Word: remaning
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...European facility. Each month, it processes 15,000 worn-out, grime-encrusted engines and parts. Caterpillar has moved beyond remanufacturing just its own diesel engines and components; 40% of the automotive, truck, rail and marine motors and parts remanufactured in Shrewsbury were originally built by other companies. Fisher calls reman a "nicely profitable business." How profitable? Cat does not break out the figures, but Fisher says the returns are "above average," and Nasr notes that profit margins for some reman goods are double those of new products...
...environmental arguments for reman are equally compelling. The amount of raw materials saved annually worldwide by remanufacturing is 14 million tons, according to a University of Bayreuth study, or enough to fill 230,000 railroad cars - that's a train 1,860 miles (3,000 km) long. And while current European Union regulations dictate that only 15% of an auto can wind up in a scrapyard, that percentage will drop to 5% in 2015 - a requirement that should boost the industry's growth, since remanufacturers need a steady supply of broken-down goods for the process to work efficiently...
...waiting for regulators to drive its business. To attract old parts otherwise headed for the junkyard, the company has devised a trade-in scheme that gives customers an incentive to return worn-out goods to its distributors. If the part is deemed remanufacturable, the customer gets an already remanned replacement at a fraction of the cost of a new one. Cat is also a service provider, advising other manufacturers how to set up a similar system, or in some cases actually running their reman efforts for them. In Europe, for instance, Cat helps Land Rover manage its remanufacturing operations...
...Caterpillar's reman business is also influencing the design of the company's original parts. The firm's reman engineers now work closely with designers to produce components that will be easy and profitable to revitalize years later. "That's an absolute key," says Fisher. "It's designing for several life cycles." Take those cylinder heads, for instance. When they're first cast, they're now given a slightly thicker layer of metal on top in expectation that they will ultimately be milled down several times. Fisher says that makes the original manufacturing a bit more expensive...
...Hefty profit margins are the main driver of Caterpillar's enthusiasm for remanufacturing and its ongoing expansion into Europe. But reman's practitioners also relish the challenge of giving clapped-out parts new leases on life. "It's all about taking back old stuff in mass quantities and doing something with it," Fisher says. That waste-not ethic is evident on the shop floor of the Shrewsbury complex. Tim Baker, the plant's operations manager, says employees get excited about coming up with new ways to salvage. "Our people are very passionate about not throwing things away," says Baker...