British companies will struggle to compete in an emerging circular economy unless quality and regulatory issues surrounding product remanufacture are properly addressed, Caterpillar has warned.
The machinery firm is a world leader in remanufacture, which it defines as “the process of returning end-of-life, broken or blemished product to a same as new condition in a manufacturing environment”.
However, it believes the business activity remains an under recognised sector in the UK.
Caterpillar outlined its concerns in the form of written evidence submitted to the Government’s Environmental Audit Committee last week, as part of a wider inquiry by parliament to investigate the potential for growing a circular economy.
Within the document submitted, Caterpillar pointed to a number of market and policy constraints it felt were hampering the adoption of more circular-led business models.
One barrier, it said, was the lack of an acceptance of a clear definition of remanufacturing. This is effectively allowing a variety of companies to claim they are remanufacturers, without clear corroboration.
“Within the UK there are many different product sectors engaged in genuine remanufacturing; however it is very fragmented in reality, and thus the overall UK picture is difficult to identify, quantify or leverage,” Caterpillar stated.
The company also raised concerns that within public procurement, there is little evidence that remanufactured products are being recognised as either acceptable or mandatory options for purchasers to consider or specify.
It added that certain regulatory drivers such as the WEEE (Waste Electrical & Electronic Equipment) and ROHs (Restriction of Hazardous Substances) Directives are creating significant areas of uncertainty.
“If a product was first introduced with a then-legitimate material or substance contained within it, what is the position of the remanufacturer when seeking to return such an item to the marketplace?” it questioned.
“WEEE, ROHs and other similar regulations should explicitly validate and encourage the utilisation of remanufacturing, movement of cores and trade in remanufactured finished goods between and among member states,” Caterpillar urged, adding that it was not aware of any “specific government incentives (monetary or otherwise) or support for the remanufacturing sector”.
According to the firm, a genuine remanufacturing sector is capable of being materially profitable for companies willing to invest for the long term. It said the UK manufacturing supply chain should see the remanufacturing option as a “major opportunity” to build new and profitable business opportunities.