the balance in favor of Nortek, we think we know.....but we
have been sworn to secrecy by a third party.
Other Strange Practices
Exaggerated Performance Numbers
The Heating and Ventilation Institute (HVI) certifies
hoods and blowers for air movement performance (Cubic feet/minute (CFM)) and
noise characteristics. This testing is particularly important
because exaggeration is not unknown to the hood business. Most range
hood manufacturers are HVI members. HVI member companies are not required to HVI certify
for Sound and Performance, but companies that
certify one of their products are required to certify all their products within 12-18
months.
Broan, Rangaire, and Nutone brand products are HVI certified and have been for
several years. Best has been part of Nortek for several years, and
therefore should be completely certified by now. It is an inexpensive
process and there is some marketing advantage to being certified, yet except for
2 new blowers which work only with the model K260, none of the Best line is
certified. Why is this? There may be a very good reason. Several independent sources peg BEST chimney
hood CFM performance at roughly 66% of the claimed CFM performance.
This would mean:
Claimed 350 CFM Models would actually perform around (unknown)
Models: K23,
Claimed 600 CFM Hood Models would actually
perform around 396 CFM
Models: K13, K29, K34, K41, K201, K251, IS23, IS241, IS251
Claimed 1100 CFM Hood Models would actually perform around 750 CFM
Models: K42, KE222, K271, IS42, IS102, ISE222
This is not an exhaustive list of affected
models. This will all be amended, and an apology given, if we receive
independent test data, preferably from HVI.
Nortek has 3 painful options:
1) How does one tell the marketplace, customers,
distributors, and dealers, that the numbers have been fudged. Not going to
happen.
2) For market reasons, certification can only come with
a complete redesign of the blower and therefore the hoods, since the hoods are
not big enough for a bigger blower. Jacked up prices, unhappy
customers.....they don't like that either.
3) Be very quiet and hope nobody says anything.
So far this seems to have worked.
It certainly is an ugly situation for such a large company to be in. Worse
it skews the entire industry to corrupt practice. A company with a model
which competes with one from BEST, would have to decide between A) selling
at the same price as BEST, but showing very low certified performance numbers,
hurting sales or B) selling at the same price as BEST, and exaggerating
performance like BEST. There is a little bit of both going around.
Best has made 1 move to clear things up. In 1997, Best launched the new
HVI certified P6 and P12 which fit only into their K260 hood, to replace the
un-certified P1, and P2. Best ate the cost difference and launched at the
same price.
See our September, 2003
follow up.
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Revised: April 13, 2007