Source
ESB
April 06, 2006
Bumps
are appearing on the road to environmental compliance in the electronics
industry. For one, not all regions of the world are making equal progress
toward meeting the July 1 deadline for the European Union’s RoHS directive.
Asia is lagging behind North America, and North America is lagging behind
Europe. Meanwhile, non-compliant components may be drying up.
A
recent study by Global Sources finds that more than 90 percent of Asia
manufacturers believe they will be compliant by the July deadline, but some in
the electronics industry doubt those optimistic projections. The Global Sources
survey reports that 91 percent of South Korea manufacturers were compliant last
fall. In Hong Kong, the percentage was 84 percent. Taiwan was 63 percent
compliant last fall, while Mainland China was 50 percent ready.
The
discrepancy in the view of readiness comes from expectations of meeting the
July 1 deadline. While manufacturers were claiming they’d meet the RoHS
deadline, those on the ground have their doubts. “We have a sale manager
dealing with a contract manufacturer in China, and they don’t expect to make
the date [RoHS deadline], and they don’t want everyone to know they’re not
going to make the deadline,” says Jim Smith, SVP of warehouse and distribution
worldwide at Avnet Electronics Market, a division of Avnet Inc. “They don’t
expect to be compliant until November.”
Smith
notes that Europe leads worldwide regions in RoHS readiness. “Europe ramped up
quickly, they’re already ordering 70 percent or greater in compliant parts,”
says Smith. “Manufacturers are moving more aggressively in Europe than in North
America or Asia.” He notes that Asia, particularly China, is the lagging
region. “The adoption trend in Asia is very slow,” says Smith. “Our order rates
for products are still predominantly in non-compliant components.”
Some
companies won’t be able to stand up and say they’re compliant because they
don’t have the compliance documentation, either materials content data or compliance
certificates. Component suppliers that have long been compliant haven’t
necessarily seen the need to issue documents assuring their products’
compliance. “In some cases, the product has always been compliant, but it
hasn’t been certified,” says Smith. “Or they say the product has been compliant
for a long time, but the part number hasn’t changed to indicate that it’s now
compliant.”
Some
companies in North America and Asia are hoping the European Union won’t come
down hard on non-compliant companies immediately after the July 1 deadline. “As
we’re getting down to the deadline, there seems to be a feeling that it’s not
going to be strictly enforced,” says Smith. “There is speculation that they
will not insist on compliance on July 1.”
Smith
believes some manufacturers may end up surprised by the zeal with which
compliance will be enforced by European government bureaucrats who are strongly
in favor of environmental laws. “It’s both a political issue and a competitive
issue in Europe,” says Smith. As for the political issue, government officials
may take a hard line on post-deadline non-compliance. “Americans like to think
they’re concerned about the environment, but we have no idea of the political
issue it has become in Europe,” says Smith.
As
for the competitive issue, Smith believes companies that ship non-compliant
product have to worry about competitors tipping off the government about their
non-compliant products. When Sony was told by The Netherlands government to
withdraw 1.3 million PlayStation game consoles just before Christmas in 2001
because the games’ cables contained cadmium – outlawed by the Dutch government
at the time – industry watchers speculated the government had been tipped off
by a PlayStation competitor.
In
the middle of the trend toward compliant products, the exempt or non-compliant
market for components is tightening. “Just last week we head from a couple
suppliers of significant prices increases for non-compliant product,” says
Smith. “Many anticipated price increases for compliant components, but that
hasn’t been the case. We’re seeing increases in non-compliant products, and the
lead time for non-compliant product is stretching out while the lead time on
compliant product stays the same.” He also notes that he is seeing an increase
in end-of-life notices on non-compliant product. He believes that the market
for non-compliant product is shrinking so manufacturers are phasing it out.
“It’s pure economics,” says Smith.
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