Remanufacturing could boost Scottish economy by £620m by 2020
The remanufacturing industry in Scotland could grow rapidly to provide greater revenue and more jobs by 2020 if certain challenges can be overcome, says a report released today (5 March).
‘Circular Economy Evidence Building Programme – Remanufacturing Study’, a report commissioned by Zero Waste Scotland (ZWS) and Scottish Enterprise, estimates that, at present, remanufacturing - returning a used product to at least its original performance with a warranty that is equivalent or better than that of the newly manufactured product – accounts for £1.1 billion in sales and employs some 17,000 people in Scotland alone.
However, it predicts that if ‘significant investment and action’ is taken by the Scottish Government, this could grow by an additional £620 million by the end of the decade, whilst creating around 5,700 extra jobs.
The 117-page report analyses key sectors across Scotland to assess the size and potential of the remanufacturing industry in the country. It also sets out barriers to the growth of the industry and recommendations for the future.
The report analyses 14 sectors, including the marine, aerospace, automotive, and rail industries and found that there are four main remanufacturing sectors:
- aerospace – which currently employs 2,400 people in ‘maintenance, repair and overhaul’ (MRO) activities such as remanufacturing, accounting for a turnover of £440-670 million;
- automotive – which currently employs between 650 and 900 people in remanufacturing roles, with a turnover of £35 million;
- energy – which employs 10,000 in remanufacturing, with a turnover of £300 million; and
- rail – which employs around 160 people in remanufacturing, with a turnover of £35 million.
The report highlights that although these four sectors are already working in remanufacture, there is room for ‘significant improvement’. The report notes that there are also ‘opportunities for growth’ in other areas, such as remanufacturing ICT and mobile electronics (as around ‘80 per cent of companies dispose of old ICT equipment as waste’) and medical equipment (which is not currently purchased by NHS Scotland).
Barriers to progress
However, in order for the economic and environmental benefits of remanufacturing to happen, four barriers need to be addressed:
- supply issues ‘preventing access to the end-of-life product that is the core for remanufacturing’;
- technical problems faced by remanufacturers that ‘prevents them effectively remanufacturing products’;
- demand barriers ‘preventing increased demand for remanufactured products’; and
- a ‘lack of data of remanufacturing that prevents effective government or sector intervention’.
The report also identifies that that ‘information barriers are largely associated with the ability of policy makers to effectively target remanufacturers’, highlighting that the infrequent use of the term ‘remanufacturing’ or an alternative (such as MRO in aerospace) being used (and data skew ignoring the many small SMEs involved in remanufacturing) can be a barrier to uptake.
As such, the report lists a range of recommendations to combat these market failures and maximize Scotland’s remanufacturing potential by 2020, including:
- agreeing of a definition of remanufacturing;
- having the Office of National Statistics annually collect data on remanufacturing to help identify opportunities;
- improving and incentivising return rates, perhaps through new collection techniques such as deposit schemes or creating a brokerage service for spare parts;
- developing a scheme to provide certification for remanufacturers;
- introducing new collection techniques such as reverse logistics with delivery companies;
- engaging with designers and remanufactures to create products for remanufacturing;
- establishing a forum to share best practice to new market entrants;
- identifying technical issues through current delivery bodies such as Zero Waste Scotland;
- researching advanced materials repair and remanufacturing technology;
- using public procurement to increase demand for remanufactured products in markets where remanufactured products are present;
- unifying teaching approaches at all levels including undergraduate, post graduate and professional development to help train remanufacturing practitioners – perhaps through the use of a Remanufacturing Chair – and developing cross disciplinary teaching support for remanufacturing;
- developing links with other nations that are exploring remanufacturing; and
- developing new funding routes for remanufacturing, perhaps through the UK Green Investment Bank.
‘Determined to pursue’ remanufacturing opportunity
Speaking at the Holyrood Waste Conference today, Richard Lochhead, Environment Secretary for the Scottish Government, said: “Remanufacturing is a key area with momentum in Scotland.
“The report published today identifies the major areas of remanufacturing activity in Scotland. The Scottish Government is determined to pursue this opportunity and earlier this week, the First Minister launched Scotland’s Economic Strategy, which emphasizes the importance of remanufacturing for a variety of existing sectors.
“The challenge is to ensure we put in place the structures and support to nurture this promising activity, and help us move towards a more circular economy where we keep products in high value use for as long as possible.”
Commenting on the report, Iain Gulland, Chief Executive of ZWS, said: This report is a landmark in providing evidence of the fantastic economic potential of remanufacturing in Scotland.
“Remanufacturing is already a key part of the developing circular economy in Scotland and can play even more of a part in the future – reducing our reliance on raw materials and creating high quality jobs I communities across the country.”
Remanufacturing on the rise
The report is the latest push that the Scottish Government has made into exploring the opportunities for remanufacturing, after it launched a new Scottish Institute of Remanufacture, based at the University of Strathclyde in Glasgow, in January.
ZWS has committed £300,000 to the institute, while the Scottish Funding Council (SCF), which distributes funding from the Scottish Government to the country's colleges and universities, has awarded £1 million to the centre. The funding will be spread over three years.
Companies based in Scotland have reportedly already pledged over £800,000 of funding, or in-kind support, for potential research projects for the institute.
Other groups have also begun researching the benefits of remanufacturing recently, with the All-Party Parliamentary Group for Manufacturing (APMG) and Sustainable Resource (APSRG) warning in December that the UK Government had to do more to ‘lift the regulatory burden’ on UK remanufacturing if the sector’s ‘enormous economic, social and environmental potential’ was to be realised.
Read the ‘‘Circular Economy Evidence Building Programme – Remanufacturing Study’, or find out more about remanufacturing in Resource 77.