Environmental Regulations (RoHS) and their effect on Industry

1. Environmental Regulations (RoHS) and their effect on Industry Ron Collis Rockwell Automation Global Standards and Trade Group Asia Pacific Region

2. Agenda • Who is Rockwell Automation? • Economies, Regulations and Definitions • Forbidden materials • Governmental Activity • How does this effect Industry (Rockwell Automation) • Recommendations • Discussion

3. Who is Rockwell Automation Rockwell Automation is US 5 Billion Dollar Electrical Controls manufacturing Company. What does Rockwell Automation manufacture? • We manufacture Factory Automation products; these are Electrical and Electronic products used to control the manufacturing processes • These products control Electric motors on pumps, fans, conveyor • Control production quantities, volumes • Monitor product quality and volumes • Initiate Recipes and batch processes. What are these products? • Motor starters, Variable frequency Drives for Motors, Power and energy Monitors, Programmable Controllers, Industrial Computers, Operator screen devices, message displays, sensor products. What is my roll in Rockwell automation? • Identifying new standards initiatives that may impact RA products • Developing industry positions on key initiatives. • Understanding different economies Regulations • Promoting common Certification Stratergies. • Assists BU coordination of strategic standards participation, Certification activity for AP and provide Regulatory

4. Agenda • Who is Rockwell Automation? • Economies, Regulations and Definitions • Forbidden materials • Governmental Activity • How does this effect Industry (Rockwell Automation) • Recommendations • Discussion

5. Asia Pacific Environmental Regulations. New Regulations affecting Industrial Automation products are increasing.

6. Regulation by Country Country requirements that impact our ability to sell and our customers’ ability to ship product. • China RoHS (MII) • Major activity with RA to label Electronic Information Products (EIP). • Korea RoHS (ME, MCIE, MC&T) • Legislation has been passed to allow Regulations to be established. On their second draft of this legislation. • Japan RoHS (METI) • implemented Japan-specific labeling requirements only This is much broader and cover RoHS, WEEE, Packaging

7. Regulation by Country Country requirements that impact our ability to sell and our customers’ ability to ship product. • Australia RoHS • Government is reviewing a RoHS Strategy for the whole country. • Taiwan: Considering RoHS Legislation

8. Definition of producer • Manufacturers of electrical or electronic products • Importers of electrical and electronic products • Retailers/distributors who sell their own branded products • Assembly companies selling their own branded products.

9. What is a homogeneous material? • A homogeneous material is a single substance such as a plastic, for example the PVC insulation on insulated copper wire. Components such as capacitors, transistors and semiconductor packages are not "materials" but will contain several different materials. For example, a semiconductor package will contain at least six as shown below.

10. Agenda • Who is Rockwell Automation? • Economies, Regulations and Definitions • Restricted materials • How does this effect Industry (Rockwell Automation) • Governmental control? • Recommendations • Discussion

11. RoHS materials and there concentrations • Maximum concentration in homogeneous materials of the 6 substances.

12. Lead (Pb) • Used in: Solder, pigment, stabilizer in plastic, glass • Exemptions (EU): • For glass in CTR’s, electronic components and fluorescent tubes • Alloying element in steel, Aluminum and Copper alloys • Solders: • High temperature solders • For servers, storage and storage array systems • For network infrastructure • Ceramic parts (Piezo-electrics) Companies have indicated that to meet compliance with various lead restrictions, alone, The costs are in the billions of dollars.

13. Cadmium (Cd) • Used in; Contacts, Pigments, Electroplating, Metal coating • Exemptions (EU): • Cadmium plating (but NOT if covered by the Cadmium Directive 91/338/EC)

14. Mercury (Hg) • Used in; Tilt switches, sensors, fluorescent and discharge lamps • Exemptions (EU): • Different kind of Fluorescent lamps

15. Chromium Vl or Hexavalent Chromium (Cr6+) • Used in; Coatings on metals, Primers, Pigments • Exemptions (EU): • Anti- corrosion agent for the carbon steel system cooling system in absorption refrigerators

16. Bromium flame retardants (PBB’s and PBDE’s) • Used in; Fire retardants in polymers • Wire insulation • Polymer at higher temperature • Exemptions (EU): • Deca-BDE PBDE PBB

17. Agenda • Who is Rockwell Automation? • Directives, Regulations and Definitions • Forbidden materials • Government activity • How does this effect Industry (Rockwell Automation) • Recommendations • Discussion

18. EU RoHS: How do I demonstrate compliance?example UK • The criteria for analysis will depend on the quantity of product put onto the market, the relationship with suppliers, the risk of banned substances being present, and the potential environmental impact. The UK Regulator recommends using suppliers’ declaration - producer analysis is more suited for specific or unique cases - but in both cases relevant records should be kept for fouryears after the EEE product was placed on the market. The UK government accepts this approach as a way of demonstrating due diligence. • Penalties • Failure to comply with the requirements of the UK’s RoHS Regulations will result in the removalof manufacturers’products from the market place. In addition, those held responsible face, on summary conviction, a term of imprisonmentnot exceeding threemonths and/or a fine of up to £5,000. Where any offence is tried on indictment, the maximum penalties are a term ofimprisonmentof up to two years and an unlimited fine.”

19. EU RoHS - A Prediction Portable Devices(for data entry retrieval, program storage, etc.) Portable Devices(for data entry retrieval, program storage, etc.) 2010 Industrial Computers, Monitors and Accessories PLCs, Drives, Motor Controlgear, Sensors, PanelViews, Message Displays PLCs, Drives, Motor Controlgear, Sensors, PanelViews, Message Displays 201X Industrial Computers, Monitors and Accessories NOTE If intended for incorporation within equipment that needs to comply with RoHS, then the RA product also needs to comply Category 3IT & Telecomms Category 9Monitoring & Control Instruments Excluded July2006 Industrial Computers, Monitors and Accessories Portable Devices(for data entry retrieval, program storage, etc.) PLCs, Drives, Motor Controlgear, Sensors, PanelViews, Message Displays

20. Key requirements of China RoHS • It's not Just Another RoHS. It's CHINA RoHS! • Key Differences: • Two phase approach • The scope is different • The requirements are different • There are no exemptions • Labels and marks are required • The concept of "Put on the market" is different • The penalties are different • The responsibilities dictated by the law are different • Material testing down to the homogeneous materials in every single part you use to build your product may be required • You will have to design labels, issue change orders, and assess inventory in order to comply • The standards that you have to comply with are Chinese sector standards

21. China RoHS Phase 2 • Testing of Products will be required to be undertaken at one of the some 23 ( Ministry of Information Industries (MII) designated test Laboratories located in China • Testing to a Chinese sector Standard as no International standard exists as these rules go into effect. • A Catalogue of effected products will be issued towards the end of 2007. There will be no exemption issued • There will be a Grace period between the issue of the catalogue • CCC Marking of the product will be required • Will the labelling requirements of phase 1 go away? • In country survaillance will be undertaken

22. Japan RoHS • Japan feels the methods to decide maximum permissible values (thresholds), scopes for exemption in enforcement are ambiguous with EU RoHS. • The Chemicals/Compounds are the same as for the EU RoHS directive. • Products mentioned in the legislation are IT equipment. • Products must be designed with Recycling in mind. • Information on how to recycle effected products must be supplied to the Recycler if it is requested • Will have limited effect on RA products as the legislation stands at the present time • Voluntary at present • Japan to undertake a risk assessment on health of humans and on environment of the effect of these chemical substances.

23. Australia RoHS • The Australian Government commissioned a Study on RoHS last year (2006). • The results of that study have not been made public as was promised. • Good news here, The Australians haven’t worked out what to do yet! • If and when they do it will based on the six substances nominated by the EU and being referenced by China, Japan and Korea • What rules will be used to enforce such legislation has yet to be determined. • RA is at this table and discussion continue.

24. Key Requirements of Korean RoHS • On their second draft of this legislation. • The Chemicals/Compounds are the same as for the EU RoHS directive. • Products mentioned in the legislation are IT equipment. • Products must be designed with Recycling in mind. • Information on how to recycle effected products must be supplied to the Recycler if it is requested • Will have limited effect on RA products as the legislation stands at the present time • Become effective on 1 January 2008 Industry would like all Economies to have a harmonised version of RoHS

25. Agenda • Who is Rockwell Automation? • Economies, Regulations and Definitions • Forbidden materials • Governmental Activity • How does this effect Industries (Rockwell Automation) • Recommendations • Discussion

26. What to do? • As manufacturers/producers, we are expected to exercise ‘due diligence’ to ensure none of the restricted substances are present in each homogeneous (component) element of the equipment we place on the market.

27. What to do?! • For differing economies, the RoHS type regulations may differ. • For Multiple markets there maybe differing ways to determine the levels of restricted materials. • Manufacturers will require multiple checks of component supplier’s components for differing levels of Hazardous material • Component suppliers will have show evidence by declarations • This may require checks of these declarations via testing. • It may lead to products being specific to a particular market, (modify replace, redesign). • Require multiple labelling of products.

28. China Labels There is a labelling requirement to indicate whether the Six chemicals/compounds are present within the product • This logo indicates that the six hazardous substances are not present in the product or are present in levels not exceeding the maximum concentration values. • The other logo indicates that one or more of the six hazardous substances are present in the product at levels exceeding the maximum concentration values. If the size of the Rockwell Automation product is too small to display the Logo at the required size, the Logo will be included in the product literature. An example of the logo is given below. The number in the center of the logo is the “Environment Friendly Use Period”

29. Japan labels JIS (Operation Rule) Law and Regulation (Legal Requirement) Marking Legal requirement for marking andinformation disclosure 6 Substances Contained Materials contained are indicated by mark Operation rules (specific requirements) by JIS Optional marking Marks indicated for reference purposes Annex 4 (for reference purposes) Needs be stipulated specifically by JIS 1. For consumers and recyclers 2. Marked on materials other than affected materials also 6 Substances Not contained

30. Rockwell product Label

31. China RoHS content label • If a Electronic Information Product (EIP) contains more that the maximum concentration of the 6 designated chemicals/compounds; • A Hazardous contents label table must be fixed to the product indicating what chemicals are in excess of the maximum level within the product. A label indicating the date of EIP manufacture is also required and will be in the following format: “YEAR, MONTH, DAY”

32. Japan RoHS content label • If a Electronic Products contains more that the maximum concentration of the 6 designated chemicals/compounds; • A Hazardous contents label table must be fixed to the product indicating what chemicals are in excess of the maximum level within the product.

33. Effect of RoHS Regulations on Industry Non Harmonised Regulations can be disruptive • Even minor differences between an International Standards and a National Standard/Regulations will cause significant problems for the sales persons • Loss of particular market segment. • Consultants will not recommend products that do not indicate the meeting a particular standards requirements. • Increased costs in proving that the product does comply with the local standard/Regulations which may involve additional local Testing

34. Effect of RoHS Regulations on Industry • Restriction of market access – potential for Technical Barriers to Trade if not implemented uniformly • Potential civil and criminal liability for noncompliance • Costs of supply-chain management • More stringent materials content management Reporting and Testing • This will be a huge administrative Burden • All these extra cost will end up in the price of the product. • OEMs/Distributors will pass liability to suppliers through contracts • OEMs will not purchase non-compliant parts When faced with different country compliance systems, companies across supply chain find it extremely costly to operate several production lines at one time.

35. Agenda • Who is Rockwell Automation? • Economies, Regulations and Definitions • Forbidden materials • Governmental Activity • How does this effect Industries (Rockwell Automation) • Recommendations • Discussion

36. Recommendations • In those APEC economies that have adopted or are about to adopt RoHS-type requirements, those economies should consider harmonizing regulated conformity assessment requirements to facilitate trade of the same RoHS-compliant products globally by; • Harmonizing with other relevant international standards, including restricted substances lists, allowable limits, analytical testing standards and conformity assessment activity • Harmonizing of exemptions for technically-justified applications of restricted substances; • Avoiding country-specific marking and labeling requirements; • Minimizing or, where appropriate, eliminating unnecessary divergence in requirements (In Country Deviations);

37. If you need additional information contact me at rscollis@ra.rockwell.com APEC recommendations can be used as a baseline for future standard development on this issue.