According to Circle Economy, 93.1% of materials entering the global economy are drawn from virgin sources, and linear material use destroys an estimated €25.4 trillion in value annually – nearly 31% of global GDP. For industrial players, those figures point directly at the operational models most companies still depend on and the cost of leaving them unchanged, writes Erich Labuda, President, Motion Services Division, ABB.
Erich Labuda
Resources are being consumed faster than they can be replenished. The knock-on effects – tightening critical material supply chains, volatile energy prices, and growing pressure on decarbonization targets – are already reshaping how manufacturers plan capital investment and manage long-term asset performance.
Circularity built in, not bolted on
Industrial equipment, such as motors, drives, compressors, pumps, are long-life infrastructure. Yet procurement decisions often still focus on acquisition cost alone, leaving environmental and financial value embedded across an asset’s full lifespan largely uncaptured.
Circular principles applied from the design stage change that equation. Equipment engineered for modularity, repairability, and future upgrades can adapt to shifting requirements rather than being prematurely retired. Motors designed without rare earth materials reduce energy usage and cut exposure to geopolitically sensitive supply chains. A motor ABB produced for a steel plant is one case in point: achieving 99.13% efficiency, it is projected to save approximately 61 GWh over a 25-year service life. It’s proof that circularity built into design acts as a value multiplier across decades of operation.
Total cost of ownership: the question that changes everything
For a long time, and still today, industrial decisions have been optimized around upfront price. That model made sense in an era of stable supply chains and predictable energy costs. That era is gone.
The most expensive line items rarely appear on an equipment invoice. They show up later – in unplanned downtime, inefficient energy use, premature replacements, and the loss of flexibility when assets can’t be upgraded to meet evolving requirements. In many industries, a single hour of unplanned outage can cost $500,000, dwarfing years of savings from the lowest upfront bid.
Decisions made through a total cost of ownership lens change the answer. Sometimes the circular choice is a targeted upgrade that extends an asset’s productive life by 10–12 years. Sometimes it is replacing a fleet of ageing, inefficient equipment with new high-efficiency assets designed for a further two or three decades of reliable service. In both cases, the logic is the same: maximize value over the full asset lifetime and minimize waste along the way.
Real sites bear this out. When GlaxoSmithKline upgraded legacy motors at its Tuas South vaccine facility in Singapore – pairing ABB variable speed drives with rare earth-free IE5 synchronous reluctance motors – annual electricity use dropped by 615 MWh, cutting CO₂ emissions by 246 tons and exceeding the site’s decarbonization target by 25%. At Aurubis, Europe’s leading copper producer, replacing 460 outdated motors with new high-efficiency IE4 and IE5 models paired with ABB drives delivered 25 GWh in annual energy savings with a 3.5-year payback – a clear case where investing in new, better-designed equipment was the smarter circular decision.
Every year of reliable, efficient operation – whether from an upgraded asset or a new one built to last – is a circular and business win. It keeps value in productive use and reduces the environmental footprint of an asset over its working life.
Closing the loop at end of life
Circularity does not end at decommissioning. Material and economic value creation at end-of-life is central to any credible business strategy – but only when it is designed in from the outset. Through ABB Motion’s Take-Back and Recycling Programme, aluminium producer Novelis recovered powertrain components at its Swiss facility, with up to 99.4% of materials recyclable through specialized processes and zero waste to landfill.
Treated as an afterthought, that end-of-life value disappears. Engineered in from the start, it becomes a measurable outcome.
Act now, not when regulation demands it
Regulatory frameworks such as the EU’s Circular Economy Act are accelerating the shift toward durable design and responsible material recovery. But organizations that wait for compliance obligations to make a change will trail those already embedding lifecycle thinking into procurement and asset management.
The case for action is already there – in lower energy bills, reduced emissions, supply chain resilience, and assets that continue delivering value long after a short-horizon purchase would have been retired. Life-cycle asset management is not a stopgap between replacements, nor a sustainability program. Embedded properly into procurement and strategy it’s a key lever for operational resilience and competitive advantage.
Author Erich Labuda, President, Motion Services Division, ABB
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