How the circular economy can help Trump's aims
21st November 2016 | Catherine Weetman
Author Catherine Weetman gives her take on how a Trump presidency could benefit from the circular economy
The U.S., along with the rest of the post-industrial world, faces complex issues: manufacturing jobs lost, real wages down, and dependence on fossil fuels and imported goods. Instead of making sweeping statements, Trump could sweep up waste to make new products and grow remanufacturing (already worth U.S. $45 billion each year).[i]
Trump’s campaign included bold promises: to re-shore manufacturing, to create 25 million new jobs, and to double economic growth. CNN notes that ‘Trump's plan calls for lowering taxes, removing “destructive” regulations, increasing U.S. energy production, and negotiating new trade deals in favour of American businesses,’ and talk of imposing import tariffs as high as 35 per cent. High living standards and levels of consumption in the U.S. create challenges, with consumer electronics, clothing and machinery helping the U.S. become China’s largest export market. Trump talks about turning around the $350 billion U.S. trade deficit with China. U.S. companies reduce labour costs by outsourcing (or offshoring) manufacture to China, and more U.S. jobs have disappeared as technology and automation improves labour productivity. Resource security is a concern: whilst the U.S. mines a range of metals and minerals, it imports many critical materials, depending on China (especially for Rare Earth Elements, essential for many technology applications) and other countries including Russia and Canada.
These circular economy flows unlock the domestic vs. outsourcing problem by sweating resources:
- designing longer-lasting products ready for upgrading and repair;
- choosing easily recoverable materials for reuse into new products; and
- remembering that waste equals food: extracting valuable elements from end-of-life and process waste to create new by-products and recovering process inputs such as energy and water.
It makes sense to keep materials circulating: keeping the product itself in use, or recovering materials to remake into new products. Dumping waste in a landfill, or exporting it for reprocessing, means re-importing all the valuable resources that were discarded. Circularity in consumer categories could yield approximately 700 billion USD in materials savings worldwide every year.[ii]
Made to be made again
Remanufacturing, restoring an end-of-life product to like-new condition, is well-established in the U.S. Over 6,600 companies supported 180,000 full-time jobs in 2011, increasing exports by 50 per cent in two years across aerospace, consumer products, and many industrial and technology applications.[iii] Trump could leverage the experience of companies like Caterpillar to accelerate remanufacturing.
Along similar lines, 3D printing, or Additive Manufacturing, reduces material input and waste. Companies like GE are investing heavily, seeing potential for 3D-printed components to replace complex sub-assemblies with multiple parts, reducing weight and improving structural integrity. 3D-printed spare parts keep machinery and technology equipment going for longer. The U.S. could deploy 3D printing to enable distributed (e.g. local) manufacturing.
U.S. companies have promised to use more recycled materials, but are struggling to secure supplies. The Economist reports that ‘low landfill fees and a fragmented waste-management system have kept the country’s recycling rate at around 34 per cent for two decades—far lower than most rich countries’. America can recycle high-quality materials to use in new products, rather than downcycling into lower-grade plastics, aggregates, fillers etc.
Economy (not necessity) is the mother of invention
Are these circular economy levers enough to grow the economy? Moving away from low-cost sources, or imposing heavy import tariffs, would increase prices and put pressure on household budgets. The current budget deficit will make it difficult to cut taxes and invest in welfare and infrastructure. Why stick with GDP as the headline measurement of success? Perhaps Trump can adopt a more populist measure, like Gross National Happiness used in Bhutan, and tax use of virgin materials, instead of wages.
Businesses worldwide, of all shapes and sizes, are re-thinking their strategies and delivering new value. A Circular Economy Handbook for Business and Supply Chains will show how organisations across all market sectors are using the circular economy to develop new products, expand markets and future-proof their business models.
For a 3D Printing update, listen to this BBC podcast: In Business: Has 3D Printing lived up to the hype? http://www.bbc.co.uk/programmes/p046f41v#play
[ii] World Economic Forum (2014) Towards the Circular Economy: Accelerating the scale-up across global supply chains, p18 http://reports.weforum.org/toward-the-circular-economy-accelerating-the-scale-up-across-global-supply-chains/