While remanufacturing is not an entirely new concept, a recent report by the All-Party Parliamentary Sustainable Resource Group (APSRG) believes it has the potential to be £5.6bn industry in the UK, rather than the £2.4bn it is at present.
Remanufacturing involves rebuilding, repairing and restoring an end-of-life product to meet or exceed its original performance specifications, and offering a warranty to match.
It’s still considered a fledgling industry in the UK and Europe, certainly when compared to the US where remanufactured production grew to $43bn (£26bn) between 2009 and 2011, supporting 180,000 full-time jobs.
Can the UK crack remanufacturing and what are the potential drivers?
According to the manufacturers’ organisation EEF, remanufacturing could give British manufacturers a competitive edge by significantly reducing operational costs. For example, remanufacturing typically uses 85 per cent less energy than manufacturing and in some cases, can be twice as profitable.
The APRSG is currently looking at a number of different business models that could help the UK maximise remanufacturing opportunities. It also wants to see a UK centre of excellence for remanufacturing.
However, getting buy-in from the manufacturing and engineering sector is thought to be the biggest challenge that remanufacturing has to overcome.
For example, effective remanufacturing often requires collaboration between original equipment manufacturers (OEMs), and third party manufacturers of the same product. There are question marks over the willingness of remanufacturers to share their competitive business model with potential competitors.
Finding ways to ensure the return of parts and products from consumers back to an OEM or third party manufacturer is another barrier. Financial incentives might need to be considered to foster greater awareness and action by consumers.
There are also wider concerns from the sector about customers’ perception of remanufactured products, and the issued of cannibalisation – where sales of remanufactured products have the potential to impact on sales of new products.
To address some of these concerns, plans are afoot to establish a European council for remanufacturers which would help shape policy in this area.
What are the legal considerations for remanufacturers?
As well as the practical concerns, there will inevitably be a number of legal considerations for businesses looking to establish themselves in the sector. As mentioned above, one of the main barriers is thought to be concern about collaborating with competitors.
Any business entering into a joint venture with another company will need to ensure they take all necessary legal and contractual steps to protect their business. Intellectual property concerns may be chief among these. For example there has been concern from OEMs in the printer cartridge industry that remanufactured cartridges may infringe on their patents.
Remanufacturing also has a higher level of uncertainty and complexity than traditional manufacturing. Thus the role of strong planning and control procedures, including legal protections from problems in the supply chain, is vital.
Simon England is head of the manufacturing and engineering sector team at Harrison Drury solicitors in Kendal, Lancaster, Garstang and Preston. For more information on this, or any other legal matter affecting the manufacturing and engineering sector, contact Simon England on 01772 258321