[SOLVED] Since the early 1990s, woodstove sales have

Since the early 1990s, woodstove sales have declined from 1,200,000 units per year to approximately 100,000 units per year. The decline has occurred because of
(1) stringent new federal EPA regulations, which set maximum limits on stove emissions beginning in 1992;
(2) stable energy prices, which reduced the incentive to switch to woodstoves to save on heating costs; and
(3) changes in consumers’ lifestyles, particularly the growth of two-income families.
During this period of decline in industry sales, the market was flooded with woodstoves at distressed prices as companies closed their doors or liquidated inventories made obsolete by the new EPA regulations. Downward pricing pressure forced surviving companies to cut prices, output, or both. Years of contraction and pricing pressure left many of the surviving manufacturers in a precarious position financially, with excessive inventory, high debt, little cash, uncollectible receivables, and low margins.
The shakeout and consolidation among woodstove manufacturers and, to a lesser extent, woodstove specialty retailers have been dramatic. The number of manufacturers selling more than 2,000 units a year (characterized in the industry as ‘‘large manufacturers’’) has declined from approximately 90 to 35 in the prior 10 years. The number of manufacturers selling less than 2,000 units per year (characterized as ‘‘small manufacturers’’) has declined from approximately 130 to 6. Because the current woodstove market is not large enough to support all of the surviving producers, manufacturers have attempted to diversify in order to stay in business. Seeking relief, nearly all of the survivors have turned to the manufacture of gas appliances.
The Gas Appliance Market:
The gas appliance market includes three segments:
(1) gas log sets,
(2) gas fireplaces, and
(3) gas stoves. Gas log sets are ‘‘faux fires’’ that can be installed in an existing fireplace. They are primarily decorative and have little heating value. Gas fireplaces are fully assembled fireboxes that a builder or contractor can install in new construction or in renovated buildings and houses. They are mainly decorative and are less expensive and easier to maintain than a masonry/brick fireplace. Gas stoves are freestanding appliances with a decorative appearance and efficient heating characteristics.
The first two segments of the gas appliance market (log sets and fireplaces) are large, established, stable markets. Established manufacturers control these markets, and distribution is primarily through mass merchandisers. The third segment (gas stoves) is less than five years old. Although it is growing steadily, it has an annual volume of only about 100,000 units (almost identical to the annual volume of the woodstove market). This is the market to which woodstove manufacturers have turned for relief.
The gas stove market is not as heavily regulated as the woodstove market, and there are currently no EPA regulations governing the emissions of gas heating appliances. Gas stoves are perceived as being more appropriate for an aging population because they provide heat and ambiance but require no effort. They can be operated with a wall switch or thermostat or by remote control. Because actual fuel cost (or cost savings) is not an issue for many buyers, a big advantage of heating with wood is no longer a consideration for many consumers. Gas stoves are sold and distributed through mass merchandisers and through natural gas or propane dealers. The gas industry has the financial, promotional, organizational, and lobbying clout to support the development of the gas stove market, attributes that the tiny woodstove industry lacks.
Unfortunately, life has not been rosy for all of the woodstove companies entering this new market. Development costs and selling costs for new products using a different fuel and different distribution system have been substantial. Improvements in gas logs and gas burners have required rapid changes in product design. In contrast, woodstove designs are fairly stable and slow to change. Competition for market share has renewed pricing pressure on gas stove producers. Companies trying to maintain their woodstove sales while introducing gas products must carry large inventories to service both product lines. Failure to forecast demand accurately has left many companies with inventory shortages during the selling season or with large inventories of unsold product at the end of the season.
Many surviving manufacturers who looked to gas stoves for salvation are now quietly looking for suitors to acquire them. A combination of excessive debt and inventory levels, together with high development and distribution costs, has made financial success highly uncertain. Continued consolidation will take place in this difficult market during the next five years…………….

Question: Since the early 1990s, woodstove sales have