will be especially interested in companies positioned to exploit remanufacturing capabilities as a route to more profitable growth, or in defence of their markets.
This occurs usually where the goods have a relatively high intrinsic value, with a bias towards industries involving large industrial machinery or performing complex processing tasks, and high technical content industries such as power turbines and aerospace. Also included are certain automotive applications related to transport and specialised loading equipment.
Emergent electronics markets can provide opportunities to exploit repair techniques, as are now appearing in the LCD market. However, these may be transient due to the high rate of background technology change.
Some businesses are attractive due to the structure of the particular market. For example, companies applying disruptive business models that break down traditional make and sell customer relationships are more likely to find value-adding opportunities in remanufacturing.
The driving force can be possible disruptors in the business environment, such as caused by legislation. The major class of legislation currently being imposed in Europe is that related to producer responsibility. Companies that are well positioned to cope with this responsibility, either as OEMs or as contract agents, may find favour with investors.
Investors confidence is largely based on the ventures management competence, track record and access to complementary skills. Structural features of successful remanufacturers can be indicators of a commitment to the activity. In particular, electronics operators have succeeded where they have joined-up design and maintenance teams i.e. the requirements at end-of-life are fed back to alter the product design. Similarly, sales and marketing teams need to be aware of the portfolio of options that remanufactured products offer to the product mix: new, swap-outs, upgrades etc, often at higher value than new sales. These considerations apply largely, but not exclusively, to OEMs.
Independent remanufacturers typically face a different problem in that they do not have access to OEM design information; a core capability in these companies will be ability to access such information either through networks, or dedicated reverse engineering teams.
Public sector investors
may have more complex motives. In this respect, they may also wish to consider a range of other benefits associated with stimulating or supporting remanufacturing:
- Bolstering local employment by rejuvenating traditional sectors.
- Developing and stimulating new capabilities in the existing skill base.
- Promoting and stimulating resource re-use and recovery.
- Becoming a purchasing exemplar to the community.
- Building synergies between local companies.
- Creating opportunities to stimulate the research and academic base.
- Reducing their own costs through intelligent purchasing.
Development agencies will be interested in remanufacturing for its potential to generate regional employment. In large-scale manufacturing, companies tend to source components from limited disparate sources, often from abroad. By contrast, large remanufacturing companies tend to concentrate on the core elements and sub-contract locally to trusted affiliates who can refurbish other sub-assemblies. Remanufacturing hubs can thus seed diverse local companies.
Even where primary goods are made abroad, UK service operations may be upgraded to remanufacturing sites to the benefit of local economies.