According to a new report from the All-Party Parliamentary Sustainable Resource Group (APSRG), the UK’s remanufacturing market is valued at £2.4 billion, yet has the potential to increase to £5.6 billion. An opportunity exists for the UK to make more of its remanufacturing potential, increase skills and create jobs. An example of success is the United States, as it is the largest remanufacturer in the world. Between 2009 and 2011 the value of United States remanufactured production grew by 15% to at least $43 billion (£26 billion). This supported 180,000 full-time U.S. jobs in over 70,000 remanufacturing firms.
Complimenting the economic and employment opportunities is the environmental benefits related to remanufacturing. The remanufacturing of products results in reduced greenhouse gas emissions, material use and water consumption, when compared to the manufacture of new products. Remanufacturing typically uses under 85% less energy than manufacturing. Studies conducted at the Fraunhofer Institute in Stuttgart, Germany, have estimated that the energy savings by remanufacturing worldwide equals the electricity generated by five nuclear power plants. This equates to over 10 million barrels of crude oil or a fleet of 233 oil tankers. Estimates for resource impact suggest remanufacturing also saves in excess of 800,000 tonnes of carbon dioxide emissions each year; approximately equivalent to 1% of emissions from cars. The Fraunhofer Institute estimated that raw materials saved by remanufacturing worldwide each year might fill 155,000 railroad cars, forming a train 1,100 miles long.
Susanne Baker, senior climate and environment policy adviser at the manufacturers’ organisation EEF, says that: “remanufacturing may give British manufacturers a competitive edge if they aim to be the successful model. It’s about getting used products back to the factory in a cost-effective way. It presents an opportunity to reduce operational costs significantly.”
Remanufacturing presents a strong business opportunity and anecdotal reports have suggested it may be twice as profitable as manufacturing. It has been estimated that through remanufacturing the competitive advantage for businesses is vast. This could either be through using a sales-based business model with slightly reduced prices or using a leasing model, where customers effectively pay the same price for a new product. Lavery and Pennell conservatively estimate a net reduction in input costs of approximately 34%. With reduced input costs and increased labour spend, there may still be up to a 50% increase in gross profit. Also, the report believes that incentives are needed to encourage smaller businesses and better education is needed through the creation of a new Centre of Excellence for UK Remanufacturing. Creating both of these may provide the UK with the opportunity to make the most out of its remanufacturing potential and become a world leader in this field.
Earlier this year, the APSRG launched its second parliamentary inquiry into remanufacturing, seeking to identify what business models lend themselves best to the activity. In its first inquiry, it called for the establishment of a UK remanufacturing centre of excellence, to raise the sector’s profile and encourage greater knowledge transferred between key players. If developed, it aims to be made up of a variety of partners with specific and complimentary skills in remanufacturing. Backing the proposal is a consortium of stakeholders; including the High Speed Sustainable Manufacturing Institute, the Centre for Remanufacturing & Reuse (CRR), the Carbon Trust and the Knowledge Transfer Network.
Plans are now afoot to assess the size of the remanufacturing market across Europe, a move that should benefit the UK. Consultancy group Oakdene Hollins is leading the two-year project, which starts in early 2015. The aim is to establish a European council for remanufacturers as part of the work: “We see it as a need for a body at a national or European level that represents the views of remanufacturers in the policy sphere. ” Oakdene Hollins state.
Which businesses might benefit most from investing in remanufacturing?