Electronic Design

Environmental Rules Continue To Impact The Supply Chain

Environmental laws continue to play havoc with industry companies trying to keep up with changes in the rules and regulations.

The dynamics of the electronics industry, from its quick-turnover innovation cycles to the rapid expansion of maturing market sectors, are forcing environmental regulators to re-evaluate, or “recast,” many of the substance restrictions they began discussing in the mid-1990s. As a result, the European Union’s Restrictions on Hazardous Substances (RoHS) and its Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulations are affecting—and, in some cases, straining—virtually every level of the electronics manufacturing supply chain.

“Customers are asking for a complete environmental compliance solution which would allow their engineers to be free of the compliance headache and keep them free to work on design and manufacturing issues,” says Peter Robinson, vice president of Total Parts Plus, which specializes in environmental compliance and obsolescence management.

The EU continues to tweak RoHS to ensure that the revised version of the directive is fully aligned with REACH, which regulates all materials and substances made in, or imported into, the EU, as well as all products that enter the EU. Discussions on the RoHS substances list, which initially banned six substances—lead, mercury, cadmium, hexavalent chromium, polybromated biphenyls (PBB), and polybromated diphenyl ether (PBDE)—are currently underway about adding new substances, possibly by early 2012.

Several industry sources believe the REACH list of substance requirements could top 130 by the end of 2012. Among the changes are additions to the original list of six RoHS substances by the EU’s Environmental Committee. As a result, a coalition of industry companies that includes Hewlett-Packard, Dell, and Sony Ericsson is looking for alternative materials for the most likely candidates, such as polyvinyl chloride (PVC).

The EU’s parliament, commission, and council met in late September and a vote on updating the language of RoHS could come as early as late November. Fern Abrams, director of government relations and environmental policy for IPC – Association Connecting Electronics Industries, a global trade group that represents more than 2700 member companies, believes there are now three key issues before the EU’s legislative bodies. The first is open scope. The second is substances restrictions, and the third is substance exclusions.

“The substances seem to be the area where there is the most controversy,” notes Abrams. In fact, she says that largely because of lobbying by IPC, other trade organizations, and individual companies, it’s not likely that any substances will be added to the list, at least not any time soon.

Several companies, ranging from private consultancies to trade and standards organizations, are focusing more on environmental issues. Most of them advise smaller and medium-sized companies to assess their compliance with current regulations and their ability to meet new demands for implementing future rules changes.

Total Parts Plus has developed a Compliance Complete Service, a Web-based management tool to help OEMs produce and present their customers with completed environmental compliance reports on their products. Reports can be generated in IPC-1751, IPC-1752, JGPSSI (Japan Green Initiative), and any future format required by the OEM’s customers. Also, Design Chain Associates LLC and Technology Forecasters Inc. now jointly offer a service called the Design-for-Environment Process Integration Roadmap (DPIR) to help companies proactively address current and emerging global environmental requirements while minimizing costs.

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The Pentagon and its contractors will have a significant impact on materials markets and supply-chain issues as they respond to evolving environmental regulations. Market analysts at U.K.-based Strategy Analytics believe environmental legislation will become increasingly important for the defense industry in accessing the cost benefits of commercial-off-the-shelf (COTS) source components. The market intelligence firm predicts that the market penetration of COTS electronics will increase through 2015, but says the defense sector will need long-term strategies to deal with the new and emerging regulations.

“As the mainstream industry races to greener practices as mandated by government regulations, the defense industry will need to factor environmental regulations into their long-term sourcing strategies,” says Asif Anwar, director of the Strategy Analytics’ Advanced Defense Systems Service. “In some cases, this will require a reassessment of the ‘total cost benefits’ of a COTS component.”

RoHS and REACH are also having an impact on medical device manufacturers. Under proposed new rules, medical devices are scheduled to come under the EU’s RoHS directive in 2014. Non-compliance with REACH could lead to significant penalties. (Each EU member country determines its own penalties.) There are exemptions for medical products, but that could change, and new substances could be added to the regulation’s Substances of Very High Concern (SVHC) list over the next few years. In fact, one EU source has suggested that up to 500 chemical substances could make the SVHC list by 2020.

“One key feature of the proposed changes is that they have changed ‘Electronic Information Products’ to ‘Electronic and Electrical Products.’ They have not defined the new scope yet,” says Michael Kirschner, president of Design Chain Associates, who believes this might be an indication that China may want to more closely align the scope of its regulations with the EU’s RoHS.

In July, the Chinese government’s Ministry of Industry and Information Technology (MIT) issued a proposed update to the China RoHS regulation that has been in force since March 1, 2007. The ministry requested stakeholder comments through August 19 on the proposed changes.

The IPC and the Indian Printed Circuits Association are also working together to address the most recent round of proposed substance restrictions. In fact, The IPC has urged the Indian government’s Ministry of Environment and Forestry to consider removing devices and monitoring and control instruments from the list of product categories covered because of their extreme complexity and suggested instituting a phase-in plan for medical devices and monitoring and control equipment, similar to that proposed in the revision of the RoHS directive.

Hazardous E-Waste Bill

Legislation introduced in the U.S. Congress in late September, the Responsible Electronics Recycling Act of 2010, also will impact developing countries. It seeks to stop “recyclers” from dumping electronic waste in those countries. 

“This e-waste bill will stem the tide of toxic techno-trash sent from the U.S. to developing countries around the world,” says Barbara Kyle, national coordinator of the Electronics TakeBack Coalition, a national environmental organization.

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Environmental groups as well as Apple, Dell, and Samsung all support the bill. According to a report by the U.S. Government Accountability Office (GAO), electronic waste is currently exported to developing countries by U.S. companies that claim to be recyclers to be burned, flushed with acids, and melted down in unsafe conditions, also mostly in developing countries.

The bill adds a new section to federal Resource Conservation and Recovery Act (RCRA) laws, establishing a new category of “restricted electronic waste” that cannot be exported from the U.S. to developing countries. Non-hazardous or tested and working electronic products or parts are not restricted.

Other exemptions from the restrictions are products under warranty being returned to the manufacturing facility that made them; products or parts being recalled; and crushed cathode ray tube (CRT) glass cullet that is cleaned and fully prepared as feedstock into CRT glass manufacturing facilities. Twenty-three states in the U.S. have passed e-waste recycling legislation, but these laws do not ban e-waste exports, which is an international trade issue and requires congressional legislation.

The Canadian Department of the Environment, meanwhile, has elected not to ban five rosin-containing substances from all products manufactured and sold in Canada. The department concluded that the five rosins identified under Batch 10 of the Canadian Chemicals Management Plan are not inherently toxic, bioaccumulative, or persistent and, therefore, do not pose a threat to human health or the environment.

“Restricting rosins would have made it extremely difficult for electronics manufacturers to continue doing business in Canada,” says Karl Seelig, vice president of technology for AIM Solder Inc. and chairman of the IPC Solder Products Value Council. Rosins are a key ingredient in soldering materials used in the manufacture of more than 75% of electronics products.

Conflict Minerals

Another recent development that is likely to impact the industry is coming out of the U.S. Securities and Exchange Commission (SEC), which is drafting new reporting requirements on the use of so-called “conflict minerals.” The rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama on July 21, 2010, directly affect manufacturers of products containing tin, tantalum, gold, tungsten, or any other conflict minerals that are covered under Section 1502 of the law.

Specifically, the law imposes direct SEC reporting requirements on any publicly traded companies whose products contain metals derived from minerals that are mined in areas such as the Democratic Republic of Congo (DRC) or neighboring countries, which the government says provide revenue to groups that might finance conflicts in the area. Companies will be required to submit a due diligence plan with their annual SEC report. The SEC has 270 days to finalize the regulations and implement the requirements.

“This is not really an environmental issue, it’s a trade issue,” says the IPC’s Abrams. “But it should concern the entire electronics industry. The Congress would like us, the electronics industry, to solve what the OECD \\[Organization for Economic Cooperation and Development\\], the United Nations, and the \\[U.S\\] State Department can’t solve.”

“These new reporting requirements could have a significant impact on the entire electronics industry supply chain, much like the lead-free requirements of RoHS,” says Mikel Williams, chairman of the IPC Government Relations Committee and president and CEO of DDi Corp. The impact of the SEC regulations will extend beyond publicly traded companies, “flowing down through the entire supply chain, from the OEMs to the solder manufacturers and everyone in between,” Williams says.

“Ultimately, while this is targeted to reporting, it will undoubtedly impact the selection of suppliers throughout the supply chain, as public companies now will be responsible for detailed knowledge about the location of source materials affected by the new regulations.” Today, companies have no mechanism through which to comply with this requirement, according to Williams.

The association is working to modify its IPC-1752A, Materials Declaration Management document to address the supply chain’s need to exchange data on metals derived from conflict minerals.

The IPC Solder Products Value Council has also issued a position statement that “supports governments, non-governmental organizations, and industry groups in their efforts to eliminate trade of ‘conflict minerals,’ especially mined tin from the DRC.” Additional information on this issue is available at www.ipc.org/conflict-metals-activities.

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