Recently, at the Remanufacturing International Forum in Beijing, we have again met Caterpillar Remanufacturing Asia Pacific General Manager Li Zhengyu and Li Ke, deputy general manager of Caterpillars associated enterprise Yuchai Remanufacturing Services (Suzhou) Co., Ltd., and interviewed them about relevant topics.

Remanufacturing has become a requisite link of Caterpillar

Referring to the importance of remanufacturing in Caterpillars business sectors, Li Zhengyu said, on the one hand, remanufacturing is a sector of a certain scale to Caterpillar; on the other hand, remanufacturing is vital to Caterpillars machinery and engine sales, because customers can get low-cost spare parts as good as new, if Caterpillar does not do that, customers are likely to reject Caterpillars machinery and engines. For this reason, Caterpillar attaches great importance to remanufacturing.

Referring to Yuchai Remanufacturing Services (Suzhou) Co., Ltd., a joint venture of Yuchai and Caterpillar, Li said, remanufacturing can help to sell new machinery from the perspective of Yuchai, the habit of using remanufactured engines has been developed in China, and many public transport companies demand remanufacturing service when purchasing new machinery from Yuchai. Key customers and professional customers like large companies, professional institutions and contractors particularly value remanufacturing, as they are professionals instead of common terminal consumers. They have good sense, reliable information sources, and fast and deep understanding of remanufacturing.

Like Li Ke, Li Zhengyu gave many examples when being asked about his impression on domestic key customers. For example, Shenhua Group and Jiangxi Copper Corporation have visited Caterpillars remanufacturing plant in Singapore. Some enterprises have even visited Caterpillars plant in the USA. When deciding to purchase Caterpillars heavy-duty trucks upon investigations, they must take remanufacturing capacity as a yardstick. For another example, every week, one or two group of customers including agents and terminal customers will visit Caterpillars remanufacturing plant in Singapore. Most of these visitors are from countries like China, Australia, Indonesia and India. Before purchasing Caterpillars machinery, they will take into account factors such as remanufacturing capacity, supply time, supply volume and production capacity. As many companies have used Caterpillars mining trucks for over a decade or even three decades, it will be infeasible without follow-up support.

Remanufacturing management is far more complex than manufacturing

Referring to remanufacturing management, Li Zhengyu uttered, Too complex. You need only to invest some money in order to build a new engine plant, but you will unnecessarily build a qualified remanufacturing plant with money, he said. For instance, at a new plant, a part may have an exclusive name; but a part probably has three or four different states in remanufacturing, you have to name all the states, then it will be complex for the management system. A prominent characteristic of remanufacturing is that you cannot totally duplicate things of others for your own enterprises. Duplication is feasible for manufacturing but infeasible for remanufacturing, enterprises should summarize their experience and management modes based on their own characteristics and markets.

Li Zhengyu added, the value of every step is different for processed old parts, so is the status of processing. In terms of internal financial management, even the value of old parts needs to be accounted. Now you can feel the complexity of remanufacturing.

Besides, the manufacturing volume of new parts or new machinery is generally up to tens or hundreds of thousand units, there are only two or three models, and technological processes are available, making it easy to manage processes. But it is totally different for remanufacturing, 20,000 remanufactured engines are likely to have 40 or 60 models. Why? Because engines of all batches or models need to be remanufactured, engines differ in installation size, some match buses and some match trucks, and engines of the same model may differ in configuration. Such great complexity is really a huge challenge for plant management. The manager of a new engine plant with a scale of 5 billion yuan is unnecessarily capable of managing a remanufacturing plant with an output value of 1 billion yuan. Remanufacturing is totally different in management mode, intelligence and capacity, and is far complex than new engine plant, Li Zhengyu said.

After the running-in of the joint venture plant over the two years, I still feel remanufacturing is a very complex system, Li Ke said, adding, I felt remanufacturing to be complex first, thought it is just so-so afterwards, but consider something disapproved then to be classic actually when recollecting two years later.

Remanufacturing allowance should be taken into account in future domestic engine design

With four decades remanufacturing experience, Caterpillar has been mature in remanufacturing-oriented new engine design. Referring to the relation between remanufacturing and original engine design, Li Zhengyu remanufacturing-oriented new engine design has hardly been considered in China.

Then, is there any vast difference between remanufacturing-oriented new engine design and original general design in China? Li Zhengqu gave a negative answer, but said it is a concept, i.e. design engineers must have the sense, have experience more importantly and should keep exploring in practice. Just as a traditional Chinese medicine has many possible formulas, the products of every company should be explored for a long period of time.

Li Ke, who has worked on both manufacturing and remanufacturing at Yuchai, felt the same. Original engine design in China has become totally difference after the concept of remanufacturing has been introduced, previously, designers tried to minimize weight and make the most of every material when designing engines and some parts; after the concept of remanufacturing was introduced, designers have to consider the allowance based on the original designed life of eight years, he said, adding, now all domestic engine manufacturers are confronted with the problem of remanufacturing: actually companies have had great difficulty in recovering old engines and the possibility of remanufacturing has been low, because remanufacturing was not considered when these engines were designed, now remanufacturing has been costly.

Caterpillar-Yuchai plant is promising

Referring to the operating conditions of the Caterpillar-Yuchai remanufacturing plant, Li Ke was optimistic. Different enterprises have different actualities, old parts is not the biggest problem at present, Yuchai has a market inventory of 3 million engines, nearly 500,000 units are scrapped every year, Phase 1 of the plant has a planned production capacity of 20,000 units, the market inventory is excessive to the plant.

Over the year since the joint venture went into operation, the workload of engine R & D and test has been intense, and its remanufacturing operations have covered six series and over 100 types. Li Zhengyu expressed his satisfaction with the operation conditions of the joint venture. The overall context and domestic policies are favorable, relevant state departments have offered strong support, apart from problems such as value-added tax on old parts recovery, he hoped the government would ease enterprises burden at the initial stage of domestic manufacturing.

(Source: Zhao Sanming/China Industry News)