Report on the remanufacturing of refrigerated display cabinets

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©Centre for Remanufacturing & Reuse 2009 Within these organisations, the reputation of the remanufacturer ensured a steady flow of business. Now, market competitiveness and uncertainty dictates that the buyers default to much shorter planning and buying horizons. The volume of RDC purchases is also variable and dependent on a few key players. For example, Morrisons‟ takeover of Safeway led to a significant drop in the orders from Safeway; a similar scenario occurred when ASDA was bought by Wal-Mart. Whole life costs are not considered Due to the purchasing procedures of several retailers, the tendency to buy new is reinforced. Yearly budgets and budgets which are focused on capital outlay mean that there is little incentive to purchase the most energy efficient cabinet, or cabinets which are suitable for remanufacture. Also, we have seen little evidence that retailers consider the environmental consequences of buying new as opposed to remanufactured RDCs. Imbalances in fiscal incentives Financial incentives available for the new energy efficient RDCs are not open to remanufactured units. The Enhanced Capital Allowance (ECA) scheme was set up to encourage companies, through tax allowances, to choose energy-efficient plant. This scheme has been criticised by both retailers and manufacturers. The complexity in applying for ECA means that some retailers are not fully claiming under the scheme, which in turn is a disincentive for the manufacturer to apply. Remanufacturers are also affected. The ECA scheme specifies that “Only spending on new and unused energy-saving equipment can qualify for ECAs” 10 ostensibly making remanufactured units ineligible for the scheme. Anecdotally though, there is some uncertainty over this point and further discussion with the Department for Energy and Climate Change is necessary. An additional problem is that, even if remanufactured RDCs meet the environmental standards, subjecting individual RDCs to the testing criteria will be prohibitive. 10 http://www.eca.gov.uk/etl/about/, accessed on 07/05/2009 Page 30 of 38
©Centre for Remanufacturing & Reuse 2009 4.2 Recommendations Enhance retailer education A whole life cost model would fairly reflect the benefits obtainable from remanufactured RDCs and allow genuine comparison against new units of all price brackets. Suitably presented, there is potential to shift the purchasing decisions of the retailers. It is apparent that the organisational structure of retailers encourages buyers to look at the lowest initial cost of the products and not the lifetime impact of the initial purchase. Therefore engaging retailer buyers who have overall control of the purchasing process of cabinets is critical to the uptake of remanufactured RDCs. A change of focus to act through the CSR arms of retailers could also be productive. Since the issue was raised that reliable environmental savings data were not available, abstracting the figures and tables in this report will be a good step to addressing this. If at all possible, the final purchasing decision for RDCs should involve the engineers and the service personnel within the retailer. This should ensure that remanufacture is given sufficient consideration. Make the case for accreditation and level tax incentives The Enhanced Capital Allowance (ECA) scheme was set up to encourage companies, through tax allowances, to choose energy-efficient plant. Certain new RDCs can also qualify for this scheme. Currently, the ECA scheme only covers new equipment to the detriment of remanufactured products. There is evidence that remanufactured RDCs can be as energy efficient as new, therefore there is a strong argument that appropriately remanufactured RDCs should also be included on the ECA lists. This could be achieved by carefully selecting certain remanufactured cabinets for inclusion into the scheme or by including remanufactured cabinets which meet the requirements of the ECA. The resulting tax relief could provide a large enough incentive to encourage the purchase of more remanufactured RDCs. Clearly, however, there are certain institutional and regulatory barriers that need to be overcome. One of the main concerns from policy makers is the potential for unscrupulous operators to offer equipment that has not undergone thorough remanufacturing protocols. Systems for accreditation and standardisation of the methodologies for remanufacturing RDCs need to be adopted to ensure that only energy efficient, high quality remanufactured cabinets are eligible for tax incentives. Additionally, since remanufacturers can upgrade fridges to meet modern efficiency targets, further discussions may be necessary to address the complexities of remanufactured RDCs meeting energy efficiency criteria with different configurations. In parallel, an investigation of the current testing Page 31 of 38
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Report on the remanufacturing of refrigerated display cabinets

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