A case for an SEZ of Reconditioned Machinery, Automobile, Household Goods

The financial turmoil has upset many businesses, making thousands of people jobless. It has bruised many economies so significantly, that the world is likely to take sometime to regain confidence, before it considers investing in those countries again. Several Financial Institutions have been jolted and are in serious need of repairs & restructuring. Large Business Conglomerates across the globe are busy reassessing their plans, reorient to the emerging situation, renew emerging demand-supply scenarios & busy defining new & more robust supply chains to effectively cater to emerging situation. Effects are being seen everywhere as several people being rendered jobless even as quite a few others are transferred and witness role changes with redefined wages. The same are results of corporate adaptation towards emerging demand scenarios, restructuring of the length, breadth & depth of their product-lines and assessment of required production capacity. Governments across the world are adapting their monetary & fiscal policies to help population & organizations adjust to the “emerging realities”. This is even while quest for reassessment to make changes to the Regulatory Regimes and Business Policy & procedures, Institutional Support Architecture and Infrastructure Support development continues across the Globe. While the Corporate quest for stability continues; it can be said with some conviction that with such volatility in commodity prices, fluctuating storage (due to interest rates) & haulage (due to bunker oil) charges, dynamic processing costs (due to regulatory, policy, environmental concerns & infrastructure changes) shall continue and that the flux in the business environment is the only constant. We may be better off to prepare for the era of High Speed changes to Business/Organization structures. Welcome to the Era of Change. As the organizations and societies work out the mechanics to operate in such an environment, an apparent point is that the organization and societies need to drive towards maximum efficiencies as scope for wastage in such hard pressing competitive environment going to be minimal. Organizations across the world need to seriously reassess how the treat their own assets, be it production machinery or office equipment or consumables etc. when the same are rendered useless due to changing circumstances. They also need to assess if some value could be squeezed while helping customers dispose of the produce of the company such as Automobiles, Household goods etc. While Waste Management as a science, as business and as social service set up has progressed well especially in developed economies, its focus has mainly been on Environment & Pollution control. The businesses & societies shall now need to look beyond just Waste Management mindset. They have to identify how to dispose assets so that they can squeeze whatever little values can be squeezed out of them to drive efficiencies. Fortunately the biggest economy, the USA offers tremendous opportunity to realize efficiency gains from such efforts. It has long sustained a use and throw culture where almost every city generates tonnes of waste in its land fills. People have been comfortably dumping Furniture, Electronic Goods, Lawn Equipment, Utensils besides, Rags, Waste Paper, Plastics, Kitchen waste, Glassware etc. Though the Enterprises exist for metal recycling who have been active in recycling say for example an Automobile, however everybody realizes that a lot needs to be and can be done if the USA is to become more efficient on this count. One of the ways could be to explore if the waste could be of use somewhere. Quite a few developing countries have put Barriers including Outright Ban to import of such goods as it threatens to cripple their nascent industries which would fail in front of threat from such cheap imports. Some others have in mind things like pollution, domestic technical standards, hygiene etc. It may also be noted that the Business Conglomerates have themselves not been open to such an idea as for them longer life of the product may undermine the demand for new products or threaten their associates & subsidiaries business elsewhere. Besides, such an effort on part of Business, does not yield it any Tax concessions or Subsidy and also brings with it some unknown/unmeasured legal liabilities associated with the sales of such goods. It may also be possible that such goods may have been altered during the time of ownership of its original buyer and so a corporate might be dealing with some stuff that it doesn’t fully understand or is not equipped to handle. Therefore, the business has so far been handled by recycling companies who besides making a small margin on business may also be making some carbon profits or earning some revenue from Municipalities or local government. In the emerging era, obsolescence of manufacturing machinery, be it for technology changes or supply chain reorientation due changes in business environment, is likely to be much more pronounced. Besides innovation in technology, design, style & customized offerings shall also affect consumer choices or obsolescence of consumer goods (especially durables). The choice with the US Agencies is to orient their policies & tax/subsidy structure to manage this obsolescence in a better way. The manufacturers in the USA can be encouraged to collect replacement goods (i.e. old goods that customer shall replace using new wares) and make most economical use of those goods. They may be repaired at an Overhaul/Garage facility within or outside the USA; the product may be stripped of its working components for reuse or the same may be scrapped to be converted into other distinct product entity. Then the products may be consumed within the USA (by bringing suitable regulatory structure & taxation policy) or outside of the USA where such products are acceptable. The US agencies can alter their policies to encourage recycled product usage by giving GSP benefits, Exim Bank & ECA support and other financial aid to countries that help US manage environmental challenges. It may be noted that use of Industrial & office machinery rendered unusable within US might actually help in Industrialization & technological up gradation in some of the least developed countries. It may be noted that though the economic rationale for such proposition was always there, however there has always been a lack of support from the legislative structure which penalizes the seller heavily for damages and that makes sales of used/reconditioned goods a regulatory nightmare. Then there is lack of support from the point of Taxation, lack of support from Export Promotion Agencies which view them as an activity devoid of any job creation potential, besides a less favorable business abroad (because of low reliability). The present Economic Situation offers unprecedented opportunity to make changes in regulatory & taxation policies to regain competitiveness for US manufacturing & enterprise, make improvements to economic structure and the way we live, while contributing towards world environment. To tackle Consumer concerns, an institutional structure may be created that bears the liability towards consumers/society beyond a certain point, supported by the government. Besides, states may be encouraged to start Special Economic Zone for reconditioning/recycling goods & hence generate related jobs for local youth. Such activities may also be encouraged with support of Export Promotion Agencies in countries like Mexico, Central America (countries), the Indian Sub-continent and other Asian & African countries who can recondition/recycle goods competitively and thus contribute to environmental hygiene besides making an economic gain for them. When enticed with adequate credit support for creation of infrastructure for Reconditioning units and such SEZs, maybe on the back of Government to government relations, the policy is likely to find support from a large number of countries who want to push development ahead even as they deal with the current economic squeeze. For the US corporate, this opens up new opportunity to create jobs within, even as it enhances environment protection while continuing to reshape as per emerging global trends in short to medium term. In short, this may lead to a stronger America in the medium to long term. This may have some potential stablise the world economy.