Core Competency

The USS Merrimack was a 4,636-ton steam frigate built at the Boston Navy Yard and commissioned in February 1856. After four years of service in European and Pacific waters, she returned to the Norfolk Navy Yard in Virginia, and was decommissioned in February 1860.

Merrimack was still there receiving repairs when the state of Virginia seceded from the Union in mid-April 1861. In an effort to make her unusable to the Southern cause, Federal forces burned and sank Merrimack as they withdrew from the Norfolk Navy Yard on April 20, 1861.

On June 23, 1861 the Hon. S.R. Mallory, Confederate Secretary of the Navy, ordered that the USS Merrimack be salvaged and converted into an armored casemate ironclad.

Albeit dramatic, the salvaging of the USS Merrimack fits with the modern day explanation of remanufacturing as defined by The Remanufacturing Institute (TRI):

'Remanufacturing is the process of disassembling products during which time its components are cleaned, repaired or replaced and then reassembled to sound working condition.'

Since that Civil War era repurposing project, remanufacturing has grown into a significant revenue stream for many companies in many industries. Henry Ford was an early adopter of full-scale remanufacturing as we know it today. During the Depression, Ford 'authorized' a number of his dealerships to remanufacture engines and other components. Today the automotive industry remains one of the largest segments of the $53 billion remanufacturing market.

Remanufacturing is broken into two sub sectors: capital goods and consumer durable goods. Capital goods remanufacturing is by far the more mature segment of the market and one that encompasses the off-highway industry.

The off-highway component

The message is fairly consistent among OEMs and component suppliers in the off-highway industry. While experiencing impressive success today, many entered the field of remanufacturing only because their customers demanded it.'Our program started in 1973 at the request of one of our customers,' says Steve Fisher, general manager of Caterpillar Remanufacturing Services. 'Basically they said they would only buy new product from us if we offered them a remanufactured product as well.'

The first remanufactured product that Caterpillar offered was a medium-duty on-highway truck engine. 'Frankly, at that time and for the first part of our reman journey, it was viewed by the company as a necessary evil. It wasn't something we did because we chose to, rather because our customers required it.'

Bruno Jost, remanufacturing manager for Bosch Rexroth, tells the same story about the origins of remanufacturing in his company.

'In 1994, when Rexroth was still owned by Mannesman, we were approached by our largest customer. They wanted to start a remanufacturing program with us because they had this type of program in place with other component suppliers,' says Jost.

Since those reluctant entrees into reman, there has been a significant shift in corporate attitudes toward remanufacturing activities at both firms. Fisher recalls that in the mid- to late-'90s, Caterpillar began to realize the full potential of remanufacturing.

'First, it's a great value for the customer, says Fisher. 'Warranty is same as new, quality is the same as new and reliability on reman products is the same as new products, but it's anywhere from 40% to 60% of the cost of a new product. Second, there is the social responsibility aspect. Remanufacturing is the ultimate form of recycling.'

And finally adds Fisher, that if it is done well, remanufacturing is 'a very attractive business.'

Over the last five years, Cat's remanufacturing business has doubled in size and scope. And they expect it to double again over the next five years.

'Technician in a box'

As off-highway equipment and components become more electronic, the level of sophistication needed to repair those product increases. And it is no secret that there is a shortage of skilled technicians out there. So remanufacturing becomes a viable alternative for dealers and others who traditionally repair products, but today do not have the resources or know-how to do so.