Examination of Witnesses (Questions 80-98)
Mr Bob Lisney, Mr Martin Charter, Dr Tim Cooper and
Professor Simon Pollard
11 DECEMBER 2007
Q80 Lord May of Oxford: If I may
just summarise what I think I have heard, it is that the motivation
for taking more account of whole-life and end-of-life is a mixture
of regulation and also creating the right cultural awareness so
that it becomes fashionable to want to do that; but once you put
that in place there is a second problem in that you need designers
and product manufacturers to be aware of the things you can do
to fulfil these objectives. There is quite a range of things one
would need to be thinking about more carefully?
Mr Charter: Having the right tools, in that
sense the resources and support at the right level. Most SMEs,
for example, have no knowledge of issues so you have to start
where they are. It has to be introduced in the right way. The
other key element, which links back into the other key points,
is the business benefits of doing this, so it is a management
and a business issue. Particularly for the larger companies this
is not going to happen unless it is integrated into the product
development process. Companies like Philips (and I quote that
because they have got the numbers now and the revenue) have six
focal areas of eco-design, of which materials reduction is one,
increased recyclability is another, reduction in energy, reduction
in packaging et cetera. They look at it more holistically
and throughout the lifecycle.
Professor Pollard: There are exemplars I think
of companies that do this well. There are a few but they do tend
to be premium products. A good example is Velux blinds, that is
a functional, durable product and Velux have an incessant desire
to strip-out waste and cost from their manufacturing process.
They know they are a premium product and they have applied many
of these processes of efficiency and waste reduction because it
is a cost during manufacturing to really manufacture in a lean
way a high premium, durable product which has a real premium place
in the marketplace with respect to daylight blinds. They would
be worth looking at in more detail.
Dr Cooper: May I take Lord May's question and
link it back to the original one on economics? You mention the
influence of designers and manufacturers, may I bring in also
the influence of the marketing departments in companies. The original
question was about why designers behave in a particular way. My
Research Centre held a seminar at the Design Council a few months
ago on design for durability and one of the issues raised by the
designers was that they would want to look at the whole of a product's
life and the end of life stage more than they can at the moment,
but within the corporate culture they are operating in, the marketing
departments have more power and authority than designers; and
the designers are told they have a specific brief. They would
like to work beyond it but cannot, because at the end of the day
they are working to a particular client's wishes.
Q81 Lord Lewis of Newnham: If I may
just preface my remarks by saying in a sense that is exactly what
we are saying, it is money that counts at the end of the day,
and that is the motivation. So one has got to in some way or another
involve waste within the positive rather than the negative side
of the whole of this issue. The question I would like to put to
you is: we are very conscious over the problems with SMEs, and
I think that is a problem that really is very difficult indeed.
If we take many products which are now based on a multinational
rather than on a national basis, if you take motorcars for instance,
they are primarily produced by the Japanese; there is no British
production to any large extent at all of motorcars; although they
may be being produced in the country the driving force is normally
outside. You are in a pretty unique position as far as I am concerned
because you have got a broad base, I assume, of experience of
waste problems throughout the world. Do you see the effect of
multinationals? The policy of multinationals must be that they
are not concerned with the waste problems in the UK; they are
concerned with the waste problems in general. Do they differ radically
and does this influence, in any way whatsoever, the general design
or productivity that is being involved by the multinationals?
Mr Charter: I feel there are probably several
questions in that question. Quoting electronics, we are doing
a project where we are trying to take out so-called eco-design
to India, China and Thailand. What is happening in those countries
is twofold: particularly in China and India the illegal importation,
for example, of e-waste is being processed in very bad conditions
and that is going to happen even though China is putting bans
in. They have got a big coastline and people need to earn money,
and the local governments need to earn so that is going to continue
to happen. What the Thais have started to think about, and I still
do not know how they get round the Basle Convention on this, is
to say, "Actually we would like some of this e-waste because
we are going to recondition it, we are going to remanufacture
it and we are going to resell it to other parts of Asia, e.g.
Laos and Cambodia". In a sense they are treating waste as
a resource. What we are also seeing particularly in India and
China now is a second issue, which is this huge-growing domestic
consumption and production. One of the conclusions of our reports,
maybe tactically it is a time in those countries that are at very
early stages to start to talk about design for e-waste reduction
as part of eco-design. What we see transnationally there are two
issues: you have got the foreign direct investment companies,
for example, in China, the big guys basically who have knowledge
about this issue; but once you get down to the nationalised companies
or the smaller guys all of this is an incredibly new issue and
it is not on their agenda because they do not have the drivers.
Q82 Baroness Platt of Writtle: Could
you explain the "design for remanufacturing" principle
and outline what skills and investments are needed to implement
this?
Mr Charter: On the basis of an initial report
we did, which we believe is one of the first ones to look at design
for remanufacturing, this is an ill-researched area. You have
got very subtle difference between remanufacturing, reconditioning,
refurbishing et cetera. What we understand remanufacturing
to be is a process where in effect the products come back into
a remanufacturing factory and all the components and subassemblies
are checked universally to make sure that they still function.
Design for remanufacturing we believe is a much more holistic
concept and, in a sense, to really talk about design for remanufacturing
you need several elements. You need your factory and your remanufacturing
factory. Xerox, for example, have both co-located. What you need
is a take-back system. You need from a very strategic level to
make a decision that you are going to develop, in a sense, forward
manufacturing and reverse manufacturing. That really is a high
level strategic decision about investing and doing the processes.
It then gets down to the level of designers and building in, for
example, design for disassembly so when the products come back
they are able to be disassembled, checked, validated, replaced
and then resold. Xerox claim they can get seven revenue streams
out of their core platform. It comes back seven times, seven revenue
streams, six diversions from landfill and a per capita reduction
in CO2 per unit. Our belief is that it has got several layers.
It is very strategic; you have really got to design the system
and then empower the designers themselves with the right sort
of thinking to enable them to do it.
Q83 Baroness Platt of Writtle: So
you are thinking in terms of a remanufacturing factory? How do
small and medium businesses fit into that? You can imagine a large
firm actually going into that strategy but at a smaller level
that would be much more difficult. To a certain extent I suppose
you might say it is very close to repair?
Mr Charter: Others may have comments on this.
What we found is remanufacturing in reality for SMEs is scavenging.
That is what it is. They actually scavenge off other people's
technologies and products. Maybe in that sense it is not a universal
panacea. There are certain criteria where this can happen, and
in certain criteria it cannot.
Q84 Baroness Platt of Writtle: Something
has got to develop actually, has it not?
Mr Charter: Yes.
Q85 Lord Haskel: Mr Lisney and Mr
Charter, in your paper Sustainable Approaches to Waste Reduction
you talk about the lessons that could be learnt from the "Japanese
`system innovation' related to resource productivity". I
wonder if you could explain to us what this is about, and what
the benefits are of this Japanese system?
Mr Charter: On the base of our three or four
year-old DTI missions my understanding is basically they have
put a whole set of policy tools, a more holistic approach, to
really start to move towards a more resource-efficient economy
that builds on their existing strategies around energy, which
they started in the 1970s. Basically they have used a green purchasing
law passed in 2001 to start to really drive the supply side companies
to demonstrate a lower environmental impact or else they will
not get the contracts with government. That is point number one.
Point number two is that they passed the home appliance recycling
law, their equivalent of the WEEE law, in 2001. They started activity
in the mid 1990s and really got consensus by industry and government
and also key influential academics that this is the way Japan
was going. In 2001 there was certainty for the manufacturers the
law was going to come into place; so that was a really important
point—this certainty amongst all stakeholders that thing
were going to happen on time. That gave the companies the confidence
to invest in developing the recycling technologies. The day the
law came into place between 45 and 50 recycling factories opened,
so very co-ordinated. They have also used other policy tools—and
I argue it is a policy tool. They have this eco-products exhibition
they have run since 1999 that has 150,000 visitors and 500 exhibitors,
so it is a huge thing. They are using different tools to raise
awareness and to provide incentives and disincentives. I guess
the system level thing is that macro-perspective that they developed
the infrastructure that works, and they are achieving their targets;
we originally went in looking at the innovation related to technology
around the recycling. However, basically a lot of the recycling
in those recycling factories is manual; it is not high technology.
It is the system that is driving it rather than any fancy technology.
Mr Lisney: They also made very clear the target
per category of product or industry and that was agreed, I gather,
with the industries so they were quite high. For example, if you
look at the targets by 2010 most of them will be 50 per cent plus—there
is only about one I think because of its nature which is less
than that—and some are up to about 80 per cent recovery,
so they are very, very high. They will be achieved because of
this strategic planning. They have also given a very clear target
for their products in savings in resource use, some of the things
Dr Cooper was talking about, extending life, repair and reuse;
all those things have to be demonstrated; so it is very clear
and very open that your product you are presenting to the marketplace
has to have those qualities. They have also, I think, developed
a culture which perhaps might be easier for Japan of take-back,
leasing or service. In a way there is some thought, certainly
in European areas now, about leasing and service; and, finally,
labelling. It has been very clear about what consumers, whether
business or domestic consumers, should do by very clear labelling
of the product and what you do at its end of life, and that I
think has been important. Finally, they have developed something
like 35 eco-towns for this processing and remanufacturing that
was broadly spatially planned, if you like. I am not sure that
is a replicable thing in the UK but it did indicate they had this
balance and understanding that, once you turn the tap on to get
material back and products back, you have to have some places
in which you undertake that activity, as opposed to the alternative
which was mainly landfill.
Q86 Lord Haskel: What happens about
imported products? Do the Japanese companies try to carry out
these practices in their companies elsewhere, for instance the
Japanese factories in Britain or in America? Is that part of the
culture?
Mr Lisney: Yes. There was clearly some concern
about freeloading in terms of the dismantling and the cost of
that. I think one of the debates we had this time last year with
them and has been followed up in July this year was about material
security. As materials get very scarce around the world, you have
got the development of resource needs in China, India and Brazil
and so on, they are very concerned about hanging onto that material
because its value will go up; so anything that comes in they will
want to retain that physical material as it is a marketable product.
They will operate on the basis of trying to recover it.
Q87 Lord Haskel: If you are importing
products into Japan to be sold through a chain of shops and this
chain of shops is committed to some of these principles you have
just explained, do they insist that this culture also is put into
the product which they are importing?
Mr Lisney: I am not sure about the design stage.
Mr Charter: In terms of imported products, I
do not know.
Q88 Lord Haskel: The point I am trying
to get at is maybe you could explain to us what lessons we could
learn here in Britain, because here we have an economy where the
majority of things that we buy in the shops are in fact imported.
Mr Lisney: One of the things they do have is
their 3Rs initiatives. One of their aims, the Asia-Pacific community,
is to discuss these issues so that they try to get a commonality
of concept. Also they have engaged with the European Union and
clearly with our own government and trade missions. Part of their
aim is to have some kind of world debate about these types of
initiatives.
Mr Charter: They are operating through the Asia
Productivity Organisation in trying to raise awareness. They have
taken out within Asia versions of their green purchasing network
into Malaysia, Thailand and other countries. They have also taken
versions of their eco-products exhibition where generally the
exhibitors tend to be Japanese technology. What they have beyond
this is, a larger critical mass of the Japanese companies have
this eco-design concept on-board, compared to maybe the relatively
few US or European companies. So it is much more integrated into
the way they are thinking. They are also taking it down through
a key guy who maybe might be useful to invite here—part
of the original so-called Factor Four Club, looking at a factor
four reduction in energy and materials that was set up in the
1990s with Amory Lovins and Ernst von Weiszäcker—a
guy called Professor Yamamoto. He is a very, very influential
thought leader in terms of what goes on in Japan. They have been
developing within the University of Tokyo a so-called Factor X
methodology that is looking at a Factor X reduction of energy
and materials that then in effect is disseminated to all the big
companies. They are developing much more of a universal approach
to this. In the context of a lack of global standards, and a lack
of common understanding, the Japanese are trying to develop more
of a common understanding in Japan that is then being fed out
globally.
Q89 Lord Sutherland of Houndwood:
This is very striking but clearly it is not without costs. I wondered
who put up the capital, for example, for the 40 or 50 new factories
that are recycling factories on day one? Where does the capital
come from for the eco-towns? Are there government incentives?
Are there tax incentives? Are there subsidies? How does that work?
Mr Charter: My understanding is, I forget the
name of it, the Japanese have these broad systems where sometimes
they have got banks in their group business systems. It is actually
the companies who own this recycling infrastructure rather than
the waste management guys, so again that is a different structure,
and that is since they have more control over their infrastructure.
If they have got their products coming back they are in a sense
in control of those loops more effectively. Going round some of
the recycling factories, there have been some incentives in the
sense of certain technologies within the factories; there have
been some subsidies for recycling technologies.
Q90 Lord Sutherland of Houndwood:
You mean the development of the technologies?
Mr Charter: Yes. The key point is it is a fundamentally
different way they are organising it.
Mr Lisney: I cannot speak for every industry
but when I was there I did speak to the President of one of the
electronics organisations who had a very successful recovery remanufacturing
factory where nothing leaves it, it is all sold. What he said
was he makes money out of it and there is profit, but he knew
effectively that because of this pre-planning and the signals
given to the market that material was going to come; and because
he was the only game in town that is where it was going. Essentially
there was some kind of leadership connect between supply and demand,
without perhaps other than the new design side of technology.
Essentially the idea of resource management has got to be run
by the market. If we are in a global market it has got to be cost-effective
otherwise we get the first outcomes.
Q91 Baroness Platt of Writtle: What
you have said is very interesting indeed. When one thinks of Nissan
in the North-East do they do it too? Do they adopt that culture?
Might they act as a centre in this country, or indeed Japanese
or Asian companies?
Mr Lisney: Nissan, like other car companies
now, will have accountability for recovery of their vehicles,
to recover and recycle them to about the 95 per cent level now.
What they do not know is how they do that and would not want to
do it through their distribution networks and other things. Certainly
on the electronics rather than the cars, the Japanese companies
are doing their compliance through European platforms. They might
be pan-European or might just be set up for this country. Because
they know they have to comply they will set up a recovery system
and they will make it cost-effective.
Q92 Baroness Platt of Writtle: It
might act as an exemplar?
Mr Lisney: Yes, they could certainly do that.
Professor Pollard: You can also look to Nissan
and the automotive sector for these key aspects of waste reduction
during production and the stripping out of costs, because some
of these have become international leaders in production efficiencies,
so they have probably got both aspects. We were talking earlier
about the need to put all of these aspects of design, production
efficiency and end-of-life take-back together. Some of these Japanese
companies are among the best at connecting these features.
Q93 Chairman: Could I just ask about
the supply chain. A lot of Japanese manufacturing is not manufactured
in Japan. Does it go down the line, or does it stop in Japan and
the remanufacturing only happens there? If it is into places like
China, and Taiwan probably adopts a similar approach to the Japanese,
most of their manufacturing is done on mainland China, where you
get the feeling at times that there are variable standards and
there are dangers of counterfeiting and things like that. How
confident are you that what is being done is done right down the
supply chain?
Mr Charter: From my experience I share your
scepticism. I feel a number of the global brands cannot really
afford not to approach best practice; but once you get outside
of that there is a lot of concern out in the region, for example,
even getting down to ISO14000 (environmental management systems),
to what extent those are just being bought in some instances.
The auditor comes in, they have the thing on the wall, the auditor
goes out and it is turned back to the wall and it is back to business
as usual. What I have seen from our project in Thailand, when
there is a surprisingly large amount of Japanese manufacturing,
is that the Japanese have tried to influence a number of the key
multipliers to raise awareness of these issues. The Thais have
got quite a lot of investment out of METI and people like that,
and around things like lifecycle analysis. My understanding is
that they are starting to bring over some of their knowledge on
recycling technologies into Asia. What I see is if you see the
equivalent of WEEE laws starting to emerge in China and Thailand
et cetera, which is being discussed, what the Japanese
will be doing related to their systems innovation is selling whole
recycling factories—not just the technology. They know how
to run these things; they have been doing it since the mid 1990s.
They set these pilots up—Hitachi in 1995—so they know
how these things work. Thinking outside of the box, they are going
to be heavily involved in trying to influence the whole development
infrastructure.
Q94 Lord Sutherland of Houndwood:
I wonder if we could move from production mainly to consumption
now and the issues that arise for consumers. The evidence we have
received suggests that many consumers do not maintain and repair
products and they discard them, often while they are still working.
For example, I still have my gramophone but the main problem is
trying to get something to play on it that it is not so crackly
that you do not want to hear it. Clearly we discard things when
they are still capable of use. We have mentioned the telephones
already. Are there ways in which consumers can be influenced into
a different culture, a different way of doing things? If so, who
should try influencing them?
Dr Cooper: The evidence is quite stark. The
trends recorded in the Family Expenditure Survey suggest
the average household now spends 60p per week on repairs; it is
virtually nothing. Take footwear—there was a time 40 years
ago when a third of all spending on footwear was on repair work;
those days have long gone. It is an issue which needs to be addressed.
On the positive side, many products are more reliable than they
used to be in the past. Gone are the days when we had our first
colour TV and rented it rather than bought it because we were
a bit worried that it would break because it was a new technology.
There have been improvements in reliability and this partly accounts
for the trend; but it is also undoubtedly the case that people
have lost the sense that such products are investments for life.
They buy them, move the old ones out and get new ones in. My Centre's
survey on appliances found that 40 per cent of consumers rarely
or never get their appliances repaired and the reason for that
(no great surprise here) is cost. All too often the price of new
products has come down as the products are made in countries where
labour costs are very low, but they would have to be repaired
in a country where labour costs are relatively high—the
so-called "repair cost scissor". This is a problem.
As to what to do about it, there needs to be cultural change but
culture is hard to change. It obviously has to start off partly
in our schools, universities, churches, mosques and the other
ways by which people develop their values in society. I think
there are also shorter-term and practical ways in which advances
could be made. In Austria, for example, one of the countries which
has been taking a lead on repair work, they have done some research
of different fiscal incentives. There was a European Union study
into fiscal incentives which explored the possibility of reducing
VAT on repair work, for example, as a means of tweaking prices.
They found that this measure was not going to be as effective
as reducing taxes on labour for repair work, which would be more
likely to have an economic impact and bring the relative cost
of repair work down. In Vienna they have quite a large community
reuse programme and publish an annual guide to repair services
to get information to consumers. I do not know if others have
the same experience as me, but trying to find a repairer who you
can trust is often the problem. The guide lists several hundred
repairers just in the city of Vienna alone, although identifying
reliable repairers is another issue. To go back to my earlier
point about the power of marketing, I think there is a need for
a slightly different form of system innovation here. Take the
example of footwear and the system of how we obtain shoes; we
buy shoes in one shop and get them repaired by a different company.
In other words, the company that is selling us the good has an
incentive to get us to replace those products as quickly as possible
to maximise their sales. They do not really have a strong incentive
to repair them because the repair shop is owned by a different
company. I think there is a need for change by all parties. I
must conclude by saying that in the retail sector repair services
are often invisible. I have been to a well-known department store,
and probably like you I keep my goods for a long period of time,
whose staff were surprised when I brought an item back and asked
if it could be repaired. It was a bag I wanted restitching and
of course they could get it repaired—but there was nothing
to advertise that fact. The retail environment is very much about
the linear economy, the fast throughput economy—buy it,
replace it, buy it, replace it—and I think there needs to
be a change in the very structure of how we do retailing to encourage
people to buy the service and not just buy the product; the service
being the ability to use a product over time.
Q95 Lord Sutherland of Houndwood:
You mentioned the Austrian example, which sounds very interesting.
Did Japan do anything in this area in this huge change of culture
on the business side to prepare the public for the idea that things
would be recycled and possibly repaired?
Dr Cooper: I have not done work in Japan. I
know they are said to have a culture of caring for products. I
do not know if Martin knows more.
Q96 Lord Sutherland of Houndwood:
Should our Government be doing anything, is the question?
Mr Charter: I do not know if the retailers in
Japan are doing anything. What I do see there is that they have
cascaded it. The initial thing is work on the government consumer
and that has then impacted on the business. They see working on
the consumer, and therefore through retailers, as a longer term
strategy, so they have prioritised the way they are dealing with
the different consumption chains. I do not know Japan but certainly
the fact that Wal-Mart and now Tesco's, Marks & Spencer's
and Carrefour and the other big retailers are starting to move
on this agenda, I am sure the big Japanese retailers at the high
level will be starting to look at this more.
Professor Pollard: A well-publicised example
of what Dr Cooper is talking about is a company called Interface
which makes carpets in the States. They have a service mentality
towards their carpets. What they have done is they have minimised
the use of oil in their carpet, they have made a random design
on the carpet so if there are spills aspects of the carpet could
have been taken out and replaced with new carpet which matches
into the old carpet, providing much greater longevity of the product,
and that is a successful and well-publicised example of what is
called product service systems that Dr Cooper was talking about.
Q97 Lord Haskel: If I could just
explain, Interface make carpet tiles, that is the way they do
it.
Professor Pollard: They do, that is quite right.
Mr Charter: Just to add, as part of their advisory
group, they found problems with that service model in the fact
that they are having to change the whole way they sell the product.
They have had to adapt their whole marketing strategy to deal
with not selling outright purchase which they have actually found
more difficult than it sometimes appears in the public domain.
Q98 Lord Sutherland of Houndwood:
In our economy, by and large, it seems to be that it is only the
very expensive things like motor cars where repair is built into
the system and central heating systems where, if you have boilers,
they will service the boiler and so on. Are there any other sectors
that are not high cost that are moving in this direction? You
have instanced carpets.
Dr Cooper: I do not think there are other sectors
moving in this direction at all. In fact, it is the reverse. I
have certainly spoken to one electronics retailer and they have
said that every year fewer and fewer of their products are worthy
of repair. It is getting to the stage now where even things like
washing machines are becoming increasingly irreparable. You asked
if there is more that the Government could do. I think there is.
I know that the Chancellor has been in discussion with colleagues
in Europe about preferential treatment for greener goods, and
the discussion that I mentioned was taking place in the European
Union a few years ago, about encouraging repair, was also linked
to creating jobs because of course one of the advantages of repair
work is that it brings jobs to the UK economy. I think the Government
would do well to investigate the possibility of greater fiscal
incentives towards repair work.
Chairman: I think, gentlemen, that is very helpful.
Lord May?
Lord May of Oxford: Can I apologise because
after this I am going to walk out because I have got a meeting
with Geoff Rooker about the Climate Change Bill, but in the paper
that two of you prepared for us there are some very interesting
comments cautioning against setting targets and the like in absolute
terms without taking account of population change. One of the
great silent issues in the whole climate change discussion is
population which went off the agenda. It is not even mentioned
in the Millennium Goals of the UN, as a very deliberate result
of pressures from certain quarters. Would there be time to just
ask about that for a moment or two or should we just note it for
the future?
Chairman: I think it would be simpler because
this is breaking new ground. There may well be other issues—and
there is certainly one area that we have not covered this morning
but we thought we would write to you—and perhaps we could
also write to you on this population issue. This is a dimension
which we have not really covered.
Lord May of Oxford: They have raised it very
thoughtfully.
Chairman: It is something that we have not picked
up on and we could maybe come back to you on that. I have to say
that there are not too many issues on which we need to come back
to you because you have been extremely frank and open and thorough,
although I think you have probably given us more problems than
you have solved for us. That is perhaps the best compliment we
can give you! Thank you very much for your time this morning and
we will be in touch on a couple of outstanding issues.
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