February 2006

Will Processing WEEE Lead To Costs Or Savings For Manufacturers?

When manufacturers take back WEEE to meet legislation controlling the recycling of electrical and electronic equipment, what could be the balance of costs and savings, for example from remanufacturing?

To comply with the Waste Electrical and Electronic Equipment (WEEE) Directive all electrical and electronic equipment put on the market in the EU will have to be labelled to show it can no longer be sent to a landfill site. That will give users an extra reminder of their new responsibilities to help manufacturers or their agents take back products at their end-of-life.

Through such measures the WEEE Directive seeks not only to control disposal of equipment for environmental benefit, but also to promote re-use of electronic waste through recycling.

Manufacturer’s preparations for the WEEE legislation

The obligations in the WEEE Directive, though delayed for a third time, are forcing a change in the product plans of electrical and electronic equipment manufacturers. Many suppliers are already working out ways to ease the recycling of their products by designing equipment featuring a greater number of demountable components. This allows the manufacturer to harvest and reuse the parts returned to them at end-of-life.

A lot of manufacturers are joining compliance schemes whereby a third party assumes the role of a collection and recycling agency. "The idea of a compliance scheme is that it's an umbrella organisation which provides a service to producers," said a spokesperson for the DTI. "The compliance scheme would take on the responsibilities that a producer would otherwise have, such as registering and ensuring that appropriate records are kept."

If major manufacturers could take back a large proportion of the equipment they sell, that resource, in terms of the plastics, the PCBs and the other components, could be built into the next generation of products.

Advantages

Such a remanufacturing strategy could lower manufacturers' component costs. Although the added recycling responsibilities are likely to mean users pay slightly more for equipment initially, eventually the upfront price of these systems could come down if reuseable components are available at a lower price.

Some suppliers are already achieving early compliance in a bid to create a 'green' brand, and many buyers are embracing the concept of environmental awareness under the banner of 'corporate social responsibility'. But it is the potential financial gains that go hand in hand with the efficient disposal of products that will capture the attention of many in the supply chain.

At the moment, this push is being driven by tier-one manufacturers that have the clout to influence manufacturing processes. That could give the major manufacturers an edge over smaller suppliers, with environmental friendly products set to become a key marketing benefit.

Will costs rise?

The EU and the DTI are wary about giving any precise figures for how much extra goods will cost once the cost of recycling is added in. Estimates include price rises for computers and TVs of 2 or 3 per cent and white goods, such as fridges and washing machines, around 1 per cent.

Dudley Ollis, Secretary of Environmental Health and Safety at UK trade association Intellect thought 3 per cent was rather low and that the charges for buearocracy and sorting returned product, added to the cost of recycling, could increase this to 10 per cent for some goods. Particularly, says Ollis, as it is often cheaper to manufacture goods from new rather than recycled materials.

However, how much of this extra cost is passed on to the customer is debatable. "It's still a competitive market, and companies may decide to swallow some of their margins rather than put up prices," said Ollis.

Even so, the increase in landfill tax and the introduction of an incineration tax in the UK means any hike in the price of electronic goods to recycle them would be offset by the cost of disposing of them by other means.

Currently, it is the tax-payer that pays for the disposal costs of electronic equipment, both financially and through the health and environmental hazards this presents. The WEEE Directive has the potential to move these costs to the price paid by the purchaser.

Ultimately, the recycling and effective disposal of products may bring prices down. Mark Strutt, Toxics Campaigner at Greenpeace, expects an initial rise. "Disposing will cost more and more money. With better design and infrastructure, customers should not be paying any premium and maybe even less. Once the infrastructure is in place, manufacturers will save money hand over fist."

Ollis sums it up by saying: "It's a shared chain, from producer to consumer, and everyone has their part to play in protecting the environment."

If you are interested to discuss waste management and issues related to WEEE, contact Steve Stones on 024 7632 3260.

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