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Tyler Voorhees is working in the Office of Public Affairs at the International Trade Administration for the summer. He is a junior at Washington and Lee University in Lexington, Virginia.
In day to day life, most of us usually imagine new goods when we think about buying anything. But that ignores an entire group of goods that we call “remanufactured goods,” which is just a generic term that describes a product that goes through a recovery process where it is transformed through cleaning, testing and other operations so that it meets the same specifications as a new good. Pieces subject to wear are replaced or processed to restore original performance while housings and other components are cleaned and reused to preserve their value. Remanufactured goods are therefore not old consumer goods sold as is, like an old radio from a thrift store. They are products that are just as good as a newly manufactured good, but less expensive! In addition to the cost savings, the process has important environmental benefits.
Opening markets for remanufactured products has been an important ITA goal. While remanufactured goods dominate important market segments in the United States and account for roughly 90 percent of automotive parts sales in most wear part categories, many countries try to limit imports of remanufactured goods through barriers such as outright bans. Others force remanufactured goods to meet restrictive licensing requirements. This is because many countries associate remanufactured goods with used goods and waste, so ITA is working with industry and colleagues in the U.S. government to educate countries on the benefits of remanufacturing.
The United States has brought the issue of remanufactured goods to the World Trade Organization (WTO) to try and make trade in remanufactured goods more open and is now working with countries in the Asia-Pacific Economic Cooperation (APEC) on a “pathfinder” process designed to familiarize countries on the benefits and quality of remanufactured goods. We are also working bi-laterally with major trading partners like China to open their markets to remanufactured products. Likewise, we have included special language in our free trade agreements to allow U.S.-made remanufactured goods to qualify for tariff free access.
As noted above, there are a lot of economic and environmental benefits from opening up trade in remanufactured goods. Remanufacturing represents a huge possibility for job growth. In the United States alone, there are estimates that more than 73,000 firms specialize in remanufacturing, and most of them are small and medium-sized businesses, with a few larger multinational corporations mixed in. Some sources claim these firms are growing at 20-30 percent per year. Remanufacturing is also relatively labor intensive. Remanufactured goods require the original good to be disassembled, cleaned and remade by skilled labor. Overall, remanufacturing employs more skilled labor per good produced than traditional manufactured goods.
There are also huge environmental benefits. A remanufacturer can use 85 to 95 percent less energy and materials per unit produced than a new equipment manufacturer because the reused “cores” retain the energy and materials from their original production. Global estimates of energy saved through remanufacturing equals about 120 trillion BTUs (British Thermal Units) a year. In simple terms, that’s about equal to:
- 10.8 million barrels of crude oil or 233 oil tankers
- The lifetime fuel consumption of 75,000 car owners
- The electricity generated by five nuclear power plants every year!
By reusing much of the material in the core of an old product, businesses can avoid additional waste from finding its way into landfills, and save the harm of removing new raw materials from the earth and also reduce demands on increasingly valuable water resources. This is truly “Reduce, Reuse, Recycle” in action. By preserving the energy, materials and water from original production of reused core inputs, remanufacturing provides access to the same high quality goods at lower prices. Because the input costs for remanufactured goods are lower than a new good, it means remanufactured goods can be priced much cheaper than new goods.
Global demand for products is rising quickly thanks to a growing middle class in developing countries. Because of this, the cost of raw materials is sky-rocketing. Remanufacturing can provide a way to produce the same high-quality goods we’re used to for a fraction of the cost, and save the environment at the same time. There’s already been huge growth in the remanufacturing sector, along with a lot of good-paying jobs. Bringing down trade barriers will only help create jobs, and help us create a more sustainable economy.
