ReMaTecNews | DECEMBER 2017 by RAI Amsterdam

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February/March 2018

REMANUFACTURING INTERNATIONAL NETWORK | KNOWLEDGE | BUSINESS

Sticking point: the potential of reversible glue Core logistics - new pilot study Why the time is right for reman in Malaysia

Also

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The Research Issue

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EDITORIAL

Published by RAI Amsterdam B.V. P.O. Box 77777, 1070 MS Amsterdam The Netherlands

‘The business case for remanufacturing is in place: now all that’s required is for businesses themselves to get serious about reman’

It used to be said that ‘nobody ever got fired for choosing IBM’. The computer giant was seen by senior managers as a safe, reliable option. You couldn’t be blamed for going with IBM – even if things went wrong. Choosing a less well-established brand, on the other hand, carried an inherent risk. An updated version of that maxim might be ‘nobody ever got fired for choosing new’. We all know (and policy makers agree) that remanufactured products are, for a variety of reasons, as good as – if not better than – new ones. However, the wider public has yet to be convinced. Reman is a well-kept secret. This is why there is great news for IT remanufacturers

in the shape of an academic study which found that reman laptops performed well compared with new models (p6). These findings should give procurement managers all over the world pause for thought, especially given the favourable price differential. Why do you need to replace your three-year old computers with expensive new units when reman ones can do more or less the same job for perhaps half the price? The business case is good – now all that’s needed are role models in the corporate world to make it a reality, says Mark Jolly (p16). He’s right – and that goes for reman in every other sector as well. By the way, ReMaTec has its own research to share too. Starting on p12 we reveal for the first time some results from our exclusive survey, in partnership with management consultancy Kemény Boehme & Company, on the industry. You’ll find plenty to keep you occupied there, including some insightful thoughts on the future, and there is more at www.rematec.com. As you would expect, ReMaTecNews also remains true to its international remit in this issue: we look at why the time is right for marine reman in Malaysia (p22), investigate a core logistics pilot in Scotland (p24), examine what the circular economy has to offer emerging markets (p26) and get the lowdown on this year’s challenges for reman in North America (p19). For such a well-kept secret, remanufacturing certainly has quite a reach. Perhaps it’s time to make some more noise.

In association with Route2Market Editor Adam Hill: editorial@rematecnews.com Phone: +44 (0)7931 502947 US correspondent Denise Rondini: drondini@gmail.com Asia-Pacific correspondent Tim Maughan: easternscribe@hotmail.co.uk Route One Publishing Managing Director Andrew Barriball: abarriball@ropl.com Project & Production Manager Miranda Le Croissette: mlecroissette@ropl.com Phone: +44 (0)1322 612080 Contributors in this issue Michael Haumann, Mark Jolly, Nazery Khalid, Tim Maughan, Denise Rondini, Volker Schittenhelm, Andrew Stone Marketing Communications & PR Evelien Feijen: e.feijen@rai.nl Phone: +31 (0)20 54915 81 Advertising Sales Yorien de Ruijter Phone: +31 (0)20 5493075 Fax: +31 (0)20 5491889 advertising@ReMaTecnews.com Publisher Evelien Feijen (responsible under Dutch Press Law) e.feijen@rai.nl Design, Production & Printing Route One Publishing Ltd Copyright RAI Amsterdam, Amsterdam, The Netherlands Reproduction No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopied, or otherwise, without the prior written permission of the publisher, RAI Amsterdam B.V. Subscription magazine & eNewsletter www.rematec.com Change of address info@ReMaTecNews.com ReMaTecNews online www.rematec.com/news Circulation Approx.13,500 readers per edition. The magazine is delivered on a controlled circulation basis to recipients in Western Europe, Eastern Europe, Africa, North America, South America and Asia.

Adam Hill Editor

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ReMaTecNews

CONTENTS

The glue that’s like a screw Discover how reversible glue could spark a revolution in making Design4Reman a practical reality

The Research Issue

What’s that coming down the road? Reman experts outline the challenges and opportunities they expect to encounter during 2018

COVER STORY For the first time, ReMaTec’s exclusive research reveals what remanufacturers think about the industry - from core logistics to quality control

The wave that is sweeping the world

There are compelling economic reasons for promoting marine reman aggressively in Malaysia

16 24

News Reman laptops hold their own against new, Volvo’s transmission remanufacturer demonstrates its green credentials - and we reveal the winners of ReMaTec’s survey competition

26 28

Two birds, one stone A logistics pilot scheme in Scotland is helping to bring remanufacturers closer to the cores they depend on

Email your comments and stories to editorial@rematecnews.com

The circular economy could be a powerful driver for emerging markets - if they can harness its potential

APRA sets up legal entity The move will give the organisation more weight with European Union in terms of lobbying and funding

Viewpoint ‘Reman laptops work well - so let’s persuade companies to use them,’ says Mark Jolly of Cranfield University

Engine of growth

First impressions count FIRM was an early supporter of the European Remanufacturing Council and the relationship is bearing fruit

ReMaTecNews

NEWS

ReMaTec research - winners announced! New research by ReMaTec and management consultancy Kemény Boehme & Company has revealed the variety of remanufacturing activity across a range of business sectors. More than 90 responses were received, with each respondent eligible for a prize for participating. Chosen at random, three winners each receive a €50 Amazon voucher. They are: • Richard Catley, engineer, Ricoh UK Products • Jirka Horvath, senior operations manager, ZF • Dirk Schultz, service solution engineer, Getrag

Respondents to the survey, which was carried out at ReMaTec 2017 in Amsterdam as well as online and on social media, came from North America, Europe and Asia-Pacific. The research covered the markets in which they operate, as well as detailed questions about products and processes, and issues such as reverse logistics and warranties. While respondents suggest that automotive reman will stagnate or decline, sectors such as marine and aerospace are set to grow in importance. • See p12, Revealed: the new global remanufacturing benchmark

March mission to China

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Image: Niyazz/Shutterstock.com

MERA MAKES BOARD ADDITIONS MERA – The Remanufacturing Association has elected David Overbeeke, president and CEO of Brake Parts, as its new chairman. He takes over from Peter Butterfield, chairman and CEO, Omega Environmental Technologies, who has been in post for the last two years. Meanwhile Sanjiv Khurana, president, Detroit Diesel Remanufacturing, and Andreea Raaber, vice president, business development, Bendix Commercial Vehicle Systems, are to join MERA’s executive committee. Justin Greenberg, CEO, DieselCore; David Olsen, CEO, Transaxle; and Russ Schinzing, president, Electronics Remanufacturing Co, are to join the trade body’s board.

ReMaTec 2017 in Amsterdam

A UK-China mission on remanufacturing is set to take place on 12-14 March 2018. Organised by University of Brighton and supported by the UK government’s Foreign & Commonwealth Office and Knowledge Transfer Network, the agenda includes workshops in intelligent manufacturing and reman and a visit to an industry demonstration base. The purposes of the trip include understanding the impact of government policies such as Made in China 2025 and to explore potential synergies. The organisers hope that it will also stimulate more collaboration between stakeholders, including professional associations, between China and the UK. For further information or to register your interest, contact Yan Wang: Y.Wang5@brighton.ac.uk

Reman laptops ‘meet office needs’: study Remanufactured laptops perform almost as well as new ones for most basic tasks, but are considerably cheaper, according to an academic study. The paper, Circular computing performance comparison for office tasks: new vs. remanufactured was written by Mauricio Alva Howes of Cranfield University, and compared new and reman versions of various well-known models to gauge the differences. Howes found that remanufactured models’

general performance was 93-97% that of new models – but that there were some pronounced differences. While there was parity on tasks such as word processing and browsing, spreadsheets and video conferencing systems showed a performance of around 90%. This dipped lower when it came to batteries, with new laptops providing 64% more power life. New laptops were also slightly more consistent in terms of performance –

but reman laptops sold for as little as half the price of new, which suggests that they are a good deal for many companies. Remanufactured laptops for the research were provided by A2C Services. The ‘office needs’ tested during the project were defined as 22 potential uses for office users, grouped into four main categories: text management, data management, multimedia and internet-based tasks. •See Viewpoint, p16

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C-ECO joins CE100 programme Circular Economy Solutions (C-ECO), which runs the CoremanNet automotive spare parts core return service, has joined the Ellen MacArthur Foundation’s CE100 programme. The firm is the third from Germany to be admitted to the 120-strong network of companies whose aim is to promote the virtues of the circular economy. C-ECO sees the move as a “great opportunity” to get in contact

with companies outside of their own market. Announcing its CE100 membership, the company stated that it was hoping “to find new partners, co-operations and new projects in new market segments”. C-ECO was founded in February 2016 as a spin-off from Robert Bosch, with an HQ in Göttingen and sites in Karlsruhe, Germany and Chicago, US. The venture’s expertise in reverse logistics gives it the credentials to join CE100, which was founded in 2010 and consists of corporate members, governments, city authorities, academic institutions and “emerging innovators”. Members include Apple, Unilever and Renault France.

APRA European Symposium 2018 19 - 20 April 2018

Hotel SOFITEL Budapest Chain Bridge, Budapest, Hungary

 Topics that matter  High-quality speakers  Manifold networking opportunities  Benchmark remanufacturing plant visit to Remy’s Miskolc site

The Automotive Parts Remanufacturers Association (APRA) is the only association that represents the whole Automotive Remanufacturing Industry, globally

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ReMaTecNews

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NEWS

MERITOR LAUNCHES REBUILDER PROGRAMME Meritor has launched its North America Authorised Rebuilder Programme for drive axle carriers, which includes the company’s 145, 14X TM and 160 products. Four Canadian companies − Capital Gear, Coast Powertrain, ULT Powertrain and The Gear Centre - have been made the first members to supply wholesale distributors and dealers across Canada with rebuilt Meritor carriers. The companies “are committed to using 100% genuine Meritor content for replacement parts and approved processes to deliver the highest-quality rebuilt carriers that fleets expect”, said Krishna Natarajan, senior director, Steering, Suspension and Drivetrain, Aftermarket for Meritor. All rebuilt units have a unique serial number for quality assurance purposes, and will come with a two-year nationwide warranty. The company plans to extend the programme to the US this year.

Volvo reman is really green A project to remanufacture transmissions for Volvo Cars has been shown to have distinct environmental benefits, according to academic researchers in Sweden. Scandinavian Transmission Service (STS) remanufactures 3,500 units for the manufacturer every year. Remanufacturing in circular economy: A gearbox example by Pranav Gahane and Mohamad Kaddoura carried out a life cycle assessment of 30 components in a remanufactured and in a newly produced transmission and found that the reman product leads to a 36% reduction of carbon dioxide emissions compared with a newly-manufactured transmission, where the

production process requires the use of raw materials such as steel and aluminium.“ The master’s thesis gave us several important answers,” says Gunnar Magnusson, remanufacturing manager at Volvo Cars. “It was confirmed that our years of investments in remanufacturing has generated many positive

environmental effects. It is also interesting that the analysis showed so clearly that a remanufactured and upgraded transmission becomes a more efficient product with reduced environmental impact.” The reman process includes upgrades with new components, leading to fewer emissions from cars. Volvo: environmental benefits

Mobilatina is coming to Frankfurt A new event aimed at the Latin American engine market, Mobilatina, will be held on September 12 at Saal Europa during Automechanika Frankfurt. There will be presentations on technologies for engine rebuilders as well as other trades involved in aftermarket and mobility such as car service shops, parts retailers and body-shop owners. Content will be presented

mostly in Spanish, with translation to English, German and Portuguese. Organised by the Instituto de Estudos da Mobilidade, it follows on from an event last April, Rectilatina, during Automec in Sao Paulo, Brazil, which was attended by rebuilders from countries including Argentina, Bolivia, Chile, Peru and Uruguay. Contact omar@conarem.com.br for more information.

Knorr-Bremse and major Chinese commercial vehicle manufacturer Dongfeng have expanded their collaboration – which was established in 2015 - following a new signing ceremony (right). Originally, Knorr-Bremse Dongfeng Electronic & Technology Commercial Vehicle Braking Technology Co focused on the production of mechanical compressed air valves and complete ABS. But now Dongfeng Auto Parts

Image: Knorr-Bremse

Knorr-Bremse expands Dongfeng collaboration

(Group) Co has contributed its compressor business and associated activities to the joint venture.

Peter Laier, who is responsible for KnorrBremse’s commercial vehicle systems division, spoke

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of the companies’ “close co-operation” and added that they were “constantly optimising our products to meet the specific requirements of the Chinese market”. The expanded agreement with Dongfeng Auto Parts “will help to launch adapted solutions to make Chinese commercial vehicles safer, smarter, and more environmentally friendly”, he concluded. ReMaTecNews

NEWS

BORGWARNER PROMOTES LISSALDE BorgWarner has appointed company veteran Frédéric Lissalde (below) to executive vice president and chief operating officer, where he will be responsible for the operations of the group, with the various business presidents reporting to him. Lissalde himself, who has been with BorgWarner for 18 years, will report to James Verrier, president and chief executive officer. Lissalde was most recently president and general manager of BorgWarner’s largest business unit, turbo systems. Previously, he was vice president and general manager of transmissions systems and vice president of global sales and marketing of BorgWarner drivetrain systems – as well as managing several drivetrain operations in Europe before that. In a separate statement, the company said it is forecasting revenues of $11.5-11.8 billion to 2020, with organic growth of 5-7% over the next three years.

Garages welcome EU regs Proposed EU legislation on vehicle type-approval regulation, which seeks to ensure that crucial repair data from a vehicle’s data system is available to independent garages, has been welcomed by trade associations. European auto parts body FIGIEFA said provisions on the on-board diagnostics (OBD) connector and access to repair and maintenance information (RMI) represent “a huge step forward for the aftermarket regarding access to in-vehicle data” and will increase competitiveness for customers. The organisations say that some vehicle manufacturers have started to introduce measures which prevent independent operators accessing the OBD port - and that the unstable format of RMI made available to independent repairers often hampers the repair process, resulting in increased time and cost.

Independent Automotive Aftermarket Federation (IAAF) chief executive Wendy Williamson (pictured) said: “Although not the end game it’s a significant step towards keeping the OBD port alive.” The agreement needs to be given the green light by the European Parliament’s IMCO Committee - if it is then approved by the parliament

itself, the new regulation will come into force from 1 September 2020. FIGIEFA president Hartmut Röhl warned the EU Commission “must now find a solution on how to address the telematics access to the ‘connected car’, and we call upon it to start working in 2018 on the interoperable, standardised, secure and open-access platform”.

Williamson: significant step

Perkins appoints Zuckerman and Schultz Perkins Engines Company has created a senior sales position to position its brands as viable for rental customers. Andy Zuckerman, currently Americas sales director, will now become global rental manager. His position will be taken by Ron Schultz, who takes responsibility for industrial engine sales execution for Perkins branded products in the region.

He was most recently aftermarket director and general manager of the global on-highway truck division of Caterpillar. Jaz Gill, vice president of global sales, marketing, service and parts said Zuckerman has “vast rental experience”. He added that Schultz can “step right in and help us in many ways as we serve customers and grow our brand in the Americas”.

Daimler pilots on-demand 3D-printed parts

Frédéric Lissalde

www.ReMaTec.com

Daimler Trucks North America has begun making the first deliveries of 3D-printed plastic parts to customers as part of a pilot programme. The company sees 3D printing, in particular ondemand, as a means of fulfilling parts which are

difficult to provide through traditional supply chain models, “such as those for older trucks or parts with very low or intermittent demand”. Jay Johnson, general manager for the company’s aftermarket supply chain,

said the pilot was “only the beginning as we continue to develop this technology”. Daimler has partnered with the 3D printing specialist Technology House and has made the first parts using the selective laser sintering process.

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2018

NEW: Introducing New Award Categories

Remanufacturer of the Year Awards 2018 Proudly introducing a new set-up of the most prestigious award in the industry, the Remanufacturer of the Year award. Competing in categories, the RotY awards 2018 will honour individuals and companies deemed to have served the remanufacturing sector with distinction. The award ceremony will take place in September 2018 and nominations are open from March 2018.

Do you have what it takes? Check categories and nomination forms at www.rematec.com/roty.

Organised by:

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16-01-18 14:59

REMANUFACTURING STUDY 2018

Revealed: the new global remanufacturing benchmark In a major exclusive study, ReMaTec and Kemény Boehme & Company have uncovered what companies think about their work in the remanufacturing industry, from core handling to issues of quality. Published in ReMaTecNews for the first time, here are a few of the highlights

confident, professional sector which has Pacific were asked about the markets in ast year, at ReMaTec 2017 in a clear eye on the future. which they operate, their products and Amsterdam, ReMaTec and The good news is that reman is a processes, as well as how they handle management consultancy strongly-growing market in which key issues such as reverse logistics and Kemény Boehme & Company diversification, professional core warranties. More than 90 responses were (KBC) conducted a study to provide management and high quality standards received at the show, via ReMaTec.comREMANUFACTURING REMANUFACTURING STUDY 2017 STUDY 2017 deep insight into all aspects of today’s REMANUFACTURING STUDY are of increasing importance. But there and from 2017 other social media channels. remanufacturing industry. Respondents GENERAL COMPANY PROFILE (1/3) GENERAL COMPANY PROFILE (2/3) STUDY 2017 are challenges… These answers build up a picture of a from North America, Europe and AsiaGENERAL COMPANY PROFILE (1/3)

URING PANY PROFILE (1/3)

WHO WAS PART OF THE STUDY? WHO PART OF THE STUDY? TYPES WAS OF PARTICIPANTS WHERE ARE THE PARTICIPANTS FROM? TYPES OF PARTICIPANTS

HOW IS REMANUFACTURING? WHERE AREIMPORTANT THE PARTICIPANTS FROM? WHERE ARE PARTICIPANTS FROM?BY REMANUFACTURING SHARE OFTHE COMPANY REVENUE GENERATED PARTICIPANT ORIGIN PARTICIPANT ORIGIN

PARTICIPANT ORIGIN

24% 24%

49% 49%

OEM/OES1) IAM2) Tier-n3) Others4)

7% 7%

n = 91

22 22 6 6 18 18 45 45 % 20

20% 20%

OEM/OES1) 1) OEM/OES 2) IAM IAM2) 3) Tier-n Tier-n3)4) Others 4) Others 2%

GER

er-n

Others

43%

14%

29%

IAM

Tier-n 2% Tier-n 43% FR

Others

<25%

20%

n = 91

IAM

Tier-n

TOTAL

25-50%

50-75%

>75%

17%

26%

21%

32%

29%

14%

16% 16%

52%

2%DK

20% 20%

7% GER 26% BE 7%

GER

OEM/OES

OEM/OES 20%

n = 91

share of revenue

3% SE

n = 91 OF REMANUFACTURING BUSINESS? RELEVANCE 20%COMPANY 5% 16 % ASKED STAFF WORKING OF IN REMANUFACTURING IN THE RELEVANCE REMANUFACTURING 7% BUSINESS? URING BUSINESS? STAFF WORKING IN REMANUFACTURING IN THE ASKED COMPANY

IN THE ASKED COMPANY % of staff

3% 3%

n = 91

5% 5%

2%FR

43%

IT 5% % of staff OEM/OES IAM Others TOTAL 52% 42% 43%5% 43% <25% 3%ES IT TOTAL OthersES 71% 14% 0% 14% 52% 42% 3% 43% 43% 43% <25% IT 4% 5% 14% 14% 7% 25% - 50% 43% ES 5% 7% 3% 4% 5% 14% 14% 7% 25% - 50% 17% 26% 14% 14% 22% 50% - 75% US 5% 7% 7%CN JP 3% For approximately 70% of the OEM/OES and Tier-n respondents 17% 26% 14% 14% 22% 50% - 75% US 7% 3% CN JP 26% 26% 29% 29% 28%5% >75% 22% n = 91 n = 91 remanufacturing means 50% or less of total sales. For more than 50% US CN JP 26% 26% 29% 29% 28% >75% n =3)91 n = aftermarket 91 of IAM surveyed remanufacturing 50% or more of total sales. 1) OEM = original equipment manufacturer/OES = original equipment service 2) IAM = independent Tier-n = suppliers 4) e.g. service, government,means university, consultancy 28%

REMANUFACTURING STUDY 2017 © Kemény Boehme & Company GmbH | ReMaTec

www.ReMaTec.com

F m

N th q

» Re

Nearly one-third of IAM’s generate more than 75% of their total sales by © Kemény 4 Boehme & Company GmbH | Re remanufacturing – more than a quarter of respondents at OEM/OES.

n = 91 n = 91 1) OEM = original equipment manufacturer/OES = original equipment service 2) IAM = independent aftermarket 3) Tier-n = suppliers 4) e.g. service, government, university, consultancy

REMANUFACTURING STUDY 2017

nal equipment service 2) IAM = independent aftermarket 3) Tier-n = suppliers 4) e.g. service, government, university, consultancy

F re to

November 2017

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REMANUFACTURING STUDY 2017 PRODUCTS & PROCESS (2/4) REMANUFACTURING STUDY 2018

REMANUFACTURING STUDY 2017 MARKETS (2/4)

WHAT ARE YOUR FOCUS PRODUCTS?1)

WHERE IS REMANUFACTURING LOCATED?1)

TODAY'S FOCUS

LOCATION OF REMANUFACTURING PLANTS/SITES

OEM/OES

IAM

Tier-n

Others

Central Europe

47%

42%

80%

30%

Eastern Europe

11%

20%

Region

North America

12%

21%

20%

Asia-Pacific

24%

21%

20%

Africa and Middle East

South America

10%

OEM/OES

20%

IAM

engine & engine parts

20%

engine & engine parts

transmission &

steering/suspen-

transmission 18% 15% North America and Eastern Europe also play a sion systems & parts components crucial role as location sites.

 To of su pa

In South America, Africa and the Middle East, on the Tier-n is hardly any reprocessingOthers other hand, there of parts. air conditioning >> The market proximity plays in comparison to electronic other parts cooling 29% such as &low aspects, labor costs, 27% a key role in the components choice of location for reprocessing.

29%

engine & engine parts

18%

 To en as fo

steering/suspension systems &

» The market proximity plays in comparison to other components aspects, such as low labor costs, a key role in the choice of location for remanufacturing. «

n = 91 1) multiple answers possible

A re as

Parts remanufacturing sites are located mainly in Central Europe and Asia.

» Th n = 91

1) multiple answers possible

REMANUFACTURING STUDY 2017

Parts remanufacturing sites are located mainly in Central Europe and Asia. North America and Eastern Europe also play a crucial role as location sites. In South America, Africa and the Middle East, on the other hand, there is hardly any reprocessing of parts. The market proximity plays in comparison to other aspects, such as low labour costs, a key role in the choice of location for reprocessing.

The remanufacturing industry is currently dominated by the automotive industry (cars, commercial vehicles, buses, agricultural machinery). According to the REMANUFACTURING STUDY 2017 respondents, however, the automotive industry will decline or stagnate in all areas. MARKETS (4/4)or aerospace are becoming increasingly New industries such as trains, marine important.

WHAT ARE THE FOCUS INDUSTRIES – ACROSS ALL TYPES?1) TRENDS TODAY AND IN THE FUTURE passenger cars & light commercial vehicles and heavy trucks 23%

agricultural and buses & coaches 10%

12%

11%

At OEM/OES today (and in the future) the focus is on the remanufacturing of engines and engine parts as well as transmission and transmission parts. Today IAM are also focusing on the remanufacturing of engines and engine parts as well as steering/ suspension systems – in the future turbo and turbo parts will become increasingly important. Today Tier-n are remanufacturing engines and engine parts, transmissions and transmission parts, as well as air conditioning systems – in the future, the focus will be on engines and engine parts.

“The automotive industry will decline or stagnate in all areas. New industries such as trains, marine or aerospace are becoming  The remanufacturing industry is currently dominated increasingly important” by the automotive industry (cars, commercial vehicles, buses, agricultural machinery).

16%

11%

trains, marine, aerospace, healthcare, industrial machines, energy 5% 9% 7% 9% 3% 7%

1) multiple answers possible

4% 7%

9% 5%

today

REMANUFACTURING STUDY 2017

in future

 According to the respondents, however, the automotive industry will decline or stagnate in all areas.  New industries such as trains, marine or aerospace are becoming increasingly important.

» The diversification of the remanufacturing industry is increasing – new industries are opening up. «

+ n = 91

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November 2017

ReMaTecNews

REMANUFACTURING STUDY 2017 PRODUCTS & PROCESS (4/4) REMANUFACTURING STUDY 2018 WHAT ARE YOUR PRIMARY COMPETENCIES?1) TRENDS TODAY AND IN THE FUTURE

22% core management

Tier-n -

7% 7%

cleaning as well as testing technology

22%

20%

44%

75%

adjustment  The primary competences of Tier-n are the design surcharges and development of components/parts and the development of tools for remanufacturing.

20%

Tier-n

 Today IAM have their primary competences in core management and remanufacturing technology.

25%

7% software technology

IAM

 The primary competence and 75% of OEM/OES 56% is today 25% in the future in the remanufacturing technology as deposits well as in the field of testing and diagnostics.

29% design and development

OEM/OES

Others

TOTAL 29%

design and development

software technology

TYPES OF INCENTIVES FOR CORE RETURN & GOOD CORE QUOTA

incentive

10%

17%

software technology

in future

IAM 29% 19%

remanufacturing technology

HOW DID YOU GET BACK OLD PARTS/CORES?

today

OEM/OES

REMANUFACTURING STUDY 2017 CORE MANAGEMENT (3/3)

 In the future the importance of software competence will increase significantly for OEM/OES, IAM and Tier-n.

69% 54% 38% good core » New technologies require the development of new quota skills, such as software technology. «

100%

Three incent versa adjust

At the and ad

The sh OES w

23%

» There

n = 91

n = 91 1) multiple answers possible

REMANUFACTURING STUDY 2017 © Kemény Boehme & Company GmbH | ReMaTec November 2017

REMANUFACTURING STUDY 2017

The primary competence of OEM/OES today and in the future is in remanufacturing technology as well as in the field of testing and diagnostics. Today IAM have their primary competences in core management and remanufacturing technology. The primary competences of Tier-n are the design and development of components/parts and the development of tools for remanufacturing. In the future the importance of software competence will increase significantly for OEM/OES, IAM and Tier-n.

Three-quarters of the OEM/OES use deposits as an incentive model for the return of cores – and vice versa for Tier-n, where three-quarters stake on adjustment surcharges. At the IAMs there is no clear trend between deposits and adjustment surcharges. The share of good cores is clearly highest at OEM/OES with almost 70%.

75% or more of the surveyed companies give a one or two year 2017 REMANUFACTURING STUDY warranty on remanufactured parts – a one year warranty is the rule. QUALITY More than two years warranty (1/1) are only given by OEM/OES. Some interviewees even offer no guarantee on the remanufactured parts.

1. Central and Eastern Europe are crucial markets for the companies surveyed, with North America and AsiaPacific regions also playing an important role. 2. Europe remains the key market for them when it comes to remanufactured parts. 3. Passenger cars, light commercial vehicles and heavy trucks are among the key target industries for those who responded to the survey, with marine, aerospace and healthcare some of the main industries which are seen as being increasingly important in future. 4. When it comes to focus products, they ranged widely – from air conditioning and braking to engines and 75% or more of the surveyed companies give a one transmissions. or two year warranty on remanufactured parts – a 5. Core logistics isisthe central, one year warranty rule. with about 70% of OEM/OES mainly procuring their cores from their own products More two years warranty are onlytogiven orthan warranty returns. In addition theirbyown products, OEM/OES. two-thirds of IAM respondents use the parts of other manufacturers and procure core/part Some interviewees even offers nofrom guarantee on thedealers. remanufactured Half of Tier-nparts. companies focus on warranty returns.

HOW DO YOU ENSURE QUALITY?

DIFFERENT OFFERS OF GUARANTEE TO CUSTOMERS

OEM/OES

IAM

Tier-n

Others

no guarantee

10%

18%

20%

50%

one year

45%

47%

60%

two years

30%

35%

20%

Survey in brief

Interested to learn more? more than two years

15%

50%

Full ReMaTec/KBC study is available via the MyReMaTec.com portal. Please direct survey questions to » There is usually a warrantyf.feuerbach@kbc-consultants.com on remanufactured parts – but there are many exceptions. +49 «(0)151 148 472 08

n = 91

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REMANUFACTURING STUDY 2017

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NOTES & COMMENT

Best of

VIEWPOINT

We need role models to boost laptop reman Mark Jolly

s part of the standard cycle of IT ‘estate’ replacement, the typical lifecycle of a personal computer is three to four years - when the cost of maintenance is believed to be greater than the cost of replacement. The average PC is a lavish and exotic piece of work: copper from Chile, gold from Mali, iron ore from Brazil, nickel from the Congo, bauxite from Peru. Many components depend on rare earth or platinum group metals highlighted as under threat in the EU's list of Critical Raw Materials. The tightening Waste Electrical and Electronic Equipment (WEEE) regulations have led to standard systems for recycling in the developed world. When large organisations update the old machines, some parts will be properly recycled. But much IT hardware is also sent to developing countries, where there is only haphazard waste management and materials are still, in the end, simply dumped. New work by Cranfield University research student Mauricio Alva Howes has provided evidence of the benefits of remanufacturing hardware. We have reached a stage where the improvements in functionality and performance are shrinking - our PCs do everything we need, as quickly as they need to. So the criteria for keeping PCs

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for longer is also shrinking they just need to work. In his study, Howes carried out a range of benchmarking tests comparing the performance of remanufactured HP, Lenovo and Dell laptops - machines which have been cleaned and refurbished - against that of new models from the same brands. The remanufactured laptops used in the research came from A2C Services, an established IT reuse and recycling business which has launched its Circular Computers services. Large employers with huge IT estates can opt for a circular economy approach: sending their used machines for refurbishing, and taking on a supply of remanufactured PCs. As part of the model, A2C makes a donation to environmental charities addressing the impacts of the IT manufacturing industry. Tests on the most typical uses of PCs in a work setting - office systems Mark Jolly, head of sustainable manufacturing, Cranfield University

like email, word processing and the use of spreadsheets, databases and video conferencing - showed overall that the remanufactured computers performed at between 93% and 97% of the level set by the new computer. There is a small fall-off in performance when it comes to graphic processing, and in some cases with battery life, but in terms of everyday use by employees, the differences are minimal. What’s needed are role models: it would set a powerful example for the IT sector if large employers adopted the reuse approach to IT.

the Blog Some misconceptions about remanufacturing After years focusing on selling new products, a general understanding of remanufacturing, the aftermarket, and what addressing it entails, is lacking among OEMs. Often, OEMs attempting to enter the aftermarket confront pushback from their dealers who believe that a partnership between their parent and an independent remanufacturer would erode their market share and revenues.

In reality, those dealers do not have the market they fear losing. Second and third tier vehicle owners, for example, do not go to dealerships for replacement or remanufactured parts. They go to convenient local independent distributors with whom in many cases they have had long and positive relationships. OEMs frequently are also concerned about diluting their brand by getting into the all-makes-andmodels programme required to support the broad array of remanufactured products that will attract customers. Again, in reality, the allmakes strategy already has moved from an exclusively independent aftermarket offering into the mainstream of OE remanufacturers, and quite successfully. • To read more, go to www.rematec.com/blogs

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DESIGN4REMAN

No sticking point for glue like a screw

What if a glue could act like a screw? Adam Hill talks to Lukas Hoex about the possibilities of a new adhesive which could change the way products are manufactured – and remanufactured

ompanies evolve with the times – and so do the processes they use as new materials or platforms are developed which radically alter how they go about their day-to-day business. DSM-Niaga, a joint venture established in 2014 in the Netherlands, has been working on something which might just change the way we think about how car interiors are put together – and therefore about how they might be remanufactured at the end of their first lifecycle. The company’s mission is to redesign everyday products ‘from the ground up’, making them fully recyclable in an easy and affordable way, while retaining quality. The clue is in the name: Niaga is the word ‘again’ spelt backwards. As a concept, Design4Reman is well entrenched in the remanufacturing industry – but making it a reality is much more tricky: it takes a lot of work

to design something so that it can be easily remanufactured. That problem is exacerbated depending on the materials used to make it in the first place. If a product is mass produced then it is likely that glue will have been used in it somewhere – which is something of a problem for the circular economy. Taking things apart when components have been glued together is fraught with difficulty.

Glue like a screw For this reason, manufacturers which only use screws to put their products together – for example, when using wood, concrete and some plastics – offer remanufacturers a head start when it comes to breaking products down for cleaning and repurposing. But screws don’t suit every product. This is why DSM-Niaga has put its energy into developing a glue which works like

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a screw. The product the venture has come up with performs a conventional adhesive function: it holds different layers of material together, just as you would expect from glue. But there the similarity with ‘ordinary’ glue ends: when this glue is exposed to a signal, it ‘unsticks’, thus allowing the various constituent parts to be separated from one another. Gluing together (‘bonding’) and taking apart (‘decoupling’) are a crucial part of this process. Remanufacturing – one of the cornerstones of the circular economy – could be revolutionised by a solvent which has the ability to be ‘unstuck’. “We’re in the middle of looking at different applications,” explains Lukas Hoex, marketing manager of DSMNiaga. “It started as a project to redesign carpets, today made from many different materials glued together with latex.” ReMaTecNews

➤

DESIGN4REMAN

➤ Carpets are one of the biggest items clogging up the landfill sites of the world right now, so finding a way to recycle them is an environmental imperative. “We wanted to make carpets more recyclable,” he goes on. “And for that we needed to drastically reduce material complexity, and design a reversible glue which would still offer a strong bonding of fibres. The carpet is now on the market and is selling.” As an interesting aside, the new design on sale in the US also meant easier installation, improved fire resistance and stain resistance, weight reduction - and a 90% energy reduction in production. These benefits might not be available in every case, but they are an exciting reminder of what can be achieved. “We are exploring other products now,” Hoex says. “For example, mattresses are a combination of different materials which are glued together for the eternity. We need to redesign the whole product.”

Redesign strategy The company’s redesign strategy can be summarised easily enough: • use the lowest possible range of materials • use only materials with scientific proof on their recyclability and material health

• all materials should be easily recovered in their pure form after use. This means furniture is another possibility, Hoex tells ReMaTecNews. “We are looking for partners in other industries, since we don’t make tables ourselves,” Hoex comments. “We just signed an R&D agreement with ECOR, a company that makes table tops from waste cellulosic material without additives.” The research collaboration between the companies will focus on developing fully recyclable alternatives for particleboard, MDF and other panel materials which are commonly used in industries such as construction, furniture, interior decoration and display. “We have started experimenting and found that the bond strength is very good and also the decoupling is still good,” Hoex says.

Automotive interiors So far, so good. While things are at an early stage, the work of DSM-Niaga must give remanufacturers pause for thought. Extremes of temperature can play havoc with the bonding and decoupling process, but that does not mean the use of the glue should be ruled out altogether in applications such as the automotive industry. Metals are a potential area of innovation, but Hoex

“Our selection of products to redesign is from a waste and health perspective… But we realise that electronics is a huge market and we see the potential”

DSM-Niaga: pushing the boundaries

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is understandably cautious about the challenges involved in such a radical move away from what DSM-Niaga has been working on. “The interiors of cars would be an easier applications challenge than the engine itself,” he says thoughtfully. “Due to the high temperatures under the hood, we see highest potential in the interior. It would be super cool for us to talk to the automotive industry to see what is possible.” Co-operation between sectors has the potential to unlock benefits, he believes: “They bring the know-how and performance indicators from their industries. We know about adhesives and design. It’s a small piece of the puzzle.” However, potential partners should be warned that they are going to have to be prepared to think differently. “We do ask for a willingness to redesign the whole manufacturing process,” Hoex goes on. “This isn’t about efficiency gains in an existing process – it’s about designing from scratch.” His enthusiasm for the project is infectious and he wants as wide a debate as possible about the possibilities – not least among the readers of ReMaTecNews. “It would be super cool to have a call to action,” Hoex says. “So that any company in another industry who reads it might respond. I see a lot of interest in recycling and waste.” If we are talking about goods that are owned by millions – if not billions – of people around the world and yet which are often discarded, then could reversible glue be used in electrical appliances, or phones and laptops? “Electronics is different from textiles,” Hoex points out. “In the end our selection of products to redesign is from a waste and health perspective, such as mattresses and carpets. But we realise that electronics is a huge market and we see the potential.” All in all, these are exciting times to be at the cutting edge of design technology. Hoex does not make extravagant claims for the reversible glue. But it might unlock possibilities – directly or indirectly – for companies to find new ways of making gains for themselves and for the environment. It is the sort of innovation, the sort of thinking, that will make remanufacturers sit up and seriously consider how their own processes might be improved and what the future might hold.

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MARKET INTELLIGENCE

What’s that coming down the road? No-one watches the remanufacturing market as closely as the people who depend on it. With that in mind, Denise Rondini asks half a dozen reman professionals what they see in store over the coming year – and what will be the key influences in North America

he early part of a year is an ideal time to take stock – and when you want to know what’s what, it makes sense to go to the experts. So what do some of the remanufacturing industry’s biggest names think will be happening during 2018? “We expect the market demand for reman and rebuilt transmissions to rise versus 2017,” says William Fouch, manager, aftermarket marketing at Eaton. He says this is because “the robust new truck production levels over the past decade include transmissions that are just entering into their first repair cycle”. Joe Kripli, president of APRA, agrees that new truck production over the past couple of years bodes well for remanufacturing. “We have had a relatively high number of vehicles - roughly 16.5 million - entering the market,” he says. However, the nature of some products has changed - complicating things for remanufacturers. “If you are a starter and alternator remanufacturer, a large number of vehicles are now entering the market with a stop/start function,” he says. What this means is that where

previously there was both a starter and an alternator now there is one combined unit. “Hence less product entering the market,” Kripli explains. On the plus side, he adds, “the unit is more costly”.

Rise of electrics Kripli also cites electrification as having a big influence on remanufacturing. “Every vehicle built is averaging 35 ECUs per vehicle,” he points out. William Fouch, Eaton “Take a conservative prediction of 16 million vehicles produced in 2018 times 35 ECUs per vehicle and you get 560 million ECUs entering the market in 2018.” Kripli says now is the time for remanufacturers “to look at the future and decide if you are part of the electrification movement or not. This is a big step for many and an investment. That is not to say you can’t live off of the product already in the field for another ten years, but how do you survive after Joe Kripli, APRA that?” While there has been growth in recent years of the number of trucks which have automated transmissions, Fouch says Eaton will continue to focus its efforts on the manual transmission side. ➤

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Image: Rawpixel/Shutterstock.com

“[Now is the time to] decide if you are part of the electrification movement or not. That is not to say you can’t live off of the product already in the field for another ten years, but how do you survive after that?”

ReMaTecNews

MARKET INTELLIGENCE

➤ However, it is now placing additional

John Blodgett, McKay

Henry Foxx, Bendix

John Chalifoux, MERA

emphasis into remanufacturing the electric components of automated transmissions such as ECUs and other items related specifically to automation. Looking beyond 2018, Fouch says: “We expect prolonged growth for the automated side of our business as the acceptance rate for automated transmissions continues to gain momentum.” John Chalifoux, president and COO of MERA, The Remanufacturing Association, says remanufacturers are optimistic about new opportunities heading into next year “and remain confident that the remanufacturing market will continue to be stable”. However, although MERA thinks the industry is poised for additional growth in 2018, that growth “may be more muted compared to recent years”. Many MERA members are adding to their production and inventory capacities because they see expanding opportunities in remanufactured technology and electronic components and as a result of greater OE awareness of the benefits of remanufactured goods for the OE service channels. Chalifoux adds: “As more buyers and fleets implement green initiatives, remanufacturing is poised to represent even greater value to the end-user, thus increasing the demand for remanufactured goods.”

Showing value In addition to the number of vehicles in the market making conditions right for remanufacturing, Henry Foxx, director of remanufactured products at Bendix, says that momentum has come “from showing the value reman brings to the marketplace”. In addition, he says there is an increased comfort level from the consumer in using reman products and that bodes well for reman growth in 2018. He adds that remanufacturers will have to continue to work to “clearly differentiate between reman, rebuilt and clones. There will be an increased focus on understanding the differences and showing the benefits of reman over clones”. Bendix will continue to launch remanufactured versions of its OE products including a focus on offering more electronic components to the marketplace: “We will also be looking at ways to increase the life of the core and will continue to evaluate additive manufacturing processes.” Other reman figures also believe that such technologies could begin to make an impact. Shawn Zwicker, director of global operations for Cummins new and ReCon parts, says: “In 2018 we are likely to see advances in additive technologies and those advances becoming more readily available, making the business case stronger for their implementation on the

2018: Six areas that could impact your operations MERA members have identified the following challenges:

3. Policy and regulations Uncertainty about US government policy regarding the North America Free Trade Agreement (NAFTA) along with international trade barriers from foreign countries means remanufacturers face 2. Competition from imported new some unknowns at this time. In addition, products As new aftermarket parts production shifts regulation of certain reman markets like DPFs, engines and other emissions-related to international locations, low cost, newlyparts are a concern. manufactured components can, at times, compete with remanufactured products. “To combat this, reman companies should 4. Availability of cores focus on how their products restore the OE The global availability of cores remains a chief concern among remanufacturers. part, with known fit and function, back to Chalifoux says: “New developments same-as-new or better condition,” MERA’s in reverse logistics and supply chain John Chalifoux says. management for core supply would help drive remanufacturing growth.” 1. Market shifts in product demand Opportunities will arise with electronics and electrically-assisted components, batteries and electrification.

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5. Lack of pricing power Reman companies do not have the flexibility they would like when it comes to pricing, Chalifoux says, because of factors like increased competition, projected softer growth and changing market dynamics. 6. Contract/warranty terms and conditions Remanufactured components, as replacement parts, are sometimes subject to over-zealous warranty terms. “Additional education and awareness of remanufacturing quality will be instrumental in developing confidence with buyers,” Chalifoux concludes.

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MARKET INTELLIGENCE

remanufacturing floor. More research will help manufacturers determine which additive technologies, other appropriate metallurgy or manufacturing processes are best for restoring work surfaces in a robust and cost-effective manner.” John Blodgett, vice president of sales and marketing for MacKay & Company, says his market research firm is not forecasting any significant changes in the use of reman products in 2018: “We have seen some drop-off in recent years of reman which appears to be driven by lower-cost new options which are more price competitive.” He says this first occurred with rotating electrical products: “Fleets decide for the smaller differential in price they are willing to use new and avoid the hassle of dirty cores and the associated paper work.”

North America perspective When it came to asking our panel of experts what factors will have an influence on remanufacturing in the US and Canada, the answers were intriguing.

Foxx says core policies will have the biggest impact on reman this year: “One of the challenges, and one of the things we have to deal with is making more customer-friendly processes to return core.” Even though the differences between remanufactured parts and clones have been documented, the fact that clones do not require cores is seen as a plus by consumers – but he insists: “There is a significant trade-off in the performance level between the two types of products.” Zwicker believes that “within North America, our customers have a good awareness and understanding of remanufactured products”. However, outside North America, customers have a different perception of what reman means. “Broader consumer acceptance of remanufacturing outside of North America would be great for the industry,” he suggests. A good economy is the thing Fouch believes will help drive more reman versus repaired units being sold: “For

freight haulers time is money, so the quicker the truck is able to get back on the road the quicker it’s making money for the owner.” Automation and additive manufacturing are two areas where Foxx sees opportunities for remanufacturers. He believes companies will have to determine how to “play into the increased focus on vehicle electrification and autonomous vehicles”. In future, the need to remanufacture these electronic components will be a significant opportunity for reman, he concludes. Blodgett says the future trend in reman in North America “is going to be for reman providers to sell the green attributes of reman versus new, tout the resources saved by using reman versus manufacturing a new product”. Historically the conversation/pitch of reman has been the cost savings, he adds. “As that advantage gets squeezed for some components, I think you will hear more about the green attributes.”

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ReMaTecNews

MALAYSIA

The wave that’s sweeping the world Remanufacturing is a natural fit for marine businesses worldwide. Nazery Khalid, honorary secretary of the Association of Marine Industries of Malaysia, explains why he believes there are compelling economic reasons for promoting reman aggressively

emanufacturing is a growing industry that is fast gaining recognition as an economically viable activity, along with its benefits in protecting the environment. Remanufactured items are virtually indistinguishable from similar new items yet offer ‘like new’ condition and performance under full warranty despite the lower prices. Amid increasing global awareness on the need to reduce carbon footprints and the austerity drive in challenging economic times, remanufacturing has assumed a higher level of importance. As ReMaTecNews readers know well, it involves the refurbishment or restoration of used, worn-out or obsolete parts, equipment, machinery and vehicles for transformation into a ‘new’ condition. These products carry warranty periods similar to new products. Items restored using a combination of reused, repaired and new parts are more often than not cheaper without compromising usability, safety and efficiency. It has to be stressed that remanufacturing is not the use of second-hand parts.

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Remanufactured items must match the same customer expectations for new products. They have to go through stringent testing to ensure that they meet the same performance specifications.

Warming up Leading the way in global remanufacturing activities are the US and Europe, while many other countries are increasingly warming up to its economic, environmental and social benefits and are actively developing their remanufacturing industries. Global Industry Analysts has projected

the global market for remanufactured automotive parts to reach $140 billion by 2020. Besides the huge economic impact, the industry also generates positive multiplier effects in terms of fostering investment, boosting infrastructure development and creating highly skilled, value-adding employment opportunities. The remanufacturing industry is based on the concept of delivering quality at lower cost and promoting the reduction of waste and conservation of resources through the use of components and materials recovered from used items.

Malaysia focus There are currently 39 companies in Malaysia involved in remanufacturing. They are domestic-oriented and have narrow sectoral focus, producing items using varying manufacturing processes with varying levels of warranty.

Malaysia’s marine industry provides a potentially attractive platform for remanufacturing

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MALAYSIA

Leading the remanufacturing activities in Malaysia are the electronics and IT sectors (with 19 companies involved), automotive parts and components sector (ten companies) and plant machineries and equipment sector (eight companies). The International Trade and Industry Ministry has also been tasked by the government to develop a policy for Malaysia’s remanufacturing industry which will act as a roadmap for its longterm development. There are several compelling reasons to promote remanufacturing aggressively in Malaysia. The economic justification is strong. Malaysia spends considerably on imports of vehicles, equipment, parts and components to power its economy, hence using remanufactured items can help reduce the country’s foreign exchange outflow and current account deficit. It can also lower the capital and operational expenditures of local industries and businesses dependent on imported items.

Nurturing skills From the point of view of human capital development, the remanufacturing industry could foster the nurturing of skilled workers who are crucial in undertaking the dismantling, cleaning, restoration, reworking, assembly and testing activities. The remanufacturing industry could also attract foreign direct investment and talents into the country, and foster research and development activities. Last but not least, remanufacturing activities also contribute towards sustainable development and reduction of greenhouse gases (GHG). The marine industry provides a potentially attractive platform for remanufacturing. It is a global industry which utilises a wide range of vehicles (such as ships, trucks and stackers), equipment (cranes, engines and pumps) and parts which have to meet stringent technical standards. The economic logic of remanufacturing becomes more pronounced amid the current challenging landscape of the marine industry, which has been hit hard by the global recession that started in 2008. Local shipping companies are struggling amid low demand for shipping services to support seaborne trade and offshore exploration and production activities.

Exposure to foreign exchange from purchasing imported parts and equipment adds to the woes of operating in a very challenging business environment. Using remanufactured products could help reduce the local marine industry players’ dependence on expensive imported products. It could also help promote the development of a new subsector which will benefit the economy.

Marine potential A vibrant remanufacturing sector within the marine industry would not do harm to Malaysia’s ambition to become a regional logistics hub and a globally competitive maritime nation which hosts world-class ports and local and foreign players in the marine industry. In this regard, remanufacturing in the marine industry has great potential to be developed in Malaysia. Being a nation dependent on the marine industry to facilitate its trade and power its economic growth, there will always be high demand for marine assets and services in this country. As it stands, there is only a handful of local companies involved in remanufacturing activities in the marine industry, namely for parts and components such as engines, valves and pumps. They operate on a small scale and focus on serving the small domestic market amid low demand for remanufactured products from local companies. They make do without any policy support, incentives or core pool of skilled or technical workers. But with the right enablers in place (see box What Malaysia’s marine reman industry needs), Malaysia could become a player in remanufacturing in the marine industry which would not only benefit the relevant practitioners but also the economy as a whole. The ingredients for success are already there. It is just a matter of having the right recipe in the form of a welldefined and visionary policy to harness them, and strong co-operation between the stakeholders in Malaysia’s marine industry to capitalise on the wave of remanufacturing that’s now sweeping the world.

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What Malaysia’s marine reman industry needs To promote remanufacturing in Malaysia’s marine industry, the following enablers must be in place, says Nazery Khalid: • A facilitating policy covering aspects such as well-defined legal and institutional framework, market access, licensing, certification and incentives • Provision of customised incentives to marine industry players in terms of financing, importation of core components, human capital development and OEM, among others • A set of standards for remanufactured products for the marine industry • A core group of skilled and technically adept workers able to undertake the range of activities in remanufacturing • Availability of specialised supporting services such as inspection, testing, R&D, design, accreditation, licensing, aftersales service, consultancy and others • Efforts to educate and increase awareness of industry players of the viability of using remanufactured products

Nazery Khalid

ReMaTecNews

CORE LOGISTICS

Two birds, one stone Getting hold of cores is a major issue - but Scotland is pioneering a programme which links a remanufacturer with the high street consumer and a logistics company. Tim Maughan investigates

emanufacturing is commonly associated with the handling and reforming of business and industrial products. But a pilot study in Scotland is pioneering a programme which links the high street consumer, a national distribution company, and a remanufacturer. Stavros Karamperidis, assistant professor of shipping and international logistics at Heriot Watt University in Edinburgh, speaks of “trade flows, and how you can move products from point A to point B”. In an interview with ReMaTecNews, he explains: “I realised that there is an opportunity for [transport] businesses, as they operate half empty, are coming back not fully loaded, so the utilisation ratio could be increased.”

Increased utilisation The unusual reman study is trying to identify how to increase the utilisation of companies from a logistics perspective, and has teamed up with transport company Menzies Distribution to find out. The products under scrutiny are small household electronic devices such as toasters, telephones, and laptops, whose disposal falls under Waste Electrical and Electronic Equipment (WEEE) regulations. Menzies vehicles drop a load such as magazines at a shop - nothing unusual about this part of the transport chain - but then the remarkable part of this remanufacturing process swings into action. Shop customers drop their unwanted devices in dedicated areas of the shops, as they buy everyday items. The defunct goods are then dropped at Menzies warehouses, before being trunked to remanufacturer CCL North in Irvine, Ayrshire. “We prefer small electrical appliances that usually end up in landfill, because small electrical appliances are not usually disposed of properly, they are usually just thrown in the bin, thrown in the garbage, end of story,” he says. The pilot scheme is currently funded by the Scottish Institute for Remanufacturing. Image: Hurst Photo/Shutterstock.com

Selling point

Committed recyclers could well be prepared to drive some distance to drop unwanted WEEE goods, but it is hard to picture such a process on a large, national scale. The beauty of the scheme Karamperidis is part of a four-strong www.ReMaTec.com

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CORE LOGISTICS

team working on the project - is the fact that the customers kill two birds with one stone: they buy their goods from the shop and drop their WEEE items at the same time. Convenience is a major selling point. “We are trying to do some analysis of what people are feeling about small electrical products after they reach the end of the lifecycle, and we found that they weren’t bothered because the collection centres were so far away from them. It is changing the perception of WEEE,” he says. Unwanted items like laptops and smartphones carry a lot of personal information, Karamperidis asserts, and that even after their disposal, security is important. “We have bags and boxes where they can be stored safely, because of the personal data that exists,” he adds. Customers are given a receipt when they drop an old device, and the item can be traced through the supply chain.

Satisfying needs Karamperidis emphasises that it is vital to understand the needs of the retailer, a crucial conduit on whom the project depends. “We have to satisfy the need of lots of shops,” he points out. “They are busy, selling other stuff, and of course having a dedicated space in a convenience store, just for remanufacturing products, they want to keep the stock as minimum as possible on their premises.” The extra business for the remanufacturer is an obvious benefit, but what’s in it for the retailer? The outcomes of the pilot project are yet to be fully realised, but Karamperidis stresses that there is already a noticeable increase in consumer ‘traffic’, with more customers visiting the shops - to both buy daily products, and to drop their toasters, phones, laptops, and so on, at the reman spots. Shopkeepers are given a small bursary, in exchange for their loan of the shop space. Funding is an issue (see box, How the Scottish pilot scheme works). “I also think that local councils could help us, because, at the end of the day, we are removing waste from their waste chains,” he points out. “We are asking the customers to make a selection about what’s going in the bin, and what’s not, and we’re saving the landfill from poisonous products.” But he acknowledges: “We are still in a preliminary phase, and we don’t know

the outcomes. Without knowing the outcomes of the pilot, we cannot really say who’s going to be the funder we are looking for.”

Information circulation Efficient supply chains are important, too, states Karamperidis, not least for the remanufacturer: “As long as you are able to provide cheap transportation, because remanufacturers operate on very narrow margins, they can break

“We should probably be a bit more openminded in the future, if we want to make remanufacturing work”

even. They have a special delivery, with X company, which is going to cost them let’s say £15 to collect an old mobile phone, and they have to spend a lot of money to remanufacture it, and send it to the market.” In the long term, warns Karemperidis, it will be vital that information is circulated among all parties, across the chain. He concludes: “The overall initiative is good for the environment, and it’s good to try to identify what’s developing. I think that we should probably be a bit more open-minded in the future, if we want to make remanufacturing work, because at the moment everybody is keeping their cards close, without sharing information. And if you cannot share information in the supply chain, you cannot reduce the costs.”

How the Scottish pilot scheme works Menzies Distribution was an obvious choice for the pilot scheme, chiefly due to its large scale of operation. The company was unfamiliar with remanufacturing but was keen to get involved. “We have a great match,” explains Stavros Karamperidis of Heriot Watt University. “They deliver anywhere in Scotland, any convenience store. Scotland is a very remote and isolated area, apart from the central belt. There are a lot of places in the Highlands that are remotely located.” To date, the pilot study has focused on Glasgow, and is still in its first phase. As further analyses and information are collated, and outcomes noted, Karamperidis says that the project is likely to cover fresh geographical areas. At the moment 13 convenience stores are participating in the project: launched in September last year,

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to keep an eye on what is its first phase was happening every day, and due to finish at the the overall operations. end of January 2018. Also, we need to keep an “We are collecting eye on the marketing of the data and making the campaign, because decisions on a weekly we have to motivate and basis, so we have some educate people. That is preliminary outcomes,” what we are doing as a he says. “Everyone is university. We have to so happy with what we liaise with the partners are collecting, and the every day, find out how quality of the products.” the deliveries are going, He expects, with all the how we can create information collated, to optimisation, and the run a second, two-week overall supply chain.” pilot project in May this year. There are also plans to expand the scheme into a “pan-Scottish base”. The implementation date of the main programme, though, is yet to be set in stone. “We have to think about [further] funding applications,” he concedes. “It’s research for us, so if we don’t get any external funding, it’s impossible. As a university, we have to have a researcher associated with a project, Stavros Karamperidis

ReMaTecNews

EMERGING ECONOMIES

Engine of growth A new report finds the circular economy could be a powerful driver for growth, job creation and environmental stewardship in emerging economies - if they can harness its potential. Andrew Stone takes a look

riving the growth of the circular economy, including remanufacturing activity at mass scale, may now be within the grasp of developing economies and could enable them to compete in a higher tech world, according to a new report from UK-based thinktank Chatham House. “It appears to offer a credible industrialisation pathway in an era of digital disruption and automation. It will help create value out of challenges, such as resource scarcity and pollution, that could otherwise undermine development gains,” says A Wider Circle? The Circular Economy in Developing Countries.

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climate goals. Remanufacturing is one of the promising elements of the circular economy for emerging economies, says the report. A sector which has hitherto been seen as the domain of wealthier established economies is now attracting rapidly growing interest within developing nations. Professionalising reman can play a positive role in heading off crises in both health and waste. For example, according to the report an estimated six million to 16 million people are exposed to dangerous levels of lead at primitive lead battery recycling plants. This could be remedied by promoting reman activity with higher standards and a more skilled workforce.

“Regional remanufacturing and reprocessing hubs could emerge all over the world if the added value from economies of scale exceeds the cost of transport”

Image: Tom Wang/Shutterstock.com

The report’s authors, Felix Preston and Johanna Lehne, suggest that reman could now be at a tipping point. This is thanks not just to new technology that is now ripe for adoption by emerging economies (see box: How digital innovation could drive emerging market remanufacturing) - but also because policy makers in emerging economies and their development partners have become alive to its possibilities in recent months and years. “The circular economy is rising up the development agenda,” says the report. “[It] could develop into a powerful umbrella term, helping to build political momentum around a set of ideas that can be applied in and tailored to multiple sectors or cities.” Regional remanufacturing and reprocessing hubs could emerge all over the world if the added value from economies of scale exceeds the cost of transport, it suggests. Such a scaled-up circular economy also has the potential to help industrial sectors within emerging economies mature and rise further up the value chain. And the potential benefits of a growing circular economy are more than economic for the world’s poorer nations. It will also afford more sustainable growth, more resilience and the ability to contribute to global

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EMERGING ECONOMIES

A head start Developing nations are already generally better disposed to developing on such lines, says the Chatham House report, since much economic activity will typically already revolve around repair and re-use in less wealthy ‘makedo-and-mend’ economies. There are also arguably great opportunities in remanufacturing in emerging economies since such activity is typically labourintensive and is often resistant to easy automation. “The remanufacturing and repair of products tend to require more labour than does manufacturing from raw materials,” the report notes. “Deconstruction, a necessary prerequisite to scaling up the reuse of building materials, is typically more labourintensive than demolition.” The report even suggests that by encouraging a circular economy to take root, developing nations could leapfrog the more resource-intensive phases of economic development that wealthier nations have historically had to undergo. With young, rapidly burgeoning populations and fast-growing middle classes, the imperative for emerging economies to embrace the growth of a circular economy should increase. Resource and waste pressures will rise hand-in-hand with growing consumption as incomes rise.

Barriers to growth It is not yet clear which path emerging economies will take, however. “Middleclass citizens in the developing world are already starting to consume more and reuse less, heading in the direction of wealthier people in developed countries,” says the report. But it adds: “It is possible that technical innovation and new business models could transform this pathway, decoupling economic growth from resource use. There is already evidence in emerging economies that future societies will need fewer resources than anticipated.” But the path to a scaled-up circular economy will not be smooth: there are multiple challenges to realising this potential and creating higher-value circular economy activity is not easy. For example, growing a domestic circular economy will often involve - or even depend on - international co-operation. “Unlocking the value of this trade will depend on lowering non-tariff barriers, in particular

addressing the lack of clarity on the rules that apply to different waste and secondary materials; these rules currently vary between countries,” says the report. Businesses themselves face challenges too. Larger emerging economy incumbents may find it hard to embrace new business models and new behaviours required of them, while the smaller firms that could lead such disruption often lack access to the data, logistics and expertise needed to make such ventures a success. The report also acknowledges that, although emerging economies may already have a more circular economy approach, this will not automatically mean they will adapt well to high-end reman processes. “More ‘circular’ behaviour is often born out of economic necessity, while highervalue opportunities for reuse and remanufacturing are relatively rare.”

Race against time Developing nations are also in a race against time to embrace new opportunities in reman - given the looming economic disruption coming from robotics, greater automation, and advanced manufacturing. The increasingly intensive and shared use

of resources driven by new platform businesses - for example, car- and ride-sharing services - may also reduce opportunities for remanufacturing in future. Much more work needs to be done to explore how development organisations and partner countries can help realise circular economy potential, particularly around establishing trade partnerships, regional hubs and pilot zones, says the report. But time is of the essence. There is “a limited window of opportunity” in which to shape the emerging circular economy agenda and at present much activity is taking place on a trial project basis rather than being part of a considered and overarching circular economy strategy. While developing countries may well turn out to have a competitive advantage in certain parts of the circular economy, particularly where abundant, low-cost labour is needed, such as in the reuse and recycling of textiles, this is unlikely to be the case across the remanufacturing sector. “Remanufacturing requires a skilled workforce…for the most part, it is too early to tell how this will play out in developing-country contexts,” the report warns.

How digital innovation could drive emerging market remanufacturing The digital revolution is one of the most significant reasons why developing economies might be able to embrace new circular economy opportunities - not least among them, remanufacturing. These technologies include the ability to track physical assets using the emerging generation of cheap, smart sensors as well as the use of predictive analytics. “Digital platforms for secondary products and new, more service-oriented business models could provide opportunities to people in

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all segments of society, especially in reverse logistics,” says the report. The capabilities these offer can help optimise any repair, upgrading, remanufacturing and recycling processes, it says. “‘Trace and return’ processes already allow firms to track their products while in use, optimising the timing of repairs and upgrades,” the authors point out. “Online marketplaces for waste products and materials are being piloted in several US cities. The socalled ‘internet of things’ will bring a step-change in

our ability to know where materials and products are in the economy. Far from leaving this trend to OECD countries, companies in developing and emerging economies – such as Alibaba, Tencent and Huawei in China, or Safaricom in Kenya – are well placed to capitalise on it. Many companies are introducing technologies that can trace products along supply chains with end-to-end certification – including using distributed-ledger technology to help curb corruption and ensure environmental integrity.”

ReMaTecNews

APRA to set up European legal entity In order to provide more benefits to its members, APRA Europe is to become an official legal entity: this will give the organisation more weight in the European Union when it comes to lobbying – and funding “Everything changes and nothing stands still” is what the Greek philosopher Heraclitus already knew in ancient times. And so does APRA constantly change, adapt and evolve. We are happy to inform you that the board of APRA has just recently decided to elevate the long-existing APRA European Division – well known as APRA Europe – to an official European legal entity named Automotive Parts Remanufacturers Association Europe. It will be a nonprofit organisation located in Belgium. In recent weeks, both boards from the US and Europe have worked hard to elaborate a feasible and easy-toimplement solution for strengthening the European activities. We have now reached a framework which does not affect operational membership but offers the chance to make more use out of an APRA membership. None of our members,

neither in Europe nor in the US, will lose any of their benefits - but will gain even more.

How members will benefit Having an individual legal entity with registered location in Europe will bring us more possibilities to extend our activities and to represent our members’ interests better. Here are the main drivers and motivation for taking this step: 1. Formal, legal presence within Europe allows for receiving funds from the European Union for APRA’s contribution to remanufacturing-related R&D projects. The outcomes of such projects can directly contribute to the sustainable success of our member companies. 2. Being a European legal entity allows us to carry out targeted lobbying within law-giving institutions and

among other politicians. This will result in a more precise, more reliable and more predictable business environment for our members and the whole remanufacturing industry. 3. Our European members may find more identity with the association while also having a direct contact person within Europe (we have already reported on the new membership services of Michael Haumann). 4. Decision processes within the cornerstones of the legal entity will be accelerated, leading to a more efficient organisation. “We are happy to have a consensus on this step,” says Joe Kripli, president of APRA. “Daniel Koehler has our full trust and support to set up our European legal entity and bring it to profitable growth to the benefit of all our members.” More information will be forthcoming.

APRA European symposium: save the date!

Michael Haumann

Image: Resul Muslu/Shutterstock.com

Building on the success of previous editions, APRA will host its biannual symposium in Budapest, Hungary. High-quality speakers, manifold networking opportunities and a benchmark remanufacturing plant visit to Remy’s Miskolc site are just a few features which you can expect. An extraordinary venue complements the symposium and makes it a ‘must’ to join. Save the date and block your calendar: from 19-20 April 2018. See www.apra.org/2018Symposium for more details. • For sponsorship opportunities, please contact Michael Haumann (europe@apra.org)

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DIARY

February 2018 07.Feb - 10.Feb

05.Apr - 08.Apr

22.Aug - 24.Aug

AUTOMESSEN

MOTOR SHOW

AGRITECHNICA ASIA

Lillestrom, Norway

Poznan, Poland

The first spin-off event from the world’s largest trade fair for agricultural machinery and equipment. Bangkok, Thailand

16.Feb - 25.Feb

CANADIAN INTERNATIONAL AUTO SHOW Toronto, Canada 23.Feb - 25.Feb

CLASSICAUTO MADRID

10.Apr - 12.Apr

TYREXPO AFRICA Johannesburg, South Africa 18.Apr - 20.Apr

APRA EUROPE SYMPOSIUM Budapest, Hungary

Madrid, Spain

March 2018 08.Mar - 18.Mar

GENEVA INTERNATIONAL MOTOR SHOW

29.Aug - 09.Sep

MOSCOW INTERNATIONAL AUTOMOBILE SALON

25.Apr - 27.Apr

AUTOMECHANIKA HO CHI MINH CITY Ho Chi Minh City, Vietnam

May 2018 1.May - 3.May

CLEPA AFTERMARKET CONFERENCE European Association of Automotive Suppliers’ annual conference features speakers from industry, politics, trade associations and service providers. Brussels, Belgium

September 2018 11.Sep - 15.Sep

AUTOMECHANIKA Frankfurt, Germany

BILSPORT PERFORMANCE & CUSTOM MOTOR SHOW Joenkoeping, Sweden 30.Mar - 08.Apr

NEW YORK INTERNATIONAL AUTO SHOW New York, USA

April 2018 03.Apr - 05.Apr

KIAE – KAZAKHSTAN INTERNATIONAL AUTOMOTIVE EXPO Astana, Kazakhstan 5.Apr - 8.Apr

AUTOMECHANIKA ISTANBUL

September 2018 11.Sep - 15.Sep

AUTOMECHANIKA FRANKFURT Frankfurt, Germany

June 2019

IAA COMMERCIAL VEHICLES

Dubai, UAE

Hanover, Germany

08.May - 10.May

ROTRA

Kielce, Poland 23.May - 26.May

SIA-AUTOTECHSERVICE June 2018 20.Jun - 23.Jun

AUTOMOTIVE MANUFACTURING Bangkok, Thailand

August 2018 08.Aug - 10.Aug

NACE AUTOMECHANIKA Atlanta, USA 08.Aug - 10.Aug

INTERNATIONAL BIG R SHOW The Big R Show is switching from Las Vegas and will co-locate with NACE Automechanika for the first time. Atlanta, USA

23.Jun - 25.Jun

REMATEC 2019 The largest remanufacturing event in the world, bringing the whole supply chain of reman together. Amsterdam, Netherlands

19.Sep - 27.Sep

AUTOMECHANIKA DUBAI

Kiev, Ukraine 30.Mar - 02.Apr

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Moscow, Russia

Geneva, Switzerland 21.Mar - 22.Mar

Meet the team! Contact us to

October 2018 23.Oct - 25.Oct

PARTS2CLEAN International trade fair for industrial parts and surface cleaning, covering a range of products and sectors. Stuttgart, Germany 30.Oct - 01.Nov

AUTOMOTIVE AFTERMARKET PRODUCTS EXPO (AAPEX) Las Vegas, USA

November 2018 06.Nov - 18.Nov

SAO PAULO INTERNATIONAL MOTOR SHOW São Paulo, Brazil

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13.Nov - 15.Nov

METSTRADE

The world’s largest exhibition of equipment, materials and systems for the international marine leisure industry. Amsterdam, Netherlands 23.Nov - 26.Nov

ISTANBUL COMVEX The sixth expo for commercial vehicles, buses and components. Istanbul, Turkey 30.Nov - 09. Dec

LOS ANGELES AUTO SHOW Los Angeles, USA

7.Nov - 10.Nov

AUTOMECHANIKA BUENOS AIRES Buenos Aires, Argentina

30.Nov - 09.Dec

BOLOGNA MOTOR SHOW Bologna, Italy

Istanbul, Turkey

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First impressions count FIRM was an early contributor to, and supporter of, the CER’s vision for raising the profile of reman. Volker Schittenhelm reflects on the early stages of what is already a successful partnership At the beginning of 2015, the EU Commission announced that UK-based research and consulting company, Oakdene Hollins, would be funded in order to set up a reman-related project consisting of a reman study with key figures, a European reman network and a European Remanufacturing Council (CER). The first reaction of established trade associations like FIRM was to keep an eye on the venture. Risk or opportunity? Competition or new partner? Always open for networking within the global reman industry - and with the only target making our environmentalimpacting industry better known to the public and to politicians - we decided to embrace the chance, to see the partnership and thus to approach Oakdene Hollins. At the 2015 edition of ReMaTec, members of the FIRM board offered our expertise, our competence, our position in the industry and our network in order to support the CER’s funded responsibilities. And it was a good and prospective strategic decision!

Meanwhile, FIRM is a member of the CER, representing the automotive segment of reman alongside IT, aerospace, toner & cartridges, medical & healthcare and logistics. Last November, IBM’s European headquarters in Paris hosted the CER’s first members’ meeting which covered updates about activities, organisational decisions, the working programme for 2018 and the steering committee.

Working programme (highlights) • Find a suitable MEP within the EU Commission to help CER navigate EU institutions and legislation • Produce a two-page position paper showing the various segments of reman, explaining the principle of a product’s second life cycle, distinguishing between material and product recycling and presenting key figures with regard to the industry’s turnover, employment and CO2 reduction • Look at tax-related issues like tax equalisation within Europe or tax reduction for renewed products

To sum up, members’ priorities were centred on Brussels and on policy issues - but it was also stressed that the CER does not want to be in competition with existing product-based associations. It should help other associations, encourage collaborations and operate on a global network level.

Steering committee In order to strengthen the decisionmaking process and to channel and classify the members’ wishes and specific needs, a steering committee was recommended. The following member representatives volunteered: Maxime Furkel – Lexmark (cartidges) Geoff Willis – Slater Electricals (electrical) Vincent van Dijk – ETIRA (toner & cartridges) Andrew Lahy – Panalpina (logistics) Volker Schittenhelm – FIRM (automotive) The steering committee has decisionmaking rights and will have at least four meetings per year, with the first one in early 2018.

Conclusion Medical & Healthcare

Automotive

Illustration source: ildogesto/Shutterstock.com

Logistics

CER represented segments

Power & Distribution

Toner & Inkjet

Aircraft

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Although quite new in the business, CER will play an important role within the global reman network and in the global discussion of the circular economy to which reman - in the sense of the second life cycle - belongs without question. It is very important for established and experienced associations and organsations like FIRM to be part of that council in order to steer and support the organisers in their efforts. On the condition that we kept our independence, FIRM’s first impression of Oakdene Hollins still counts and we made the right decision to participate and steer! So we say to the CER: welcome to our global network, with the main and biggest reman industry stakeholder platform of ReMaTec. www.rematec.com

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