The U.S. Economy Needs Remanufacturing- Are you convinced?

The U.S. U-6 unemployment rate (the true measure of unemployment because it includes discouraged, marginal and seasonal employment) fell below 10 percent for the first time since June of 2008.

Good results? Sounds great to me… but while we continue to add jobs in warehouse and distribution, trucking, and staff-level IT, there is a sector of the economy that many people don’t hear about. It creates domestic jobs, reduces environmental impacts, and decreases our dependency on foreign products.

REMANUFACTURING.

If I had a podcast, I would yell the statement below into the microphone!

REMANUFACTURING IS CRITICAL TO THE U.S. ECONOMY!

Do I have your attention now?

The term ‘remanufactured’ is too often confused with ‘used’ or ‘repaired’. Remanufacturing is a comprehensive and rigorous industrial process by which a previously sold, worn, or non-functional product or component is returned to a “like-new” or “better-than-new” condition and warranted in performance level and quality[1].

The U.S. is the world’s largest producer, consumer and exporter of remanufactured products. In its 2012 report, the U.S. International Trade Commission estimated that that the value of U.S. remanufactured production had reached $43 billion by 2011, supporting approximately 180,000 full-time jobs[2].

Just recently, the U.S. House of Representatives unanimously passed S. 565, the Federal Vehicle Repair Cost Savings Act, which requires federal agencies to encourage the use of remanufactured parts for vehicle repair when doing so lowers costs, maintains quality and performance, and does not compromise safety. Senators James Lankford (R-OK) and Gary Peters (D-MI) introduced this measure in the House of Representatives after a Government Accountability Office (GAO) study they requested confirmed that remanufactured parts tend to be less expensive than comparable new parts. The Federal Government maintains a fleet of approximately 588,000 vehicles at an annual cost of nearly $1 billion ($1,700 per vehicle per year).

To put this in perspective, remanufactured auto parts are typically 25-40% less expensive than comparable new. This switch could save us (the U.S. taxpayer) $250-400 MILLION DOLLARS PER YEAR.

Take this same line of thinking to the U.S. Commercial vehicle market. In 2014, the U.S. Commercial vehicle market was just north of 7.7 Million[3] vehicles. If the U.S. Commercial vehicle market incurs the same annual maintenance cost as the Federal Government, then $13 BILLION is spent annually to maintain these vehicles. A move to remanufactured components would yield a savings of $3.2-5.2 BILLION DOLLARS per year! What could U.S. businesses do with an additional 5 BILLION to spend on innovation, research and development? How many new jobs, new technologies, and new solutions could be developed?

So, why is remanufacturing important beyond cost savings for the U.S. government?

  • Remanufactured products utilize ~80% less energy and resources to produce.
  • Remanufactured products are tested and certified to the latest standards (not just the ones created when the product was made).
  • Did I say that remanufacturing creates jobs? Good jobs. Steady jobs. Jobs in areas that have historically been economically depressed (buildings are cheaper, people are available to work).
  • Remanufacturing creates a win-win-win scenario – it is good for the customer (lower cost), good for the business (better margins), and good for the environment (no one strip mined to get new materials!).

Changing Mindsets

My wife won’t buy remanufactured.

There, I said it.

I have been in the service and aftermarket / sustainability space for 25 years, but it is hard for me to convince my wife that remanufactured goods are actually better than new. An actual person touched that product and deemed it worthy; it wasn’t just spit from a production line in some foreign plant. An American worker, maybe our neighbor, cousin, or friend, inspected and tested that product to make sure it would work as intended.

The challenge for the industry is to convince my wife, and the millions like her, that buying a remanufactured product is better. We have proven as a nation that we can change minds when it is important, not every mind, but many. It was only a few years ago that cigarette smoking was ‘good for you’, that seatbelts were an accessory item, and that people ate at McDonald’s (ok, we are still working on that one!).

Remanufacturing is key to a strong U.S. economy. We consume it, so we should reman it…and consume it again or sell it to a developing nation. I have always wanted to say it… a vote for Remanufacturing is a vote for America!

Start voting!


[1] Remanufacturing Industries Council, www.reman.org

[2] Remanufactured Goods: An Overview of the U.S. and Global Industries, Markets, and Trade. U.S. International Trade Commission, October 2012

[3] http://press.ihs.com/press-release/aapex/commercial-vehicle-demand-us-and-canada-continues-strengthen-according-ihs-autom