A System Dynamics Model of Automotive Recycling in Australia

Abstract

Automotive or End of Life Vehicle (ELV) recycling in Australia is a profit-driven activity undertaken by automotive dismantlers without the oversight of explicit government policy. Among the growing concerns are the environmental impact of the activity and the failure of the industry to implement a voluntary code of practice. An underlying problem clouding these concerns is the literature gaps concerning the operations of the industry, the issues facing the industry, and how these issues could be overcome. This research reports on a series of studies undertaken to address these knowledge gaps by applying System Dynamics (SD) as an investigative approach.

Semi-structured stakeholder interviews are conducted to gather quantitative and qualitative data about business operations and material flows. An adapted Qualitative Data Analysis method is used to extract the essential variables and causal links thematically. An aerial survey of recyclers premises and two ELV dismantling trials are also conducted to collect data for variables in the simulation SD model. Furthermore, a Scenarios Planning workshop, including two print surveys, is facilitated to validate the scoping of the problem and model areas and to determine plausible scenarios facing the industry and their effects.

This research identifies the sustainability of the industry as an overarching problem, with the financial performance affecting and determined by five areas of concern: i) ELV supply/demand and disposal, ii) workforce, iii) premises, iv) parts sales, and v) industry image.

The research also identifies two major growing threats to the industry. The first threat is an increasing unfair competition from backyarders at the ELV supply level. This issue is weakening the industry financial performance and overall industry image while increasing the overall environmental impact of the dismantling activity. The second threat lies with the automobile increasingly becoming a throw-away product, catalysed by the motorists and insurance industry preference for new instead of used parts for repairs. This growing trend threatens the demand for parts reuse and the business case for the industry.

The simulation results support a nationally harmonised and enforced licensing policy with requirements for proper handling of ELVs as leverage to help improve the overall industry image and financial performance, despite the added compliance costs. The policy obliterates the unfair competition by encouraging the backyarders to either fold operations or become licensed operators. The overall environmental impact of automotive dismantling decreases significantly. A longer use cycle for the automobile and the promotion parts reuse could also enhance these metrics further.

A secondary finding is a forward integration business strategy, to help improve the financial performance and reduce the environmental impact, using a multi-dismantling machine to break apart ELVs into broad material categories.