Canadian firms set to emulate Europe’s ‘toxic’ battle

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How much did complying with RoHS cost Celestica and Avnet?

Neither company was willing to disclose specific numbers.

“I’ve heard some people estimate that compliance would raise costs by 10 per cent. I think we did a little better than that,” said Celestica CIO Charles Kirk.

Steve Schultz, director of strategic planning and communications at Avnet said at the cost of compliance to the industry as a whole was huge but worth it. “I think it cost the industry billions of dollars, but the real benefit is we eliminated elements that were hazardous.”

When RoHS-like legislation takes effect in North America it may mean additional costs for transnational electronics/electrical products manufacturing companies that have already invested heavily to fulfill the European directive.

That’s because the “emerging restrictions [may not] always line-up with one other,” said Joe Scala, director of operations for global RoHS compliance at Celestica. He said many companies have spent millions just auditing and rewriting their database of components and materials as part of a long process of complying with RoHS.

It’s a concern they might have to do this again to comply with disparate regulations.

Will these costs be shifted to the customer? At least one Canadian analyst says that isn’t likely.

“There may be some costs transferred but these would be hardly noticed,” said Carmy Levy, senior research analyst for the London, Ont-based technology research firm Info-Tech Research Ltd.

Levy expects North America to follow in Europe’s footsteps pretty soon in adopting anti-toxic legislation and practices. “European countries are traditionally leaders in such matters. But I would be surprised if the U.S. and Canada didn’t follow within a year.” However, the analyst says it will be considerably more difficult for RoHS-type directives to be implemented across this continent than it was in Europe.

The cohesive nature of the EU, he said, aids and abets the ratification of accords such as RoHS. The North American market, on the other hand, is controlled by individualistic corporations and governments.

Levy anticipates a patchwork of legislation in North America and said this presents a challenge.

Celestica’s Scala agrees. He said laws restricting toxic substances are likely to be passed – not across the entire country – but by individual provinces or states. And that, he said, would make it difficult for companies to come up with a unified strategy.

A similar situation exists in the related area of e-waste.

As of now, Canada has no countrywide e-waste legislation. However, individual provinces have devised creative ways of responding to the problem.

For instance, Alberta has a program where consumers pay a fee for the collection and disposal of computers, televisions, and other electronic items. The proceeds fund collection and recycling centres across the province.

In the U.S. there are currently no federal laws limiting the use of lead in electronic products. However, in California, the Electronic Waste Recycling Act prohibits the selling of electronic products containing lead in the state. The restriction will go into effect on January 1, 2007.

At least 20 other U.S. states have legislation pending for RoHS-like regulations.

At a recent meeting, the Commission for Environmental Cooperation (CEC) reviewed a draft study on a voluntary program to implement RoHS –type substance restrictions in the U.S., Canada, and Mexico.

The CEC is an international organization created by Canada, Mexico and the U.S. under the North American Agreement on Environmental Cooperation. The body administers the environmental agreements associated with the North American Free Trade Agreement.

Seattle-based Basel Action Network (BAN), a global e-waste watchdog, sees compliance with RoHS as a “win-win situation”. “Manufacturers avoid the risk of liabilities. Consumers get greener and safer products,” said Richard Gutierrez, a policy analyst at BAN. “This is a great step, but we’d like to see more hazardous inputs banned.”

Environment Canada estimates that more than 140,000 tones of computer equipment, phones, televisions stereos and appliances are dumped into Canadian landfills each year. From this waste comes an estimated 4,750 tons of lead.

For decades, consumers and governments have suffered the costs and consequences of toxic materials found in electronics components according to Gutierrez. “Manufacturers were able to externalize the cost of toxic material disposal by passing it on to governments and consumers.” By incorporating anti-toxic waste policies into product design, the cost is transferred to where it rightfully belongs, the BAN analyst said.

With files from Joaquim P. Menezes

To read Part 1 of this feature click here.

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