Tighter green laws will lead to IT component shortages

Gartner warns of trouble ahead as environmental laws tighten up.

Electronic equipment and computer manufacturers were today warned to brace themselves for component shortages as governments worldwide prepare increasingly stringent green regulations.

Gartner urged vendors to invest in R&D so that their products comply with both existing and forthcoming international environments rulings.

According to Gartner, vendors will need to reduce the environmental impact of their kit as more governments around the world impose regulations on substances that may cause harm.

The warning comes after the European Union’s Restriction of Hazardous Substances (RoHS) directive came into effect in July 2006. RoHS stipulates that manufacturers producing products that contain certain hazardous substances will face removal from the market and potential heavy fines.

In January 2007, the Waste of Electrical and Electronic Equipment (WEEE) directive comes into effect, imposing strict regulations on the way electrical equipment can be disposed.

Gartner predicts that these European regulations are "just the first of many". China has passed its own, more stringent version of RoHS which comes into effect on 1 March 2007. Japan has had a law in place since 2000 and recently passed amendments that came into effect on 1 July 2006. Gartner expects South Korea, Australia, China and California to be among the first to implement further ‘green’ legislation.

Meike Escherich, principal research analyst at Gartner, noted that manufacturers should standardise on the most-stringent legislation and anticipate ‘green’ concerns to avoid production problems, as more countries move to adopt such directives.

“Failure to transition products on time can lead to high inventories and dramatic price cuts, similar to the effect we saw in Western Europe as the RoHS came into effect,” said Ms Escherich. “Non-compliant components will be gradually removed from the global supply chain and force manufacturers to discontinue products that contain them.”

Currently, only 43 percent of the PC installed base worldwide is affected by RoHS regulations, leading some manufacturers who ship only into the United States, the Middle-East and some other non-European countries to feel they need not concern themselves with it. However, Gartner believes such legislation will have a worldwide impact as component manufacturers can no longer justify separate production lines for ‘green’ and ‘non-green’ parts.

“Not far from now, ‘non-green’ parts will be assigned end of life status and green legislation will come to impact every single PC manufacturer,” added Escherich.

“The worldwide market should expect to see longer lead times, part shortages and rising prices for non-compliant parts over the next two years.”

As a result, Escherich advises enterprises to ensure they have an adequate supply of required parts and systems during the transition period.

“European organisations should be prepared to specify products free of lead and other hazardous substances in requests for proposals now, and we recommend that global and multi-regional companies plan for an orderly transition to compliant products in 2007,” said Escherich.

“Good record-keeping is important to demonstrate compliance to enforcement agencies if required.”

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