Keywords

1 Introduction

The balance between industrial evolution and production, and environmental impacts and disposal is crucial for the business performance [8]. Environmental impacts have constantly increased pressure on industrial evolution to avoid things called waste. Eventually, when trying to bend the linear economy to a circular economy it is essential to remember that manufacturing itself is consuming fossil resources. So, even we can extract all used material and transform them into new raw material, we have to also transform our manufacturing in a way that we use only circulated energy sources. Manufacturing is an indispensable element of the innovation chain; it enables technological innovations to be applied in goods and services, making new products affordable and accessible to a multitude of consumers and, thus, increasing societal and economic benefits [9]. However, increased competition for access to scarce or critical resources has become another major concern for the manufacturing industry in addition to fulfilling the obligations of environmental legislation at a minimum cost [8]. By promoting the adoption of closing-the-loop production patterns within an economic system, the circular economy aims to increase the efficiency of resource use, with special focus on urban and industrial waste, and to achieve a better balance and harmony between the economy, environment and society [4].

The European Commission adopted the new circular economy action plan (CEAP) in March 2020. It is one of the main building blocks of the European Green Deal, Europe’s new agenda for sustainable growth. The EU’s transition to a circular economy (CE) will reduce pressure on natural resources and will create sustainable growth and jobs. It is also a prerequisite to achieve the EU’s 2050 climate neutrality target and to halt biodiversity loss. The new action plan announces initiatives along the entire life cycle of products. The CEAP promotes CE processes, encourages sustainable consumption, aims at preventing waste and keeping resources in the EU economy for as long as possible [2, 3]. Similarly on national level, several European countries have launched R&D programs to advance different aspects of the circular economy. For example, in Finland, the Finnish innovation fund Sitra released a national roadmap towards the circular economy in 2016 [12]. At the regional level, smart specialization strategies have further defined and implemented EU priorities that strive towards a smart, sustainable and inclusive economy with high employment, productivity and social cohesion by the year 2020 [15]. Aligning with the European Commission’s intentions, various regions have also increasingly raised the circular economy as part of their smart specializations.

2 Motivation and Research Question

The circular economy is understood well from an environmental sustainability perspective and is very visible in the waste management, recycling and bioeconomy industries. However, there is a lack of visibility in existing circular economy business activities. The circular economy conceptual frameworks are either too general to address the circular economy in manufacturing or they are too focused on a certain aspect related to the circular economy, such as remanufacturing or maintenance, and do not consider the relevance of the circular economy concept as a whole. The the main goal of this paper is to identify and validate a circular economy readiness between communication and actual action in the circular economy business in manufacturing companies in a regional context. This kind of readiness level study is a useful tool for public authorities and manufacturing companies to better understand existing situation to communicate fact based information and facilitate circular economy business development. We set the following research questions: 1.)What are the circular economy baselines in different regions in manufacturing? 2.) How to separate the existing capability from wishes?

3 Literature Review

Traditionally, the circular economy has been seen as a waste management approach. However, as recent studies such as Ghisellini et. al [4] show, the view is becoming wider by Leider [8]. Repurposing, remanufacturing or even repair could be the best strategy based on King et. al. [9] studies. From the perspective of production and operations research, the theoretical framework of sustainable manufacturing is slowly emerging to be part of the circular economy.

According to the Ellen MacArthur Foundation [1], the circular economy is restorative and regenerative by design. It can be viewed an economic strategy that suggests new ways to transform the current and predominantly linear system of consumption into a circular one while achieving economic sustainability with much needed material savings. By relying on a system-wide innovation, the circular economy aims not only to redefine products and services by minimizing negative impacts but, like Leider [8] explain, also to reduce solid waste, landfills and emissions through such activities as reuse, remanufacturing and/or recycling.

Circular economy business models fall in two groups. The first group encourage reuse and extended service life through repair, remanufacturing, upgrades and retrofits. The second group turn old goods into new resources by recycling the materials. Such a model would change the economic logic because it replaces production with sufficiency: reuse what you can, recycle what cannot be reused, repair what is broken and remanufacture what cannot be repaired [13, 14]. Lieder et al., [8] shows how concurrent engineering will take bigger role in modern engineering. Prieto-Sandoval et al., [10] proposed new kind of thinking for circular economy. As Korhonen et. al, [7] explain the circular economy concept has been created mainly practioners and policymakers. In general, it is accepted that the circular economy is seen as a transformation from a traditional linear economy to circular [6, 7, 10]. In this world view the linear and circular economies are not seen as opposites. Instead, they complement each other. Already in manufacturing, we can see different levels of circularity taking in place when old equipment like engines and powerelectronic components are remanufactured and repurposed. The circular economy can potentially close the loop in materials consumption at the end of the product lifecycle. Ideally, it enables a continuous cycle of resources without the need for disposing used material and extracting new resources to product lifecycles Signh [11]. Recently, the idea of a closed loop concept, especially in manufacturing, has been extended to other kind of resources, such as information and energy Ghisellini [4].

4 Research Methodology

This research is a qualitative study, literature review of circular economy baselines and data analysis based on the expert interviews and data analysis. The literature review was done mainly with Scopus database in 2019–2021. Searching phrases included terms like; circular economy, circular economy in manufacturing, modern manufacturing, material consumption, distributed manufacturing, reuse, repurpose and recycle. The case research included 4 main steps 1) data collection (incl. Collection of secondary data of manu.companies from available sources); 2) data mapping and interpretation (incl. Mapping regional CE acitivites among manufacturing companies based on qualitative analysis).3) Case study among two regions, and 4) analysis and further recommendation. The data search was related to the companies who had participated to university collaboration in the recent 5 years and were located in Tampere region and/or the South-Karelia region [15, 16].

The research data used was i) general information of company specific data; ii) the positions in value chain classifying companies within the 10 different roles of circular economy; and ii) the levels of activity in 15 different application domains both in the linear and the circular economy. In relation to the utilized circular economy conceptual framework, repurpose was dropped out in the early phase of data collection, as there was no sign of its industrial relevance. The application domains of design, manufacture and disposal were added to the data collection to indicate the more traditional establishments of the studied companies. In addition, recovery water treatment and energy recovery were distinguished separately (Table 1).

Table 1. Principles for data collection
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Fig. 1.
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An example of circular economy activity in value chain positions

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Figure 1 illustrates the matrix structure to combine the collected data. In this study, the Eurostat nomenclature of territorial units for statistics NUTS level 3 was used. As a result, a map, called the regional circular economy profile, illustrates macro-level activity. The rows indicate the different roles in the value chain, which are linked to columns that represent the different application domains in the linear and circular economy. Primary data presentation indicates the accumulation of regional circular economy activity. In this approach, all of the collected data from different companies are summed up to make visible the overall levels of circular economy activity in each application domain.

5 Results

For the Tampere region, we collected data from 62 companies in the manufacturing sector or directly linked to manufacturing value chains; 49 of the companies are registered in the Tampere region and 13 had side offices or active business lines in the region. The companies can be further classified as follows: 8 primary material processors, 12 part manufacturers, 16 product manufacturers, 5 distributors, 13 service providers in engineering design and software, 15 lifecycle service providers, 6 business to business users, 12 collectors and 7 disposers. Machinery and equipment, and waste collection, treatment and disposal activities—the material recovery (C28, C38 in Nace coding) sector was represented by 17 companies (NACE, 2010), Fig. 2. This sector is specifically strong in this region. The second largest sector represented was wholesale trade, excluding motor vehicles and motorcycles. This was closely followed by computer programming, consultancy and related activities by 6 companies. The latter sector is also one of the region’s traditionally strong sectors in relation to other regions in Finland.

Fig. 2.
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Sectoral allocation of companies in the Tampere region study

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In the mapping of Tampere region’s manufacturing sector—the manufacture of Based on the collected data, we found the regional distinctive profiles of the manufacturing sector’s circular economy activity, which is illustrated in Fig. 4. Results indicates that the Tampere region has strong levels of design and manufacturing, which aligns with our original expectations. Overall, the most active circular economy domains were identified in maintenance, share and recycling. Concerning the individual circular economy application domains, the key role involves the product manufacturers. Within this domain, maintenance business is the most active application domain and the area of investment; however, in many occasions, companies seem to include refurbishment, repair and remanufacturing as an integral part of their maintenance service.We assume that for this reason, refurbishing, repairing or remanufacturing may not be visible, although each can be actively used. In addition, product manufacturers are moderately active in modernizing their existing products. This is especially visible in the case of machinery products that have relatively long lifecycles. Accordingly, part manufacturers in general seem not to utilize circular economy actively, although few exceptions do apply (Fig. 3).

Fig. 3.
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Summary of Tampere region’s circular economy profile in the manufacturing sector

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Service providers (engineering) were highly active in the share application domain and moderately active in maintenance. Most of the identified activity in practice concerned new digital solutions or services, which add value to the existing machinery through better capacity, improved utilization rates and anticipatory maintenance. Therefore, in many cases, share and maintain application domains emerged. Correspondingly, we identified the service providers (lifecycle) are highly active in the maintenance domain and moderately active in the share, repair and modernization domains. Lifecycle service providers tend to have these two services separated. Packagers and distributors are highly active in the maintenance, share and reuse domains and are moderately active in the repair and modernization domains, as they tend to provide one-stop shop services for customers to run the distributed products and redistribute old products. All the users in the case study are business-to-business renting companies, and, therefore, the share domain is highly active. In addition, the maintenance, reuse and repair domains are moderately active, as the companies benefit for longer lasting products, and later they can resell old machinery.

For the South Karelia region analysis listed 68 companies mainly comprising of machinery companies around the region’s capital city of Lappeenranta; 12 of the companies are large enterprises, and 56 represent small and medium sized companies. Looking at the region’s sectoral allocation, most of the manufacturing companies, 19 in total, represent the manufacturing sector of fabricated metal products, except machinery and equipment (C25 in NACE).The second largest list of representatives were from the sector manufacturing machinery and equipment (C28 in NACE). Sectoral allocation in relation to NACE is illustrated in Fig. 4. What is notable in this sectoral allocation is the importance of sectors C16—manufacturing of wood products, except furniture; manufacturing of straw articles and plaiting materials—and C17, the manufacturing of paper and paper products. The large enterprises in these sectors spread across a wide range of different positions in the circular value chain. According to the identified regional profile in Fig. 5, this region has a strong level of manufacturing activity, and almost half of the companies have in-house design. In general, the most active circular economy domains are in maintenance, recycle close loop and reuse. The bio-economy refers to wood-based and biodegradable products, and it, seemingly, has a great importance in the region’s circular economy context. The most active positions in the circular economy value chains are part manufacturers and engineering consulting service providers. Both are moderately active in the maintenance business.

Fig. 4.
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Sectoral allocation of companies in the South Karelia region’s study

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Fig. 5.
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South Karelia region’s circular economy profile in the manufacturing sector

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Accordingly, the primary material processors are moderately active in the recycle close loop, maintenance and reuse domains. Surprisingly, product manufacturers in general seem to be only lightly active in the given circular economy domains, although the companies are high in number in the region. Service providers in for the product lifecycle are low in numbers and only moderately active in maintenance. Gatherers of core resources are highly active in the recycle close loop, reuse and maintenance domains and moderately active in the share and repair domains. Collectors are highly active in the closed loop recycling, reuse and maintenance domains and moderately active in share and repair domains. Packagers and distributors and users (business-2-business) represent the same forest industry companies and are highly active in the maintenance, reuse, recycle in close loop, share and repair domains. Finally, disposers that are represented mainly by the two large enterprises from forest industry are highly active in the maintenance, repair, reuse and recycle close loop domains, as discussed in the 9R approach from Jawahir et. al. [5].

6 Findings

The research provided answers to RQ1 “what are the circular economy baselines in the region” by looking at the regional circular economy profiles and comparing them, we can make generalizable remarks. In the Tampere region, machinery companies are naturally orienting themselves towards maintenance business. There is a growing interest towards service business in general, which extends the current traditional maintenance and repair shop activities towards more digitally advanced and proactive prevention of product failure. In the Tampere region, the cross-sectoral possibilities of combining regional strengths in machinery production, information and communication technology (ICT) and engineering design make the sharing business models a fruitful area to invest in. In Tampere region waste management, water management and recycling sectors, a connection between waste and the circular economy has raised attention. Additionally, remanufacturing is gaining business potential, as there are few pioneering companies in the region.

The South Karelia region had fewer large or medium sized enterprises and fewer original equipment manufacturing companies. Thus, the region is more dependent on part manufacturers, which are dependent on subcontracts. Therefore, there is relatively little orientation towards industrial services. Instead, the region’s manufacturing sector still focuses on investment in production technologies. In the South-Karelia region there is a strong dependence on the few large forest companies, which characterize the regional manufacturing sector. This makes the region naturally orientate towards material flows in recycling. The importance of biomaterials is explicit in South Karelia’s baseline. South Karelia, the increasing consumption of packaging materials, both plastics and bio-based alternatives, makes the area of packaging reuse and recycle an especially important area to focus on.

For the RQ2 “How to separate existing capability from wishes” the partial answer was reched. The visualisation of circular economy activities in manufacturing companies. Based on the experience gained from these case studies, many of the mapped circular economy application domains are relevant to manufacturing. It has to be noted that in general, manufacturing companies do not yet identify themselves as practicing circular economy business models. For manufacturing companies, the most relevant and clear application domains were maintenance, repair, modernization, reuse (resales) and remanufacture. Based on the finding from the research, material recycling is evidently not a main stream business model within the collected data context.

Therefore, it is deduced that circular economy is in very early phase among companies. Research institutes, universities and news paper are ahead of reality. Based on realized and practical information the gap between the circular economy theory and real manufacturing are far from each other.