Source
ESB
December 14, 2005
RoHS
deadline: Closer to ready
Component
suppliers are getting into reasonable shape as they prepare to meet the July 1,
2006 deadline for compliance with the European Union’s Restriction on Hazardous
Substances (RoHS). According to a study that Technology Forecasters Inc. of
Alameda, Calif. prepared for Avnet Inc., 82 percent of suppliers do not expect
the RoHS transition to extend lead times. In another piece of good news, most
suppliers are willing to absorb the cost of transitioning to green parts. Only
28 percent indicate they will pass along price increases, and those raising
their prices say the increases will be slight.
Most
suppliers say they will be fully compliant by the July 1, 2006 deadline. The 20
percent that indicated they would not be ready by next summer are either exempt
from the RoHS directive or they don’t distribute to companies that sell into
the European market. The number is considerably lower than the 31 percent of
component suppliers who last year said they were not sure they would be able to
make the RoHS deadline.
The
road to compliance has taken longer than most parts suppliers anticipated. Last
year, more than 60 percent of suppliers expected to cross the line into
shipping the majority of their orders with compliant parts during 2005. Only 36
percent actually achieved that self-set deadline. Now, most suppliers don’t
expect to cross the 50 percent threshold for shipping green parts until 2006 or
beyond.
So
far, it looks like shifting suppliers can solve any gaps in compliant parts.
Officials at Chicago-based distributor, Newark InOne, say they have no holes in
their selection of lead-free components. They attribute this to their broad
line card. If one of their suppliers doesn’t have a particular connector in a
compliant version, then another supplier does. We have heard of some cases,
where OEMs have had to go to new suppliers from Asia in order to find what they
need, but we have yet to hear any stories about compliant versions of parts
becoming unavailable altogether.
Michael
Kirschner, president of Design Chain Associates in San Francisco, finds that a
good portion of the supply chain is already compliant. He does note, however,
that compliance is uneven across different types of parts. “We see most PC
board-mounted active and passive part manufacturers well on the way [to
compliance], with most, but not all, of their parts,” says Kirschner. “When you
get to electro-mechanical and mechanical, they’re not as far along.”
Kirschner
believes that interconnect component manufacturers may be having more difficult
than most suppliers. “Some are better than others in the interconnect space,
but they have a part proliferation problem, as lots of parts are
single-sourced,” says Kirschner. “Plus, they have a gritty supply chain that
includes lots of regrind and recycled materials. Cleaning that up will be a
challenge.”
He
notes there are some areas of the component business where suppliers are still
not fully aware of RoHS. “When you get to the subassembly and module
manufacturers, the questionable quality of the supply chain really becomes
apparent,” says Kirschner. “Some will tell you that they’re compliant – or at
least tell you when they will be compliant – but others won’t even return phone
calls and when you finally get hold of them, they have trouble spelling
R-O-H-S.” He notes that product manufacturers need to find new suppliers
quickly if their present suppliers don’t look like they’re going to be ready.
“At this late date, OEMs need to be taking draconian measure with their
non-compliant supply base,” adds Kirschner.
One
positive example comes from Panasonic of Osaka, Japan. The company announced in
October that it has become RoHS compliant on 96 percent of its products, which
adds up to 1.32 million items. The company reached that impressive milestone
back in March, more than a year before the RoHS deadline.
To
accomplish going green, Panasonic worked with more than 11,000 suppliers
worldwide, completely refuting the notion that OEMs will be held back from
compliance because of slow suppliers. As well as become RoHS compliance,
Panasonic also created a Website dedicated to consolidating material-content
data on thousands of suppliers. With
large companies such as Panasonic proving you can go green early and with
distributors having little difficulty presenting a full line of compliant
parts, OEMs should be in good shape to make next summer’s RoHS deadline.
Visit sourceESB.com for all your sourcing needs.
We would like to hear from you. Please e-mail article feedback or comments to esbideas@primediabusiness.com