Paper-cup economics
Things are made to be thrown away. It is cheaper to make a new one, we are told. But why should this be so? Is it necessarily the case? Could it be otherwise? What would have to happen to bring about this change?
The alternator in my jeep failed, last week, as did the seal in the master cylinder. We were going to replace the seals, but we gave it to a workshop to have it sleeved and have the seals done at the same time. This is the second time I’ve had this done; the soft cast alloy of the original part eroded after 18 months, but a good quality repair with a stainless steel sleeve lasted almost ten years.
The alternator, on the other hand, couldn’t be repaired. The brushes were mounted in a single piece of plastic moulded directly onto the alternator housing. This is terribly wasteful. The energy cost of making a metal housing, bearings and spindle is stupendous compared to a couple of brush contacts, not to mention the cost of a kilogram of copper for the windings. Then there’s the toxic filth that is an unavoidable consequence of extracting these things from ore.
I know why manufacturers do this. It’s simple economics. Moulding the brushes directly onto the housing saved the maker a couple of cents in production. It cost me two hundred dollars, but from the maker’s point of view this is perfect, because they got to sell another alternator. From a seller’s point of view, repairable is bad: it reduces the opportunity to sell.
The problem here is that the current economic model rewards makers for maximising the cost of replacement/repair. If makers sold capability rather than product, similar to hiring a car on a long-term lease with a comprehensive and built-in maintenance contract, then it would be in the manufacturer’s interest to minimise the cost of maintenance.
I see a number of advantages. Advantages to the consumer would be
- Total cost of ownership (TCO) would be very clear-cut.
- TCO would be reduced because in order to compete on price manufacturers would
- Consolidate their vehicle range
- Maximise parts commonality across their vehicle range
- Maximise parts compatibility over time to reduce parts inventory
- Parts would be designed for longevity to reduce maintenance costs
- Parts would be designed for ease of maintenance to reduce maintenance labour costs
- Manufacturers would design for and perform assembly exchange-repair, radically reducing down-time from the consumer’s point of view and minimising interaction costs.
From the manufacturer’s point of view,
- Significant vendor lock-in – in addition to lease terms brand loyalty is likely to be significant since TCO will be similar across comparable products, so preferences will be governed by familiarity and taste in appointment and handling feel.
- Third-party parts and service providers would be completely eliminated.
- Service schedules could be enforced without inconveniencing customers.