Europe, and not only Europe, is experiencing a significant sensitivity to environmental aspects. We saw it during the last Summit in the U.N. in New York; we can see it on the street demonstrations that take place every week, and the growing number of representatives from green parties that get elected in our parliaments. People are becoming aware that our impact on the environment is causing damage and endangering our own survival. This strong awareness is so powerful that it is one of the significant drivers of change that is taking place in our world. Through the vision of the car industry, we will try to explain what opportunity this is bringing to the printing industry.
All of a sudden everybody is talking about the Circular Economy in which most industries should adopt. While the Consumer Economy aims to produce in a manner that guaranties more consumption (we all know the story of the lamps and the technological obsolescence that makes them last for a predefined number of years), the circular economy focuses on satisfying needs. It stands on three legs: the economic leg whereby the activity must be economically sustainable; it other words, it must be competitive compared to alternative solutions. The ecological leg draws a scene that shows an activity with no environmental impact. Finally, the social leg of the circular economy focuses on how the activity impacts the society such as the employment (their transforming, creating new ones or destroying jobs). As a consequence, shifting to a circular economy is not an easy task: the current model is based on a consumer economy which we all know is very inefficient. And the circular economy is all about designing in a way that whatever is not consumed can be used again and again. So, logically, one would expect the global production to drop, with a potential negative social impact.
Some may disagree when we say that the consumer economy is inefficient. Let’s explain this. Traditionally, we have used the word “efficient” from a pure economic material perspective. But more recently there’s been a consensus to include the environmental costs in the equation. As a result, while some years ago throwing away 1000grs of plastic with some chemical powder in it and a small circuit had no cost for the manufacturer, distributor or the consumer, nowadays the obligation to recuperate the empty cartridge has a monetary cost… and a social cost too. Consequently, the more difficult it is to neutralize an empty cartridge, the more its cost grows. We may think that this cost, following the European regulation, is included in the environmental tax that cartridges are charged. The reality is much different: while the tax is supposed to subsidize the cost to dispose or reintroduce the cartridge into a production line, the tax amount does not pay for destroying cartridges which plastic does not even comply with RoHs (Restriction of Hazardous Substances Directive) that prevents the usage of substances that are toxic, can be easily destroyed and that are bio cumulative in the living bodies. And if it comes to dismantling the cartridge to separate the different components, some experts even question if this fee is enough. “The industry has experience in managing certain electronic waste such as TVs and other electronic equipment”, they say. “But the cartridge adds a complexity never considered before” (mainly due to the chemical products content like the toner). So it seems that the only cost that the fee is really considering is the one associated with collecting the cartridge and it being remanufactured for the same use. In the printing industry, only a low percentage of empty cartridges return to the market. According to the EC, in 2017 520 million cartridges were sold in Europe, but only 20% were recuperated. Every year a football stadium filled with cartridges (empty and not so empty) vanishes. Vanishes? Not literally, but in reality, this means that 416 million cartridges are generating a hidden cost (polluting the water, killing animals and plants…). This cost must be recognized and accounted for as a liability to the balance sheet of the printing industry. This per se is enough to conclude that the industry is very inefficient even though the global P&L looks sane.
Of course, shutting down printing is not an option. If we had to do the same with all industries that are inefficient, we would return to the Stone Age (which had big inefficiencies too). Instead, the industry players must address certain production abuse and focus on eliminating the habit of producing single use products.
Reluctance of Legislators
The awareness of environmental problems is inherent to a society’s degree of development. This tide is not only impacting the printing industry. There is pressure over the whole production model that is based on a consumption society. But shifting to a circular economy model has a cost that is far from being negligible. The price for certain goods will increase while sales will decrease in response to a drop in consumption. Though long term the system will readjust, short and medium term the consequences will be unpleasant. Some jobs will disappear. Some other jobs will require less employment. And new jobs will arise little by little in the long term. It is easy to understand why the politicians are reluctant to take any action (I am talking about effective actions, not announcements): whoever is the first to take the decision, he will pay the political cost if causing unemployment and the failure of many traditional businesses. But the next generation of politicians will benefit from the brave decision of the first. So, who wants to be the first? The circular economy responds to a production model that in some aspects is different to the global economy that we’ve been living in for the last 20 years. Not only the remanufacturing activity is intensive in man labor, it is also quite local and does not benefit so much from scale economies. In other words, the circular economy pushes local businesses in charge of reconditioning the products for their re-introduction in the market. Huge remote hubs where production takes place for a worldwide market do probably make less sense in remarketing than in manufacturing.
Up until now we have described a scenario where the industry is reluctant to do anything, the legislator is afraid of imposing some new rules, and the society is more and more active in demanding valid solutions. To complete the picture, one must consider some other circumstances of today’s world. The first one is that the growth of the economy is decelerating significantly, with even no growth in some European countries. Some economists say that the economic cycle is at its end. The ECB is inviting countries to spend public funds to activate the economy (just the opposite of the guideline since 2007). This means that the governments would put money on the table to activate the production. The question is: the production of what? Infrastructure? Do we need more roads or airports?
The second aspect to consider is the permanent energy blackmail risk that the European countries suffer under. Since October 1973, most of the economic events can be explained by some kind of decision coming from the OPEC. Such is the dependency of our economy on petrol that, both foreign policy and internal policy are strongly influenced by the need to ensure this source of energy.
The third aspect is new in the scenario: the capacity to generate energy from sources such as the sun and the wind. Indeed, there has been a huge improvement in the last 5 years. The scandal of Volkswagen (the falsified CO2 records in its cars) has worked as the trigger to force the reinvention of the automotive industry. This falsehood is the evidence that the industry can no longer develop under the same path; that the engine based on petrol has reached its point of maximum efficiency, and as a consequence, it is time to replace it and pursue something else with the goal of neutral environmental impact.
Surprisingly the industry has managed to lead this shift. The lack of credibility, the pressure from the society and more and more encouraged governments (please note that this all three elements work as a vicious circle where one feeds the other and the other pushes the one) are the nucleus of an explosion that has many ancillaries in all industries. While the car manufacturers are investing thousands of millions of euros to make this change (the effort is so huge that it includes building new facilities to manufacture the new engines and electronics and the acquisition of software companies, the success of their effort depends on activating the demand from consumers, which faces 3 obstacles: first is the price of the product. Mass production will take care of that. Second is that the consumers must perceive they really need to replace their current 3 years old car. This, the government is already “influencing” through restrictions that apply to traffic in the cities and other approaches. Third is to ensure that the new energy supply for the cars is easily available. Let’s not forget that the current network of gas stations has been built over the last 75 years, and is useless to the electric car. Petrol stations must convert themselves into energy stations. But, are there enough? An electric car takes 10 times longer to charge the batteries than to fill petrol in a car’s tank. If a similar demand for energy is expected for electric cars, then there must be 10 times more electric plugs than petrol pumps. A huge investment is certainly required, and private funds are not showing enough interest. This is where the wonderful confluence of all the four aspects we have identified work in perfect congruence.
The demand for a solution to the environmental problems, public funds ready to invest, the dependency on petrol imports and a clean technology that is efficient and is available conform the base of the next economy revolution: the environmental revolution. How this works altogether and how we can learn from it in the printing industry is something we will talk about in the next article.
In the previous article, we explained how the car industry has transformed (or should we say that it is transforming), triggered by the Volkswagen case about false metering emissions. Let’s do a recap. The car industry had been long time be reluctant to change its production and trade model, as much as the legislator was afraid of imposing new rules, despite of the increasing pressure from public opinion. The discovery of falsified information about metering emissions from some large manufacturers increased public pressure and empowered the politicians to say “enough”. Suddenly, from one day to the next the industry declared the end of the combustion engine, even though this shift implied huge investments from the manufacturers, and sharp changes in the infrastructure, such as the need to multiply the number of energy stations and to ensure that the production of electricity goes hand in hand with the new demand. The private funds are not showing enough interest to finance the investment needed, but in parallel, the governments have received a request from the ECB to spend 40 billion euros to energize the economy. This confluence of elements is working in perfect congruence to fuel the shift from a petrol base economy to a sustainable economy.
How is this going to evolve is something we will only confirm in the following months and years. But very likely, governments will use their financial capacity, nowadays available, to massively invest in deploying an infrastructure that attends the growing energy needs for new electric cars. This will compensate the slowdown of the economy, as much as it will provoke the enthusiasm or the green supporters. But not only that, long term there will be a collateral effect that will positively impact the economies. The need for petrol will sharply diminish freeing billions of Euros from the countries’ balance of payments. The increasing demand for electricity must, of course, be produced using the sun and the wind as sources of energy. Long term, the investment in using clean energy will be paid in large by the savings getting rid of the petrol bills.
The example of the car industry contains two lessons: first is that an industry must know when time has come for change; if one waits for external factors to trigger the change, one must be ready to face the risk and the cost of losing the control. The motion industry lost the control when the change exploded; although it managed to get it back, it had to pay a multibillions bill. Second lesson is that a reasonable change always pays for itself. Long term, investing in efficiency always pays for itself. And nowadays we have learned that the environmental impact is a fundamental element of the costs, no matter what business you are in.
Needless to say, the printing industry is not facing the same situation. But, like any other industrial activity, it is and will be deeply examined from an environmental perspective and will have to pass or fail. In the first part of the article we explained why printing is so inefficient when the environmental costs are added to the existing recognized cost. The industry is based on a consumption model whereby a cartridge is used once. This single usage of the cartridge generates a cost that up until recently was not part of the price of the cartridge.
But it has not always been like this. Indeed, soon after the inception of the desktop printers, some pioneers identified a business opportunity by picking up and reutilizing the empty cartridges. Honestly, I do not think that in their mind they were acting with any kind of environmental purpose. No matter what the reason was, they established the base to turn the printing industry into an environmental neutral operation. Indeed, the cartridge remarketing activity operates as a scrap yard which takes in the waste from printers, which then reutilizes the materials to produce new printing resources that feed the printers again.
Like the car industry, printing has enemies that claim the end of it. Surprisingly, these are inside enemies: we hear too often IT stakeholders talking about Paperless office as the only future. Such direction is a dangerous fake: “dangerous” because it creates the illusion that the printing activity is dead, and as a consequence it scares away the necessary investments; “fake” because printing has demonstrated it is still necessary (just an example: primary schools that 10 years ago started to work with tablets are now re-introducing the paper books, in an effort to slow down the significant increase of myopia among the young students – https://medicalxpress.com/news/2019-02-screen-linked-epidemic-myopia-young.html). While the information is most of it now stored electronically, printed paper is still irreplaceable for communicating or for working. One does not question the advantages of storing the data in an electronic format, but what it is evident is that paper remains a very valid and necessary output to access data in many circumstances. Therefore, if printing is still a social need, one would expect from this industry that it works on a solution to improve its weaknesses, instead of destroying itself.
In Europe, the public administration has seen the opportunity to intervene. Pushed by the global environmental protection feeling, the European authorities are currently working in 3 initiatives that will soon have a relevant impact. The Green Public Purchasing Criteria for Imaging Equipment is about to be published. The revision of the Voluntary Agreement for the Printing Industry is under discussion. And the “ecolabel” for cartridges appears to become the third. In all three, ETIRA is playing a relevant role and proactively contributing. These tree initiatives have in common one thing: the circular economy as the goal. In other words, Europe wants to shift from “produce clean” to “re-use more and produce less”, and the world of cartridges is the perfect starting point.
Here we find the first mayor difference compared to the car industry: the printing industry is trying to lead the change and supporting the initiatives from the EC. All the remanufacturers and most of the manufacturers (OEMs) are moving forward together. But this was not always like this. The current situation is the result of many years of lack of respect for the rules of the game (such as infringements of patents, selling low quality products where there is no possibility for the buyer to notice, and breach of European RoHs), all for the sake of selling more thanks to the cheapest price. This lack of agreement between stakeholders in the past explains why the customers perceive only one difference between cartridges: this difference is the price. And we’re not talking about home printer customers. Has anyone seen a public bid where price is not the main argument to beat? And, how many public bids have you seen where the customer wants to have evidences of the performance of the cartridge? Taking into consideration that the players in this industry have not been able to educate the market about what must be looked at when buying a cartridge, one welcomes the EC initiatives to do it instead.
The lack of effective communication between the stakeholders, specifically between OEMs and Remanufacturers, has flooded the European market with SUCs (Simple Use non OEM Cartridges) that are now driving everybody crazy. Why now? Because since the incorporation of cartridges to the WEEE (Waste Electric and Electronic Equipment Directive) it’s been noticed that a big portion of the cartridges that are collected have entered the market without declaration, without control. Most of them do not even comply with mandatory chemicals rules such as RoHs . In other words, because there is now a legal obligation to track all used cartridges, we are getting visibility of what type of cartridges have been sold and are still being sold in Europe. It is difficult to size the problem after so many years of lack of control. But now that we have visibility, there is no alternative other than to react and to “clean up” the market. The printing industry has the knowledge and the technology to become the first among many sectors to put in place a circular economy that is economically efficient, neutral to the environment and with a positive social impact in terms of the creation of local jobs.
How this will be done is up to the stakeholders (remanufacturers and OEMs) to discuss, agree, get the support from the legislator… and execute! But one would not like to finish this article without providing some hints about what a solution/s must incorporate:
- Track the cartridges: each cartridge must be tracked from manufacturing, to usage and then disposal and re-utilization.
- Re-use: no cartridges must be of one single use. Tracking would control it.
- Transparency: make transparent to the buyer and to the government agencies aspects such as the life of the cartridges, the number of times recycled, the amount of pages actually printed, and the companies involved (manufactured by, remanufactured by)
- Educate the market to efficiency: the buyer, public or private, company or domestic, has the right to know that comparing prices of cartridges does only make sense if the cartridges are all performing the same and free from any toxic component. Price should not be anymore the most relevant criteria in a public bid. Instead, the performance (cost per actual page printed) and the capacity for re-utilization of the cartridge must be the priority.
The printing industry has still the opportunity to turn the situation into a winning situation for everybody. Initiatives such as “1 Million Cartridges” (1MC) supported by most of the wholesalers in Spain is a clear example of how some market players are trying to take a leadership to shift the market. The 1MC Initiative provides to the university student’s the knowledge of how to avoid any impact on the environment by simply verifying what they buy. A knowledgeable buyer is the best marketing campaign that a company that does things right can have. These buyers become the best supporters of a circular economy. One hopes to see more initiates of this kind coming soon in all territories.