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Impact of Electrical and Electronic Equipment Recycling Legislation on the Western European Plastics Markets
Frost & Sullivan, May 2005
New Recycling Legislation Prompts Shift in Packaging Material Selection
As more and more plastics are being recycled with improved results, the new European Union (EU) legislation - Directive 2002/96/EC - regulating the collection and recycling of waste from electrical and electronic equipment (WEEE) is set to come into effect on 13th August 2005. This directive provides regulations to govern product design, information for users, waste treatment, financing, penalties, inspection, recovery and collection. Manufacturers of electrical and electronic equipment (EEE) are already introducing changes in product design to facilitate the recycling of their products to ensure legislative compliance. While these changes may disfavour plastics altogether or simply reduce the varieties used, it remains up to the plastic suppliers to adapt to the new necessities and exploit potential opportunities, such as additives for recycled plastic.
This Frost & Sullivan research service analyses the impact of EEE recycling legislation on the European plastics market. It quantifies the volume of plastics used in EEE and lists key trends affecting this market. The study also discusses differences between European countries regarding the collection systems, amount of plastics recycled and degree of legislative implementation and analyses possible threats and opportunities. This research service is designed to assist the plastics industry in assuring a strong future in the EEE applications market.
A Consumer Driven EEE Market Favours Demand
Due to technological advancements and changing trends, the life span of products, particularly in the information technology (IT) and telecommunications sectors, is on the decline. As growing consumerism in these sectors drives growth in the EEE markets, shorter product life spans favour plastics not only because of increased consumption, but also because their limited longevity becomes less important. A trend among original equipment manufacturers (OEM’s) has been to replace metals with plastics because of their lower costs and varied design properties.
On the other hand, many European OEMs are moving their production to Asian countries such as China and India. This movement is largely fuelled by the lower manufacturing costs in these countries owing to cheaper labour costs. The reduction of manufacturing in Europe is likely to have a negative impact on the consumption of plastics in this region, notes the analyst of this research. To minimise the impact and take advantage of the lower labour costs, European plastic producers are opening production facilities and sales offices in Asia.
European Union Expansion Offers Greater Market Potential
With the EEE market in Western Europe approaching saturation, enlargement of the EU is likely to open new markets for EEE companies and lead to greater movement of goods and capital. The new EU member states have a higher annual growth rate than the EU-15 countries. Since consumption of both plastic and EEE goods are directly related to gross domestic product (GDP), the growth in Eastern Europe is expected to affect both plastic producers as well as EEE manufacturers positively.
Plastics for the EEE market are usually a small fraction of a plastic producer’s total business and most producers prefer to invest in bigger market segments such as automotive. With none of the main plastic producers focusing on the EEE market, there is a clear marketing opportunity for those that can align themselves with the requirements of the OEMs. Growth is likely to be mainly driven by the replacement of existing equipment and shortening of the lifespan in certain categories, particularly IT and telecommunications equipment, says the analyst. Consumption in Eastern Europe is also expected to grow faster than in Western Europe.
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