Re-manufacturing and re-conditioning: promising avenues to a circular economy and resilient growth

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29 January 2018

Circular economy has become the mantra of the recent EU political debates and it has definitely put many people in a deep state of reflection. The concept is not new and it has typically been associated with recycling, the ideas of reuse or repair being considered as obstacles to innovation. It seems, however, that while the debate was getting hot around definitions, new economic models, innovation, environmental or social issues, the re-manufacturing and re-conditioning were actually well established practices in certain industrial sectors. Optimizing the product value and extending its useful life are nowadays seen as important avenues towards a truly circular economy.

A report of the U.S. International Trade Commission from October 2012 estimates that the value of US remanufacturing production reached $43 billion by 2011, supporting approximately 180,000 full-time jobs. Statistics from Europe are not readily available, but it is clear that we are not there yet, whereas Asian countries like Korea and China are making big strides to capture the economic value from re-manufacturing.

Of course, re-manufacturing and re-conditioning are not equally suitable for all industrial sectors. If certain products made of materials like steel or other alloys (and generally metals) can go through numerous re-manufacturing cycles, for products made of synthetic materials like rubber, glass or plastics the number of cycles is limited due to the alteration of materials properties, hence loss of quality. It is therefore worth mentioning that re-manufacturing/re-conditioning cannot be seen as a perpetual process and there is still need for primary natural resources to enter the manufacturing processes.

The facts demonstrate that the market mechanisms decide whether or not an economic model is viable. Thus, re-manufacturing or re-conditioning for a wide range of industries (electronics, automotive, tyre, industrial equipment, etc.) is profitable, as conservation of materials can present important advantages, especially for scarce and expensive natural resources. Other tangible benefits are reduced energy consumption and reduced waste disposal costs for the same product quality, just to name a few. The size and complexity of the value chain plays a key role: reverse logistics and collection of specific waste stream (used products) only works in the “business-to-business” cases, as the main challenge is re-collecting the used product and bringing it back to the manufacturing facility.

Optimising the product value by extending its useful life is one of the challenges that the European Circular Economy framework wants to address, along with the social and environmental dimension. Growth of the re-manufacturing industry seems to stumble on the general lack of awareness, but also on some legal uncertainties, especially related to the ambivalence “waste – product” under the Waste Framework Directive. Not to mention the complication layer added by REACH and the need to substitute certain hazardous chemicals.

The EU policy would truly add value if it could facilitate the uptake of re-manufactured materials through various legal instruments (e.g. green public procurement, preferential taxation, etc.) based on their environmental performance.

There will be a day when the environmental footprint of a product will be seen as a quality, next to its use and performance, and will also have a monetary value.

By Adriana Jalba, Director of Chemicals Practice at Cambre Associates

52 Rue Defacqz
1050 Brussels,
Belgium

T +32 (0)2 645 79 90
information@cambre-associates.com

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