Cost Drivers Related to the Recovery of End-of-Life Vehicles (ELVs)

1. Cost Drivers Related to the Recovery of End-of-Life Vehicles (ELVs) Shahin Rahimifard Advanced Manufacturing Systems and Technology Centre Wolfson School of Mechanical and Manufacturing Engineering Loughborough University

2. Advanced Manufacturing Systems and Technology Centre • AMST Centre was formed in 1990. • One of the registered R&D centres of the Department of Trade and Industry (Dti). • Involved in more than twenty major National and European R&D programmes, and also alarge number of short term industriallyfund project. • Centre’s activities are typically based on : - • Manufacturing Systems Engineering • CAD / CAM Technologies • Production Planning and Control • Information Modelling and System Integration • SME Manufacturing Research • Sustainable Product Design and Manufacture www.lboro.ac.uk/AMSTC

3. Presentation Contents • Environmental Conscious Manufacturing VersusSustainable Development • Closed Loop Manufacturing • End-Of-Life Vehicles (ELVs) Directive • Cost Drivers Related to the Recovery of ELVs • Concluding Remarks

4. Environmentally Conscious Manufacturing versus Sustainable Manufacturing • Environmentally Conscious Manufacturing (ECM) concepts are concerned with minimisation of the negative impact of manufacturing activities on the environment through developing equipment, methods, procedures and environmental standards. • Sustainable Development is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. The contemporary view of this concept is based on three pillars of Social, Economical, and Environmental issues.

5. Product Life Cycle Approach to Sustainability

6. Life Cycle Approach to Sustainability

7. One of the Major Goals of Sustainable Manufacture Traditional Manufacturing Sustainable Manufacturing Transformed

8. Additional Activities within Closed Loop Manufacturing Supply Manufacture Use Re-process/Recover the used products Collect the used products Sort/Assess the used products

9. Product Recovery Options • Remanufacture is where the discarded products are repaired, reconditioned and re-supplied. Typically remanufactured products do not change shape or functionality. • Reuseis the disassembly and reclamation of parts , components, and modules within discarded products for reuse in old or new products. • Recycleis the reclamation of the material from parts, components, and modules within discarded products. • Incinerationis the reclamation of energy within the parts, components, and modules of discarded products as the last resort when all the aforementioned options are not possible.

10. A Holistic View of Product Recovery Options

11. End-Of-Life (EOL) Value A simple equation for calculating the EOL value of a product to a company is :- If EOL Value = End-of-life product value to a company EOL Revenue = Revenue from material and components for reuse Cost Col & Trans= Cost for collection and transportation of EOL products Cost Reco & Recy = Cost for processing EOL products Cost Resell & Redis = Cost of resell and redistribution of recovered parts and material Then EOL Value = EOL Revenue – [Cost Col & Trans + Cost Reco & Recy+ Cost Resell & Redis]

12. Business Model 1 to Support Product Recovery Recoverer Supplier Manufacturer Distributor Customer Collector Used products are returned to the original manufacturer Ø Ø Manufacturing activities are expanded to include recovery operations Ø Often is based on a Product Leasing initiative e.g. photocopiers, PCs

13. Business Model 2 to Support Product Recovery Manufacturer Supplier Customer Collector Distributor : : Independent Customer Recoverer Supplier Manufacturer Customer Collector Distributor Ø Independent recoverer carries out the recovery processes Ø Recovered products can be supplied back to original manufacturer or be sold to any third party customer Ø More suitable for consumer products with a wide geographical distributione.g electronic and electrical goods, cars, packaging waste

14. Major Cost Drivers In Sustainable Product Design and Manufacture New Technology& Processes Cost Drivers in Sustainable Product Design and Manufacture Market Conditions Environmental Legislation Materials, Resources, & Skills

15. End-of-Life Vehicles (ELVs) Directives • To cope with the environmental effects of estimated ‘nine million’ tonnes of vehicles that reach the end of their useful lives each year in Europe, the European Union drew up the End-of-Life Vehicles (ELVs) Directive which came into force on 21 October 2000. • Member States should have transposed the Directive into national law by 21 April 2002. The ELV directives came into force in the UK on the 3rd November 2003. • Purpose is to encourage the design of new vehicles that :- • a) Facilitate dismantling, reuse, recovery and recycling of their components and materials, • b) Integrate an increasing amount of recycled materials into new products, and • c) Limit the use of hazardous substances.

16. A Summary of ELVs Directives • Producer Responsibility is one of the main features of this directive whereby the Vehicle Manufacturer is responsible for the take-back and recycling of all the vehicles they produce from 2007. • Producers (vehicle manufacturers or importers) to pay ‘all or a significant part' of the costs of take back and treatment from January 2007. • Producers, Dismantlers and Shredders etc. to establish adequate systems for the collection of ELVs from the outset. • Recovery Targets for all End-of-Life Vehicles by weight have also been set by the ELV Directive which are :- • 85% of by January 2006 (minimum 80% recycling), and • 95% by January 2015 (minimum 85% recycling).

17. Size of the Problem in UK • 1,400,000 million are true ELVs, • 400,000 crashed/premature write-offs, and • 300,000 are abandoned vehicles. It is estimated that around 2,000,000 cars are scrapped in the UK every year, fromwhich :-

18. Cost Drivers : New Technology and Processes 1 Some examples of technological challenges in the recovery of ELVs • Fuel tanks, made out of high density polyethylene, are now a feature on more than 60% of new European cars and represent one of the biggest plastic components. One of the biggest challenges for recycling has been to find ways of removing fuel residues and other coatings that accumulate on the fuel tank during its lifetime and would otherwise taint the raw mate • Heat resistant polyamide plastics, such as Nylon, used in the demanding environment found under the car bonnet account for between 15 and 20% of the plastics used in cars. However, because of tough quality standards, re-use and recycling of polyamides has been very limited.

19. Cost Drivers : New Technology and Processes 2 • Some examples of technological challenges in the recovery of ELVs :- • Two industrial techniques already exist for sorting plastics for recycling. Unfortunately, both have flaws. Laser Induced Breakdown Spectroscopy (LIBS) can sort plastics at high speed with 100% accuracy for some of the most common types of plastics such as polyvinyl chloride (PVC) and polyethylene terephthalate (PET). However, it is unable to identify other types of plastics with the same degree of accuracy. An alternative technology using infrared beams can distinguish between all plastics, but the process speed is painfully slow. • Used tyres represent one of the biggest environmental problems attributable to the car industry, with most of the millions discarded every year finding their way into local dumps. One of the main obstacles is economic: although recycling tyres is technically possible, it is cheaper to start from scratch with the original raw material. One way of cutting the pollution problem is to extend the life of existing tyres by rethreading. A reliable cost effective solution for this process is yet to be developed.

20. Current ELVs Recycling Practices Source : Automotive Consortium on Recycling And Disposal (www.smmt.co.uk)

21. Current Recycling Operators/Actors • Dismantlers - recover the valuable parts and remove items such as batteries, tyres, fluids, hazardous materials e.g., containing mercury (depollution). • Shredders - separate materials by type into ferrous product, and non-ferrous product. Often bear the costs of ELVs waste for final disposal to landfill. • Media Separation Plants - separates non-magnetic shredder fraction by type into separate non-ferrous metal product. • Material Recyclers - specialised for recycling Metal, Plastic, Tyres, Oil.

22. Breakdown of Materials (by weight) within Modern Cars Source : Waste-Online (www.wasteonline.org.uk)

23. Cost Drivers : Materials • It is estimated that from the total weight of ELVs processed dismantlers and scrap yards :- • Typically 70-75% of is metal. and • and other 25-30 % are non-metallic waste (often referred to as shredder residues) which includes plastics, rubber, glass, textile, paint, oils and lubricants, paper and cardboard. • From Shredder Residues produced by dismantlers, scrap merchant and feeder yard :- • 70% recovered by Shredders to steel, • 10 % goes to heavy metal plants for further recovery processes, and • 20 % sent to landfill as waste. • Heavy Metal Plants will recover the following from their in feed:- • 7 % to steel, • 20 % to aluminium, • 13 % to magnesium, copper and zinc, and • 60 % to landfill as waste. • 450,000 tonnes of non-recyclable waste from ELVs is currently sent to landfills in the UK each year, which accounts for up to 10% of the UK’s annual total hazardous waste.

24. Reuse of Recovered Non-metallic Metallic Materials within ELVs • Mechanical recycling of flexible polyurethane seat foam from shredding residue for carpet underlay • Glass from shredder residue as road aggregate • Shredder residue to make paving slabs • Rubber used in road aggregate and playground. • Tyres are able to replace up to about 25% of the coal which would otherwise be used in cement kilns, This processes could provide a recovery option for up to half of the UK’s total waste tyre arising. • Tyres have a high calorific value, about 20% greater than that of coal, which on burning can be harnessed to produce energy.

25. Cost Drivers : Resources (in UK) • Dismantlers • Estimated at 5000 in total. • 3000 of them are licensed . • Each processed 250-1000 ELVs every year. • 55 % turnover from universal parts/used cars. • Shredders (in UK) • 37 Shredders • Very expensive to set up • Pay for sending the final waste to landfills. • Heavy Metal Plants (in UK) • Currently there are 4 heavy metal plants • 30-50% of their in feed is from ELVs. • 200 tonnes/hour of which 70% steel, 5% al, 20% waste.

26. Cost Drivers : Skill • Design • Modular construction aids replacement, • Wearing parts should be easily accessible, • Standard parts are better than special designs. • Management • Reverse logistics • Planning of recovery processes • Inventory of new, used and recovered products • Uncertainty regarding the quality and quantity of ELVs • Labour • Disassembly • Depollution • Recondition/Repairs, etc

27. Cost Drivers : Market Conditions • Marketing implications • Availability of market for recovered products, parts, or materials at a viable price. • Positive marketing image as a result of environmentally conscious manufacturing • Negative marketing implications related to product reliability issues. • Cost-benefit analysis • Cost of non-compliance • Hidden value of used products versus cost of recovery • Capital investment requirements versus recovery revenue

28. A Predicted Pattern for Profit and Loss Account resulted by ELVs Loss Time Profit The preliminary compliance cost assessment estimated that the cost of meeting the ELV directive in the UK will be in the region of £360 to £520 million.

29. Concluding Remarks • ELVs directive aims to reduce negative impacts to environment caused by vehicles at the end of their useful life. • The significant number of problems with the development and introduction of ELVs Directive, highlights a need for a more effective consultation procedures and input from industrialists and experts to the definition of future environmental legislation and directives. • Solutions for ELVs compliance will have to be :- • Sustainable to justify investment. • Flexible to counter fluctuations in the global market. • Competitive with the cost of virgin material. • ELVs compliance if managed properly could results in profit making opportunities.

30. Sources of Information SMMT (The Society of Motor Manufacturers and Traders Ltd)Tel:  020 7235 7000Web:  www.smmt.co.uk Oil Recycling AssociationTel and Fax:  01256 840049E-mail: ora8@excite.co.uk Used Tyre Working GroupE-mail: paul.hallett@dti.gov.uk   Website: http://www.tyredisposal.co.uk The European Tyre Recycling AssociationE-mail: etra@euronet.beWebsite: http://www.etra-www.com/ British Rubber Manufacturers’ AssociationE-mail: mail@brma.co.ukWebsite: http://www.brma.co.uk Department of Trade and IndustryRecycling Policy Section: 020 7215 1860Website: www.dti.gov.uk The Environment Agency (EA)Website: http://www.environment-agency.gov.uk ACORD (Automotive Consortium on Recycling And Disposal) E-mail: sfranklin@smmt.co.uk Web: www.smmt.co.uk British Plastics Federation E-mail: bpf@bpf.co.uk Web: www.bpf.co.uk British Metals Recycling Association E-mail: admin@britmetrec.org.uk Web: www.britmetrec.org.uk British Vehicle Salvage Federation E-mail: Email@bvsib.co.uk Web: www.bvsf.org.uk CARE (Consortium for Automotive Recycling) Web: www.caregroup.org.uk E-mail: Peter.stokes@vwg.co.uk Motor Vehicle Dismantlers Association of Great Britain E-mail: mvdaofgb@aol.com Web: www.mvda.co.uk