We throw away all sorts of things -- automobiles, washing machines, air conditioners. The apostles of remanufacturing believe we can pick up the pieces and put them back together again.
Back in the 1940s, the statistician W. Edwards Deming was preaching a gospel of sorts to American industry: the gospel of quality control. But most U.S. business leaders weren't listening. After the war, Deming was invited to Japan by General Douglas A. MacArthur's command to provide management advice about quality control, and there he found a more receptive audience. The rest, as they say, is history. More than any other single individual, Deming was responsible for the management philosophy that turned "Made in Japan" from a joke into a mark of quality.
Today, another industrial evangelist is making the rounds. Like Deming, he has a new faith and a small following of disciples and converts. Also like Deming, he is preaching a gospel that has mostly fallen on deaf ears.
The new preacher is, to be sure, an unlikely revivalist. A sober-voiced engineer named Robert T. Lund, he is a research professor at the Center for Technology and Policy at Boston University. And his religion is remanufacturing, a seemingly pedestrian process that involves the disassembly, cleaning, repair, testing, occasional upgrading, and reassembly of certain dutable goods. Remanufacturing is even less glamorous than the dry statistics of quality control once preached by Deming. It is not even a procedure that can claim the same near-universal appeal.
What remanufacturing offers, however, is a wholly different way of thinking about the production of goods. Finished products, component parts, and capital equipment can all, in many cases, lend themselves to remanufacturing. And that, says Lund, opens up a world of opportunities for businesses. From a producer's point of view, a remanufactured item typically requires one-fifth of the energy and one-tenth of the new raw materials needed to manufacture a new article, leading to savings of anywhere from 20% to 75% of original manufacturing costs. From the buyer's perspective, the remanufactured product works as well, and lasts as long, as a new one, at a retail price of 20% to 60% lower. Put together, these perspectives might allow remanufacturing to reshape more than a few market niches.
"We could be doing so much with it," observes Lund, while admitting that he and his fellow believers haven't had much luck so far in getting the idea adopted in the area of consumer goods. Pausing, he adds, albeit a bit reluctantly, "I'm willing to go to Japan and start a movement there -- if that's what it takes to get the United States off its butt."
Like most interesting concepts, manufacturing is as firmly rooted in experience as it is in theory. It might even be said to have a date of birth: 1929, the year a watchmaker named Albert S. Holzwasser formed Arrow Automotive Industries Inc.
Holzwasser had been repairing clocks and speedometers for Massachusetts automobile dealers. "As he went around, he saw parts for generators and starters lying on the garage floors," explains Harry A. Holzwasser, his son and the current president of Arrow. At the time, dealers repaired whatever units they could and discarded the rest. The watchmaker offered to rework them all. "He filled up his old Packard with junk," says his son. "That was the start of his business and the start of remanufacturing."
During World War II, the shortage of new parts put a premium on Arrow's wares, and the company was awarded vital raw materials, including extra allocations of copper wire, used to rewind generator coils. After the war, as returning GIs bought up every available jalopy, the company continued to grow and to prosper. Its only problem was with automotive original-equipment manufacturers (OEMs), who regarded rebuilders as low-class competition and sometimes declined to provide components. "My dad took on General Motors," Holzwasser recalls with pride, "testifying before Congress on unfair trade practices . . . and won."
The industry Albert Holzwasser had helped to found gained some statute in the process, but not until the 1970s did it finally find its identity. "A customer came up to me at one of the trade association shows where we had a booth," his son remembers, "and said to me, 'Harry, you're not a rebuilder. You've got factories, you've got assembly lines -- you're a remanufacturer.' And I thought, 'Damn it, he's right." The freshly minted description gradually gained currency. Even so, the industry still suffered from public misconception -- misunderstanding as to what the difference was, for example, between repaired, rebuilt, and remanufactured items -- and from a bias against hand-me-downs of any sort.
For the record, repaired items are simply returned to working order, whether that requires the adjustment of a screw or a new component. Rebuilt items are repaired, but worn or aging components are also replaced, thereby extending the unit's life span. Remanufactured items are disassembled as completely as they can be. Each piece is inspected, and may then be repaired, replaced, or even upgraded with new technology before the unit is reassembled. A typical remanufactured product is about 85% salvaged material and 15% new, and may carry a warranty better than that provided by an OEM. Arrow's automotive parts, for instance, now carry 12,000 mile/12 month warranties.
Remanufacturing has become an important and growing segment of the $50-billion-a-year auto aftermarket. It accounts for 10% of overall sales and nearly all sales in some categories: In 1983, Holzwasser points out, 92.2% of distributors, 95.7% of starters, and 97.7% of the clutches installed in cars were remanufactured. Arrow, a $90-million-a-year publicly held company headquartered in Framingham, Mass., is one of the largest as well as the oldest in the business.
