Remanufacturing in Wales – Landscape Review

Contents

Remanufacturing Landscape in Wales

Contents

• Project background

• Methodology

• Findings – sector summary

• Aerospace/Automotive findings

• Electronics/Energy findings

• Channels to market

• Conclusion

• Recommendations

• The Welsh Government has ‘sustainable development’ as a core principle, supporting the aim to make Wales a Circular Economy.

• The Ellen MacArthur Foundation’s Circular Economy model is shown below. Remanufacturing is highlighted as an inner loop.

Project background

• As a Circular Economy, Wales could save up to £2 billion per year in material costs, create more jobs and depend less on raw materials.

• Remanufacturing is key to achieving a Circular Economy, working to preserve the value of materials and components.

• Remanufacturing is defined in BS 8887-2:2009 as: “the process of returning a used product to its original performance with an equivalent, or better, warranty than that of a newly manufactured product”.

• BS 8887-2:2009 has nine process steps:

Project background

1. Collection of

documentation

2. Collection of Core

3. Inspection (Initial and/or

Detailed)

4. Disassembly 5. Component

remediation 6.

Replacement

7. Reassembly 8. Testing 9. Warranty

Categorise Aerospace, Automotive, Electronics and Energy sectors

Categorise sub-sectors

Compile manufacturing organisations in specified sectors/sub-sectors

Contact companies, hold telephone interviews

Evaluate and analyse information; report findings, conclusions and recommendations

Methodology - sectors

Sector Subsector

Aerospace

Electrical and electronic engineering

Mechanical engineering

Both

Automotive

Electrical and electronic engineering

Mechanical engineering

Both

Electronics

Consumer electronics (WEEE Cat 1 - 4)

Electrical and electronic equipment (WEEE Cat 3-6, 8& 9)

Opto-electronics (4 & 5)

Medical equipment (8)

High performance computing (3 & 9)

Telecommunications (3)

Energy

Electrical and electronic engineering

Mechanical engineering

Both

Methodology – training provision

Identify Further Education (FE) training providers in Wales

Categorise training relevant to remanufacturing in the defined sub-sectors

Analyse current course content that could be applicable to remanufacturing

Report an overview of FE training provision that could be used to inform remanufacturing

Thirteen colleges identified; one excluded due to no training in the

defined sub-sectors

Include manufacturing, engineering (mechanical,

electronic, aircraft), automotive/vehicle maintenance,

electricals and relevant apprenticeships

Sector Sector

turnover (£M)

Companies operating in

Wales Contacted Response

rate % Confirmed reman’ers Intensity

Reman turnover

(£M)

Aerospace 5,000 160 44 65% 14 3% 150

Automotive 3,461 150 60 70% 9 1% 45

Electronics 3,010 238 46 65% 4 0.2% 10

Energy 1,645 335 30 60% 2 0.03% <1

Total 13,116 883 180 64% 29 1.5% 205

Findings – sector summary

• There is currently relatively little remanufacturing being carried out in Wales:

• Aerospace does the most remanufacturing; the energy sector does the least.

• Manufacturing organisations do not consider remanufacturing a high priority area due to a range of barriers.

*Note: Due to rounding some numbers may not add up to the total

Aerospace Automotive

Tightly controlled maintenance, repair and overhaul (MRO) activities

undertaken which is classed as remanufacturing Sector dominated by OEMs,

due to highly controlled certification process

Aerospace in Wales employs 20,000 people and accounts

for 25% of the UK’s total MRO activities

MRO in Wales contributes approximately 7% (£150M)

towards the UK’s total remanufacturing in this sector

Range of Further Education training available covering aerospace engineering and

aircraft maintenance Highly skilled

workforce, able to carry out MRO work

Automotive remanufacturing is well established, with many

components suitable e.g. gear boxes, engines, starter motors

Investment in this sector in Wales with the opening of a new Aston Martin plant (2020), along

with other key OEMs already established (Ford and Toyota)

Remanufacturing contributes 1.2% (£45M) towards the total

sector turnover in Wales

Variety of training programmes exist around vehicle maintenance, repair and engineering, covering different

techniques and process which can be applied to remanufacturing

Education in this sector is key for remanufacturing to succeed and

ensure that staff are able to remanufacture safely

Barriers to remanufacturing include access to core, little customer

demand, decline in manufacturing in the wider supply chain and lack of

remanufacturing with OEMs in Wales

Barriers include a lack of customer demand, economic viability of

remanufacturing and the age of components, decline in local industries

outside the major cities in Wales

Electronics Energy

Wide range of end of life activities including reuse, repair, refurbishment and

remanufacture Product complexity and value drives repair and refurbishment as the

primary end of life option for electronic goods

Remanufacturing of electronics in Wales

contributes £10M to the sector’s turnover (0.2%)

Approximately 6% of the UK’s total remanufacturing in electronics comes from

Wales Three large OEMs operate in Wales, but none carries

out remanufacturing

Training around electronic engineering exists to provide broad skills, remanufacturing skills gained

through experience and applying basic knowledge to the process

Barriers include a lack of customer demand and product recognition, the value and suitability of electronics for

remanufacture, end markets for resale and technology advancement in the sector

The energy sector employs approximately 58,000

people in 2,066 organisations in Wales

A varied range of products exists in this sector, including

generators, wind turbines, photovoltaic panels and pipe

support systems

Remanufacturing in the energy sector contributes <£1M (0.03%) to the sector’s

turnover in Wales

Fewer courses exist which are applicable to the energy

sector in comparison to other sectors

High level repair and refurbishment work is carried out by companies, but does not fall within the complete

definition of remanufacturing

Barriers include the economic viability of remanufacturing in cases where products have been in use for many years in harsh conditions,

product age (newer technologies which have not reached the end of their service life) and

lack of awareness of remanufacturing and subsequent lack of customer demand

• Unlike the sale of newly manufactured goods, remanufacturing requires the return of a used product to enable resale.

• It is vital that products are returned in a suitable condition to enable remanufacturing.

• B2B transactions are generally less complex (fewer agents are involved).

• B2C transactions are generally more complex (involve wholesalers and retail agents).

• OEM remanufacturers are more likely to employ distributors, rather than agents, to resell their remanufactured goods.

Channels to market

B2C transaction channels B2B transaction channels

• The total value of remanufacturing in Wales is currently around £200 million in the four sectors investigated; about 1.5% of the total turnover in these sectors.

• There are organisations that carry out skilled refurbishment and repair activities, found mostly in the aerospace and automotive sectors.

• There is suitable training available at FE level, and the Welsh workforce therefore has the capabilities to carry out remanufacturing.

• There are significant barriers to remanufacturing in Wales:

Lack of customer demand/recognition

Lack of end markets

Cost

Declining manufacturing base

Lack of awareness of remanufacturing, both business and consumer

Conclusion

• More consumer and business education is needed in remanufacturing.

• Develop remanufacturing and link to targets to increase the amount of exports in the UK.

• Develop and increase remanufacturing to help reduce unemployment. Consider the role of specific training and apprenticeships in remanufacturing to support this.

• Create policies which include and allow the purchase of remanufactured goods, e.g. within the medical equipment market.

• Encourage producer responsibility and consideration of designing products for remanufacture.

• Create a network for collection and distribution of ‘core’ for remanufacturing to ensure a reliable and quality supply.

• Support ventures into hiring/leasing of equipment which could be remanufactured and have extended life.

• Motivate the uptake of remanufacture by targeting funding to support Welsh manufacturers.

• Consider the role of eco-labelling on remanufactured products to promote sustainable products and create customer demand.

Recommendations