The analysis below from Re-making the Industrial Economy, co-authored by Hanh Nguyen, Martin Stuchtey, and Markus Zils, featured in a McKinsey Quarterly report, outlines the value Niagara Share wants to create by working across businesses, academia, and NGOs.
Ultimately, the systemic nature of the barriers means that individual corporate actions, while necessary, won’t suffice to create a circular economy at scale. The real payoff will come only when multiple players across the business and research communities, supported by policy makers and investors, come together to reconceive key manufacturing processes and flows of materials and products.
Should that happen, our research finds, the benefits would be huge. They include:
- Net materials savings. On a global scale, the net savings from materials could reach $1 trillion a year. In the European Union alone, the annual savings for durable products with moderate lifespans could reach $630 billion. The benefits would be highest in the automotive sector ($200 billion a year), followed by machinery and equipment.
- Mitigated supply risks. If applied to steel consumption in the automotive, machining, and transport sectors, a circular transformation could achieve global net materials savings equivalent to between 110 million and 170 million metric tons of iron ore a year in 2025. Such a shift could reduce demand-driven volatility in these industries.
- Innovation potential. Redesigning materials, systems, and products for circular use is a fundamental requirement of a circular economy and therefore represents a giant opportunity for companies, even in product categories that aren’t normally considered innovative, such as the carpet industry.
- Job creation. By some estimates, the remanufacturing and recycling industries already account for about one million jobs in Europe and the United States. The effects of a more circular industrial model on the structure and vitality of labor markets still need to be explored. Yet we see signs that a circular economy would – under the right circumstances – increase local employment, especially in entry-level and semiskilled jobs, thus addressing a serious issue facing many developed countries. Ricoh’s remanufacturing plant, for instance, employs more than 300 people.