Main concerns resulting from the implementation of REACH
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1 Main concerns resulting from the implementation of REACH within the Aerospace Defence and Security business VERSION 1.4 This final document - version issued on 30th May 2012 cancels and replaces any previous version. I
2 This document has been written by the ASD REACH Implementation Working Group thanks to the strong involvement of its members. With 28 member associations in 20 countries (Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey and the UK), ASD represents the aeronautics, space, defence and security industries of Europe. The total annual industry turnover amounts to some 163 billion euros and counts over 2,000 companies, 80,000 suppliers, many of which are SMEs. ASD represents the aeronautics, space, defence and security industries of Europe in all matters of common interest with the objective of promoting and supporting the competitive development of these sectors. ASD pursues joint industry actions which have to be dealt with on a European level or which concern issues of an agreed transnational nature, through generating common industry positions. This document contains information and recommendations which have been provided in good faith by the ASD Reach IWG, reflecting the best knowledge available from experts in their field. Companies have expressed their opinions for each subject raised; however, nothing in this document is binding, these views are not necessarily definitive but are opinions on each subject. ASD will not accept any liability regarding the content of this document or issues arising from its use. Updates tracking Version 1.4: Change in part 4 (In the sub-part Support needed from Authorities : [...] their intention to incorporate them into updated versions of the candidate list) ; Various spelling mistakes Version 1.3: Various spelling mistakes Version 1.2: Front page note added regarding versions ; Suppression of any reference to the involvement of companies/associations ; Various spelling mistakes Version 1.1: Suppression of reference to hydrazine in part 2 II
3 EXECUTIVE SUMMARY The contribution of the Aerospace Defence and Security sector to the European economy and strategic defence capability is essential. This sector fully supports the need to improve both Environmental and Health protection and is committed to act accordingly. REACH, which stands for «Registration Evaluation, Authorisation and Restriction of Chemicals», is the new European regulation which entered into force on 1 st June 2007 with the purpose of managing all chemicals manufactured, imported or used in Europe. The cornerstone principles of REACH are: No registration, no market. All substances manufactured or imported >1 tonne per year at EU level must be registered over an 11-year period up until 2018; Evaluation of the hazardous properties of substances; Authorisation or restriction of uses for the most hazardous substances; Extension of the responsibility to the manufacturers and importers to assess the impact of chemicals; Obligation to declare the most toxic chemicals within products. It is expected that REACH will lead to: A significant reorganisation of the chemical supply chain; Additional and significant administrative and R&T costs. And, specifically for the aerospace and defence sector which has the following particular issues: Very low volume of chemicals compared to domestic use and other industry sectors; Low production series and long production timelines for single platform and total production runs; International certification process (any change request must be certified); The need to keep the products containing SVHC in operational conditions over their long life cycle (>30 years); Supply chains which are both international and highly complex, holding stock for long periods of time, re-sale and re-use of second hand assets; Manufacture of highly complex articles; Some substances, including some SVHC s, are absolutely critical to ensure aircraft safety (e.g. chromates for anti-corrosion protection). It is expected that the consequences associated with the implementation of REACH will be significantly higher than for other sectors. Our sectoral relevant concerns are: Business and supply chain disruption due to: - Non-registration of substances or non coverage of use (See concern 1); - Non-authorisation of substance uses (See concern 2); - Obsolescence (See concern 3); Administration and flow of data to be exchanged throughout the supply chain, whilst ensuring compliance (See concern 4) as well as particular and consistent treatment for Defence and Security sector (See concern 5); Huge additional R&T costs, in particular linked to the development/qualification of alternatives and the adaptation of processes to match safety requirements (See concern 6). REACH / Main concerns resulting from the implementation of REACH within the Aerospace Defence and Security business 1
4 RECOMMENDATIONS In addition to any activity undertaken at downstream user and supply chain levels, European Commission (EC), ECHA and Member States Competent Authorities (MSCA) could help to mitigate the risks associated with the above concerns by: Improving communication, reliability and transparency so as to anticipate and prevent - when possible - potential supply chain disruptions (ECHA), Ensuring consistency within the various Member States by implementing mandatory REACH requirements, with particular regards to the disclosure of substances in articles, Supporting the Industry in developing alternatives by setting appropriate frameworks (ECHA) and providing adequate funding (EC, MS), Ensuring flexibility (EC,MS) necessary to overcome any major potential supply chain breakage. Details are provided within the following dedicated pages. ASD key figures: Number of suppliers: > 80,000 worldwide Number of employees within ASD companies: 700,000 Cumulated turnover generated by ASD companies: 163 billion euros Number of European countries covered by ASD companies: 20 (Portugal, Spain, France, Switzerland, Italy, Germany, Austria, Greece, Turkey, Bulgaria, Czech Republic, Poland, Belgium, Netherlands, Denmark, UK, Ireland, Norway, Sweden, Finland) Number of tiers: could be more than 10 Number of items within an Aircraft: up to 400,000 Number of substances used: > 10,000 Percentage of the chemical market dedicated to Aerospace Defence and Security: ca 0.1% (excluding composites) Quantity of data exchanged: Several Billions Expected percentage of substances to be withdrawn from the market: according to some studies > 25% Overall sectoral costs of REACH implementation: > Several Billion Euros over 5 years Aircraft product life span: > 30 years 2
5 1 Aerospace, defence and security-business and supply chain - disruption due to non-registration of substances or non-coverage of uses Description of the issue: The supply chain for the Aerospace sector is both complex and very competitive. Due to this, it is impossible to know whether manufacturers or importers are registering, and covering our uses. The relationship between potential registrants, the supply chain and the end user is long and complex and this creates a lack of visibility as to continued supply. The ability of the end user to be assured of continued supply and to be able to provide commercial support if needed is severely hindered by this lack of visibility. Due to product complexity and rigorous safety standards, the Aerospace, Defence and Security industry cannot adapt supply chains and products easily or quickly to mitigate supply chain disruption. As the Aerospace sector is only a minor actor within the chemical market place, it has minimal leverage on the chemical supply chain decision making process. This issue therefore represents a significant business risk to the Sector. Downstream users and Supply Chain initiatives: Agree and implement best practices for flowing information on formulations, substance content and uses along the supply chain. Seek assurance of supply continuity on a medium/long term basis. Suppliers should communicate as early as possible along the supply chain to identify any substance at risk of non-registration. Continue cross-sectors exchanges. Share outcomes with ECHA. Support needed from Authorities: Action is needed to improve the information flow within the supply chain, to facilitate contact between potential registrants and downstream users, and to mitigate unforeseen supply chain loss. From ECHA: To extend ECHA web-site capability to allow Downstream Users (formulators and substance users such as article manufacturers) and potential registrants to make contact with each other; To, in a timely manner, disclose outcomes and decisions from Substances Information Exchanges Fora (SIEF)s; To mandate - either the disclosure of substances concerned by the registration deadline of 2013 in the current SDS (Safety Data Sheets). This will allow downstream users to identify their relevant uses and be able to inform the upper supply chain. It will also result in the risks of non registration being identified. ( presently only the hazardous chemicals irrespective of their tonnage are publicly accessible through the SDS); - or the guarantee that the relevant substances on their own or contained in delivered mixtures or articles have been properly and effectively registered. From Member States Competent Authorities: To adopt the European Commission non registration mitigation proposal so as to allow an appropriate flexible mechanism. The situation can then be addressed on a case by case basis. REACH / Main concerns resulting from the implementation of REACH within the Aerospace Defence and Security business 3
6 2 Aerospace, defence and security business supply chain - disruption due to non-authorised substance uses Description of the issue: A range of critical substances have sunset dates (date from which trade and use are prohibited-see precise definition in glossary page 9) in Annex XIV of REACH. For these substances, alternatives have to be found months prior to their sunset date. Many of these substances have no alternatives that can satisfy the requirements for airworthiness and safety within the imposed timeframe. Their typically long life cycle is > 30 years. Where potential alternatives do exist, the validation of these alternatives used in processes and in products may take years to ensure that they satisfy aircraft safety requirements and thus obtain certification. Furthermore, for in-service products, design adaptation is limited and the cost of retrofits could be beyond acceptable economical conditions. It is also worth noting that the preparation of authorisation dossiers will require extensive and sometimes sensitive communication and coordination between downstream users and the very complex supply chain (more than 10 levels). This will include SME s, many of which cannot afford the corresponding cost. It will take time to identify all of the suppliers, the uses of substances subject to authorisation, and the socio-economic impacts of any potential changes. Consequently, in some cases it could be extremely challenging for the sector to have the necessary dossiers ready in time. Downstream users and Supply Chain initiatives: Establish guidance on the authorisation process. Develop common approach per substance. Set up or participate to relevant consortia as appropriate. Support needed from Authorities: From European Commission, ECHA (including its MSC) and Member States Competent Authorities: If it is anticipated that disruption in the supply chain will occur for future substances to be added in annex XIV, it is recommended that the following options should be considered: An exemption be granted for the use of the concerned substance in the Aerospace, Defence and Security industry, providing that appropriate control is maintained along the whole life cycle of the substance; The consideration of other schemes (targeted restriction, sectoral consideration,...); Splitting the authorisation into modules, dependent upon how safety critical a substance is; - For flight safety critical substances: the authorisation to be granted for the use of these critical substances until the end of the concerned programmes including the relevant maintenance requirements, and until the product is decommissioned. - For other substances: depending upon the need for recertification, the review period ahead the sunset dates should be compatible with recertification. The time required to prepare the various dossiers and substitutes, when it is possible, should be subsequently adapted. 4
7 3 Aerospace, defence and security business supply chain - disruption due to obsolescence Description of the issue: The administrative burden and costs of REACH associated with a small market may lead, in particular for small and medium enterprises, to rationalise their substances/ product portfolios, by deciding to stop production of some particular substances when their production becomes economically unsustainable. Any change - even minor - required by such disruption will lead to a lengthy product recertification and/or process requalification. Such issues within the supply chain must be detected as early as possible to allow appropriate mitigation action. The current situation doesn t allow for sufficient transparency of the substances/uses registration status. It is worth noting that even for a minor change, it may significantly affect the overall reliability of the final products, possibly questioning its economical viability. Downstream users and Supply Chain initiatives: Develop guidance to facilitate information sharing within the supply chain in order to detect risks of obsolescence as early as possible. Support needed from Authorities: From European Commission, ECHA (including its MSC) and Member States Competent Authorities: Develop intelligence regarding any risk of obsolescence and which sector it impacts, and then make it available. In the case of an unforeseen withdrawal from the market with no particular solution envisaged to remedy this situation, the urgent cooperation of all relevant REACH stakeholders including ECHA and the EC would be required. It is recommended that the following options should be considered: The consideration of other schemes (targeted restriction, sectoral consideration,...); Splitting the authorisation into modules, dependent upon how safety critical a substance is. - For flight safety critical substances: the authorisation to be granted for the use of these critical substances until the end of the concerned programmes including the relevant maintenance requirements, and until the product is decommissioned. - For other substances: depending upon the need for recertification, the review period ahead the sunset dates should be compatible with recertification. The time required to prepare the various dossiers and substitutes, where possible, should be subsequently adapted. REACH / Main concerns resulting from the implementation of REACH within the Aerospace Defence and Security business 5
8 4 Aerospace, defence and security business and supply chain - administrative burden due to communication obligations for substances in articles Description of the issue: Traceability of information within the Aerospace industry is well developed, but it is not fully adapted to the new REACH requirements. REACH is creating a new need of data exchange both along the supply-chain and inside each company, for which the existing rules, processes and tools within the sector have to be further refined. There are many requirements (e.g. airworthiness) to take into account as well as a large variety of information systems used by companies. Our ability to provide information to customers and stakeholders as per REACH and other existing legal requirements (e.g. RoHS, Ozone Depleting Substances, Global Harmonized System, Fluorinated (F)-gas regulation,...) is dependent upon our capability to upgrade our substances tracking systems and upon an efficient and effective gathering of information along our complex supply chain down to the end user. Moreover, the continuous evolution of the list of substances (candidate list) needs to be tracked, some dissenting Members States position (rule Once an Article, Always an Article see glossary), the existence of multiple requirements and formats to report information on substances in products makes the exercise even more difficult. Downstream users and supply chain initiatives: Increase awareness on REACH in the supply chain and develop global standards for chemical reporting (e.g. standard list of declarable substances,...) in the supply chain via IAEG, addressing the IP rights and export control issues. Adapt our internal design and tracking tools (PLM tools, databases, etc.). Support needed from Authorities: From European Commission/ECHA: Seek greater stability in the Candidate List of Substances of Very High Concern, reducing the frequency of updates, thereby reducing the bureaucratic burden throughout the global supply chain. For instance ECHA could publish their list of already known Substances of Very High Concern (SVHC) and their intention to incorporate them into the updated versions of the candidate list. Seek alignment of Product Declaration Obligations against the range of existing legislative frameworks, for example through worldwide harmonisation of product declaration requirements. Take on board when possible lessons learned from other sectors which have implemented such processes (Automotive for ELV, Electronics for RoHS,...). From Member States Competent Authorities: Ensure a common understanding is agreed with respect to the rule Once an article always an article» and its practicality of implementation. 6
9 5 Aerospace, defence and security business and supply chain - lack of inter-state consistency and recognition of defence exemptions Description of the issue: REACH allows Member States to exempt defence companies from some aspects of REACH, in particular from sharing data with the European Chemicals Agency. However, in the case of dual use (civil and military) military data are protected, when the same data for civil use are not. Furthermore, there is no inter-state common implementation of exemption capability, leading to major difficulties in multi-national partnership programs and impacting trade and defence cooperation, both within the EU and with the non European countries. Also, the compliance with REACH can conflict with compliance with technology Export Controls in both military and civil aerospace applications, including under US law. All these potential issues affect multinational partnership programmes. The ability to source Defence products or their components in other EU member states is a major issue as defence technology sharing cannot be trusted without a common framework for inter-state recognition of exemptions. The combination of the above has created significant uncertainty within the Defence sector. Downstream users and Supply Chain initiatives: Work with relevant national competent authorities and defence agencies to help the development of harmonised processes for substance exemptions. Support needed from Authorities: From European Commission and ECHA (including its Members States Committee): Promote the urgently required common or consistent framework to grant such exemptions. Mandate an appropriate military counterpart to industry to address the issue, like the European Defence Agency (EDA). They should take a leading role, fully recognised by all the stakeholders (EC Authorities and Member States). Study the relevance of article 2 of REACH on defence exemption modification to have a common framework for exemption recognition. Intervene with EDA and Member States to introduce these principles in the revised REACH regulation. REACH / Main concerns resulting from the implementation of REACH within the Aerospace Defence and Security business 7
10 6 Aerospace, defence and security business and supply chain - additional costs for development of non-toxic alternatives Description of the issue: Critical substance substitutions are going to be one of the major challenges that the sector will have to address. Indeed, where a substance will have to be substituted, finding alternative solutions on new products/processes or on products/processes already in service will be particularly challenging. This is primarily because of EASA safety requirements imposed on the Aerospace sector, but also because the sector must remain economically competitive. Downstream users and Supply Chain initiatives: Share priorities for R&D, and propose areas of common interest for EU Framework potential funding. Voluntarily commit towards the development of standardised less hazardous alternatives, where possible, and their implementation within the supply chain. Support needed from Authorities: From ECHA: In order to avoid duplication of work and to guarantee efficiency in finding alternatives, adequate platforms are needed to facilitate the exchange of views between concerned industries so that the best technical and economical solutions can be adopted. From European Commission and Member States: In order to maintain the European industry competitiveness and a fair and level playing field, dedicated funding must be identified and secured. This should be included in the Common Strategic Framework so as to both develop and implement relevant innovative solutions. To help in maintaining the fair and level playing field a worldwide extension of a REACH type regulation must be sought, as already set up for GHS. 8
11 GLOSSARY The terms used within this document shall be understood as per the definitions incorporated into the REACH regulation n 1907/2006 Chapter 2 and as provided within the ECHA glossary EASA: European Aviation Safety Agency ECHA: European Chemicals Agency ELV: End of Life Vehicle Exemptions: Substances in particular which fall into several specific categories are totally exempted from the requirements of REACH: Radioactive substances within the scope of Council Directive 96/29/Euratom; Substances, on their own, in a preparation or in an article, which are subject to customs supervision, provided that they do not undergo any treatment or processing, and which are in temporary storage, or in a free zone or free warehouse with a view to re-exportation, or in transit; Non-isolated intermediates; The carriage of dangerous substances and dangerous substances in dangerous preparations by rail, road, inland waterway, sea or air; Waste as defined in Directive 2006/12/EC. Moreover, European Union Member States can also create specific exemptions in the interest of defence according to article 2 of REACH. Exemptions could be granted for some uses or categories of uses from the authorisation requirement provided that, on the basis of the existing specific Community legislation imposing minimum requirements relating to the protection of human health or the environment for the use of the substance, the risk is properly controlled. In the establishment of such exemptions, account shall be taken, in particular, of the proportionality of risk to human health and the environment related to the nature of the substance, such as where the risk is modified by the physical form. IAEG: The International Aerospace Environmental Group is an association formed by major aerospace companies which is dedicated to minimising the impact of global laws and regulations related to health and environmental issues for the worldwide supply chain. IP: Intellectual Property Once an article always an article: Several Member States regard articles within a «complex» article as a collection of several individual articles within an article. PLM: Product Life cycle Management Restriction: Any condition for/prohibition of the manufacture, use or placing on the market of a substance. The substances restricted under REACH and the conditions of their restrictions are included in Annex XVII of the Regulation. RoHS: Restriction of Hazardous Substances SDS: Safety Data Sheet SIEF: Substance Information Exchange Forum SME: Small and Medium Enterprises Sunset date: Annex XIV (list of substances subject to authorisation) will specify for each substance included in that Annex the date (called «the sunset date») from which the placing on the market and the use of that substance shall be prohibited unless an exemption applies, an authorisation is granted or an authorisation application has been submitted before the application date also specified in Annex XIV, although the Commission decision on the application for authorisation has not yet been taken. SVHC: Substance of Very High Concern REACH / Main concerns resulting from the implementation of REACH within the Aerospace Defence and Security business 9
12 Concept design by Airbus Multi Media Support June Electronic version available at
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