Professor Tim C. McAloone, who leads the national competence center for remanufacturing, reManuFactory, at DTU, explains how remanufacturing can strengthen the bottom line — and what obstacles are preventing more companies from getting started.
What are the benefits of remanufacturing?
Considering that only a very small percentage of materials are recycled in Denmark, there is an untapped potential in recycling all or part of a worn product. Remanufacturing means that a product is repaired and updated to meet current requirements and regulations—as if it were a new product.
It is good for our planet. According to its own calculations, Danish BORG Automotive Reman, which remanufactures generators, AC compressors, and turbochargers for cars, for example, emits 60 per cent less CO2 and uses 42 per cent less energy than if its products were manufactured from virgin materials.
Experience from remanufacturers shows that the savings can also be good for the bottom line. For example, it is possible to save up to 50 per cent on production costs and 60 per cent on energy consumption compared to manufacturing new products.
So why do companies still produce new products?
It is cheaper to carry on producing new products—partly because we do not currently pay the real price for the virgin materials used.
According to the International Monetary Fund, the market often ignores externalities—that is the costs that are not borne by the producer or the consumer, but by society as a whole. This includes pollution, damage to health, and loss of natural resources. The low cost of virgin raw materials does not reflect the environmental and social costs of extraction and processing. It undermines the competitiveness of recycled materials, which often bear the entire cost of collection, sorting, and reprocessing.
To have a truly sustainable circular economy, the costs must be included in the raw material price. This will require political and economic reforms.
