CHINA: Volvo CE’s China Remanufacturing Center in Shanghai draws on more than 70 years of remanufacturing experience
by Wenming Dai
Remanufacturing is the process of renovating used products to the same condition as new products. It minimizes the use of raw materials and limits depletion of the earth’s mineral resources. With respect to both environmental care and lowering costs, people are becoming more willing to recycle, reuse and make the best use of limited resources.
Volvo CE feels this should be no different in the construction industry – as evidenced by the Volvo Reman program, arguably one of the company’s most resource-friendly initiatives, offering customers a range of revitalized components.
For Volvo CE, remanufacturing involves more than just recycling and reuse: it starts as early as the component design phase and covers its entire life cycle.
Machine components that have reached the end of their life are remanufactured using high-quality genuine Volvo parts. This results in a good-as-new component able to reassure customers that it is guaranteed by Volvo, along with all the machine uptime, long service life and lower owning and operating costs that go with it.
Remanufacturing has been accepted in Europe and North America for many decades where it accounts for up to 20% of dealers’ revenue, yet it is a concept nascent to China. If an engine breaks down, the normal practice is to have it repaired or even changed – the former option could mean unreliable quality while the latter may prove too large an investment compared to the value of the machine.
“The market is big enough, but customers are not yet aware enough,” says Alexander Pajari, Product Support Director for Volvo CE China. “We are working on transforming mindsets, not just products and prices as in any other business,” he concludes.
To Chinese ears ‘remanufactured’ sounds more like ‘repaired’ or ‘recycled’. And for those Chinese who traditionally care about ‘face’ – meaning social standing or prestige – anything ‘second hand’ or ‘used’ is looked upon with suspicion. When customers are faced with remanufactured engines that are cheaper than repaired engines, the tendency is to doubt whether they really are as good as new ones.
“Even dealers look askance when we give them the prices – they think they are just too low to be true,” says Pajari, Director of the Center and responsible for its development.
The 2,000m2 complex built up by Pajari and his colleagues, including Operations Manager Bob Yoo, is located in Jinqiao, Shanghai’s suburban industrial zone, home to many top automobile manufacturers and IT giants.
Unveiled in December 2013, it is Volvo’s first remanufacturing center in China. This joint operation among companies in the Volvo Group provides Chinese customers of Volvo Construction Equipment, Volvo Trucks, Volvo Buses and Volvo Penta with certified remanufactured components that meet the same quality standards as new parts, but at a considerably lower price.
Less than a year old, the new center, which took the team more than 18 months to get up and running, was awarded ‘China’s Most Potential Remanufacturer’ award at the International Remanufacturing Summit in May 2014. With five dealers currently working with the center during the trial phase, it will open its doors to 36 dealers all over China before the end of this year. The priorities now for Pajari and Yoo are training dealers, technicians and workers, and recruiting new staff.
It is a clean and orderly workshop with a huge inventory of engine sub-components neatly shelved for pick-up during the remanufacturing process. However, the tranquility is not expected to last long. “I expect it to become much noisier soon,” says Pajari. There are also plans to expand the workshop or even to build a new site, if the business takes off as expected.
To ensure that remanufactured products match the quality of new ones, the center employs state-of-the-art equipment at every stage of production. The remanufactured products come at a lower cost but with the same warranty as new ones. Compared to new products, they are delivered in a more time-efficient manner to reduce waiting time for customers.
When remanufacturing a component, Volvo CE reuses on average 85% of materials and lowers energy consumption by 80% compared to producing a new component.
With environmental awareness growing in China, eco-friendly options such as remanufacturing are in greater demand now. Pajari believes Volvo CE has the edge over potential competitors, as the Shanghai facility is built on the company’s long history of expertise in the remanufacturing field, supported by a globalized network of Volvo Remanufacturing Centers.
And while Pajari says he is “planting a seed” in China, Yoo has a more concrete dream: “Within the next five years, I hope awareness of the environment and recycling will be everywhere in China.”
EVOLUTION OF VOLVO CE REMANUFACTURING
First established in 1992, Volvo CE’s remanufacturing program has grown into three separate portfolios: factory remanufactured components, components for classic machines, and exchange services. The exchange services program invites customers to swap their full diesel particulate filter for a factory-cleaned Reman DPF from Volvo CE. The full filter is sent to a central Volvo remanufacturing hub to be thoroughly cleaned to 95-98% of its original capacity before being reordered by another customer, thus creating a refurbishment cycle.
The factory remanufactured components service enables customers to buy remanufactured components, such as engines, turbochargers, transmissions, and final drives for crankshafts and hydraulic pumps. When a Volvo facility receives a part, it is completely dismantled, inspected, and then cleaned using advanced equipment and processes. Any parts that are damaged or do not conform to Volvo’s wear tolerances are replaced with genuine Volvo parts. The component is reassembled and tested to meet the company’s stringent quality standards, and the part is painted to give it the same protective finish as any other new part.