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The corona crisis – the consequences for reman

Author William Schwarck
Date 06/18/2020

With the continuing caution by politicians (and perhaps a greater degree of luck on all sides), the Covid 19 pandemic may be entering a late stage for now. Whether the crisis will return to haunt us within the next twelve months, no one can predict with any degree of certainty. What is clear, however, is that the crisis will usher in a new world – one that will be very different to that before the end of 2019.

What does this mean for remanufacturing?

Remanufacturing is an unusual industry. In fact, it’s one of the few manufacturing industries anywhere that combines protection of the environment, preservation of precious resources, support for local employment and affordable prices for essential consumer products – four key challenges of the modern world. In view of the significant environmental benefits associated with remanufacturing, it is clear that reman and its role within society deserve high levels of support and attention.

Fortunately, in some respects, remanufacturing is less exposed to the negative consequences of the pandemic than many other industrial sectors. Important sectors such as the automotive industries, the travel and transport sectors, hotels, restaurant and entertainment with their hundreds of thousands of employees, and exhibition organisers world-wide are all among those that face real challenges. Travelling to China for industrial shows, for example, will certainly become less attractive in an era when cross-border interaction faces greater scrutiny and practical difficulties.

One reason why remanufacturers may yet escape the worst consequences of the corona crisis is linked to the industry’s countercyclical nature. A common observation holds that financial downturns  in manufacturing to position remanufacturing as an attractive alternative to new. When motorists buy fewer new cars they keep their current vehicles longer and, therefore, opt for remanufactured parts which provide more affordable but also often better options.

This may or may not be crucial factor in how remanufacturing emerges from the current crisis, but it will help.

As a senior executive in a major remanufacturing organization recently put it:
“It’s not that remanufacturing benefits from the corona crisis. Far from it. Many businesses have been suffering considerably and a number may go out of business altogether. But remanufacturing has always shown strong resilience to economic and financial upheavals, and the downturn triggered by the crisis has given many businesses an opportunity to reappraise their business models and take stock. Despite everything I’m confident that most of the remanufacturing industry will come out on the other side in a solid position.”

A fellow executive from a different company adds:
“Let’s not forget that for many years, remanufacturers have made a living from providing solutions to problems, frequently complex technical ones. The lockdown will not have made any difference to this. By contrast, I believe that many reman companies have used recent months to analyse their options going forward. Forced by unfortunate circumstances, they will have spent time considering if and how their operations can further rationalized, how customer relations can be fine-tuned and see whether their current approach may be extended into new areas.”

Others point towards customer relations/marketing/promotion as one significant area likely to see lasting change. Certainly, a number of remanufacturers have spent the past two months considering how best to strengthen ties to customers. One remanufacturer notes: “I believe that in the longer term, this will turn out to benefit our relations with our customers. While we have been looking at how to optimize the way we work together, new cooperative ideas emerge as we get to know each other even better.”

No one in the industry is complacent about the situation. A common view is that there are hard lessons to be learned and new ways of working looked to be looked at. As one executive puts it: “In significant respects remanufacturing combines innovation and tradition. While the industry rose out of a need to preserve existing products, its future is linked to its ability to innovate, and to create increasingly technical solutions to new problems.”

This could be said to express remanufacturing in a nutshell.

One huge impact of the crisis can be expected to be on the reman industry’s ability to promote itself and represent its achievements, products and methods – both internally and to the outside world. This is shown through thus years cancellation of multiple exhibitions, seminars, conferences and trade summits. Having cancelled scheduled events in Europe, USA and Asia, the organizers, i.e remanufacturing associations and trade bodies, have been forced to postpone a series of webinars stretching into the end of the year.

Examples include the Remanufacturing Council’s annual World Remanufacturing Conference in Rochester, New York in September, which will now take the form of a webinar, and MERA, the Association for Sustainable Manufacturing, that converted its spring conference in April into a webinar and is considering doing the same for its Autumn event in September. Likewise, the World Reman Summit planned for early March in Milan, which became the epicenter for the Corona crisis in Europe, was cancelled and, as of now, is rescheduled for the autumn.

On a larger scale, Automechanika in Frankfurt, the world’s largest aftermarket exhibition, and a string of other Automechanika events outside Europe, have been postponed to 2021.

Altogether, remanufacturing together with its hundreds of thousands of employees, leaders and executives and customers, are experiencing unprecedented disruption by the corona crisis.

That’s the bad news; the good news is, that reman is an industry with an excellent record of recovering from downturns and turning challenges into opportunities. It may not look like that right now. But there is little, maybe no reason to despair. Like reman recovers valuable products to the benefit of our societies, it will also know how to recover from the troubles that are hitting the world economy.