By Mike Schmidt, AEM Director of Industry Communications —
As equipment offerings evolve over time, so do the regulations aimed at addressing what products are made of, where they originate and how they’re manufactured.
It’s no small task to collect, document and share the information necessary to remain compliant with these regulations. However, it’s becoming an increasingly important one for manufacturers of all types and sizes to ensure market access is maintained.
“Perfection is the enemy of progress,” said Chuck LePard, a senior consultant at AEM member company DXC Technology and a presenter at AEM’s recently held Product Safety & Compliance Seminar. “Things are never going to be perfect. But the more data you gather, the more you realize what you need to do to ensure compliance with new and existing regulations.”
The Impact of the EU’s End-of-Life-Vehicles Directive
It’s a lesson automotive manufacturers learned more than two decades ago with the introduction and eventual adoption of the European Union’s End-of-Life Vehicles Directive. The industry was the first to be subject to what’s essentially consumer impact regulations, and the ELV Directive served as the earliest example of a regulation redefining the term “product stakeholder.”
“These regulations say, if somebody buys your product and doesn’t maintain it properly or dispose of it correctly, the people who live around the consumer or the professional who bought your product can be impacted by it. That was a big deal because, for the first time, people were stakeholders who you had no clue were stakeholders, and you had no control over what your customer did with your product,” explained LePard.
The ELV Directive covers various design aspects along the automotive product lifecycle, including preventing the use of specific substances in vehicles. Regulators identified heavy metals such as cadmium and lead as being hazardous to the environment and public health, and they engaged automakers to help identify, locate and remove these substances from vehicles.
However, automakers struggled at first to meet the requests of regulators. And to make matters worse, no process existed initially for engaging lower tiers of the supply chain who may or may not have been aware of the chemicals contained within the products and components sold downstream to the auto OEMs.
“Once the ELV Directive was in place, it made manufacturers 100% liable for the compliance of their products,” said LePard. “If you were in the supply chain, the law didn’t apply to you.”
Establishing the IMDS
Regulators and vehicle manufacturers attempted to work together to identify, locate and remove substances from vehicles, but with limited success. Eventually, six automakers banded together to establish a shared database called the International Material Data System (IMDS) for collecting the information regulators required. The automakers also collaborated with supplier organizations, representatives from each region of the globe and other stakeholders to determine what should be reported.
“One component of it was what needed to be reported, and another component of it was how it needed be reported", explained LePard. “All the automakers involved agreed to the shared rules. And while it doesn’t mean they can’t impose additional rules on top of that, they also can’t violate the set of shared rules.”
In the years since the IMDS was developed, manufacturer participation has grown significantly. Almost all global automakers now use a solution originally developed for six, and the system evolves continually to keep abreast of the latest regulations. The list of IMDS product declarations now exceeds 98.5 million, and more than 150,000 supply chain participants report into the tool.
“Most of the regulations say, if you’re selling a service part or a maintenance kit for something, it has to be compliant with regulations in place when the product went into the market originally,” said LePard. “Having a record of the legal state of when the product went onto the market is essential, and the declarations exist to keep track of what’s actually going on.”
Restricted Substances and the Off-Road Equipment Industry
What’s transpired in the automotive industry over the past two decades has implications for off-road equipment manufacturers as well, based on regulations today and where they’re expected to head in the future. In short, OEMs need to be aware of when something related to the composition of their products change.
“You now have regulations saying you need to know when there’s a change in a product’s formulation. You may need to go through recertification and revalidation and identify those opportunities. That’s because a product that is compliant can become non-compliant just by changing its chemical composition,” said LePard. “You might not hear about it, and your suppliers might not even know you care. If they’re not in a target market where you’re selling a product, or your customers are selling your product, then the suppliers might not even be aware it’s a concern.”
Collecting, documenting and sharing the right data, however, can help OEMs avoid being legally obligated to reformulate the product. That’s why AEM, DXC Technology and other association members are leading an effort to develop reporting processes that provide OEMs with data visibility and help ensure widespread industry compliance.
“One of the things we’re finding out is, the longer you wait, the longer the list gets,” said LePard. “And the more you must do at once, the more difficult the job gets. And we’re talking about data that does not accumulate instantaneously.”
The Takeaway for Equipment Manufacturers
According to LePard, reaching down to Tier 5 or Tier 6 of the supply chain can take a couple of years. In the auto industry, the supply chain is 13 or 14 levels deep. In the off-road equipment industry, it’s 17 or 18 levels deep.
“So, imagine if it takes a few months to convince your suppliers to buy in and actually dig down to their suppliers,” said LePard. “Then imagine it takes that long in each tier of the supply chain. Optimistically, you’re looking at three to five years before you’ve really got good data. So, if regulators are already asking for 20,000 chemicals, where are they going to be in a few years?”
The onus is on OEMs to respond to ever-evolving regulations as efficiently and effectively as possible. The bare minimum is to be aware of what legal requirements currently exist. However, manufacturers would be wise to start working ahead and develop a roadmap for securing the information necessary to stay on top of, and in front of, regulatory developments.
“It’s becoming more important, because the laws aren’t just going after the regulated substances,” said LePard. “They’re now wanting to know what’s in the product completely. And if you don’t know what’s there, then how are you supposed to know how to respond?”
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