Importance of conformity assessment for manufacturers Incolab Conference Bled

1. Importance of conformity assessment for manufacturers Incolab Conference Bled September 14th, 2006 Boštjan Sovič Technical Manager Gorenje, d.d. Wet Appliances

2. Contens • A Short Overview of the Gorenje Group • LVD • Restriction of the use of certain Hazardous Substances in electrical and electronic equipment – RoHS directive • Waste Electrical and Electronic Equipment directive - (WEEE) • Conclusion B. Sovič, 14.9.2006 2

3. Coming from Slovenia, acting in the whole Europe ... A Short Overview of the Gorenje Group • Our core business is: The production and sales of large household appliances • Our organization is: A Parent Company Gorenje, d.d., and 49 Companies, from these 36 International • Export: 90% of sales • European Market Share: 4% • Represented in: 60 Countries • Sales under Own Brand Name: 2/3 • Number of employees: • - Year 2005: 10.492 • - Plan 2006: 10.568 • Consolidated net revenues from sales: • - Year 2005: EUR 1.014,7 m • - Plan 2006: EUR 1.018,4 m • Number of large household appliances sold: • - Year 2005:3,4 m units • - Plan 2006: 3,5 m units Subsidiaries abroad Representative offices abroad

4. All the best from Gorenje … 56 Years already! A Short Overview of the Gorenje Group

5. A Short Overview of the Gorenje Group Complete range of high quality products and Markets • 3 Household Appliances Factories in Velenje, Slovenia: • Cooling Program, • Washing and Drying Program, • Cooking Program. • Cooking appliances factory Mora Moravia in Czech Republic. • Additional location in town Valjevo, Serbia (September 2006). • There are plans for a washing machines factory in Russia. • Gorenje – Leading brand name in South-Eastern Europe region: predominating market share – around 60%. • Important position in Western Europe region: brand names Sidex and Körting as well.

6. A Short Overview of the Gorenje Group Gorenje Group Vision, Mission and Values • Gorenje Group Vision We want to become the most innovative, design-minded creator of home appliances in the world! Design plays a crucial role, setting Gorenje apart from its competitors. Gorenje brand – as a trend setter, advanced technology, innovations and residential culture. Gorenje's design vision:“DESIGN FOLLOWS EMOTION”. • Gorenje Group Mission We create innovative, technically accomplished, superbly designed, user- and environment-friendly appliances for home. We are focused on increasing customer satisfaction, and creating value for owners, employees and other stakeholders in a socially responsible way.

7. A Short Overview of the Gorenje Group Expansion of Other Activities, Core Business Synergy, Growth Potential GORENJE GROUP DIVISION HOUSEHOLD APPLIANCES CORE BUSINESS DIVISION HOME INTERIOR DIVISION TRADE & SERVICES 87% STRUCTURE: 6% 7% Refrigerators and deep freezers, cookers, washing machines and dryers, complementary & supplementary programme, components, water heaters, tools & ind. equipment. Kitchen furniture, Anterooms, Living rooms, Ceramics, Bathrooms. Trade engineering, Catering & Tourism, Real estate, Environment protection & Energy BUSINESS AREAS in m EUR 2005 1Q2006 PL2006 905.0 201.6 918.3 2005 1Q2006 PL2006 64.2 14.5 68.5 2005 1Q2006 PL2006 70.8 22.7 60.7 REVENUES FROM SALES: TOTAL 2005 1Q2006 PL2006 1,040.0 238.8 1,047.5 2005 1Q2006 PL2006 1,014.7 230.8 1,018.4 Consolidated net revenues from sales

8. Low Voltage Directive Objective, CE Declaration of Conformity, CE Conformity Marking • To ensure that electrical equipment may be placed on the market only if, having been constructed in accordance with good engineering practice in safety matters, it does not endanger the safety of persons, domestic animals or property when properly installed and maintained and used in applications for which it was made. • EC Declaration of Conformity is a basic document that and contains data about manufacturer, a description of the product, reference to the standards and specifications… • Before placing on the market, electrical equipment must have affixed to it the CE marking by the manufacturer attesting to its conformity to the provisions of the Directive.

9. Low Voltage Directive Current LVD • The current Directive, rating both the economic and social impact is viewed positively. • Gorenje does not use the external expertise in order to make a product compliant with the LVD. • In some cases Gorenje uses external test laboratory facilities for verification purposes (TCL, SIQ).

10. Low Voltage Directive Potential revision of the LVD • One of the most burning questions about the revision of the LVD among household appliances manufacturers is the ‘Protection against fire hazards’: • ‘Equipment must provide an adequate level of fire resistance to an external ignition source and must not contribute significantly to the spread of fire.’ • Public consultation on the potential revision of the LVD: • Manufacturing industry is broadly against any revision to the Directive, mostly citing increased costs. The fact that manufacturers were more numerously responded to the survey than other stakeholders such as consumer organizations means that one has to be very careful with inferring any 'majority' views from this survey. • Manufacturers decided in the main for stability, health and safety organizations for amendment to further work towards meeting their objectives of increasing safety levels of equipment in order to avoid the possibility of injury/ accidents. • This is also the case for the national authorities (in particular those dealing with market surveillance) who pursue the goal of easing their task of ensuring compliance to the provisions of the directive as well as the identification of suppliers of non-compliant electrical equipment. • For the above mentioned reasons it has been decided to postpone any decision.

11. Cr (VI) coatings Pb & Cd SnPbcoatings RoHS directive Objective • To ensure that, from July 1st, 2006, new electrical and electronic equipment put on the market does not contain lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls (PBB) or polybrominated diphenyl ethers (PBDE). • The Directive affects anyone that puts electrical and electronic equipment on the EU market: large household appliances, small household appliances, IT & telecom equipment, consumer equipment, lighting equipment, electrical & electronic tools, toys, medical equipment systems, monitoring & control equipment, automatic dispensers.

12. RoHS directive Activities before July 1st, 2006 • Analyses of products in terms of restriction of the use of certain hazardous substances (Pb, Hg, Cd, Cr(VI)…) • Systematic approach to RoHS compliancy verification on the basis of incoming control of material and components in accredited laboratory. • Systematic approach to modification of RoHS incompliant material and components. • Transfer requirements to suppliers and in some cases even mutual co-design of the components in order to develop compliant components. • Setting up an appropriate logistical system (orders, stocks, stock management, production, production process control, dispatch). • Introduction of appropriate system for labeling of incoming components. • Dispatching of end-products to customers in different countries according to local regulations.

13. RoHS directive Activities after July 1st, 2006 • An effective and cost-effective RoHS compliance and enforcement regime was established. • The regime basis is self-declaration by the producers. • A variety of recommended testing approaches and standards have been established and producers have adopted them. • Sampling strategies and system for regular RoHS testing of most critical components was established. • RoHS audits has become a part of suppliers audits. • Difficulties during setting up the system: • Additional costs for design and testingof new components. • Reliability of some electronic components(solders…)! • Logistical problems during the intermediateperiod (compliant and non-compliant components). • Stock and costs of incompliant components.

14. WEEE directive Objective, obligations • Objective: Environmental friendly treatment of waste Electrical and Electronic Equipment, natural resources saving, energy saving… • The Directive covers the following products: large household appliances, small household appliances, IT & telecom equipment… • Government obligations: • establish conditions for environmental friendly treatment and recycling of WEEE: until December 31st, 2007, • establish a register, finance and control system, • encourage ECO design… • Company obligations: • inscribe in a register (categories and quantities of different materails put in the market), • establish a system for environmental friendly and cost efficient treatment and recycling of WEEE, • finantial waranty for equipment put in the market after August 13th, 2005. • Basic guidelines in planning new alternative - sustainable materials: • change the way of thinking to sustainable when selecting material, • select new materials to obtain larger recycling shares (dismantling, eco-design, re-processing...), • implement legal provisions for recycling.

15. WEEE 100% PROCESSING 80% DISPOSED 20% RECYCLING 75% OTHER TYPES OF PROCESSING 5% RE-USE (?) RECYCLING MATERIALS Re-use components Re-use components (with renuwall) Re-processing materials Replacement of secondary materials Energy recovery Incineration Landfill WEEE directive Implementation of WEEE directive in Gorenje • WEEE directive requirements forrecycling and treatment rates oflarge household appliances: • Processing: 80% • Recycling: 75% • Energy recovery: 5%

16. WEEE directive Recycling products from waste electronic and electrical equipment Land filling, incineration non-valuableproducts WEEE collection valuable products(Fe, Al, Cu, plastic…) Ironworks, glassworks...

17. WEEE directive Incorporation of Gorenje in WEEE systems in EU Sweden EL- Kretsen Finland SER Netherlands NVMP Luxemburg ECOTREL Denmark EPA El-Retur Estonia EES Ringlus Ireland Latvia ? Great Britain Repic Lithuania ? Belgium Recupel Poland El-eko France ECO-Systemes Germany Individualno Portugal Amb3e Czech Republik CECED Spain ECOLEC Slovakia ENVIDOM Italy ECODOM Grece Appliance recyc. Hungary Electro-Coord Slovenia ZEOS Austria UFH Malta ? Cyprus ?

18. Conclusion • LVD • The current Directive is viewed positively. • Manufactures does not support revision of the current LVD. • Gorenje is preparing to the requirements of the Amend 1. • RoHS • From July 1st, 2006, all appliances manufactured in Gorenje and put on the market does not contain hazardous substances (Pb, Hg, Cd, Cr(VI)…). • An effective RoHS compliance regime and RoHS audits were established. • WEEE • The directive has not been implemented entirely. • National legislations have been adopted. • Systems for environmental friendly and cost efficient treatment and recycling of WEEE are establishing.