RoHS: the next six months

The earth did not shake and the sky did not fall. It was a day like any other. For those who have spent a considerable portion of the last few years preparing the industry for the European Union's Restriction of Hazardous Substances (RoHS) July 1 compliance deadline it was a little anti-climatic, which from my perspective was a good thing.

So now we are faced with the question "what should we expect next?" I do not pretend to have a crystal ball but one thing is certain, the industry has moved from the RoHS preparation phase and into the surveillance and enforcement stage and shortly the compliance landscape will be brought into sharp focus. Although I have no way of knowing what exactly will occur, I see several issues unfolding over the next six months and I suspect that there will be a few more that will be a surprise for all of us.

Companies outside the EU will transition the balance of their product lines to RoHS-compliant production.

Firms outside the EU are still converting production and will complete this process in the next six months. Prior to July 1 it had been clear that producers in the EU were ready for the RoHS deadline and had already converted their production lines. They worked their way through the maze of product obsolescence notices, exemptions and part number sourcing confusion. Companies shipping into the EU from other parts of the world have managed to comply as well but here the story differs.

Many firms in both the Americas and Asia are still converting production to RoHS compliance, especially the medium-sized and smaller firms. Some of these companies embraced a strategy of shipping early to get non-compliant buffer inventory into the EU marketplace before the compliance deadline or transitioned only those lines immediately shipping to Europe.

Now, these companies are addressing the balance of their product offerings. Many of them are running multiple lines and are finalizing the conversion of these products that will be shipping into the EU in the near future. However, it is in their interest, both economically and as a process simplification objective, to fully convert to RoHS-compliant production.

Expect price increases for leaded components

We are already seeing the price of some components that contain lead from our suppliers beginning to increase and we expect this trend will continue. There are several reasons for this, foremost being the realities of supply and demand. However, changing purchasing behavior is the other compelling reason behind these price increases. Maintaining two production lines, one for leaded components and one for RoHS-compliant components is a costly and inefficient proposition for the component manufacturer. If the manufacturer can drive purchasing decisions away from the leaded product they may be able at some point in the future to retire that line, reduce costs, and further improve efficiency by increasing device volume on the RoHS-compliant line.

Tough sourcing ahead for military contractors

Military contractors, who initially thought that they would not be impacted by RoHS, will not only have to deal with leaded component price increases, they will find it increasingly difficult to source commercial off-the-shelf leaded components.

The Department of Defense has been encouraging industry to buy commercially available products whenever possible. As a result commercial components account for a substantial amount of the defense and aerospace component spend, and in some cases representing more than half of the components utilized on a given board assembly. Today, there is still a lot of leaded inventory in the supply chain but it is drying up quickly. Add to this the anxiety over tin whiskers and the next six months will not be pleasant for those sourcing commercial off-the-shelf products for applications that required leaded components.

Second wave of documentation requests

About eighteen months ago the sea of documentation requests originating from both finished product OEMs and their contract manufacturers reached a crescendo with little consistency from one information request to the next. With minimal clarity from the EU as to content, each of these firms determined the data needed to protect themselves in the event that their products were challenged for RoHS compliance. These requests have continued, diminishing somewhat in frequency as more of the component manufacturers have made this data available on-line.

Still much of the data already collected and filed away may be incomplete or not in a useful or accessible format to demonstrate compliance. Once the clarity of enforcement occurs and the industry has a definitive model of what constitutes sufficient documentation there will be a rush to shore up any missing or incomplete documentation. Expect another wave of documentation requests to satisfy this need with the increased use of the IPC-1752 data exchange format and data repositories, such as are available from Avnet Promiere's suite of supply chain services, or other environmental data mining services currently on the market.

Continued confusion on RoHS exemptions

Despite the considerable about of information available it is remarkable how much confusion still surrounds the RoHS exemptions, but this will remain an issue over the next six months. Some companies will need to back track and reassess their exemption position as the legal landscape on this evolves and adds definition.

China RoHS shock

The full impact of China RoHS has yet to be adequately discussed and for good reason, few understand those requirements and those that are beginning to have a handle on this have much of their attention directed to EU compliance efforts. The first phase of China RoHS goes into effect in March 2007 and attention will now shift to these requirements. We are all hopeful that a clear roadmap to China RoHS compliance will emerge.

Next up, California RoHS

January 2007 is just around the corner and with it comes what has been known unofficially as California RoHS. This new California law outlines recycling requirements for certain covered electronic devices and embraces the same material substance restrictions as does the EU RoHS. Many firms not impacted by the EU RoHS will now be subject to this new California regulation and compliance will require a substantial effort between now and the end of the year. Even those firms who are in full compliance with the EU RoHS and WEEE directives would be prudent to re-evaluate the California requirements and reassess the impact on their business.

Finally, amid globalization pressures and changing market conditions our industry's RoHS compliance effort has placed a substantial demand on resources. However, the predicted supply chain disruptions were avoided and much of the work is behind us. As the industry moves into the second half of the calendar year many firms will be refining their approaches and taking a hard look at the other global environmental compliance initiatives in the pipeline.

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