Edition 63
Why Remanufacturing is Essential to the UK Economy
by Caroline Spelman, Member of the UK Parliament, All-Party Parliamentary Sustainable Resource Group

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The renaissance of British manufacturing has created an outstanding opportunity for remanufacturing, but the full potential for UK remanufacturing has not yet been realized.

To explore this potential, I have chaired an All-Party Parliamentary Sustainable Resource Group report focusing on the potential for remanufacturing. The key areas explored in this report are the economic and environmental benefits of remanufacturing, the challenges that the UK still faces regarding the uptake of remanufacturing, and the ways in which these challenges can be overcome.



So, why should we be focusing on remanufacturing? The answer is very much in the numbers: we found that the UK’s remanufacturing sector is valued at £2.4bn, with the potential to increase to £5.6bn. This will simultaneously create thousands of skilled jobs in the sector.

Remanufacturing is a global industry in which the UK is currently lagging behind. The United States is the largest remanufacturer in the world, with a remanufacturing sector valued at $43bn (£26bn), employing 180,000 people. Looking at these figures, the opportunity is clearly here for the UK to make more of its remanufacturing sector and become a global leader in this field.

So, how can we harness this opportunity? Key opportunities to incentivise remanufacturing must be taken. Manufacturing was outlined in the 2014 Budget, where Chancellor George Osborne made reference to America, which will see the creation of five million manufacturing jobs by the end of this decade. He noted that Britain’s manufacturing sector is growing and jobs are being created but raised concerns that Britain has 20 years of catching up to do in this sector. To help encourage this, promises were made to back businesses which invest and export, and to support manufacturers in all regions of our country. America is also the largest remanufacturer in the world with remanufacturing sector valued at $43 billion (£26 billion). The UK can close this gap. To do this, remanufacturing needs the same support as outlined in the Budget for manufacturing.

Alongside the economic opportunity is a strong environmental one. Evidence outlined in the report states that remanufacturing uses 85% less energy than manufacturing, equating to a saving of over 10 million barrels of crude oil. With climate change increasingly on the political agenda, remanufacturing has the potential to save 800,000 tonnes of carbon dioxide each year, roughly equivalent to the annual emissions from cars.



Many market and regulatory impediments need to be overcome in order for remanufacturing to be taken up successfully. Firstly, from the outset, products need to be designed with remanufacturing in mind. This is currently more difficult than it seems, due to the prescriptive nature of design briefs often fed down from management within companies, which do not always allow for innovative design.

Regulatory barriers also hinder the uptake of remanufacturing significantly. Of particular importance is the regulation surrounding the legal definition of waste. As it stands, the ‘Current Guidance on the Legal Definition of Waste’ does not mention remanufactured products and as such they are not exempt from those products classified as waste. This is especially unhelpful to the uptake of remanufacturing, as there is no globally accepted legal definition of remanufacturing. Market dynamics, consumer concepts and international trade are all affected by this. If consumers are not aware of what a remanufactured product is, and that it is at least as good as a new product and comes with the same guarantee as that of a new product, it is easy for them not to trust it. This same lack of trust exists on an international scale when it comes to trade. Many countries, such as Brazil, China and Russia, do not distinguish remanufactured products from used products. As such, no imports of remanufactured products are accepted. This is why one of the report’s key recommendations is that we need a globally accepted definition of remanufacturing to overcome these crucial barriers.

Remanufacturing is an area which cuts across several Government departments, and needs to be addressed as such. We need a cross-departmental Committee to be established, led by the Department for Business, Innovation and Skills, but supported by the Department for Environment, Food and Rural Affairs, to ensure cross-party collaboration and policy alignment.



There is an opportunity to address the barriers through the creation of one or more Centres of Excellence for those sectors where remanufacturing can have the largest impact. Remanufacturing is not a one-size fits all approach and is sometimes not the best approach either environmentally or economically. However, for those product types that fit the criteria for remanufacturing, education is key to its successful uptake; a Centre of Excellence, linked to a University, will provide a unique opportunity to share best practice.

Despite the barriers, there are some businesses which have recognised the potential for remanufacturing and incorporated it into their business models. For example, Caterpillar, as a leading manufacturer of construction, mining and military equipment, realised the competitive advantage that remanufacturing can achieve over its competitors. It is not just large corporations that are realising the value of remanufacturing: some SMEs, such as the office furniture company Orangebox, also remanufacture their products. These companies demonstrate that remanufacturing can make business sense.

We need to recognise the value that remanufacturing can have to the UK’s economy and environment. It can provide jobs, increase resource efficiency and result in reduced waste, as well as driving the development of a circular economy. The barriers to this opportunity need to be dismantled, however, I am confident that, if we tackle these barriers, remanufacturing can bring significant gains going forward.


RLM
Rt Hon Caroline Spelman is a Member of the UK Parliament and a former Secretary of State for the Environment in the UK Government. For more information on the APSRG’s remanufacturing project, please visit the website at:www.policyconnect.org.uk/apsrg

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