Major manufacturers and distributors in the electronics industry are well prepared to meet the requirements of the European Union’s RoHS and WEEE directives. But many of the small- to medium-size component suppliers are falling short in getting up to compliance. “Across the board large companies are more prepared than small companies. The large companies are prepared, so they don’t have to act immediately,” says Eric Karofsky, senior analyst at AMR Research. “The large companies always understand risk better. They have better planning capabilities and more capacity to spend time assessing risk.”
He notes that large companies view regulations as risk factors and they have a institutional capacity to assess risk and plan mitigation strategies well in advance of regulation deadlines. Not so with small companies. “Companies like Motorola and HP are well under way in understanding what is necessary to comply,” says Karofsky. “Most of the small- to medium-size businesses are behind the times.”
The large companies, however, depend on components from small- and medium-size suppliers. So the major companies have started to lean hard on their suppliers to get up to compliance. “Initially, the small- to medium-size businesses hampered the large companies’ ability to comply, but the large companies have the power,” says Karofsky. “A small component supplier may not be able to supply the component materials information. That provides a momentary exposure problem for the large manufacturer, but long term, the small component supplier will need to get up to speed or lose market share.”
Karofsky views RoHS compliance as a major competitive factor among small- to medium-size component producers. Not only must they produce lead-free versions of their components, they also have to manage the material content records to back up their claims of compliance. Those companies that can manage the transition best will gain marketshare over those suppliers that fall down on compliance and materials declaration. “If small companies continue to be a problem, the large companies will penalize them. If the supply base is compliant, that sets a baseline for enforcing compliance,” says Karofsky. “Eventually, competition will rule and the small supplier will get up to compliance to get more business. That’s already starting to happen.”
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