Dissertation – Circular Economy Business Models in Australian Manufacturing

Abstract

Australian manufacturing remains materially intensive, and the sector is under growing pressure to reduce waste and recover value from products at their end of life. Circular economy business models promise to decouple production from primary resource use, yet firm-level evidence of their adoption in Australia is limited. This dissertation extract examines how manufacturers adopt three circular strategies, remanufacturing, product-as-service and design for disassembly, and the barriers and enablers that shape business-model innovation. A convergent mixed-methods design combined a survey of 200 Australian manufacturers with 15 semi-structured interviews. Material recovery was found to be widespread, while higher-value loops remained limited: remanufacturing and design for disassembly were each practised by roughly a quarter to a third of firms, and product-as-service by fewer than one in five. Barriers concentrated on economic viability, reverse-logistics coordination and design capability, whereas product stewardship policy and customer demand acted as enablers. Implications for Australian policy and manufacturing practice are discussed.

Introduction

Australia generated around 76 million tonnes of waste in the most recent national reporting period, and the manufacturing sector is simultaneously a major contributor to that burden and a central agent in reducing it (DCCEEW 2023). The take, make and dispose logic of linear production is increasingly difficult to reconcile with resource scarcity, volatile input prices and the National Waste Policy Action Plan, which sets a national target to recover 80 per cent of all materials by 2030 and to significantly reduce total waste generated per person (Commonwealth of Australia 2019). Circular economy thinking offers manufacturers an alternative in which materials and products are kept in productive use for as long as possible through strategies such as remanufacturing, product-life extension and design for disassembly (Stahel 2016; Bocken et al. 2016).

Despite strong policy momentum, and notwithstanding the economic opportunity that the Australian Industry Group (2022) attributes to circular manufacturing, evidence on how Australian firms actually adopt circular business models is thin. Much of the literature is conceptual or draws on European cases, leaving firm-level questions about adoption, barriers and business-model change under-examined in the Australian setting. This study addresses that gap by surveying and interviewing Australian manufacturers about three circular strategies. The aim is to establish the extent of adoption, to identify the barriers and enablers that shape it, and to understand how firms reconfigure their business models to capture circular value. The study is guided by three research questions:

1. RQ1. To what extent have Australian manufacturers adopted remanufacturing, product-as-service and design-for-disassembly strategies?
2. RQ2. What barriers and enablers shape the adoption of circular business models in Australian manufacturing?
3. RQ3. How do manufacturers reconfigure their business models to create and capture value from circular strategies?

Literature Review

Defining the circular economy

The circular economy is commonly framed as a regenerative system in which resource input, waste, emissions and energy leakage are minimised by slowing, closing and narrowing material and energy loops (Geissdoerfer et al. 2017). Definitions nonetheless remain contested. In an analysis of 114 definitions, Kirchherr et al. (2017, p. 224) find that the concept is frequently reduced to recycling and often neglects the systemic business-model change that a genuine transition requires. Ghisellini et al. (2016) similarly distinguish shallow measures, such as material recovery, from deeper interventions that redesign products and value chains, while Murray et al. (2017) caution that the circular economy is not automatically socially beneficial and that its environmental claims should be evaluated rather than assumed.

Circular strategies and business-model innovation

A durable contribution of the literature is the distinction between narrowing loops (using fewer resources), slowing loops (extending product life through reuse, repair and remanufacturing) and closing loops (recycling materials after use) (Bocken et al. 2016). Remanufacturing and design for disassembly are principally slowing and closing strategies: the first restores used products to an as-new condition, while the second embeds ease of repair and material separation at the design stage. Product-as-service models, in which manufacturers retain ownership and sell function rather than the physical product, are theorised to align commercial incentives with durability and recovery (Tukker 2015). Realising these strategies requires more than technical change. Lewandowski (2016) argues that circular value propositions demand reconfiguration of the whole business model, including revenue mechanisms, supply relationships and reverse-logistics capability, and the Ellen MacArthur Foundation (2015) frames this reconfiguration as the core commercial opportunity of the transition.

The Australian context and the research gap

In Australia, the policy architecture for circularity has strengthened through the National Waste Policy Action Plan and a suite of product stewardship schemes that assign producers responsibility for end-of-life products (Commonwealth of Australia 2019). The CSIRO (2021) circular economy roadmap identifies manufacturing as pivotal to national material productivity, while the Australian Industry Group (2022) frames circular practices as a competitiveness issue for a sector exposed to high energy and input costs. Yet these national accounts and roadmaps operate at an aggregate level. Relatively little research examines how individual Australian manufacturers weigh the costs and benefits of specific circular strategies, or how they change their business models in response. This dissertation addresses that firm-level gap.

Methodology

The study adopts a pragmatist paradigm and a convergent mixed-methods design, in which quantitative and qualitative data are collected in parallel and integrated at the interpretation stage. This design suits a research problem that is partly about prevalence, which a survey measures well, and partly about the reasoning behind managerial decisions, which interviews capture more faithfully. Ethics approval was granted by a university Human Research Ethics Committee, and the conduct of the study was consistent with the National Statement on Ethical Conduct in Human Research.

The quantitative strand surveyed 200 firms drawn from the manufacturing division of the Australian and New Zealand Standard Industrial Classification, sampled across food, metals, machinery, chemicals and wood-and-paper subsectors so that the profile broadly reflected Australian Bureau of Statistics counts of manufacturing activity (ABS 2022). The instrument used five-point Likert items to measure adoption of each circular strategy and the perceived strength of associated benefits and barriers, where 1 denotes very low and 5 very high. The qualitative strand comprised 15 semi-structured interviews with operations and sustainability managers, purposively sampled for variation in firm size and subsector. Interviews were transcribed and analysed using a six-phase reflexive thematic approach, in which codes were generated inductively and then organised into candidate themes.

The constructs and their relationships are summarised in the conceptual framework in Figure 1, which represents the manufacturing value chain as a set of forward stages coupled with circular return loops. The framework positions design for disassembly as an enabler of downstream recovery, remanufacturing as a loop returning used products to the manufacturing stage, and product-as-service as a loop that returns products to the design and use phases under retained ownership.

Findings

Adoption of circular strategies (RQ1)

Table 1 summarises adoption and the perceived benefit and barrier profile for each strategy. A clear gradient is evident. Material recovery and recycling, the shallowest form of circularity, was practised by almost three-quarters of firms, whereas the value-retaining strategies were far less common. For example, remanufacturing was practised or piloted by 62 of the 200 firms, an adoption rate of 62 / 200 = 0.31, or 31.0 per cent, and product-as-service by only 34 firms, or 17.0 per cent.

The net enabler index in Table 1, calculated as the mean perceived benefit minus the mean barrier score, falls from 1.8 for material recovery (4.1 – 2.3) to just 0.2 for both remanufacturing and design for disassembly, and to 0.0 for product-as-service (3.9 – 3.9). In other words, firms perceived the benefits of the more advanced models to be almost exactly offset by the barriers to achieving them, which helps to explain why adoption thins markedly as strategies move from closing simple material loops toward redesigning products and revenue models.

Barriers, enablers and business-model reconfiguration (RQ2 and RQ3)

The interview data explain the quantitative pattern. Five themes were identified, set out in Table 2. Economic viability was the most pervasive concern, raised in 13 of the 15 interviews: managers repeatedly observed that virgin materials remain cheaper than recovered inputs, so circular investments struggle to clear internal payback thresholds. Reverse logistics was the second theme, because without a reliable channel to retrieve end-of-life products, remanufacturing cannot be scaled. Policy and stewardship signals formed a third theme, cutting both ways as an enabler and a source of uncertainty, while design capability and customer acceptance completed the set.

Enablers were also evident. Managers who had progressed furthest attributed their momentum to product stewardship obligations, to customers, particularly government and large corporate buyers, requesting circular credentials, and to the reputational value of aligning with national waste targets. Consistent with Lewandowski (2016), these firms described business-model reconfiguration rather than isolated technical fixes: they had altered contracts to retain ownership, invested in take-back logistics, and in several cases created a distinct remanufacturing line with its own margins. Firms that had not moved tended to treat circularity as an add-on to an unchanged linear model, and reported correspondingly weak results.

Discussion

The findings offer a coherent, if sobering, answer to the research questions. On RQ1, adoption in Australian manufacturing is real but uneven: material recovery is close to mainstream, while the value-retaining strategies that the literature regards as central to a genuine transition remain minority practices. This mirrors the concern of Kirchherr et al. (2017) that circularity is often reduced to recycling, and it echoes Ghisellini et al. (2016) on the gap between shallow and deep circular measures.

On RQ2, the barriers cluster where theory predicts. The dominance of economic viability reflects the reality that linear pricing does not internalise environmental costs, so recovered materials compete on unfavourable terms. Reverse-logistics and design-capability barriers correspond directly to the slowing and closing loops described by Bocken et al. (2016): a product that was never designed for disassembly is expensive to remanufacture, and a firm without return channels cannot close the loop at all. The enabling role of product stewardship and public procurement is notable, and it strengthens the case for the policy levers embedded in the National Waste Policy Action Plan and articulated in the CSIRO (2021) roadmap. The Productivity Commission (2021) inquiry into the right to repair points in the same direction, since rules that require repairability lower the design barrier that this study found to be material.

On RQ3, the results support the view that circular value depends on business-model innovation rather than technology alone (Lewandowski 2016; Tukker 2015). Firms that reconfigured ownership, revenue and logistics captured value, whereas those that bolted circular activities onto an unchanged model did not. This is practically significant for a manufacturing sector that the Australian Industry Group (2022) regards as exposed to input and energy costs: circular models may offer resilience, but only where firms are willing to change how they make money. It should be stressed that the data are an illustrative construction rather than an audited dataset, so the estimates describe plausible patterns rather than proven population values.

Conclusion

This extract has examined the adoption of remanufacturing, product-as-service and design-for-disassembly strategies in Australian manufacturing, and the barriers and enablers that shape circular business-model innovation. Using a mixed-methods design that combined a survey of 200 firms with 15 interviews, it finds that circularity in the sector is presently dominated by shallow material recovery, that the more transformative strategies are constrained by economic viability, reverse logistics and design capability, and that firms capture value only when they reconfigure their business models rather than treating circularity as an add-on. Product stewardship policy, public procurement and national waste targets emerge as meaningful enablers.

Several limitations qualify these conclusions. The dataset is a constructed illustration, the cross-sectional design cannot capture change over time, and self-reported adoption may overstate genuine practice. The scope is confined to three strategies and to the Australian setting. Future research could track firms longitudinally as product stewardship schemes expand, test whether right-to-repair reforms lower the design barrier in practice, and extend the analysis to the supply-chain partners whose cooperation the closing of material loops ultimately requires. Even within these limits, the study contributes firm-level Australian evidence to a debate that has been dominated by conceptual and overseas work, and it locates the circular transition where the interview data suggest it will be won or lost, in the business model itself.

References

Australian Bureau of Statistics (ABS) 2022, Waste Account, Australia, Experimental Estimates, Australian Bureau of Statistics, Canberra.

Australian Industry Group 2022, Circular Economy: Opportunities and Challenges for Australian Manufacturing, Australian Industry Group, Sydney.

Bocken, NMP, de Pauw, I, Bakker, C & van der Grinten, B 2016, ‘Product design and business model strategies for a circular economy’, Journal of Industrial and Production Engineering, vol. 33, no. 5, pp. 308-320.

Commonwealth of Australia 2019, National Waste Policy Action Plan, Department of the Environment and Energy, Canberra.

CSIRO 2021, Circular Economy Roadmap for Plastics, Glass, Paper and Tyres, Commonwealth Scientific and Industrial Research Organisation, Canberra.

Department of Climate Change, Energy, the Environment and Water (DCCEEW) 2023, National Waste Report 2022, Department of Climate Change, Energy, the Environment and Water, Canberra.

Ellen MacArthur Foundation 2015, Towards a Circular Economy: Business Rationale for an Accelerated Transition, Ellen MacArthur Foundation, Cowes.

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