Today’s big issue is how we handle end-of-life vehicles (ELV) when 1.23 billion cars will become waste worldwide. Appropriate processing and recycling are important problems when recycling cars.

Our Eco-Friendly Auto Recycling system contributes to the resource circulation society and environmental conservation. We at KAIHO INDUSTRY formulated a packaged automobile recycling system consisting of these technical components: i. Installing the automobile recycling equipment and production system; ii. Installing the computerized business management system; and iii. Providing training on automobile recycling technologies and management skills. These components are detailed below:

   i.      Installing the automobile recycling equipment

Our standardized Japanese recycling technologies will be adapted to the pilot plant. In this production system, ELVs will be collected from the local market and dismantled into mainly scrap metals (such as iron, aluminum and copper) and used recycle parts (such as engines, body parts and suspensions).

  ii.      The KRA system

The KRA system is a computerized business management system which allows users to efficiently support the execution of business processes that include automobile appraisals and order / stock / sales management. This system allows the company to manage quality control and inventory control with its extensive use of barcodes attached to individual parts. The barcode system identifies the origin, history, and specs of individual parts and provides vital information to customers.

iii.      Training on automobile recycling technologies and management skills

In 2007, we opened a training center (International Recycling Education Center, IREC) to improve the skills of automobile recycling workers for our alliance partners in Japan and overseas. We convey the technologies and management skills acquired through our 48 years of business experience to trainees through classroom lectures and practical work under the training programs at IREC.

In most developing countries, most end-of-life vehicles (ELVs) are dumped illegally, having a negative impact on the environment.

Our Auto Recycling System should be a comprehensive packaged system. We have established the International Recycling Education Center (IREC) to meet the needs of governments and domestic alliance partners. Since 2010, we have received many executive officers and technical experts as trainees from South America, Nigeria, and the Democratic Republic of the Congo, as a part of JICA’s support project.

Based on our 48 years of business experience, we have created technical manuals and localized them to the languages of various developing countries. ELVs are collected from local market and dismantled into scrap metal and reusable parts. We have contributed to an increase in the percentage of recycled cars by making items which were considered scrap reusable. (This includes a 2013 Private Sector Proposal Project for a demonstration experiment to establish an eco-friendly automobile recycling system in Brazil, which was supported by JICA.)

We assume that 3,600 vehicles will be dismantled per year to estimate business profitability.

In case of 6,000 recycled car per year, Operating Income: 48,000,000 yen / Initial Investment: 125,000,000 yen / Payback Period for the Investment: Third Year

We have dealt with customers in 85 countries. This market demand is used for the procurement and production of items (ELVs and used engines), which can increase sales volume and the profitability of each ELV.

By using the active cost accounting method in our KRA System, we can not only forecast the profitability and productivity of operations but also evaluate achievement forecasts using the PDCA cycle.

KAIHO INDUSTRY has developed a standard for rating the quality of used engines for export, which we call the Japan Reuse Standard (JRS). It is a quality standard for used products that complements the Japan Industrial Standard (JIS) for new products.

The JRS uses a five-level assessment for six items, including engine compression, starting condition, mileage, corrosion, overheating, and sludge. The engine quality is displayed in a reader chart than can be easily understood, regardless of language.

The information provided is considered essential for a sound understanding of the potential life and performance of the engine and related transmission unit.

No. of Companies and Countries

Domestic

7 companies

Overseas

5 countries

Period

Examinations *1

Shipments *2

2012

11,728 units

11,257 units

2013

11,497 units

11,940 units

2014

12,235 units

11,715 units

Number of trainees

Domestic

125 trainees

Overseas

72 trainees
– Brazil, Argentina, Mexico, Columbia: 14 trainees
– Nigeria: 35 trainees
– Democratic Republic of the Congo: 8 trainees
– The Philippines: 8 trainees
– Brazil: 7 trainees

Risk

Measures

Risk that our technology will come into conflict with the law

We will reduce this risk by partnering with JICA, JETRO, and United Nations Organizations.

Risks

Measures

Political Instability

With our partners in the local office of JICA and United Nations Organizations, we will gather related information and tighten security in the areas surrounding our overseas offices

Business Continuity

To secure business continuity, we will procure ELVs in accordance with local laws and the laws of surrounding countries. This is essential for our business.

It is necessary that we hedge against this risk by understanding local laws and customs, as well as our customers’ preferences.

Risks

Measures

Opposition from the local residents

When we expand our business to other regions and countries, we will provide explanations of our business to obtain understanding from local stakeholders and our customers.

Opposition from related organizations

When we expand our business to other regions and countries, we will hire local people who have already been engaged in auto recycling and support their social and vocational independence through technical training. We will examine the expansion of specific business at local government organizations.