ReMaTec Research Global Remanufacturing Benchmark by RAI Amsterdam

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 deep insight into all aspects of today’s REMANUFACTURING STUDY 2017 STUDY 2017 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 OF WAS PART OF THE STUDY? TYPES PARTICIPANTS WHERE ARE THE PARTICIPANTS FROM? TYPES OF PARTICIPANTS

PARTICIPANT ORIGIN

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

24% 24%

49% 49% 7% 7%

20% 20%

n = 91

22 22 6 6 18 18 45 45 % 20

OEM/OES1) 1) OEM/OES IAM2) 2) IAM Tier-n3) 3) Tier-n Others4) 4) Others 2%

GER

IN THE ASKED COMPANY

3% 3%

share of revenue

3% SE

20%

OEM/OES 20%

n = 91

PARTICIPANT ORIGIN

n = 91

n = 91 RELEVANCE OF REMANUFACTURING BUSINESS? 20% 5% 16 % RELEVANCE REMANUFACTURING BUSINESS? STAFF WORKING OF IN REMANUFACTURING IN THE7ASKED COMPANY % URING BUSINESS? STAFF WORKING IN REMANUFACTURING IN THE ASKED COMPANY

er-n

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

IAM

16% 16% BE

<25%

25-50%

50-75%

>75%

2% 52% 2%DK

17%

26%

21%

32%

20% 20%

7% GER 26% 7% GER

5% 5% PL PL

21%

Tier-n

2% 2% FR

43% 5% 29% 14% 14% % of staff OEM/OES IAM Tier-n Others TOTAL 2% FR 3% 5% IT % of staff OEM/OES IAM Tier-n Others TOTAL 3% ES 52% 42% 43% FR 43%5% 43% IT Others <25% TOTAL 52% 42% 3% 43% 43% 43% <25% Others ES 71% 14% 0% 14% IT 4% 5% 14% 14% 7% 25% 50% 43% 43% ES 5 % 4% 5% 14% 14% 7% 25% - 50% 7% 3% 17% 26% 14% 14% 22% 75% 14% 50% -7% US5% 7%CN JP3% For approximately 70% of the OEM/OES and Tier-n respondents 17% 26% 14% 14% 22%5% 50% - 75% US 7 % CN JP 3 % 26% 26% 29% 29% 28% 14% >75%22% remanufacturing means 50% or less of total sales. For more than 50% n = 91 n = 91 US CN JP 26% 26% 29% 29% 28% >75% n = 91of IAM surveyed remanufacturing means 50% or more of total sales. 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 29% 28%

REMANUFACTURING STUDY 2017 © Kemény Boehme & Company GmbH | ReMaTec

www.ReMaTec.com

F m

N th q

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Nearly one-third of IAM’s generate more than 75% of their total sales by © Kemény Boehme & Company GmbH | Re respondents at4OEM/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

F re to

| ReMaTec November 2017of REMANUFACTURING STUDY 2017 remanufacturing – more than a quarter © Kemény Boehme & Company GmbH | ReMaTec November 2017 November 2017 4

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17 2/3)

REMANUFACTURING STUDY 2017 MARKETS (2/4) WHERE IS REMANUFACTURING LOCATED?1)

WHAT ARE YOUR FOCUS PRODUCTS?1)

LOCATION OF REMANUFACTURING PLANTS/SITES

TODAY'S FOCUS

OEM/OES

IAM

Tier-n

Others

Central Europe

47%

42%

80%

30%

Eastern Europe

11%

20%

Region

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

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

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

steering/suspen-

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

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 choice of locationcomponents for reprocessing.

29%

engine & engine

steering/suspen-

sion systems & parts 18% to other » The market proximity plays in comparison components aspects, such as low labor costs, a key role in the choice of location for remanufacturing. «

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 & agricultural and light commercial vehicles buses coaches  For approximately 70% ofand the OEM/OES and &Tier-n heavy trucks respondents remanufacturing means 50% or less of total sales. 10% 23% -

11% 12% of IAM surveyed remanufacturing  For more than 50% means 50% or more of total sales. 16%

7% is a central pillar of the surveyed 7% » Remanufacturing + + 9% companies. « 9%

ompany GmbH | ReMaTec 1) multiple answers possible

November today 2017 in future

REMANUFACTURING STUDY 2017

“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  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. «

+ 5

8 Boehme & Company GmbH | Re © Kemény

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.

vehicles, buses, agricultural machinery).

11%

=  Nearly one-third of IAM's generate more than 75% 11% 11% of their total sales by remanufacturing – more than a quarter of respondents at OEM / OES. trains, marine, aerospace, healthcare, industrial machines, energy

» Th n = 91

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.

 To en as fo

1) multiple answers possible

REMANUFACTURING STUDY 2017

 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.

n = 91 1) multiple answers possible

A re as

n = 91

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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. «

n = 91

100%

 Three incent versa adjust

 At the and a

 The s OES w

23%

» There

n = 91

1) multiple answers possible

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. 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 (1/1) More than two years warranty are only given by OEM/OES. Some interviewees even offer no guarantee on the remanufactured parts.

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%

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%.

Survey in brief 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. is the central, oneCore year logistics warranty is 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 theirby own products, OEM/OES. two-thirds of IAM respondents use the parts of other manufacturers and procure core/part dealers.  Some interviewees even offers nofrom guarantee on the remanufactured Half of Tier-nparts. companies focus on warranty returns.

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

www.ReMaTec.com

REMANUFACTURING STUDY 2017

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