Second life success
Read time: 5 minutes
CNH Reman supplies farming and construction customers with remanufactured parts, saving them money and reducing delivery times. Its circular remanufacturing process also uses 80 percent less energy than producing new parts
There is no doubt that remanufacturing will be an integral part of a sustainable future. Thirteen years ago, CNH reported sales of around $35 million per year from remanufactured parts. Then, in 2009, the Company set up CNH Reman, a joint venture with Springfield Remanufacturing Corp. (SRC), which now has annual sales of more than $160 million.
The number of employees at Reman has grown from nine to three hundred people since its launch.
Bruce Krueger, General Manager of CNH Industrial Reman North America, cites two reasons for the successful expansion — the combination of the strengths of both partners and the fact that the joint venture has a high degree of independence within the Company.
“SRC has the remanufacturing know-how and an entrepreneurial culture. We’ve got the brand loyalty, the distribution, and the partnerships, so leveraging the strengths of both partners enables CNH Reman to better focus on our customers to exceed their expectations,” he says.
Reman’s factory in Springfield, Missouri (USA) has annual sales of more than $160 million.
Sustainable business is good business
Reman deals with parts including engines and engine components, electrical parts, electronics, air conditioning, driveline, hydraulics, after treatment and harvesting equipment.
The difference between remanufacturing and repairing is considerable. In the remanufacturing process, the core of the tractor or construction vehicle part is returned to Reman’s factory in Springfield, Missouri (USA). It is completely disassembled, cleaned and all parts are inspected and fixed, or replaced with new components if needed.
The unit is then fully reassembled to the same specifications as CNH’s brands' new parts.
For customers, the benefits are clear. Remanufactured parts cost on average 25 percent less than new and come with a two-year warranty with no limit on hours. That compares to a one-year warranty on new parts. “The longer warranty period confirms CNH Reman's confidence in the quality of the remanufactured part,” says Krueger. “Buying remanufactured parts is also quicker — spares can be available as much as 65 percent faster than new ones.”
Remanufacturing also demonstrates that sustainable business is good business. Remanufactured parts require 80 percent less energy to produce than an equivalent new part, reducing the Company’s use of the planet’s resources, as well as carbon emissions.
This activity is both circular and efficient. Reman in North America received over 5,000 tons of products for remanufacturing in 2022.
“We typically salvage around 25 to 30 percent of the materials from the failed parts and don’t have to buy new,” says Krueger. “There will also be, for example, the surrounding engine block that can be reused.”
“It’s clear that remanufacturing is a key part of sustainability. To me, it is sustainability as confirmed by CNH Reman’s mission statement, which is ‘Remanufacturing for a Sustainable Future,’” he adds.
THE TWO-YEAR WARRANTY VOUCHES FOR OUR CONFIDENCE IN THE QUALITY OF THE REMANUFACTURED PART
Long-term, global ambitions
To date, Reman has been primarily a North American joint venture, making more than 90 percent of sales in the region, and the remainder in Australia and Europe. Now, CNH is seeking to grow its European remanufacturing business to advance its sustainability ambitions. One of the first tasks is to change customer perceptions of remanufactured parts, says Tommaso D’Alessandro, Senior Manager for Reman in Europe, the Middle East and Africa.
“In the USA, you buy remanufactured first if it’s available,” he explains. European customers, in contrast, historically preferred new replacement parts. “In Europe, we’re working toward changing the views of the end users, focusing on customers who are very interested in the sustainability topic.”
In Europe, the business is at an early stage and has fewer parts to remanufacture but D'Alessandro says demand is already growing for what they have. “Everything that comes in is sold in a split second,” he adds.
CNH’s ambition in Europe is to increase the proportion of parts it recovers for remanufacturing from 10 percent to 80 percent in three years’ time. The company has also committed to the “You return, we Plant” project in partnership with Florence-based company Treedom. Through the initiative, every core returned contributes to the planting of new trees in CNH Reman’s forest.
Globally, its goal is to use 80 percent less energy, water, and raw materials by remanufacturing rather than making new parts by 2030.
GLOBALLY, ITS GOAL IS TO USE 80 PERCENT LESS ENERGY, WATER AND RAW MATERIALS RATHER THAN MAKING NEW PARTS BY 2030
In 2022 Reman in North America received over 5,000 tons (10.3m Ibs) of failed products for remanufacturing.
Future-proofing new parts
“The great advantage of remanufacturing is keeping parts in service for longer. Reman works on engines and other parts dating back to the 1960s,” says James Collins, Head of Sales and Marketing for CNH Reman in North America. But he points out that the business also has a clear focus on the future, looking to ensure that as many vehicle parts as possible can be remanufactured.
Krueger says that vertical integration within CNH helps to ensure sustainability because new parts can be designed with a view to remanufacturing them at a later date. “The Company’s strategic sourcing group is also talking to suppliers about making parts in such a way that they can be remanufactured, rather than us working out how to reverse-engineer them after they come to us.”
As more of CNH’s brands' machines will be electrically powered in the future, and contain increasingly sophisticated electronics, a greater share of vehicle components are becoming electrical and electronic.
So in Europe, D’Alessandro’s team is working with an Italian university to research how they can recover more of the raw materials from electronics. In North America, Reman is also carrying out more repairs on electrical and electronic components, and although the repair business remains small in comparison to remanufacturing, it grew by 63 percent last year, says Collins.
There is great support for widening the virtuous circle of remanufacturing at every level of the Company, says D’Alessandro.
“Remanufacturing makes us more reliable and more resilient. People within the Company totally love what we do. The more you do it, the more you see the benefits,” he adds.
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