ANALYSIS OF ALTERNATIVES & SOCIO-ECONOMIC ANALYSIS
Public version
Legal name of Applicant(s): FN Herstal Browning
Submitted by: FN Herstal
Substance: Chromium trioxide (EC 215-607-8, CAS 1333-82-0)
Use title: Use-2 Industrial use of chromium trioxide in the hard chromium coating of civilian firearms barrel bores and auxiliary parts subject to thermal, mechanical and chemical stresses, in order to provide a low friction coefficient as well as heat, corrosion and wear resistance properties.
Use number: 2
Analysis of Alternatives – Socio-Economic Analysis
CONTENTS
LIST OF ABBREVIATIONS ...... 6 1. SUMMARY ...... 7 2. AIMS AND SCOPE OF THE ANALYSIS ...... 9 2.1. Applicants ...... 10 2.1.1. FN Herstal ...... 10 2.1.2. Browning ...... 11 2.2. Scope of the AfA ...... 11 2.2.1. FN Herstal’s hard chromium plating process ...... 12 2.2.2. Browning’s hard chromium plating process ...... 12 2.2.3. Common characteristics of both processes ...... 12 2.3. Products concerned...... 13 2.4. Supply chain ...... 15 2.5. General methodology ...... 15 2.5.1. Scope of the AfA ...... 16 2.5.2. Actualisation ...... 17 2.5.3. Confidentiality ...... 19 2.5.4. Focus: Technology Readiness Levels ...... 20 2.6. Presentation of the “applied for use” and “non-use” scenarios ...... 20 2.6.1. “Applied for use” scenario ...... 20 2.6.2. “Non-use” scenario ...... 21 3. “APPLIED FOR USE” SCENARIO ...... 22 3.1. Elements of context ...... 22 3.1.1. Hard chromium plating ...... 22 3.1.2. Historical background ...... 23 3.1.3. Types of firearms ...... 23 3.1.4. Extraction issues ...... 24 3.1.5. Failure mode of civilian firearm barrels ...... 25 3.1.6. Market and business model ...... 27 3.1.7. Customer preference ...... 28 3.1.8. Trend in ammunition choice ...... 28 3.2. Parts concerned...... 31 3.3. Analysis of substance function ...... 33 3.3.1. Functional properties of hard chromium in the context of civilian armament manufacturing ...... 33 3.3.2. Complementary requirements for the research of alternatives to hard chromium plating ...... 35 3.4. Market and business trends including the use of the substance ...... 36 3.4.1. Use of chromium trioxide ...... 36 3.5. Remaining risk of the “applied for use” scenario ...... 36 3.6. Human health impacts and monetised damage of the “applied for use” scenario ...... 36 3.6.1. Number of people exposed ...... 37 3.6.2. Medical treatment ...... 37 3.6.3. Mortality and morbidity ...... 40 3.6.4. Synthesis of the monetised damage of the “applied for use” scenario ...... 46 3.6.5. Complementary elements of analysis: values taking into account a 4% discount rate ...... 46 3.7. Environment, man-via-environment impacts and monetised damage of the “applied for use” scenario ... 46 3.7.1. Environment impacts and monetised damage ...... 46 3.7.2. Man-via-environment impacts and monetised damage ...... 46 4. SELECTION OF THE “NON-USE” SCENARIO ...... 47 4.1. Efforts made to identify alternatives ...... 47 4.1.1. Data searches and Research & Development ...... 47 4.2. Potential alternatives already abandoned ...... 48 4.2.1. Thermal spraying with HVOF (High Velocity Oxygen Fuel) ...... 48
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4.2.2. Nickel and Nickel alloy coatings ...... 49 4.2.3. Fine polishing of firearm chambers ...... 50 4.3. Research and development works in order to reduce the exposure to Cr(VI) for hard chrome plating (FNH1) 51 4.4. Assessment of shortlisted alternatives...... 53 4.4.1. Alternative 1: Thermomechanical modification ...... 53 4.4.2. Alternative 2: Chromium deposition from Cr(III) electrolyte ...... 54 4.4.3. Alternative 3: Vacuum process with PVD/CVD ...... 55 4.5. General substitution timeline ...... 57 4.6. The most likely “non-use” scenario ...... 59 4.6.1. Potential “non-use” scenarios ...... 59 4.6.2. Synergy between uses ...... 60 5. IMPACTS OF GRANTING AN AUTHORISATION ...... 62 5.1. Economic impacts...... 62 5.1.1. Loss of revenues ...... 62 5.1.2. Lost investments...... 66 5.1.3. Relocation costs ...... 67 5.1.4. Increase in operating costs ...... 67 5.1.5. Other costs ...... 68 5.1.6. Potential financial opportunities ...... 68 5.2. Human health or Environmental impact ...... 69 5.2.1. Impacts on human health ...... 69 5.2.2. Greenhouse gas emissions ...... 69 5.3. Social impact ...... 71 5.3.1. Impact on employment ...... 71 5.3.2. Indirect impact on employment ...... 73 5.3.3. Complementary element of analysis: total cost of the loss of employment for the AfA...... 74 5.4. Wider economic impact ...... 74 5.4.1. Economic stakes of hunting ...... 74 5.5. Distributional impact ...... 75 5.6. Uncertainty analysis for both the “applied for use” and the “non-use” scenario ...... 76 5.6.1. “Applied for use” scenario ...... 76 5.6.2. “Non-use” scenario ...... 77 5.6.3. Conclusion ...... 79 5.7. General conclusion on the impacts of granting an authorisation ...... 79 6. CONCLUSIONS...... 82 6.1. Comparison of the benefits and risks ...... 82 6.2. AoA-SEA in a nutshell ...... 82 6.3. Information for the length of the review period ...... 84 6.4. Substitution effort taken by the Applicants if an authorisation is granted ...... 84 7. References ...... 85 8. Annex – Justifications for Confidentiality Claims...... 88 9. Appendixes ...... 89 9.1. Focus on barrel failure modes ...... 89 9.2. Exploded views of firearms concerned by Use-2, and identification of hard chromium plated parts ...... 91
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TABLES
Table 1. Uses of the Application for Authorisation ...... 9 Table 2. FN Herstal key figures, 2014 ...... 10 Table 3. Browning key figures, 2015 ...... 11 Table 4. Scope of the AfA ...... 16 Table 5. Impact period of the AfA ...... 17 Table 6. Inflation values taken into account in this dossier ...... 18 Table 7. European Commission’s definition of Technology Readiness Levels ...... 20 Table 8. Regulations regarding the use of lead ammunitions and use of non-lead ammunitions per European State ...... 30
Table 9. Tonnages of CrO3 over the 2013-2015 period at Herstal, for both Use-1 and Use-2 ...... 36 Table 10. Lung cancer costs for Belgium and Portugal (average of data for France, Germany and the united Kingdom) for the first two years after the diagnosis ...... 38 Table 11. Net year survival rate after lung cancer diagnosis in France ...... 38 Table 12. Individual lung cancer costs during the review period for Herstal and Viana, not taking into account the excess of risk for workers ...... 39 Table 13. Total lung cancer costs during the review period, considering the total excess of risk for workers and the respiratory equipments ...... 39 Table 14. Years of Life Lost (YLL) for Use-2 ...... 42 Table 15. Years of Life lived with Disability (YLD) for Use-2 ...... 43 Table 16. Synthesis of YLLs, YLDs and monetised damage of mortality and morbidity related to the excess cancer risk associated with lung cancer, Use-2 ...... 44 Table 17. Value of statistical life and willingness to pay to avoid cancer ...... 44 Table 18. Incidence and mortality associated with lung cancer in Europe, in 2012 ...... 45 Table 19. Mortality and morbidity costs for Use-2, complementary assessment ...... 45 Table 20. Overall impacts of the "applied for use" scenario, Use-2 ...... 46 Table 21. Overall impacts of the “applied for use” scenario, Use-2. Complementary analysis taking into account a 4% discount rate ...... 46 Table 22. Substitution timelines for Alternative 1, Alternative 2 & Alternative 3 ...... 58 Table 23. Different "non-use” scenarios depending on the outcome of the application for authorisation for Use-1 and Use-2 ...... 60 Table 24. Loss of revenues for FN Herstal related to the “non-use” scenario ...... 64 Table 25. Revenues associated with applications concerned by Use-2, over the 2010-2014 period, in M€...... 64 Table 26. Total loss of revenues for Use-2 ...... 65 Table 27. Total loss of profits for Use-2 ...... 65 Table 28. Detail of investments in amortisation, by year of last annuity ...... 66 Table 29. Relocation costs for FN Herstal, for Use-1 and Use-2 ...... 67 Table 30. Conversion factors for transportation modes. Source: Bilan Carbone v7.1.021 ...... 70 Table 31. Characterisation of the outward trip of the transportation journey associated with the “non-use” scenario...... 70 Table 32. Greenhouse gas emissions associated with the “non-use” scenario for Use-2 ...... 70 Table 33. Loss of employment in the context of the “non-use” scenario for Use-1 ...... 71 Table 34. Average individual social cost of an unemployed person in Belgium and Portugal, 2010 72 Table 35.Total cost of the loss of employment for Use-2 ...... 73 Table 36. Detail of the assessment of indirect job losses foreseen for Herstal in the context of the “non-use” scenario ...... 73 Table 37. Global direct loss of employment and associated costs for the AfA (i.e. cumulated for Use-1 and Use-2 ...... 74 Table 38. Uncertainty analysis for mortality and morbidity, Use-2 ...... 76
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Table 39. Qualitative uncertainty analysis of the main parameters of the “applied for use” scenario ...... 77 Table 40. Uncertainty analysis for unemployment costs for the site of Viana ...... 77 Table 41. Qualitative uncertainty analysis of the main parameters of the “applied for use” scenario ...... 79 Table 42. Synthesis of the monetised impacts of the “non-use” scenario ...... 79 Table 43. Other impacts of the “non-use” scenario ...... 81 Table 44. Justifications for confidentiality claims ...... 88
FIGURES
Figure 1. FN Herstal ...... 10 Figure 2. Barrel manufacturing, machining and packing activities on the site of Herstal ...... 10 Figure 3. Browning ...... 11 Figure 4. Main Browning product categories concerned by Use-2 ...... 13 Figure 5. Main Winchester product categories concerned by Use-2 ...... 14 Figure 6. Supply chain of Browning’s firearms concerned by Use-2 ...... 15 Figure 7. Browning B725 shotgun ...... 23 Figure 8. Browning X-BOLT rifle ...... 24 Figure 9. Barrel fatigue failure modes ...... 25 Figure 10. Inside of a barrel chamber without (left) and with (right) hard chromium plating, after 24h NaCl 50g/l salt bath exposure ...... 26 Figure 11. Distribution of the volumes if firearms potentially commercialised in Europe (in millions of units), by origin country ...... 27 Figure 12. Browning Maxus exploded view. In red, parts concerned by Use-2...... 32 Figure 13. Cross section of barrel bore, magnified (top) and general (bottom) ...... 33 Figure 14. Share of FN Herstal's revenues related and not related to hard chromium plating ( Use-1 and Use-2), on the basis of cumulated revenues over the 2000-2015 period...... 62 Figure 15. FN Herstal revenues for the 2004-2014 period, in M€ ...... 63 Figure 16. Barrel fatigue failure modes ...... 89 Figure 17. Barrel wear as a function of barrel length, for new and end-of-life barrels ...... 90 Figure 18. Barrel bore pictures, for new barrel (left) and end-of life-barrel (right) ...... 90 Figure 19. Copper deposit (blue part of the picture) ...... 91 Figure 20. Browning A5 exploded view. In red, parts concerned by Use-2 ...... 92 Figure 21. BAR exploded view. In orange, parts concerned by Use-2 ...... 93 Figure 22. ShortTrack exploded view. In orange, parts concerned by Use-2 ...... 94 Figure 23. Winchester SX3 exploded view. In red, parts concerned by Use-2 ...... 95 Figure 24. Winchester SXR exploded view. In red, parts concerned by Use-2 ...... 96
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LIST OF ABBREVIATIONS
AfA Application for Authorisation B Billion (€) Cr(III) Trivalent chromium Cr(VI) Hexavalent chromium DALY Disability-Adjusted Life Years EBITDA Earnings Before Interest, Taxes, Depreciation and Amortisation GHG Greenhouse Gas k Thousands (€) kgCO2e Equivalent carbon dioxide kilogram M Million (€) PV Present value tCO2e Equivalent carbon dioxide ton WHO World Health Organisation WTO World Trade Organisation YLD Years lived with disability YLL Years of Life Lost due to premature mortality
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1. SUMMARY
CONTEXT FN Herstal (Herstal, Belgium) and Browning (Viana do Castelo, Portugal) are two subsidiaries of the Herstal Group, a manufacturer of small- and medium calibre firearms. Under Use-2, FN Herstal and Browning are downstream users of chromium trioxide in the hard chromium coating of civilian (hunting, recreational shooting) firearm barrel bores and auxiliary parts subject to thermal, mechanical and chemical stresses. Hard chromium coating is a key criterion for the competitiveness of FN Herstal’s and Browning’s products; the economic impacts of its banning from the market would strongly affect both companies.
SUBSTANCE FUNCTION The main functional properties sough-after by FN Herstal and Browning with chromium trioxide include: low friction coefficient, heat resistance, corrosion resistance, surface hardening and wear resistance, chemical barrier properties, adhesion properties as well as efficient coverage of complex or inner shapes and preservation of components tolerance.
IDENTIFICATION OF AL TERNATIVES A significant work of research carried out internally and through partnerships with external research centres led to identify several potential alternative processes to hard chromium plating for the surface treatment of firearm barrel bores and auxiliary parts. As a result of testing and analysis over the last decade, three potential alternatives appear promising: thermomechanical modification (Alternative 1), deposition of chromium from a Cr(III) electrolyte (Alternative 2) and vacuum process with Physical/Chemical Vapour Deposition process (Alternative 3). These processes, however, have yet to be further investigated, implemented and qualified and will therefore not be available before the sunset date of chromium trioxide.
“APPLIED FOR USE” AND “NON-USE” SCENARIO Under the “applied for use” scenario, FN Herstal and Browning will pursue the use of chromium trioxide for the surface treatment of parts concerned by Use-2 for the period of time necessary to develop, implement and qualify an alternative process, thereby securing its revenues. In conjunction with research works for alternatives, and subject to the granting of an authorisation, FN Herstal will implement an optimised hard chrome plating process allowing to drastically reduce the exposure of workers to Cr(VI) during the period of time necessary to develop and implement a sustainable substitution process.
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The most likely “non-use” scenario is the following: with the ban on the use of Cr(VI) compounds and therefore the cessation of hard chromium treatment, FN Herstal and Browning will have to relocate hard chromium plating operations outside the European Union. Since Use-2 concerns the very core of FN Herstal’s and Browning’s current and future portfolios, this scenario will have strong economic, environmental, social and wider impacts on both companies.
IMPACTS OF GRANTING AUTHORISATION The main impacts of the “applied for use” scenario include costs related to the medical treatment, morbidity and mortality associated with the excess of risk of cancer arising from the exposure to chromium trioxide of workers over the review period. The total monetised impacts of the “applied for use” scenario amount to € 115. Monetised impacts of the “non-use” scenario include the loss of revenues, profits, employment and investments, as well as relocation costs. The total monetised impacts of the “non-use” scenario amount to € [10- 100M](#1a). Based upon the present assessment, the socio-economic benefits outweigh the risks arising from the use of the substance by a factor of approximately [100,000- 1,000,000](#1b). In addition to monetised impacts, the “non-use” scenario involves an increase in operating costs, stringent regulatory issues and safety of supply issues, impacts on human health, greenhouse gas emissions as well as indirect revenues loss, guarantee costs and impact on the goodwill of Browning.
CONCLUSION Based on the argument put forward, and in order to develop, implement and qualify an alternative solution for Use-2, FN Herstal and Browning apply for a seven-year review period.
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2. AIMS AND SCOPE OF THE ANALYSIS
FN Herstal is a Belgian industrial armament group manufacturing small- and medium-caliber firearms. From the point of view of the REACh regulation, FN Herstal is considered as a downstream user of chromium trioxide in the hard chromium coating of firearm barrel bores and auxiliary parts subject to thermal, mechanical and chemical stresses. Hard chromium coating is a key criterion for the competitiveness of FN Herstal’s products; the economic impacts of its banning from the market would strongly affect the company and endanger FN Herstal’s overall survival.
The aim of the present document is to provide a comprehensive analysis of both the Analysis of Alternatives and Socio-Economic Analysis parts of FN Herstal’s and Browning’s Use-2 Application for Authorisation (AfA), i.e: - to provide a comprehensive understanding of the context of the AfA, - to describe FN Herstal’s and Browning’s research works for alternatives, potential alternatives and substitution strategy, - to provide a comparative assessment of the monetised impacts of the pursued use of the substances (“applied for use” scenario) and the impacts of the denial of an authorisation (“non-use” scenario). For the sake of clarity, it is reminded that this document is part of a broader AfA. FN Herstal’s, Manroy’s and Browning’s authorisation dossier is indeed composed of two uses:
Industrial use of chromium trioxide in the hard chromium coating of military small- and medium-caliber firearms barrel bores and auxiliary parts subject to thermal, mechanical and chemical stresses, Use-1 in order to provide hardness, heat resistance and thermal barrier properties, as well as corrosion resistance, adhesion and low friction properties.
Industrial use of chromium trioxide in the hard chromium coating of civilian firearms barrel bores and auxiliary parts subject to thermal, Use-2 mechanical and chemical stresses, in order to provide a low friction coefficient as well as heat, corrosion and wear resistance properties.
Table 1. Uses of the Application for Authorisation
Under the brands FN Herstal, Manroy, Browning and Winchester Firearms, the Herstal Group designs, manufactures and distributes a full range of firearms and associated products for defence, law enforcement, hunting and shooting. Since 1997, Herstal Group has been 100% owned by the Walloon Region of Belgium. With manufacturing locations in Belgium, US, UK, Portugal, Japan and Finland, the global Herstal Group provides employment to a workforce of about 2,400 people.
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2.1. Applicants Use-2 of the present AfA concerns two subsidiaries of the Herstal Group: FN Herstal and Browning.
2.1.1. FN Herstal
Figure 1. FN Herstal
FN Herstal is a leading manufacturer of small- and medium-caliber firearms for both military and civil markets located in Herstal, Belgium. The history of FN Herstal, formerly known as “Fabrique Nationale d'Armes de Guerre1” or “Fabrique Nationale”, dates back to 1889. The FN Herstal manufacturing site comprises all firearm manufacturing activities: machining, surface treatment, assembly, testing, packaging and dispatching.
Figure 2. Barrel manufacturing, machining and packing activities on the site of Herstal
Main figures of FN Herstal’s activity in 2014 are summarised below:
PROPRIETE REVENUES EMPLOYEES
FN Herstal € 306M 1,314
Table 2. FN Herstal key figures, 2014
In the context of Use-2, FN Herstal manufactures and carries out hard chromium plating of firearm barrels and ancillary parts intended to be used by Browning for final assembly of hunting and recreational shooting firearms.
1 French for: “National Factory of War Weapons”
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2.1.2. Browning Browning was created in 1897 and is the inventor of the semi-automatic shotgun, Over-and-Under shotgun and, semi-automatic rifle.
Figure 3. Browning
Main figures of Browning’s activity in 2014 are summarised below:
PROPRIETE REVENUES EMPLOYEES
Browning € 320M 426
Table 3. Browning key figures, 2015
In the context of Use-2, Browning manufactures, carries out hard chromium plating operations and assembles hunting and recreational shooting firearms.
2.2. Scope of the AfA Chromium trioxide is classified under REACh as a Substance of Very High Concern due to its carcinogen category 1B and mutagen 1B properties, according to Art. 57(a) and 57(b). It was included in the Annex XIV of REACh during ECHA’s third recommendation. Sunset date for the use of 1,2-DCE is 21/09/2017; latest application date was set to 21/03/2016. Under Use-2, FN Herstal uses chromium trioxide in the hard chromium plating of civilian gun barrel bore and auxiliary parts of firearms dedicated to the civilian market. The functional properties sought-after by FN Herstal with hard chromium include: - low friction coefficient, - heat resistance, - corrosion resistance, - surface hardening and wear resistance, - chemical barrier properties, - adhesion properties, - efficient coverage of complex or inner shapes, - preservation of components tolerance.
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2.2.1. FN Herstal’s hard chromium plating process Hard chromium plating is performed by FN Herstal: - in a single facility on the site of Herstal (Wallonia, Belgium), - on three hard chromium plating treatment lines, - by 21 employees directly involved in the operation of the hard chromium lines (i.e. concerned by both Use-1 and Use-2), - working two 7hr-shifts per day, - for 200 days per year. FN Herstal overall use of chromium trioxide amounts to 5.5 tons for 2015; this tonnage includes both Use-1 and Use-2 of the present AfA at the site of Herstal.
2.2.2. Browning’s hard chromium plating process Hard chromium plating is performed by Browning: - in a single facility on the site of Viana do Castelo (region Norte, Portugal), referred to as “Viana” in what follows, - on one hard chromium plating treatment line, - by 2 employees, - working one 8hr-shift per day, - for 200 days per year. Browning’s overall use of chromium trioxide amounts to 400 kg for 2015.
2.2.3. Common characteristics of both processes Both surface treatment workshops of FN Herstal’s site of Herstal (Belgium) and Browning’s site of Viana (Portugal) were designed with chemical hazard prevention and control as key criteria. General risk management measures notably comprise: - A fully automated treatment excluding manual work for the operators nearby the chromium tanks. The only manual operations consist in the instalment and removal of parts on the processing carts. These operations are carried out meters away from the chromium tanks, and do not involve contact with Cr(VI) ; - An efficient general ventilation of the overall facility, (a) involving the overpressurisation of the room and (b) ensuring an air renewal rate of 5 to 6 air changes per hour with 100% new air (no recycling) ; - A good level of containment for the chromium-containing baths, with an automatic closure system relying on movable shutters at the surface of baths and enclosing hoods fitted on the automated treatment carts carrier ; - Specific local exhaust systems fitted on all the baths’ surfaces, connected to a high performance air treatment system; - Comprehensive pollution prevention from unplanned releases, with all the treatment lines being localised above retention ponds; - An on-site wastewater treatment plant.
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2.3. Products concerned Firearms concerned by Use-2 are sold by Browning. The present AfA also concerns FN Herstal, since it manufactures cannons and ancillary parts that are supplied to Browning in order to be implemented on firearms. Several Browning products, dedicated to hunting or target shooting, are concerned by Use-2:
Figure 4. Main Browning product categories concerned by Use-2
In addition, Browning is the exclusive operator of the Winchester trademark. Winchester-branded firearms are therefore manufactured in Viana within Browning’s production facility. As a consequence, a part of Winchester firearms are concerned by Use-2 of the present AfA, as illustrated in Figure 5 below.
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Figure 5. Main Winchester product categories concerned by Use-2
Given the criticality of the parts concerned by Use-2 for the proper functioning of firearms, hard chromium treatment of gun barrels and associated auxiliary parts is at the very core of Browning’s high-end firearms activity. Not only the surface treatment activity but also manufacturing of parts as well as firearms assembly, packaging and dispatch activities directly depend on the hard chromium plating process. Firearms concerned by Use-2 represent 67% of the Browning revenues generated by the site of Viana. It has to be noted that besides Viana, Browning and Winchester firearms are also manufacturer by Miroku Firearm Company in Japan, for which 7% share capital
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is held by the FN Herstal group. Miroku already manufactures firearms involving hard chromium parts such as Browning B525, B725, X-Bolt and A-Bolt.
Use-2 concerns a significant share of the portfolio of Browning and Winchester, and more specifically high-end firearms, which are associated with higher retail prices and revenues.
2.4. Supply chain The global supply chain of Browning firearms can be described as follows:
Figure 6. Supply chain of Browning’s firearms concerned by Use-2
2.5. General methodology On the basis of the carcinogenic properties of Cr(VI) compounds for which it is not possible to determine a threshold, and since it cannot be demonstrated that the risk to human health or the environment from the use of the substance is adequately controlled, the “socio-economic route” applies for the present application. The socio- economic route applies where it can be demonstrated that the risk to human health or the environment from the use of the substance is outweighed by the socio- economic benefits and there are no suitable alternative substances or techniques (Art. 60(4)). As per ECHA’s guidance, the assessment of the socioeconomic component of the present AfA will be based upon a Cost-Benefit Analysis approach. A comparative assessment will therefore be carried out, between the monetised impacts related to the “applied for use” and the “non-use” scenarios. In order to best reflect the consequences of both these scenarios, an effort has been undertaken to place this AfA in the context of the realistic worst-case scenario. Whenever possible: - Overestimating hypothesis have been used to assess the impacts of the “applied for use” scenario and, conversely, underestimating hypotheses have been used to assess the impacts of the “non-use” scenario;
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- Representative examples have been provided and structuring hypothesis or assertions have been justified either based on literature or institutional sources. Where appropriate, complementary elements of analysis have been provided, notably concerning: - An alternative methodology of assessment of costs related to mortality and morbidity; - An alternative assessment of the costs of the “applied for use” scenario, considering a 4% discount rate. Furthermore, and so as to provide a comprehensive understanding of the limits of the proposed assessment, an uncertainty analysis was carried out for both the results of the “applied for use” and “non-use” scenarios. This analysis, carried out both quantitatively and qualitatively, is provided in section 5.6.
2.5.1. Scope of the AfA Key elements of the scope of the AfA are provided in Table 4 below:
SCOPE COMMENT Temporal 7 years post sunset date: 2018-2024. See Table 5 for a description of boundary the triggering period for each impact. Direct impacts concern Belgium and Portugal. Geographic Indirect impacts for FN Herstal’s and Browning’s supply chain and boundaries customers cover a worldwide scope.
Monetised damage of the impacts on human health of the “applied for use” scenario includes: - Medical treatment, - Mortality and morbidity Main impacts of the “non-use” scenario include: - Economic impacts on FN Herstal’s and Browning’s activity include Economic loss of revenues, increased operational costs as well as relocation boundaries costs and guarantee costs; - Human health and environmental impacts; - Social impacts related to the loss of employment; - Wider economic impacts include impacts on FN Herstal’s and Browning’s industrial partners involved in the development, production and support of the equipments concerned by Use-2. Tonnages - Quantities used: 1.0 ton per year
Table 4. Scope of the AfA
Focus on the temporal boundaries and the impact period:
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SCENARIO IMPACT IMPACT PERIOD DISCOUNTING PERIOD “Applied for use” Medical treatment 7 yrs: 2018 - 2024 9 yrs: 2016 - 2024 scenario Mortality and morbidity 7 yrs: 2018 - 2024 9 yrs: 2016 - 2024 Loss of profits 7 yrs: 2018 - 2024 9 yrs: 2016 - 2024 “Non-use” Relocation investments 3 years: 2018-2020 5 years: 2016-2020 scenario Loss of employment 1 yr: 2018(*) 3 yrs: 2016 - 2018
Table 5. Impact period of the AfA (*) Average unemployment period is considered to be 460 days, but was rounded here to 1 yr
Present value is set in 2015, at the date of drafting of this document. Considering that the sunset date for chromium trioxide takes place at the end of the year 2017, an assumption is made that impacts will take place in 2018. Similarly, the discounting period is set to begin in 2016. In order to ensure consistency of analysis between impacts of both scenarios, and as recommended by ECHA’s guidance, it was chosen to consider a common impact and discounting period for both the “applied for use” and “non-use” scenarios. In order to remain as close as possible to the temporal scope of the AfA, it was chosen to assume that the impact period and discounting period of both scenarios correspond to the review period of each use of the AfA. This assumption can be justified as follows: - The period of time covered by the review period of the uses of the AfA comprises the period of time with the highest mortality rates after diagnosis, thereby encompassing the majority of the impacts; - By assuming that the discount period is in line with the review period, and therefore assuming that the impacts will take place in a closer future than what is realistically foreseeable, it is deliberately chosen to discount the impacts of the “applied for use” scenario by a lower factor than if a more realistic period of time was chosen, for example 20 or 30 years.
2.5.2. Actualisation All final monetised results of this document are expressed in present value (PV). In this context, the following factors are used for the actualisation of past values (correction for inflation) or future values (discounting).
2.5.2.1. Inflation Given the type of values considered (health expenditures, social benefits), it was chosen to rely on the Consumer Price Index to carry out actualisation according to inflation. The choice of this statistical estimate is in line with ILO/IMF/OECD/UNECE/Eurostat/The World Bank recommendations, stating2: “CPIs are widely used for the index linking of social benefits such as pensions,
2 ILO/IMF/OECD/UNECE/Eurostat/The World Bank, Consumer price index manual: Theory and practice Geneva, International Labour Office, 2004
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Analysis of Alternatives – Socio-Economic Analysis unemployment benefits and other government payments, and also as escalators for adjusting prices in long-term contracts.” The following values will be used in the present document:
UNITED EUROPEAN 2 BELGIUM PORTUGAL KINGDOM UNION 2003-2015 26.0% 32.4% 22.2% 28.0% 2008-2015 11.0% 18% 7.7% 11.3% 2010-2015 8.6% 11.8% 7.0% 8.0% 2012-2015 2.0% 4.1% 0.5% 1.7%
Table 6. Inflation values taken into account in this dossier3
2.5.2.2. Discounting Comparing costs and benefits during different periods of time to present values requires the use of discounting technique to translate future costs and benefits into present-days values to account for the time value of money The choice of discount rate is important since it can affect the cost-benefit results of the analysis. The higher the discount rate, the lower the future benefits and costs values will be, as compared to present values. In our methodology, we deliberately chose to use two different discount rates depending on the type of future impacts evaluated. Thus, future human health costs described in the “applied for use” scenario of this dossier will be evaluated using a lower discount rate that the one used to consider economic impacts in the “non-use” scenario. This difference is related to the different “nature” of these impacts and aims to reflect the society’s rate of time preference with respect to health risks. As per ECHA’s guidelines, the calculation of discounted values is performed on an annualised basis, with the following formula:
Considering: - = present value
- = future costs at year - = annual discount rate - = last annuity of the discount period
3 OECD, Main economic indicators, Consumer Price Index – data and methods
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Discounting of health impacts A 3% discount rate is used in this dossier for health impacts. This choice is in line with WHO4, stating: “For many years, a discount rate of 5% per annum has been standard in many economic analyses of health and in other social policy analyses, but recently environmentalists and renewable energy analysts have argued for lower discount rates for social decisions. The World Bank Disease Control Priorities study and the GBD project both used a 3% discount rate, and the US Panel on Cost- Effectiveness in Health and Medicine recently recommended that economic analyses of health also use a 3% real discount rate to adjust both costs and health outcomes.” Please note that, in order to ensure a complete consistency of the values with ECHA’s requirements, a complementary assessment is provided for the “applied for use” scenario in section 3.6.5, considering a 4% discount rate.
General discounting Based on ECHA’s recommendation5, a 4% discounting rate is used to assess the future cost/benefits values for impacts not related to health matters.
2.5.3. Confidentiality In order to preserve the confidentiality of strategic data of the present AfA, confidential business information has been blanked out in this public version of the AoA-SEA document. In what follows, such figures will be indicated as follows: [€ 10-100M](#1a). Please refer to section 8 for a justification of confidentiality claims.
4 World Health Organisation, Environmental Burden of Disease Series, No. 1 - Introduction and methods, Assessing the environmental burden of disease at national and local levels, 2003 5 ECHA, Guidance on the preparation of socio-economic analysis as part of an application for Authorisation, 2011
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2.5.4. Focus: Technology Readiness Levels Technology Readiness Levels (TRL) is a method for estimating the maturity of technology elements. According to the European Commission’s definition, TRL can be defined as follows:
TRL DEFINITION TRL 1 Basic principles observed TRL 2 Technology concept formulated TRL 3 Experimental proof-of-concept TRL 4 Technology validated at laboratory scale TRL 5 Technology validated in relevant environment TRL 6 Technology demonstrated in relevant environment TRL 7 System prototype demonstration in operational conditions TRL 8 System complete and qualified TRL 9 Actual system proven in industrial environment
Table 7. European Commission’s definition of Technology Readiness Levels6
2.6. Presentation of the “applied for use” and “non-use” scenarios
2.6.1. “Applied for use” scenario Under the “applied for use” scenario, FN Herstal and Browning will pursue the use of chromium trioxide for the surface treatment of parts concerned by Use-2 during the period of time necessary to develop, implement and qualify an alternative process, thereby securing their activities and markets. In conjunction with research works for alternatives, and subject to the granting of an authorisation, FN Herstal and Browning will implement an optimised hard chrome plating process allowing to drastically reduce the use of and the exposure of workers to Cr(VI) during the period of time necessary to develop and implement a sustainable substitution process. With respect to Use 1, Applied for Use 2 scenario will require 1 more year to be developed since no test on civil firearm has been made so far. Considering the laboratory test results achieved by FN Herstal on military weapons parts, the Technology is considered TRL 6 mature for Browning under Use 2. Specific tooling and test plan of civil firearm will be initiated to reach TRL 7 by the end of 2017.
6 European Commission, G. Technology readiness levels (TRL), Horizon 2020 – WORK Programme 2014-2015 General Annexes, Extract from Part 19 - Commission Decision C(2014)4995.
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Main impacts of the “applied for use” scenario concern operator’s health and monetized damage includes costs associated with medical treatment, mortality and morbidity. Risks and impacts of the “applied for use” scenario are respectively detailed in sections 3.5 and 3.6.
2.6.2. “Non-use” scenario The most likely “non-use” scenario is the following: with the ban on the use of Cr(VI) compounds and therefore the cessation of hard chromium treatment, FN Herstal will have to relocate the hard chromium plating in the manufacture of firearms. Since such products constitute the very core of FN Herstal’s and Browning’s current and future portfolio, this scenario entails a temporary cease of production for the period of time necessary to relocate the activity, thereby disrupting both their activity and the supply of their customers. Impacts of the denial of an authorisation would involve economic, social and distributional dimensions: - Economic impacts on FN Herstal’s and Browning’s activity mainly include the loss of revenues and relocation costs, the increase in operating costs and regulatory issues. - Human health and Environmental impacts, include impacts on human health as well as greenhouse gas emissions. - Social impacts mainly consists of impacts on employment; - Wider economic impacts include potential effects on the economic ecosystem related to hunting and recreational shooting activities.
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3. “APPLIED FOR USE” SCENARIO
Under Use-2, FN Herstal and Browning use chromium trioxide in the hard chromium plating of small- and medium-caliber civilian firearm barrel bores and auxiliary parts subject to thermal, mechanical and chemical stresses. The main functional properties sough-after by FN Herstal and Browning with Cr(VI) include : low friction coefficient, heat resistance, corrosion resistance, surface hardening and wear resistance, chemical barrier properties, adhesion properties as well as efficient coverage of complex or inner shapes and preservation of components tolerance Impacts of the “applied for use” scenario are related to the carcinogen properties of Cr(VI) compounds and include medical treatment costs as well as costs associated with morbidity and mortality.
3.1. Elements of context
3.1.1. Hard chromium plating Functional hard chromium plating is characterised by the following features7,8: - High hardness up to 1200 HV, - High resistance to wear, - Low friction and tribologically advantageous, - Anti-adhesive, - Machinability, - Resistant to chemicals, - Resistant to temperature. This technique is still widely used in industries (hard chromium plating is extensively used in mechanical engineering on parts like jacks, rolling mill cylinders, drawing dies, printing plates and cylinders, etc), despite major disadvantages: - Concentration of the electrolyte (A conventional plating bath, temperature around 60°C, contains 300 g/L of chromic acid, and one or more catalysts 9,10 such as H2SO4 ) causing significant losses in the rinsing baths and high costs for reprocessing waste water. - Emission of harmful mists above the bathroom (vesicles).
7 Morisset, Chromage dur et décoratif, publication CETIM, 1993 8 Benaben, Chrome et chromage, Techniques de l’ingénieur, Référence M1615 9 Ibid. 7 10 Ibid. 8
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3.1.2. Historical background Chromium plating for firearms started in the late 1930s following the T.K. Vincent’s report from the US Army Ballistic Research Laboratory in 1937 showing how hard chromium plating improves the performances of firearms. During World War II, the assessment of military firearms on the field allowed nations from all over the world to be convinced of the superiority of chromium plated guns. As a consequence, hard chromium has constituted a key component of armament from years 1950s and still is today. Although the civilian use of firearms is not subject to the same environmental constraints of criticality, the quality of civil weapons has always been assessed with reference to military standards. The best example might be the Browning BAR, a semi-automatic hunting rifle commercialised in 1956 on the basis of the BAR infantry rifle machine gun that was developed by John Moses Browning in 1917 and further adapted in 1938 as a light machine gun. The hunting BAR has beneficiated from chromium plating technology since 1956 in reference to military quality standard, and has been a flagship of Browning product range for this reason. The development of civilian firearms has always been based on the military armament industry and customers (hunters, sporting shooters) have always considered that similarity in design with military armament constitute a quality benchmark for civilian firearms.
3.1.3. Types of firearms In order to ensure a clear understanding of the categories of products concerned by Use-2 of the present AfA, a short definition of firearms types is provided in what follows.
3.1.3.1. Shotguns A shotgun is a firearm which uses the energy of a fixed shell to fire a number of small spherical pellets called shot, or a solid projectile called a slug. A shotgun is generally a smoothbore firearm, which means that the inside of the barrel is not rifled.
Figure 7. Browning B725 shotgun
The main categories of shotguns are: - break open double barrels shotguns (Over-Under or Side-by-Side), - pump action shotguns, - semi-automatic shotguns (inertial or gas operated).
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3.1.3.2. Rifles A rifle is a firearm with a barrel that has a helical groove or pattern of grooves ("rifling") cut into the barrel walls. This allows imparting spin and lending gyroscopic stability to the fired projectile, thereby improving range and accuracy of rifles.
Figure 8. Browning X-BOLT rifle
Similarly to defence applications, civilian rifles types include: - bolt action rifles, - lever action rifles, - semi-automatic rifles.
3.1.4. Extraction issues The key benefit of chromium plating for shotguns concerns chamber stands and lies in the improved extraction and ejection of shotshells. In such case, the main property of chromium that is used is the low friction coefficient in a severely corrosive environment and at high temperature: under such stresses corrosion may arise, which may generate extraction issues of projectiles in case the chamber stand is not properly protected. As an illustration, an attempt to design the new Browning Pump Shotgun (BPS) without hard chromium was made by Browning’s R&D team. After testing, the following figures for hard extraction incident rates have been reported: - [1-10%](3a) for non-chromium plated chambers, - [<1%](3b) for chromium plated chambers. Hard chromium plating provides an eight-fold improvement in the rate of extraction incidents of firearms and therefore constitutes a key element in the quality and competitiveness of Browning firearms. In order to meet market-dictated product quality specifications (incident rate below 0.2%), the decision was therefore made to pursue the use of hard chromium plating for the chamber of this newly designed shotgun. Those high-grade product quality specifications result from a benchmark of competitors and continuing experience to deliver high-end products to customers; it is therefore not realistic to introduce a product (with the same price level) on the market that would achieve lower performances than the ones of its predecessor.
Hard chromium plating directly participates to the maintenance in operational conditions of Browning and Winchester firearms. A suppression of this surface treatment will generate a significant increase in extraction incidents that does not comply with customer expectations for high-end firearms that are concerned by Use-2.
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3.1.5. Failure mode of civilian firearm barrels The functional need for hard chromium plating of small- and medium-calibre firearms barrel bores and associated parts subject to thermal, mechanical and chemical stresses is directly linked to failure modes of such firearms. In order to provide a comprehensive understanding of the issues at stake with Use-2’s AfA, these failure modes are covered in what follows. Apart from brutal barrel failure (caused for example by barrel obstruction and overpressure), barrels are decommissioned because of fatigue i.e. when the hit probability is degraded. A degraded hit probability is usually associated with a decreased projectile initial velocity at barrel muzzle, oscillating or obliquely striking projectiles at 50m from the muzzle as well as an increased dispersion at 50m from the muzzle. In order to ensure their maintenance in operational conditions, the main functional parameters that are monitored during servicing and maintenance of firearm include barrel forcing cone wear, barrel straightness and barrel minimum bore diameter. The decreased hit probability may arise from three types of barrel fatigue failure modes11,12,13: - forcing cone wear, inducing a decreased projectile velocity and a loss in hit probability. It is the most frequent failure mode; - copper deposit, resulting from the interaction of the barrel metal with the projectile jacket, degrades the stabilisation of projectiles; - muzzle wear, also resulting in a loss stabilisation of projectiles. These three failure modes are illustrated in Figure 9 below:
Figure 9. Barrel fatigue failure modes
Please note that these failure modes are further described in Appendix 9.1. In addition to wear issues, corrosion of barrel bores by the cartridges exhaust gases and general environmental conditions (rain, snow, storage in a wet atmosphere, seashore salts, ...) can affect the lifespan of firearms barrels covered under Use-2.
11 Allsop and al, Brassey’s essential guide to military small arms - Design principles and operating methods, p89. Londres: Brassey’s, 1997 12 Hypervelocity guns and the control of gun erosion, Washington: National Defense Research Committee, 1946 13 Handbook on Weaponry, Rheinmetall Gmbh, 1982
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As an illustration, Figure 10 below shows the difference in corrosion resistance of the barrel of a Browning BAR with and without hard chromium plating (salt bath exposure ASTM-B117-11 test) after 24 h only. While the chromium plated barrel remains unaltered, non-chromed surfaces show pitting and red dust marks. Aside from aesthetics considerations, the bore rusting affects the rifle performances through hard opening forces and incomplete closure of the bolt. To some extent, product performances may be restored through a deep cleaning process. On the long-term, however, chromium plated barrel chambers demonstrate an undisputable superiority.
Figure 10. Inside of a barrel chamber without (left) and with (right) hard chromium plating, after 24h NaCl 50g/l salt bath exposure
Hard chromium plating of gun barrel bores and auxiliary parts subjects to similar stresses allows for the reduction of their wear and therefore the extension of the firearm lifespan in order to meet customer requirements.
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3.1.6. Market and business model
3.1.6.1. Business model The business model of Browning is built upon 118 years of experience and is dedicated to high-end firearms, with extremely high performances, quality and lifespan. As of today, and given (a) the customer preference towards hard chromium plated firearms and (b) the market elasticity, hard chromium coating is a key criterion for the performance of Browning products.
The level of performance provided by the use of CrO3 directly conditions the competitiveness of Browning’s firearms vis-à-vis its competitors.
3.1.6.2. An globalised market, mostly served by companies with no regulation on the use of Cr(VI) It is estimated that the worldwide civilian firearms market represents around 21 millions of firearms per year. This market is globalised, meaning that Europe is served by several competing companies from the US, Europe and the rest of the world, with the following distribution in terms of number of firearms commercialised:
Europe 14%
United States 76%
Other 10%
Figure 11. Distribution of the volumes if firearms potentially commercialised in Europe (in millions of units), by origin country Other = Turkey, Russia, Japan, Brazil, ...
A significant share of firearms commercialised in the European Union is manufactured outside the EU and is therefore not subject to regulations on the use of Cr(VI).
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It can be anticipated that, even after the sunset date of Cr(CI) compounds, hard chromium plated guns will therefore still be available on the European market. This situation greatly defines the competing framework within which the present AfA is placed: hard chromium plating constitutes a key asset on the civilian firearms market and will remain so even after the sunset date of Cr(VI) compounds, until a substitution process is developed, placed on the market and marketed toward customers.
3.1.7. Customer preference Firearms concerned by Use-2 are meant to be put on a worldwide and oligopolistic market, with two main consequences: - Several firearm manufacturer may serve customers and, - These competitors usually already have production plants outside the EU and will therefore be able to put hard chromium plated firearms on the market after the sunset date of chromium trioxide. Furthermore, on the specific high-end sector served by Browning, customers have shown a preference toward hard chromium plated firearms. The combination of those arguments shows that hard chromium plating constitutes a key condition to the placing on the market of Browning firearms and therefore to the competitiveness of the whole Browning activity. Improving both product performance and lifespan, chromium plating has been promoted for decades as essential for high-end, high-quality firearms. As stated in section 3.1.1, this originates from the comparison with military products that are considered by the hunting and sporting community as superior and benchmarked against them in terms of quality and reliability. In summary, high-end customers search for military-grade, or as close as possible to, military-grade firearms. Given that competing firearm manufacturers with manufacturing capacities outside the EU will be able to place hard chromium plating on the market, the evolution of such a mentality can only be initiated through the promotion of an alternative to chromium plating that demonstrates equivalent features and performances. Once a relevant alternative process is available, marketing campaigns will be initiated in order to support the necessary cultural change.
3.1.8. Trend in ammunition choice A significant evolution in terms of ammunition choice for hunting and recreational shooting has been ongoing in Europe over the last decade, due to the toxicity of lead ammunitions. Although no general European regulations on the use of lead-base ammunitions is yet in place, an increasing number of countries have decided to ban their use in some circumstances, for example: - On shooting grounds, where the use of ammunitions is the most geographically concentrated (a shotshell weights around 28 grams and an
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average shooter consumption is 3,000 shotshells per year), lead is to be recycled or lead-free ammunitions are to be used; - In waterfowls areas, European regulations forbid the use of lead ammunitions in all European countries. In the United States, the use of lead is forbidden for 10 years in waterfowls areas. The following table details the situation toward lead ammunitions for each European country, both regarding regulation and use of ammunitions:
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Analysis of Alternatives – Socio-Economic Analysis USE OF NON- LEAD REGULATION REGARDING THE USE OF LEAD AMMUNITIONS AMMUNITIONS
Total Country Ban on lead Ban on lead for waterfowl Percentage Non-lead Restriction on Ban on lead Ban on lead Ban on lead for consumption of for all types of with possible ban on all of non-lead shotshells the use of lead for waterfowl for big game sport shooting shotshells hunt types of hunt shot shells (millions) (millions)
France yes yes - no no no 195 10% 19,50 Denmark yes - coming yes - yes 19 100% 19,00 Sweden yes yes coming no yes yes 23 100% 23,00 Norway yes - coming no - no 13 30% 3,90 Netherlands yes yes yes yes yes yes 10 100% 10,00 United Kingdom yes Yes(*) - no no no 237 3% 7,11 Germany yes yes yes no no yes 67 30% 20,10 Italy yes yes coming - - 280 1% 2,80
Finland yes yes - no no no 30 10% 3,00 Spain yes yes - no no no 105 0% 0,42 Switzerland yes yes - no no yes 6 100% 6,00 Belgium yes yes - no yes yes 13 10% 1,25 Portugal no - - - no no 40 1% 0,20 Czech Republic no no - no no no 16 1% 0,16 Cyprus no - - - - - 16 0% 0,00 Greece no no - no no no 85 0% 0,00 Hungary yes yes - no no no 7 0% 0,00 Poland no no - no no no 7 0% 0,00 Romania yes (>5mm) yes - no no no 7 0% 0,00 TOTAL 1,176 10% 116,44
Table 8. Regulations regarding the use of lead ammunitions and use of non-lead ammunitions per European State14 (*) In some regions
14 Source AFEMS - Association des Fabricants Europeens des Munitions de Sport
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In case of ban on the use of lead, lead ammunitions are replaced by steel ammunitions. Steel being significantly more aggressive than lead during the firing of ammunitions, its use generates an increase damaging of gun parts that undergo thermal, mechanical and chemical stresses such as barrel bores, barrel chambers, bolt head or the extractor.
As of today, around 10% of all ammunitions used in Europe are lead-free. Given the anticipated increase in regulation, this figure is estimated to significantly grow in the years to come, thereby further justifying the need for hard chromium plating or an alternative surface treatment process providing the same properties, notably in terms of friction coefficient as well as corrosion and erosion resistance.
3.2. Parts concerned Parts concerned by Use-2 include barrel chambers, gas cylinders, gas brackets, pistons, bolts and bolts pivots. Such parts are illustrated on Figure 12 below for the case of Browning Maxus and further examples are provided in appendix.
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Figure 12. Browning Maxus exploded view. In red, parts concerned by Use-2.
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3.3. Analysis of substance function During their lifespan, firearms barrels and auxiliary parts have to sustain three closely interconnected types of stress: mechanical, thermal and chemical. Operational conditions and working environment related to these types of stresses are the following: - Mechanical stresses: ammunition peak pressure is around 450MPa. - Thermal stresses: maximal flame temperature of propulsive powder is greater than 1,500°C. - Chemical stresses: high temperature corrosive gases emitted during the
combustion of propellant, including CO2, CO, H2O, H2, N2 and radicals H, OH, NO. In order to withstand such stresses, hard chromium plating of steel armament parts is necessary, notably to compensate for the weaknesses of steel as a substrate, notably concerning high temperature characteristics and corrosion resistance. The bonding of the chromium layer with the steel substrate is illustrated on Figure 13 below.
Figure 13. Cross section of barrel bore, magnified (top) and general (bottom)
3.3.1. Functional properties of hard chromium in the context of civilian armament manufacturing Considering the arguments put forward in section 3.1, and given the high level of thermal, mechanical and chemical stresses involved in their operation as well as customer requirements, production of firearms involves several technical challenges. In this context, the main sought-after coating characteristics in the context of surface treatment of firearms’ barrels bores and auxiliary parts include:
Low Friction coefficient Providing a low friction coefficient constitutes the main common sought-after property for all parts under Use-2. In order to ensure the proper functioning of parts in relative movement, such parts have to possess both a good abrasive wear resistance and a low frictional resistance. This feature is particularly important on semi-automatic shotguns where the empty shell is automatically managed by the
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Analysis of Alternatives – Socio-Economic Analysis gun design. In case of so-called, fail to extract, the gun will jam. In case of hunting or sporting use, gun jamming will result in big frustration of the user but in case of defence use of Shotguns the impact may be much severe. It is reminded that “civil firearms” platforms are also used for Law-Enforcement activities. In most critical parts, this must be completed by heat & corrosion resistance.
Heat resistance Heat resistance of the hard chromium layer allows preserving the mechanical properties of the steel substrate exposed to high temperatures (circa 200 °C). The coating must be resistant enough at the service temperature of firearms to withstand stresses related to the firing of projectiles and the propellant gas wash. Under Use-2, service temperature (~ 200°C) is lower than for Use-1 (~ 800°C). More extensive uses, resulting in higher service temperatures are reached in the so-called Varmint Target Shooting. In Prairie Dog shooting for example, the shooting rate can be so high that many shooters use two rifles: shooting one, while the other cools down. So, even if the temperature constraint is lower than for Use-1, it is not something negligible for Use-2. However, Use-2 will never be subject to the martensite-austenite phase transformation occurring at 727°C as is the case for Use 1
Corrosion resistance In order to preserve a high level of performances all along the firearms lifespan, a good level of corrosion resistance is necessary, both in atmospheric conditions and in the presence of hot oxidising gases. The presence of high temperature gases, in addition to the high pressures generated, heats the barrel to the extent that chemical interaction with the metal itself occurs; no chemical reaction can be tolerated.
Surface hardening / wear resistance Shotgun barrel bore are preferably chromed to provide an improved wear resistance under the pellets or bullet friction. This was particularly implemented by gun manufacturers, together with reinforced wads, with the introduction on the market of steel shots. The use of rifle for target shooting or hunting is subjects to the same quality criteria as those expressed for shotguns in section 3.1.4. The improved corrosion and wear resistance properties together with a low friction coating ease the empty shell extraction and the loaded shell introduction into the barrel chamber. Chrome plated barrel chambers features better cycling (i.e. less / no gun jamming). This feature is expected to play a more important role in firearm design in the future due to the ban on use of lead ammunitions in favour of steel shots, which have much more aggressive properties and therefore require an increase wear resistance of firearms parts subject to ammunition friction15.
15 T. J. Griffin, Shotshell Reloading Handbook, 5th Edition; Lyman Products Corp. 2015
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Chemical barrier The coating must act as a chemical barrier for the substrate against the erosive effects of the hot propellant gases. It must therefore be free from cracks, both as- produced and in service. Any cracks will be exploited by the very aggressive environment of propellant gases during firing, and the substrate will be attacked. These cracks will also be wedged and ratcheted open by microscopic fragments during firing, and after firing, the substrate can be attacked by simple corrosion. There should be a low solubility of chemical elements such as hydrogen, carbon, nitrogen and oxygen since these will degrade the substrate. The coating also has to ensure a low level of reactivity with these elements: there should not be a large negative free energy of reaction at the temperatures, pressures and chemistry environment encountered during firing.
Efficient coverage of complex or inner shapes The geometrical complexity of parts to be coated (small inner tubes, blind holes, inside corners, etc.) generates the need for coating process that can provide a homogeneous treatment of the parts. This applies especially for barrel chamber, gas cylinder and gas bracket.
Adhesion properties A good level of adhesion on steel substrates is required so that no delamination will result from the high level of thermal, mechanical and chemical stresses associated with the firing of ammunitions. The process therefore will result in a coating with extremely good adhesion, to the point where it is considered as metallurgically bonded. In welding terms, it must have 100% joint efficiency
Preserve components tolerance Complementarily, the treatment has to ensure dimensional compliance with firearm parts, i.e. provide a deposit thickness of 10 to 80μm, according to their specific requirements.
3.3.2. Complementary requirements for the research of alternatives to hard chromium plating
Price Given the elasticity of the market served by Browning, implementation and operation costs constitute key criteria for the selection of a potential alternative.
Compliance with the current FN Herstal’s and Browning’s industrial facilities Given the synergy between Use-1 and Use-2 in terms of processes, an industrial choice was made to develop FN Herstal’s and Browning’s expertise in terms of surface treatment. The compliance of the potential alternative process with existing surface treatment facilities therefore constitutes a key element of choice for FN Herstal.
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Risks for health and environment Any potential alternative is expected to ensure a lower level of risk for both the human health and the environment, as compared to hard chromium plating.
3.4. Market and business trends including the use of the substance
3.4.1. Use of chromium trioxide
3.4.1.1. Herstal The tonnages of chromium trioxide used for both Use-1 and Use-2 at FN Herstal’ site of Herstal over the last three years are provided in Table 9 below:
In tons 2013 2014 2015
Concentrated CrO3 (chroming) 6.5 5.5 4.5
Table 9. Tonnages of CrO3 over the 2013-2015 period at Herstal, for both Use-1 and Use-2
An estimate of the breakout of concentrated CrO3 consumption between Use-1 and Use-2 at the site of Herstal was carried out and is as follows: 87% for Use-1 and 13% for Use-2.
Based upon this allocation basis, the CrO3 tonnage associated to Use-1 amounts to 0.6 tons.
3.4.1.2. Viana
The consumption of CrO3 at the site of Viana in 2015 amounts to 400 kg
3.4.1.3. Total CrO3 tonnage
The total annual consumption of chromium trioxide associated with Use-2 for the sites of Herstal and Viana amounts to 1.0 ton for 2015.
3.5. Remaining risk of the “applied for use” scenario As described in the CSR, the “applied for use” scenario only presents a risk for workers dedicated to the surface treatment operators, for quality control operators as well as for laboratory workers; risks for general population have been shown to be negligible and have therefore not been monetised. The handling of the mixture containing the substance is well managed with general and personal protection equipments and safety procedures.
3.6. Human health impacts and monetised damage of the “applied for use” scenario Monetised damage of the impacts on human health of the “applied for use” scenario includes medical treatment, mortality and morbidity.
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When relevant, and in order to offer a comprehensive understanding of the amounts at stake, it was chosen to supplement values taking into account the total excess risk of cancer with values based on the individual excess of risk of cancer. In what follows: - Individual values refer to values based on the individual excess risk of cancer, thereby related to one worker; - Total values refer to values based on the total excess risk of cancer, thereby related to all the workers concerned by the use.
3.6.1. Number of people exposed
3.6.1.1. Herstal
Long-term exposures A total of 21 persons work on a daily basis at the site of Herstal over the three hard chromium plating lines for both Use-1 and Use-2; four persons are in charge of quality control operations.
Punctual potential exposures Punctual exposures are encountered for one operator of the laboratory staff, in charge of the sampling and the analysis of the baths composition.
3.6.1.2. Viana Two workers are in charge of the operation of the hard chromium plating line at the site of Erith; one person is in charge of laboratory operations.
3.6.2. Medical treatment Different studies evaluate the global cost of lung cancer treatment including, depending on the study: hospitalisation costs, medicine costs but also other associated costs such as in-house care16,17,18,19. For the following analysis, it was chosen to rely on data provided in a recent study20 which compares the cost of medical treatments associated with lung cancer in France, UK and Germany based on regional or national administrative databases. This study is only based on NSCLC (Non Small-Cell Lung cancer) which represents
16 Mc Guire, Treatment cost of non-small cell lung cancer in three European countries: comparisons across France, Germany, and England using administrative databases, Journal of Medical Economics Vol. 18, No. 7, 2015, 525–532 17 Simrova et al, The costs and reimbursements for lung cancer treatment among selected health care providers in the Czech Republic, 2014 18 Chouaïd et al, Economics of the clinical management of lung cancer in France: an analysis using a Markov model, British Journal of Cancer (2004) 90, 397–402. doi:10.1038/sj.bjc.6601547 19 Braud et al, Direct treatment costs for patients with lung cancer from first recurrence to death in France, Pharmacoeconomics. 2003;21(9):671-9. 20 Ibid. 16
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Analysis of Alternatives – Socio-Economic Analysis approximately 80% of lung cancers without considering the other forms such as SCLC (Small-Cell Lung cancer). Nevertheless, a previous study in France21 shows that the costs associated with other forms are 50% lower than those of NSCLCs and that the combined cost is nearly the cost associated with the NSCLC only. In order to remain in the context of the realistic worst-case scenario, it was therefore considered that 100% of lung cancers are NSCLC form. Due to the lack of specific data, and in order to maintain the same level of detail over all sites of the AfA, it was chosen to use average figures of medical costs associated with NSCLC in France, Germany and the United Kingdom to characterise cancer costs in Belgium and Portugal. In a 2-year follow-up after diagnosis approach, the different costs associated to lung cancer are listed in the table below:
YEAR 1 YEAR 2 Hospital in-patient € 9,672 € 4,547 Hospital out-patient € 1,816 € 1,092 Medicines € 5,541 € 2,063 Other € 966 € 641 Total € 17,672 € 7,441 2-year total € 25,113
Table 10. Lung cancer costs for Belgium and Portugal (average of data for France, Germany and the united Kingdom) for the first two years after the diagnosis22
Regarding this information, to monetise the health impact, we will also consider the net survival rate by country at 1 year, 5 years and 10 years after diagnosis. In a recent study23 the lung cancer survival rate at 5 years has been calculated for France and data for 1 and 10 years after diagnosis was identified by the French Institute for Cancer:
YEARS AFTER DIAGNOSIS SURVIVAL RATE 1 year 36,9% 5 years 14,7% 10 years 8,7%
Table 11. Net year survival rate after lung cancer diagnosis in France24
21Allemani, Global surveillance of cancer survival 1995–2009: analysis of individual data for 25 676 887 patients from 279 population-based registries in 67 countries (CONCORD-2), Lancet, 385: 977–1010, 2015 22 Ibid. 16 23 Ibid. 34 24 Extrapolation from European values
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To monetise the damage on human health, we will consider the probability of appearance of lung cancer on workers. The probability, in this case, corresponds to the excess of risk to have a lung cancer. The individual lung cancer costs are synthesised and listed in Table 12 below, taking into account the cost of lung cancer treatment by year after diagnosis (we consider that the cost per year after year 2 is the same as for year 2), the net survival rates at 1 year, 5 years and 10 years and the requested review period of 12 years but not considering the excess of risk. In order to conform to the realistic worst-case scenario, it was chosen to apply the survival rate of the upper bound of each year after diagnosis range: - Survival rate during the first year after diagnosis is supposed to be 100% ; - Survival rate between year 2 and year 5 after diagnosis is supposed to be 42% ; - Survival rate between year 5 and year 10 after diagnosis is supposed to be 13.6% ; - Survival rate for more than 10 years after diagnosis is supposed to be 9%. A 3% discount rate was applied to the costs in order to take into account time preference and express the cost in current value.
YEARS AFTER DIAGNOSIS OVERALL COSTS 0 to 1 year € 17,672 1 to 5 years € 10,983 5 to 7 years € 2,188 Individual lung cancer costs € 30,843 Individual lung cancer costs, discounted(*) € 27,215
Table 12. Individual lung cancer costs during the review period for Herstal and Viana, not taking into account the excess of risk for workers (*) Taking into account a 3% discount rate until the end of the review period The following table synthesises the lung cancer costs per worker, taking into account the total excess of risk for Use-2 (1.0x10-5 for Herstal and 2.7x10-5 for Viana):
YEARS AFTER DIAGNOSIS HERSTAL VIANA TOTAL 0 to 1 year € 1.8 € 0.5 € 2.3 1 to 5 years € 1.1 € 0.3 € 1.4 5 to 7 years € 0.2 € 0.1 € 0.2 Total of lung cancer costs € 3.1 € 0.8 € 3.9 Total of lung cancer costs, discounted(*) € 2.7 € 0.7 € 3.5
Table 13. Total lung cancer costs during the review period, considering the total excess of risk for workers and the respiratory equipments (*) Taking into account a 3% discount rate until the end of the review period
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3.6.3. Mortality and morbidity Several summary measures of population health have been devised, including the Quality-Adjusted Life Year (QALY), the Disability-Adjusted Life Expectancy and the Healthy Life Year25,26,27,28. The benefits and challenges of these measures have been examined in several publications29,30,31,32,33. According to the WHO recommendations34 and since it has been widely used, it was chosen to assess the impacts of both mortality and morbidity associated with an excess risk of cancer through one combined measure: the Disability-Adjusted Life Years or DALY. The DALY method is recommended by ECHA for the assessment of mortality and morbidity impacts35,36.
3.6.3.1. General methodology The following methodology is based on the general WHO methodology for the calculation of DALYs37. DALY is a combined measure of the period of time lived with disability and the period of time lost due to premature mortality:
25 Weinstein, Stason, Foundations of cost effective analysis for health and medical practices. New England Journal of Medicine, 296:716-721, 1977 26 Murray, Rethinking DALYs. In: Murray, Lopez, eds. The global burden of disease. Geneva, World Health Organization, Harvard School of Public Health, World Bank, 1996 27 Hyder, Rotllant, Morrow, Measuring the burden of disease: healthy life years. American Journal of Public Health, 88:196-202, 1998 28 Murray, Salomon, Mathers, A critical examination of summary measures of population health. Bulletin of the World Health Organization, 8(8):981-994, 2000 29 Anand, Hanson, Disability-adjusted life years: a critical review. Journal of Health Economics, 16:695-702, 1997 30 Williams, Calculating the global burden of disease: time for a strategic reappraisal? Health Economics, 8:1-8, 1999 31 Murray, Lopez, Progress and directions in refining the global burden of disease approach. Geneva, World Health Organization (GPE Discussion Paper No 1), 1999b 32 Ibid. 28 33 Murray, Salomon, Mathers, Lopez, Summary measures of population health: concepts, ethics, measurement and applications. Geneva, World Health Organization, 2002 34 World Health Organisation, Environmental Burden of Disease Series, No. 1 - Introduction and methods, Assessing the environmental burden of disease at national and local levels, 2003 35 ECHA, Guidance on Socio-Economic Analysis – Restrictions, May 2008 36 ECHA, Applying socio-economic analysis as part of restriction proposals under REACH - Workshop proceedings, Helsinki, 21-22 October 2008 37 Mathers, Stein, Fat et al, Global Burden of Disease 2000: Version 2 methods and results, Global Programme on Evidence for Health Policy Discussion Paper No. 50: World Health Organization, 2002
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Where: = years of life lost due to premature mortality and = years lived with disability. In such an approach, time is used as a common currency for non-fatal health states and years of life lost. Disability weights are thus used to formalize and quantify social preferences for different states of health, measured as number on a 0-1 scale, where: “0” is assigned to a state of ideal health and “1” to a state comparable to death. Please note that, due to the lack of specific data and in order to ensure a similar level of detail in the calculations, data used to characterise costs associated with mortality and morbidity for the sites of Herstal (Belgium) and Viana (Portugal) are, to some extent, based on French and European data.
3.6.3.2. Years of Life Lost due to premature mortality The basic formula for calculating the years of life lost (YLL) metric is the following:
Where: = number of deaths and = standard life expectancy at age of death (in years). The number of deaths ( ) is supposed to be the total excess risk of cancer. Life expectancy at age of death ( ) is calculated by subtracting the standard life expectancy (81 years on average in Europe38,39) and the average age of death by lung cancer in France (68 years in France40,41). Due to the lack of specific data for Belgium and Portugal and in order to ensure calculation homogeneousness, data regarding France have been used to characterise both sites of Herstal and Erith A 3% discount rate was applied to YLL in order to take into account time preference and express the cost in current value. YLL and intermediate data are detailed in Table 14 below.
38 Eurostat, Mortality and life expectancy statistics, June 2015 39 This value is furthermore in line with the WHO recommendations for calculation of DALYs and corresponds to the upper end of the life expectancy range to be considered. 40 INSERM, INVS/CépiDC, 2012. In: Institut National du Cancer, Mortalité nationale des cancers, 2015 41 Due to the lack of representative data, the value for France has been used.
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PARAMETERS VALUES Standard life expectancy 81 years Mean age of lung cancer death 68 years Number of years lost 13 years Site Herstal Viana Total excess risk of lung cancer, per site 1.0x10-4 2.7x10-5 Total YLL, per site, discounted(*) 1.1x10-3 2.9x10-4 Total excess risk of lung cancer, for Use-2 1.7x10-4 Total YLL for Use-2, discounted(*) 1.4x10-3
Table 14. Years of Life Lost (YLL) for Use-2 (*): considering a 3% discount rate until the end of the review period
3.6.3.3. Years Lived with Disability The calculation of the years of life with disability (YLD) is based on the following formula:
Where: = disability weight, = number of incident cases and = average duration of disability. In the case of lung cancer, the value of 0.772 was used for 42. The number of incident cases ( ) was estimated by multiplying the number of workers exposed and the excess of risk of cancer. The average duration of disability ( ) was obtained by subtracting the mean age of death (68 years43) and the mean age of diagnosis (66 years44,45) associated with lung cancer. A 3% discount rate was applied to YLD in order to take into account time preference and express the cost in current value. YLD and intermediate data are detailed in Table 15 below.
42 Migrin, A Review and Meta-Analysis of Utility Values for Lung Cancer, U.S. EPA 43 Institut National du Cancer, Cancer du Poumon – Quelques chiffres, Les cancers en France en 2014 44 Ibid. 43 45 45 Due to the lack of representative data, the value for France has been used.
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PARAMETERS VALUES Mean age of lung cancer death 68 years Mean age of lung cancer diagnosis 66 years Number of years with disability 2 years Disability weight 0.772 Site Herstal Viana Total excess risk of lung cancer, per site 1.0x10-4 2.7x10-5 Total YLD, per site, discounted(*) 1.6x10-4 4.2x10-5 Total excess risk of lung cancer, for Use-2 1.3x10-4 Total YLD for Use-2, discounted(*) 1.7x10-4
Table 15. Years of Life lived with Disability (YLD) for Use-2 (*): considering a 3% discount rate until the end of the review period
3.6.3.4. Synthesis of the monetised damage related to mortality and morbidity Monetised damage related to YLLs and YLDs was calculated using the central value of a statistical life-year recommended by ECHA46 and based on the NewExt study47: € 55,800 (in 2003 price levels). This value is in line with Desaigues48, which estimated the central value of life year to € 50k, based on a survey of French residents and with EurovaQ study49, proposing a value per life year of € 45,064. Please note that an uncertainty analysis of the costs associated to mortality and morbidity using the lower and upper bounds of Value of a Statistical Life-Year is provided in section 5.6. Correction for inflation was applied based on the change in consumer price index on average in Europe: 28.0% over the 2003-2015 period50. Final YLLs, YLDs and monetised damage are synthesised in the following table:
46 ECHA, Guidance on Socio-Economic Analysis – Restrictions, May 2008 47 NewExt, New Elements for the Assessment of External Costs from Energy Technologies, 2003 48 Desaigues, Rabl, Ami, Boun My Kene, Masson, Salomon, Santoni, 2007a. Monetary Value of a Life Expectancy Gain due to Reduced Air Pollution: Lessons from a Contingent Valuation in France. Revue d’Economie Politique 117 (5), 675–698, 2007 49 EurovaQ, European Value of a Quality Adjusted Life Year, Final Publishable Report, 2010 50 OECD, Main economic indicators, Consumer Price Index – data and methods
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PARAMETERS VALUES YLL 1.4x10-3 YLD 1.7x10-4 DALY = YLL + YLD 1.6x10-3 Value of life year lost(*) € 71,403 Total cost for mortality and morbidity (PV) € 111.3
Table 16. Synthesis of YLLs, YLDs and monetised damage of mortality and morbidity related to the excess cancer risk associated with lung cancer, Use-2 (*): considering a 28.0% average inflation rate in Europe over the 2003-2015 period
3.6.3.5. Complementary assessment Since the costs associated with mortality and morbidity constitute the main monetised damage of the “applied for use” scenario, and in order to validate the previous calculation, another estimate methodology was used, based on the value of a statistical life and the willingness to pay to avoid a cancer case as provided in ECHA’s SEA guidance:
WILLINGNESS TO PAY VALUE OF A STATISTICAL LIFE TO AVOID A CANCER CASE € 1,052,000 € 400,000 per non-fatal case Initial value (2003 price levels) (supposed 2008 price levels) 28.0% 11.3% Inflation over the 2003-2015 period(*) over the 2008-2015 period(*) Present value € 1,346,161 € 445,361
Table 17. Value of statistical life and willingness to pay to avoid cancer51 (*) = On average in the European Union Please note that the value of € 400,000 per non-fatal case for the willingness to pay to avoid a cancer case is not referenced in ECHA’s guidelines. It was nevertheless used in this complementary analysis since it is in line with the value of € 395,656 calculated by Alberini and Ščasný52. Mortality rate was derived from incidence and mortality data in Europe:
51 ECHA, Guidance on the preparation of socio-economic analysis as part of an application for authorisation, Version 1, January 2011 52 Alberini and Ščasný, Stated-preference study to examine the economic value of benefits of avoiding selected adverse human health outcomes due to exposure to chemicals in the European Union, FD7. Final Report - Part III: Carcinogens, Charles University in Prague (Environment Center), September 2014.
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PARAMETERS VALUES Lung cancer incidence 313,000 Lung cancer fatal cases 268,000 Mortality rate 86% Survival rate 14%
Table 18. Incidence and mortality associated with lung cancer in Europe, in 201253
Based on the parameters previously put forward, the overall impacts of cancer, as calculated with this methodology are synthesised below:
PARAMETER VALUE COMMENT
Taking into account: the total Number of fatal cancer excess risk of cancer and the cases over the review 1.1x10-4 average mortality rate of lung period Mortality cancer in France Subtotal: Discounted until the end of the € 123.6 costs of mortality review period Taking into account: the total Number of non-fatal excess risk of cancer and the cancer cases over the 1.8x10-5 average survival rate of lung review period Morbidity cancer in France Subtotal: Discounted until the end of the € 6.9 costs of morbidity review period
Total € 115.9 € 130.5
Table 19. Mortality and morbidity costs for Use-2, complementary assessment
The results of this complementary assessment (€ 130.5) validate the results obtained with the DALY approach (€ 111.3).
53 GLOBOCAN 2012 (WHO), Lung Cancer Estimated Incidence, Mortality and Prevalence Worldwide in 2012
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3.6.4. Synthesis of the monetised damage of the “applied for use” scenario The overall monetised impacts of the “applied for use” scenario can be summarised as follows:
IMPACTS COSTS Medical treatment € 3.5 Mortality and morbidity € 111.3 Total € 114.8
Table 20. Overall impacts of the "applied for use" scenario, Use-2
3.6.5. Complementary elements of analysis: values taking into account a 4% discount rate In order to ensure a complete consistency of the values with ECHA’s requirements, monetised impacts of the “applied for use” scenario are also provided considering a 4% discount rate:
IMPACTS COSTS Medical treatment € 3.3 Mortality and morbidity € 105.2 Total € 108.5
Table 21. Overall impacts of the “applied for use” scenario, Use-2. Complementary analysis taking into account a 4% discount rate
3.7. Environment, man-via-environment impacts and monetised damage of the “applied for use” scenario
3.7.1. Environment impacts and monetised damage Environment impacts have been shown to be negligible and have therefore not been subject to a monetised quantification.
3.7.2. Man-via-environment impacts and monetised damage Man-via-environment impacts have been shown to be negligible and have therefore not been subject to a monetised quantification.
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4. SELECTION OF THE “NON-USE” SCENARIO
A significant work of research through partnerships with external research centres led to identify several potential alternative processes to hard chromium plating for the surface treatment of firearm barrel bores and auxiliary parts. As a result of testing and analysis over the last decade, three potential alternatives appear promising: thermomechanical modification (Alternative 1), deposition of chromium from a Cr(III) electrolyte (Alternative 2) and vacuum process with Physical/Chemical Vapour Deposition process (Alternative 3). These processes, however, have yet to be further investigated, implemented and qualified and will therefore not be available before the sunset date of chromium trioxide.
4.1. Efforts made to identify alternatives
4.1.1. Data searches and Research & Development Research and development works for the substitution of Cr(VI) in the surface treatment of firearms barrels and auxiliary components date back to 2003. Taking into account both the expenditures already carried over the last decade and those planned in the coming years, a total of € 180k will have been spent annually by FN Herstal on the 2010-2018 period. This amount can be divided between internal and external resources as follows: 44% for external resources (research centres or supply of equipment) and 56% for internal resources. As outlined above, data searches initiatives have been based on both internal and external resources: - Internal resources involve working hours of FN Herstal Research and Development department. - External resources mainly involve partnerships with Belgian research centres, consisting of two public-private R&D centres dedicated among others to surface treatment specialties and one university department focusing on PVD54. Although efforts of FN Herstal to identify alternatives have primarily been focused on Use-1, they have also largely benefited to Use-2, since potential alternative process have similarities between both uses. A total of € 30k have been dedicated by Browning to the research of specific for alternatives to Use-2.
54 Due to confidentiality agreements, the name of these research centres cannot be disclosed in this document.
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4.2. Potential alternatives already abandoned Several potential alternative processes are mentioned in the literature55,56,57. Among these, very few processes appear to comply with FN Herstal and Browning requirements for Use-1 or Use-2 in terms of (a) functional properties (hardness, heat resistance, corrosion resistance, etc.), (b) meeting of standard requirements and (c) ability to be implemented on complex shape parts. In addition, a mechanical process that showed to not be adapted with FN Herstal’s and Browning’s industrial capacities is also presented. However, as mentioned in section 3, civilian firearms are not subject to environmental constraints as harsh as military products. As a consequence, one of the potential alternative abandoned for Use-1 is still considered as a potential alternative for Use-2 (thermomechanical surface modification). It will require additional Research & Development efforts to probe their relevance, as described in section 4.4. The potential substitution processes that have been considered for Use-2 are developed in what follows.
4.2.1. Thermal spraying with HVOF (High Velocity Oxygen Fuel) In the HVOF process, powdered material is accelerated at high speed and temperature and sprayed on the component in a plastic state. The coating is deposited droplet by droplet.
WC-Co (tungsten carbide - cobalt) and Cr3C2-NiCr (chromium carbide - Nickel chromium) powders are particularly used as substitutes for hard chromium. From a technical point of view in the context of Use-2, these processes show significant limits, such as: - Inability to coat small and intricate parts, or parts with a small internal diameter (about 100 mm)58. This last part is particularly critical for Browning products, since small caliber firearms that are produced have internal barrel diameters comprised between 5.56 and 18.5mm. - The bond between the sprayed-on coating and the substrate is purely mechanical; by contrast, chromium plating adheres to the substrate according to the laws of solid-state physics. The mechanical bond of the HVOF coatings is potentially subject to poorer adhesion of the coating. - Coatings applied are porous and, in case the coating thickness is too low (i.e. <80μm) and not fully sealed, increased corrosion may be encountered. As a
55 Holeczek, Kölle, Metzner, Report on inclusion of chromium trioxide (CrO3) in Annex XIV - Fraunhofer IPA-Institut für Produktionstechnik und Automatisierung, 2011 56 Bielewski, Replacing Cadmium and Chromium, Institute for Aerospace Research National Research Council Canada Ottawa, Ontario CANADA- RTO-AG-AVT-140, NATO Science and Technology Organization, 2011 57 Audino, Use of Electroplated Chromium in Gun Barrels - US Army RDECOM-ARDEC-Benet Laboratories, DoD Metal Finishing Workshop Washington, DC 22-23 May 2006 58 Ibid. 56
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consequence, HVOF cannot be accepted as a potential alternative to hard chromium plating for parts whose dimensional requirements imply low coating thicknesses. Conversely, small or complex components with undercuts are particularly difficult to coat with this process if they can be coated at all. - HVOF processes result in rough coating surfaces. Depending on the application, such surfaces may require subsequent machining, which can be very costly when hard ceramic coatings such as WC-Co are used. Large quantities of hard metal dust are produced during both the spraying (up to 60% overspray can be expected) and the grinding processes, thereby posing potential hazards for the health of operators. - HVOF coatings have a very low factor for elongation at fracture and are brittle.
Taking into account the abovementioned considerations, HVOC was rejected by FN Herstal as a potential alternative solution to hard chromium, for the functional requirements of Use-2 as well as of Use-1.
4.2.2. Nickel and Nickel alloy coatings Deposition can be accomplished either electro-chemically or without the use of electric current. Nickel-based coatings such as electroless nickel are increasingly used in the industry as safer and more environmentally-friendly alternatives to hard chromium plating. In the context of requirements in terms of high temperature wear resistance, Nickel- based coatings have a low melting point (1,455°C against 1,907°C for chromium). For gun bore applications, nickel has a significant potential drawback related to the interaction with nickel and copper from projectiles. Due to its low melting point, copper melts during the firing of ammunition and the travel of projectiles in the barrel bore. In case of extended firing, molten copper may build up on the bore surface and then interact with the nickel coating to form low-melting, easily eroded surface layers59. Electroless nickel-phosphorus (Ni-P) are hardenable, corrosion resistant coatings consisting of nickel alloyed with a varying percentage of phosphorous, comprised between 8% for harder coating layers to 10% for better corrosion resistance properties. Such processes offer good thickness uniformity and control but the use of nickel and nickel alloys as potential alternatives is subject to a few technical limitations: - Unhardened nickel and nickel alloy coatings have a lower hardness than functional chromium plating.
59 Montgomery, Watervliet, Interaction of copper-containing rotating band metal with gun bores at the environment present in a gun tube - Weapons. Laboratory, Watervliet Arsenal, WVT-TR-74026, 1974
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- Heat treatment is required to increase the hardness of Ni-P alloys deposited without the use of electric current: temperatures of approximately 400°C are required. For small thickness parts, Nickel plating heat treatment can generate parts warping. For other applications, parts tolerances should be monitored. Also steel substrates characteristics should be checked. - Electroless Ni-P composite coatings are available with addition of nanoparticles such as silicon carbide (SiC) for an improved wear resistance. The use of such nanoparticles is increasingly mentioned in the scientific literature in order to modify the properties of nickel coatings, so as to tend toward the functional properties of hard chrome plating. This process is nevertheless reported to be very hazardous for the health and safety of workers. - Electroless nickel-boron (Ni-B) coatings exhibit better wear resistance properties, a lower friction coefficient and higher hardness but lower corrosion resistance properties as compared to hard chromium plating. In addition, Ni-B coatings are expensive to produce, have limited availability and plating baths contain toxic substances, such as lead or thallium.
Tests with Ni-B as an alternative coating have been conducted by FN Herstal between years 2005 and 2006. Qualification tests on weapons did not appear conclusive in the case of military firearms (Use-1). Although specific testing on civilian firearms (Use-2) has not been conducted, Ni alloys are discarded as potential alternative to Cr(VI) as regards to the potential interactions with nickel and copper from projectiles as well as to their relative hazards.
4.2.3. Fine polishing of firearm chambers Fine polishing of firearm chambers (surface roughness: Ra < 0.02mm) is used by some firearm manufacturers in order to counteract the detrimental effect of the firing of ammunitions on the extraction of shotshells. This process, however is not deemed appropriate for the present AfA, for the following reasons: - Fine polishing of firearms chambers only provides low friction properties and does not constitutes an alternative to other sought-after properties of Use-2 such as heat resistance, surface hardening and wear resistance or corrosion resistance. As a consequence, in case of intensive shooting or poor firearm maintenance, fine polishing will provide a lower firearm lifespan as compared to hard chromium plating. - Polishing would be limited to firearms chambers, and therefore does not constitute an alternative for other parts subject to the thermal, mechanical and chemical stresses of Use-2, notably barrel bores, gas cylinders, bolt heads or extractors. - Polishing constitutes a completely different process than surface treatment and does not comply with the industrial strategies of FN
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Herstal and Browning in terms of facility, machinery, workforce or know- how.
Polishing of firearms chambers is neither deemed a technically nor an economically feasible alternative process for the functional requirements of Use-2.
4.3. Research and development works in order to reduce the exposure to Cr(VI) for hard chrome plating (FNH1) In conjunction with research works for alternatives, FN Herstal has undertaken works for the optimisation of hard chromium plating in order to reduce the use of and the exposure of workers to Cr(VI) compounds. Confronted with the difficulty of identifying an alternative technology meeting FN Herstal’s and Manroy’s technical requirements for Use-2, it was decided in 2011 to redesign the hard chromium plating process in such a way as to greatly reduce the exposure of workers to Cr(VI). This project will be referred to as “FNH1” in what follows. This work has mainly been driven for military product (Use-1) and the technology has been matured until TRL 7. From a technical standpoint, this initiative would benefit directly to civilian product (Use-2). However, the technology has to be considered at TRL 6 for Use-2 The principle of this innovative chromium plating process is based on ------(#3a). FNH1’s expected benefits include: - The use of much smaller baths volumes than for immersion and removing of the soaking step in the baths, thereby reducing chemical hazards for workers’ health; workers will be separated of hard chromium plating installations by two floors and there will be no contact between the operators’ position and chemical substances during the surface treatment operations. - The possibility to obtain a chromium surface offering improved performances as compared to the immersion process. It is also known that this kind of process helps limiting hydrogen embrittlement60 as well as the overvoltage effects related to the stagnation of gas bubbles in the barrel. - The increase in productivity made possible by the use of high current densities during electroplating, which are made possible thanks to ------
60 Yin, Wang, Surface and Coatings Technology 114, 213–223, 1999
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------(#3b). The general timeline of research works can be outlined as follows: - First exploratory phases were conducted between 2011 and 2013 under contract in an electrochemistry lab and a pilot plant of a research centre. - In the second step (2012-2013), a pilot (laboratory-scale) line for this experimental chromium plating process and tooling was designed and manufactured with the research centre, on the basis of results of laboratory research works. The start of FNH1 and the development of plating parameters were performed in 2013. - The first qualification testing on military barrels produced on this experimental treatment line took place in 2014. FNH1 is currently at TRL 7 (Technology demonstrated in relevant environment) and is expected to attain TRL 8 (System complete and qualified) or 9 (Actual system proven in industrial environment) within 2022. - Use-2 specific test will be initiated in 2017 with the objective to go from TRL 6 to TRL 7. - The third implementation step consists in the development and the installation of an industrial-scale prototype, requiring a significant engineering work notably in terms of scaling and safety. The budget for the third step is foreseen to amount to at least € 300k and up to € 1M. - The fourth implementation step is the replacement of current lines with FNH1-inspired lines. Estimated implementation costs of this process are comprised between € 6M and € 10M (considering a unit cost of € 1.5M to € 2.5M per chroming line and the need for four chroming lines for both Herstal and Viana). The implementation timeline of FNH1, along with that of Alternative 1, Alternative 2 and Alternative 3, is outlined in section 4.5. Please note that, since FNH1 was primarily developed for the functional requirements of Use-1, the industrial-scale research and development works may be delayed for Use-2. This delay, however, is not foreseen to put into question the final implementation of FNH1. The future industrialized version of the processing line, will allow separating the positions of workers and baths by two floors. There will be no contact between the operators’ position and chemical substances during the surface treatment operations. Given its nature and level maturity, FNH1 will not require the re-qualification of firearms, which makes its implementation possible in the early phase of the review period and thereby relevant in the context of the substitution process. From an economic standpoint, aside from investments, operation costs are foreseen to be similar than those of the current hard chromium coating process.
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In case Alternative2 is deemed compliant with the functional requirements of Use-2, it is also likely to be compliant with the FNH1 process, making the overall new process even more economically relevant to FN Herstal.
FNH1 will constitute an improvement for the hard chromium plating process and will be carried out in a separate room (away from workers), thereby reducing the exposure of workers for all the steps related to the operation of the plating line (notably for the installation and removal of parts to be treated on jigs). The improvement of this new process, the development of plating tools and endurance shooting tests will be pursued on a set schedule until the end of 2016. The choice to industrialise or abandon this process will be conditioned by the favourable or unfavourable opinion of ECHA toward the present AfA.
4.4. Assessment of shortlisted alternatives Research works have resulted in the identification of three potential alternatives for the functional requirements of Use-2: thermomechanical modification (Alternative 1), deposition of chromium from a Cr(III) electrolyte (Alternative 2) and vacuum process with Physical/Chemical Vapour Deposition process (Alternative 3).
4.4.1. Alternative 1: Thermomechanical modification
4.4.1.1. Substance ID and properties In a liquid nitriding bath or nitriding atmosphere which is maintained between 500 - 630°C, nitrogen-bearing salts produce a controlled and highly uniform release of nitrogen at the interface of the workpiece. Diffusion and chemical combination of nitrogen with nitride-forming elements in the substrate metal produce, through a catalytic reaction, a tough and ductile compound layer with exceptional engineering and wear properties.
4.4.1.2. Technical feasibility of Alternative 1 Tests have been performed in the past on parts free of constraints with respect to high temperature and harsh corrosive environment. As the treatment occurs at high temperature, there is a risk of part deformation and degradation of dimensional tolerances, to be checked through deeper testing. The technology is considered as TRL 3. Alternative 1 will be further investigated between 2016 and 2019 by Browning R&D department in order to assess its compatibility with Browning functional requirements for Use-2. In case of successful outcome, Industrialization and internal qualification will be considered between 2020 and 2022.
4.4.1.3. Economic feasibility and economic impacts of Alternative 1 Economic feasibility and economic impacts are to be assessed between 2016 and 2017 together with the continuation of technical feasibility tests.
4.4.1.4. Availability of Alternative 1
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Salt bath nitriding solution (Melonite®, Tufftride®, Tenifer®…) as well as gaseous nitriding solutions are commercially available and have seen an increasing interest from the civilian firearm industry over the past recent years. Alternative 3 has been implemented by competing companies for some firearm parts; its compliance with Browning specific quality criteria and performance criteria has yet to be investigated.
4.4.1.5. Hazard and risk of Alternative 1 Alternative 1 has been reported as safe and non-hazardous in the literature. Hazards and risks are also to be assessed in 2016-2020 together with technical feasibility tests.
4.4.1.6. Conclusions on Alternative 1 Alternative 1 will be investigated over the next four years at laboratory scale and may be implemented within Browning production facility in case of positive outcome of these research works regarding its technical and economic feasibility. Browning intends to approach specialised companies in order to internally test and evaluate their coating solutions against firearm functional requirements and Browning’s own quality standards. Alternative 1 constitutes the most hoped-for alternative solution for the functional requirements of Use-2.
4.4.2. Alternative 2: Chromium deposition from Cr(III) electrolyte
4.4.2.1. Substance ID and properties Under Alternative 2, chromium deposition is investigated with the use of a Cr(III) electrolyte instead of a Cr(VI)-based electrolyte.
4.4.2.2. Technical feasibility of Alternative 2 Research works have been focused for some time on deposition of trivalent chromium electrolytes in the context of chromium plating. In the area of decorative chromium plating, trivalent chromium electrolytes are already being used as a substitute for Cr(VI) electrolytes-based chromium plating for some applications. However, processes for the deposition of functional chromium coatings using trivalent chromium electrolytes are still in development phase. Even after conclusion of development works, deposition of hard chromium coatings from trivalent electrolytes will only be possible for special applications and for very simple component geometries due to the electro-chemical limits, low hardness and low coatings thickness. FN Herstal initiated in 2014 a literature search on the subject in collaboration with a Belgian research centre. The most promising approaches are actually laboratory tested. As of today, Alternative 2 is at TRL 3, meaning that active R&D works are in progress but that technical feasibility and compliance with FN Herstal’s, Manroy’s and Browning’s functional requirements have yet to be demonstrated.
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From an industrial point of view, Alternative 2 does not constitute a major change as compared to the current process since it consists of a replacement of the electrolytes of the current baths. As a consequence, it would certainly be compliant with current facilities and surface treatment lines and its implementation would incur much lower costs than for Alternative 3, both in terms of investments and operating costs (personnel).
4.4.2.3. Economic feasibility and economic impacts of Alternative 2 Alternative 2 will certainly be compliant with the current hard chromium plating lines and will therefore not imply heavy investments for its implementation. It will, however, imply a strong increase in the cost of electrolytes. Cr(III)-based surface treatment processes furthermore require a more frequent chemical monitoring (several analysis on a daily basis as opposed to one analysis per week with the current process) and therefore require hiring a dedicated laboratory technician. Alternative 2 is also expected to require increased maintenance works and therefore increased wastewater treatment capacity, with related costs of the order of magnitude of € 100k per line.
4.4.2.4. Availability of Alternative 2 No commercially available solution exists, that meets the requirements of FN Herstal and Browning for the presents AfA’s Use-2.
4.4.2.5. Hazard and risk of Alternative 2 Cr(III)-based surface treatment solutions may involve the use of boric acid. Since hazard and risk constitutes a key parameter in the selection and development of an alternative, the Applicants focuses on boric acid-free solutions.
4.4.2.6. Conclusions on Alternative 2 Given its compatibility with the current surface treatment facilities at the sites of Herstal and Browning, Alternative 2 constitutes the most hoped-for alternative to Cr(VI)-based processes. As of today, however, Alternative 2 is at a too low level of maturity to prejudge of its final compliance with the requirements of Use-2.
4.4.3. Alternative 3: Vacuum process with PVD/CVD
4.4.3.1. Substance ID and properties PVD and CVD processes are relatively well-known alternatives to hard chromium plating. Included in this category are sputtering and cathodic arc deposition that produce thin coatings (below 10 μm) and Electron Beam-PVD (EB-PVD) techniques which can produce coatings up to hundreds of micrometers in thickness. Two of the most important features of PVD coatings, relevant to hard chromium applications, are high deposition rates and compressive residual stresses in the coatings after deposition. Among PVD coatings considered as hard chromium alternative are CrN, TiN and Metal containing Diamond-Like Carbon (Me-DLC) coatings that can be deposited by magnetron sputtering or cathodic arc evaporation.
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4.4.3.2. Technical feasibility of Alternative 3 Vacuum technologies are constantly evolving. As of today, these processes have limitations in the context of Use-3. FN Herstal is supporting, since 2014, projects of two Belgian research centres, with the aim of developing new high performance coatings and above all, new deposition tools, able to overcome limitations associated to the complex geometry of weapon parts. PVD processes offer high quality coatings but due to the process technology, coating capabilities of inner surfaces parts and blind holes of parts with complex geometry, are highly limited. Alternative 3 is at TRL 3, meaning that active R&D works are in progress but that technical feasibility and compliance with FN Herstal’s and Browning’s functional requirements have yet to be demonstrated. From an industrial point of view, Alternative 3 constitutes a complete disruption of the industrial facilities at the sites of Herstal and Erith. Its implementation would therefore require a complete modification of the workshop as well the employment of a qualified and trained personnel.
4.4.3.3. Economic feasibility and economic impacts of Alternative 3 Capital costs as well as operation costs for PVD equipments are expected to be high but, due to its low level of maturity, a precise estimate of the costs associated with Alternative 2 cannot be carried out.
4.4.3.4. Availability of Alternative 3 Vacuum processes are relatively well-known from an industrial point of view, and are notably implemented for the surface treatment of simple-shaped parts and external surfaces. These solutions, however, do not comply with the requirements of FN Herstal’s and Browning’s products in terms of geometrical shape (notably: long and thin tubes that constitute gun barrels) and potential magnetisation of parts that are used. As of today, no vacuum solution is available that can be implemented in thin tubes such as those used by FN Herstal and Browning and even experimental devices still have to be miniaturised by around one order of magnitude. Such a miniaturisation does involve very strong technical challenges that ongoing research works aim at overcoming.
4.4.3.5. Hazard and risk of Alternative 3 A preliminary assessment does not seem to show that Alternative 2 involves hazard and risks.
4.4.3.6. Conclusions on Alternative 3
Alternative 3 is investigated for the substitution of CrO3 for the surface treatment of firearms parts concerned by Use-2. Its development still require major technical improvements in terms of the size of device and its implementation would constitute a major change in terms of equipment and staff
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as compared to the current hard chromium process. As it constitutes a completely different process from hard chromium, comprehensive long and costly requalification procedures of FN Herstal’s and Browning’s products will be required to permit their commercialisation.
4.5. General substitution timeline The general substitution timeline foreseen for the implementation of alternative processes is outlined below. Alternative 1 constitutes the most hoped-for alternative solution for Use-2; its implementation within FN Herstal’s and Browning’s industrial capacities is expected in 2024. Alternative 2 and Alternative 3 also constitute potential alternative solutions for the functional requirements of Use-2 but a longer period of time is foreseen for their implementation; these alternative solutions constitute “back-up” solutions in case Alternative 1 does not permit to attain the functional properties of Use-2. On the basis of this timeline, and considering both uncertainties on the technical steps and research results, as well as the period of time needed to submit a new dossier should the need arise, substitution is foreseen no sooner than in 2024.
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2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Industrial-scale research works 1 2 FNH1 Industrialisation Internal qualification Laboratory-scale research works Alternative 1: Industrial-scale research works Thermomechanical Industrialisation modification Internal qualification Laboratory-scale research works Alternative 2: 3 Chromium deposition Industrial-scale research works from Cr(III) Industrialisation electrolyte Internal qualification Laboratory-scale research works Alternative 3: 4 Industrial-scale research works Vacuum process with 5 Industrialisation PVD/CVD Internal qualification
Table 22. Substitution timelines for Alternative 1, Alternative 2 & Alternative 3 Key milestones: ❶ = Launch of industrial scale R&D works on FNH1 will be conditioned by the granting of an authorisation for a twelve-year review period for Use-1 ❷ = The industrialisation of FNH1 will not be required if Alternative 2 is deemed appropriate ❸ = Continuation of works on Alternative 2 will be conditioned by the results obtained between 2016 and 2021 at laboratory-scale ❹ = Investments for industrial-scale processes for Alternative 3 will be conditioned on the failure of research works on Alternative 2 ❺ = Investments for industrial facility dedicated to Alternative 3(new facility) will depend on the issue of the industrial-scale research works
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4.6. The most likely “non-use” scenario Hard chromium plating plays a central role in the activity and the competitiveness of firearms manufactured by Browning. As described above, due to the high level of requirement for the hard chromium plating of parts identified in the scope of Use-2, no satisfactory alternative will be available in 2017.
4.6.1. Potential “non-use” scenarios With the prohibition to use Cr(VI) compounds, two potential situations can be foreseen for FN Herstal and Browning: (a) downgrade of products performances (commercialisation of non-chromed firearms, (b) subcontracting of hard chromium plating activities outside the EU and (c) relocation of hard chromium plating activities outside the EU. It will be shown in what follows that the downgrade of performances as well as the subcontracting hypothesis are not deemed realistic and that the most likely “non-use” scenario is the relocation of hard chromium plating activities outside the EU.
4.6.1.1. The downgrade of performances hypothesis As demonstrated in section 3.1, and given the high-end market segment served by Browning, firearms with untreated barrel bores will not be favoured by Browning customers. Since competing companies with production capacity outside the EU will still place hard chromium plated firearms on the market, a downgrade of Browning firearms performances by the cease of hard chromium plating of parts subject to thermal, mechanical and chemical stresses is therefore not deemed realistic since it would lead to a severe loss of market that would affect the overall Browning product range.
4.6.1.2. The subcontracting outside EU hypothesis Subcontracting of the surface treatment activities outside the European Union is not further investigated for the following reasons: - Hard chromium coating constitutes a very specific and complex process. Potential subcontractors for such operations have not yet been identified; - Subcontracting would imply a loss of know-how for FN Herstal and Browning, thereby potentially impeding the companies’ research and development potential in the future; - The impact on employment would be greater than in the case of relocation, since industrial support and control functions would be impacted in addition to production teams.
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4.6.1.3. The relocation outside EU hypothesis Relocation outside EU appears the most-likely “non-use” scenario insofar as it allows maintaining specific know-how within the FN Herstal group as well as the mastering of processes and that it is relevant in terms of synergy with the “non-use” scenario of Use-1. The FN Herstal group holds shares in the Miroku Firearm Company in Japan that already possesses hard chromium plating capacities and that may constitute a potential host company for the relocation. Miroku, however, does possess the industrial capacity to absorb the production of the site of Viana.
4.6.2. Synergy between uses Given that FN Herstal is concerned by both Use-1 and Use-2 of the present AfA, “non-use” scenarios for each use to some point depend on the outcome of the application for each use, as illustrated in Table 23 below.
AUTHORISATION FOR USE-1
- FN Herstal (Use-2) and Manroy: - “Applied for use” scenario: pursued relocation of hard chromium
activity for FN Herstal, Browning 2
- operations outside the EU and Manroy for the period of time - Browning: pursued activity for the necessary to implement an period of time necessary to alternative process implement an alternative process
- FN Herstal (Use-1) and Manroy: pursued activity for the period of - “Non-use” scenario: relocation of time necessary to implement an hard chromium plating activities of AUTHORISATIONFOR USE alternative process FN Herstal, Browning and Manroy - Browning: relocation of hard outside the EU chromium activity outside the EU
Table 23. Different "non-use” scenarios depending on the outcome of the application for authorisation for Use-1 and Use-2 = Authorisation granted; = Authorisation not granted As can be seen, and in order to ensure a good understanding of the dossier, the “non-use” scenario for Use-2 of the present AfA is based on the assumption that neither Use-1 nor Use-2 is granted. In this context, relocation of hard chromium plating activities does appear as the most-likely “non-use” scenario.
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4.6.2.1. The most likely “non-use” scenario On the basis of the above arguments, the most-likely “non-use” scenario appears to be the relocation of hard chromium plating operations outside the European Union. Potential host countries have not yet been identified and will depend on the relocation process implemented in the context of Use-1, as well as the hard chromium capacities of the Miroku facility in Japan. Given that no alternative will be available before the sunset date of chromium trioxide, impacts of the denial of an authorisation would therefore involve economic, social and distributional dimensions: - Economic impacts on FN Herstal’s and Browning’s activity mainly include the loss of revenues and relocation costs, the increase in operating costs and regulatory issues. - Human health and Environmental impacts, include impacts on human health as well as greenhouse gas emissions. - Social impacts mainly consists of impacts on employment; - Wider economic impacts include potential effects on the economic ecosystem related to hunting and recreational shooting activities.
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5. IMPACTS OF GRANTING AN AUTHORISATION
The “non-use” scenario will generate significant economic impacts (and notably a loss of revenues, relocation costs and loss of investments), social impacts (loss of employment), as well as environmental impacts (greenhouse gas emissions) and other impacts (impact on Browning’s goodwill, increase of operating costs, customer duties).
5.1. Economic impacts
5.1.1. Loss of revenues
5.1.1.1. FN Herstal As already stated, all firearms manufactured in Herstal contain hard chromium plated parts. The activity of FN Herstal therefore strongly depends on hard chromium plating, as illustrated in Figure 14 showing the share of the cumulated revenues over the 2000-2015 period that are related and not related to hard chromium plating (Use-1 and Use-2):
(#1c)
Figure 14. Share of FN Herstal's revenues related and not related to hard chromium plating (Use-1 and Use-2), on the basis of cumulated revenues over the 2000-2015 period.
From a global point of view over the 2000-2015 period, an average of (#1d) of the revenues of FN Herstal is shown to directly depend on hard chromium plating. The evolution of the global revenues of FN Herstal over the 2004-2014 period is provided on Figure 15 below:
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350 306 300 249 237 250 224 214 201 203 200
179
€ M 150 136 114 118 100
50
0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Figure 15. FN Herstal revenues for the 2004-2014 period, in M€
Given the restructuring of the company during the last years, the average of FN Herstal revenues for the 2011-2014 period, i.e. € 243M, is considered as representative of the future revenues of the company during the review period that is applied for Use-2 (7 years post-2017). Hard chromium plating concerns both Use-1 and Use-2, with the following breakdown in terms of revenues: [10-100%](#1d-1)} for Use-1 and [1-10%](#1d-2)} for Use-2. It is estimated that the relocation of hard chromium plating activities will entail a three-year loss of revenues for FN Herstal, corresponding to the period of time needed to plan, build and render operational the relocated surface treatment workshop. The calculation of the loss of revenues associated with the “non-use” scenario will therefore be based on the assumption of a 3-year loss of revenues for FN Herstal. This hypothesis, although not considered as realistic per se (it does not, for example, take into account the fact that the very survival of the FN Herstal would be jeopardised in case of a 3-year cease of activity), was elected since it provides underestimated figures for the present assessment. An uncertainty analysis regarding the loss of revenues and the impact on employment is provided in section 5.6. In order to remain in the context of the realistic worst-case scenario, the estimate of the loss of revenues generated by the “non-use” scenario is based on a zero-growth hypothesis for the revenues of FN Herstal over the review period. For uncertainty analysis purpose, an alternative estimate, taking into account the growth of revenues of FN Herstal over the review period on the basis of the past years trends is provided in section 5.6. Based on the above assumptions, the calculation of the loss of revenues is synthesised in Table 24 below:
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VALUE
Average annual revenues for FN Herstal over the 2011-2014 € 243M period Share of revenues directly related to hard chromium plating [10-100%](#1d-6) Share of revenues related to hard chromium plating that are [1-10%](#1d-3) related to Use-2 Relocation period considered for the loss of revenues 3 years Total loss of revenues for FN Herstal [10-100M](#1d-4) Total loss of revenues for FN Herstal, discounted(*) [10-100M](#1d-5)
Table 24. Loss of revenues for FN Herstal related to the “non-use” scenario (*): considering a 4% discount rate over the 2018-2020 period Taking into account an average gross margin rate of [10-100%](#1e), the total loss of profits associated with the “non-use” scenario amount to € [1-10M](#1f).
With a loss of revenues of € [1-10M](#1h) over the 2018-2020 period, the “non-use” scenario for Use-2 will generate significant impacts on the economic activity of FN Herstal.
5.1.1.2. Browning
Direct loss of revenues The direct revenues associated with applications concerned by Use-2 for Browning have been identified for the years 2010 to 2014:
M€ 2010 2011 2012 2013 2014 Revenues associated with 62.5 55.8 58.6 72.0 85.3 applications concerned by Use-2
Table 25. Revenues associated with applications concerned by Use-2, over the 2010-2014 period, in M€.
The assessment of the loss of revenues for Browning due to the relocation is based on the average of the revenues associated with applications concerned by Use-2 over the 2010-2014 period (€ 66.8M) and the duration of the period of time needed to relocate the hard chromium plating activity (3 years). In order to remain in the context of the realistic worst-case scenario, the estimate of the loss of revenues generated by the “non-use” scenario is based on a zero-growth hypothesis for the revenues of Browning over the review period. For uncertainty analysis purpose, an alternative estimate, taking into account the growth of revenues of Browning over the review period on the basis of the past years trends is provided in section 5.6. Under such assumption, and taking into account a 4% discount rate, the total loss of revenues foreseen in the context of the “non-use” scenario over the period of time necessary to relocate surface treatments activities amounts to € 171.5M.
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Considering a similar average gross margin than for FN Herstal, the discounted loss of profits generated by the “non-use” scenario amounts to € [10-100M](#1i.
With a loss of profits of € [10-100M](#1j) over the 2018-2020 period, the “non- use” scenario for Use-2 will generate significant impacts on the economic activity of Browning.
Indirect loss of revenues The loss of direct revenues will have a knock-on effect on other products commercialised by Browning since dealers and end-users will favour products from competitors, thereby inducing a commercial relationship with competitors that will be detrimental to the sales of Browning firearms. Since (a) dealers will buy more products from competitors and (b) competitors will leverage chrome plated guns with other products of their offering, it is estimated that the indirect loss of revenues induced by the “non-use” scenario amounts to 20% of the total turnover of Browning (€ 320M in 2014), i.e. € 64M.
The “non-use” scenario will have a knock-off effect on the sales of other Browning products and thus generate an indirect loss of revenues for the company. Given that it is based on rather weak assumptions, the estimate of the monetised indirect impacts provided above will neither be considered in the calculation of the total loss of revenues nor in the calculation of the costs-benefits ratio for the AfA.
5.1.1.1. Total loss of revenues and profits The cumulated loss of revenues and profits in the context of the “non-use” scenario for Use-2 amounts to:
VALUE
Loss of revenues for FN Herstal discounted 1-10M](#1j-1) Loss of revenues for Browning, discounted € 171M Total [100-1,000M](#1j-2)}
Table 26. Total loss of revenues for Use-2
VALUE
Loss of profits for FN Herstal discounted € [1-10M](#1k) Loss of profits for Browning, discounted € [10-100M](#1l) Total € [10-100M](#1m)
Table 27. Total loss of profits for Use-2
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Cumulated for FN Herstal and Browning, the “non-use” scenario for Use-2 will generate a loss of revenues of € [10-100M](#1n) over the 2018-2020 period.
5.1.2. Lost investments
5.1.2.1. Lost investments The inventory of all the investments made in favour of the hard chromium plating lines at the site of Herstal has been carried out by FN Herstal’s accounting department. The assessment of the lost investments foreseen in the context of the “non-use” scenario is based: - On the identification of the investments still due for amortisation in 2017 and after, as well as the precise number of amortising years remaining; - On the annualised costs method; - On a 4% discount rate. A synthesis of the investments amounts concerned by the assessment is provided below:
LAST ANNUITY TOTAL AMOUNT IN AMORTISATION 2017 € 100,616 2018 € 222,035 2019 € 12,793 2020 € 4,850 2021 € 4,850 2023 € 61,281 2024 € 78,768 2025 € 13,917 TOTAL € 494,260
Table 28. Detail of investments in amortisation, by year of last annuity (*) = Considering a 4% discount rate over the amortisation period
The total lost investments foreseen for the site of Herstal in the context of the “non-use” scenario amounts to € 494,260.
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5.1.3. Relocation costs Cumulated relocation costs for Use-1 and Use-2 of the hard chromium plating activities have been estimated by FN Herstal:
DEPRECIATION COST AMOUNT JUSTIFICATION PERIOD Land purchase and building Estimation based on the costs in € 3 to 6M 30 years construction Belgium Estimation based on the costs of Chromium plating lines € 4 to 5M 15 years hard chromium plating lines in Herstal Ventilation system, wastewater Auxiliary equipments € 6M 15 years treatment plant, ... Creation of the legal entity, follow- Other € 3M 3 years up costs, industrialisation costs Total, discounted € 16 to 20M -
Table 29. Relocation costs for FN Herstal, for Use-1 and Use-2
On the basis of the annualised costs method and taking into account (a) the lower bound of relocation costs (€ 16M) in order to remain in the context of the realistic worst-case scenario as well as (b) a 4% discount rate, the total monetary value of the investments made for relocation over the twelve-year review period amounts to € 12.1M.
Considering the land purchase, building construction, installation of chromium plating lines as well as expenses for auxiliary equipments and other costs, relocation costs are estimated to € 12M.
5.1.4. Increase in operating costs
5.1.4.1. Transportation costs The “non-use” scenario will mechanically induce an increase in transportation and logistics-related costs.
5.1.4.2. Packaging costs Given the safety requirements related to the transportation of firearms, and in order to adapt to the transportation steps foreseen with the relocation, the “non-use” scenario will entail a significant increase in packaging needs.
5.1.4.3. Other costs The “non-use” scenario will generate a significant increase of the costs associated with support functions, such as insurance and licensing fees.
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The “non-use” scenario will directly impact the competitiveness of FN Herstal and Browning, even after the relocation of hard chromium plating activities is completed, due to an increase in transportation costs, packaging costs as well as insurance and licensing fees.
5.1.5. Other costs
5.1.5.1. Customer duties Placing products on the market without hard chromium plating will result in degraded performances and of the frequency of incidents of firearms (notably: stringent increase of extraction issues as stated in section 3.1.4). Such malfunctions would have to be covered by the products guarantee, thereby involving a significant increase in guarantee costs, reworking operations and replacement of damaged parts (chambers, barrels, gas cylinders).
5.1.5.2. Impacts on brand’s goodwill In the context of the “non-use” scenario, producing firearms that are not up to the high-end reputation of Browning and Winchester or ceasing the manufacture of such firearms during the period of time needed to relocate hard chromium plating activities will have a negative impact on the brands’ goodwill. From a financial point of view, the goodwill of Browning can be estimated to 13 times the company’s EBITDA61 (€ 48M in 2014), i.e. € 624M.
The “non-use” scenario will have negative impacts on the goodwill of Browning and Winchester. Since this impact depends on a conjunction of factors and cannot therefore be precisely estimated, it was however chosen to not qualitatively take it into account in the cost-benefits ratio.
5.1.6. Potential financial opportunities Even though the relocation host country has not yet been determined, it is likely to be located either in northern America or Eastern Europe. Such countries are likely to have a lower cost of labour than Belgium or Portugal. This situation, however, does not represent a potential financial opportunity for the following reasons: - Even though local production workers will have to be hired, supervisory and European management staff will also have to be hired. Altogether, gains in terms of global labour costs are foreseen to be low or nil.
61 Earnings Before Interest, Taxes, Depreciation and Amortisation
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- Even though the labour cost may be lower in northern America or Eastern Europe than the current situation for FN Herstal or Browning, productivity rates are also known to be lower than in Belgium or Portugal. Overall competitiveness gains are not foreseen to be significant in the context of the relocation of hard chromium plating activities. - Given the significant investments and the increase in operating costs triggered by the “non-use” scenario, the relocation of the hard chromium activity will generate much higher detrimental financial impacts than potential opportunities.
Potential gains in terms of cost of labour will not, by far, compensate the impacts generated by the relocation of hard chromium plating activities.
5.2. Human health or Environmental impact
5.2.1. Impacts on human health It is reminded that, even though the Applicants will implement all necessary risk management measures at the relocated site dedicated to hard chromium plating activities, the “non-use” scenario does not involve an overall reduction of risk for workers since it involves the exposure to Cr(VI) compounds outside the European Union.
5.2.2. Greenhouse gas emissions The “non-use” scenario involves an increase of transportation and therefore of greenhouse gas (GHG) emissions. A rough estimate of such emissions is provided in what follows, on the basis of the following formula:
With the following units:
- : kgCO2e - : km - : tons
- : kgCO2e/(ton.km)
5.2.2.1. Conversion factors Conversion factors from the Bilan Carbone® database62 have been used for the assessment of greenhouse gas emissions arising from the diverse transportation journeys needed for the conveyance of parts from the Herstal and Viana plant to the relocated hard chromium plating workshop:
62 The Bilan Carbone® is a tool developed by the ADEME (“Agence de l'environnement et de la maîtrise de l'énergie” or “French Agency for the Environment and the Energy Management”) dedicated to the calculation of greenhouse gas emissions.
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TRANSPORTATION MODE CONVERSION FACTOR
21-ton truck 0.23 kgCO2e per ton.km
5,500 twenty-foot equivalent unit container ships 0.01 kgCO2e per ton.km
Table 30. Conversion factors for transportation modes. Source: Bilan Carbone v7.1.021 Nota: kgCO2e = equivalent carbon dioxide kilogram
5.2.2.2. Transportation journeys Since the exact location of the relocated workshop is not defined at the time of writing of the present AfA, average distances have been used to characterise the outward trip of the transportation journeys associated with the “non-use” scenario:
STEP MODE DISTANCE 1. Site to departure harbour Truck 500 km 2. Transportation by container ship Container ship 10,000 km 3. Arrival harbour to treatment plant Truck 500 km
Table 31. Characterisation of the outward trip of the transportation journey associated with the “non-use” scenario. Nota: a) given the uncertainty on the values, it is assumed that the transportation journeys are identical for Herstal and Viana and b) it is assumed that the return trip will be identical to the outward trip.
5.2.2.3. Frequencies It is estimated that the transportation needs in terms of parts to be treated amount to - One 40-feet container per week from Herstal and - One 20-feet container per week from Viana. It is assumed that containers are to be loaded to their maximum load, i.e. 30.5 tons63.
5.2.2.4. Greenhouse gas emissions On the basis of the parameters mentioned above, and taking into account the need for both an outward and return journey as well as the share of activity related to Use-1 and Use-2 of the present AfA, the total greenhouse gas emissions associated with the “non-use” scenario for the sites of Herstal and Viana amount to:
TOTAL GHG EMISSIONS
Annual greenhouse gas emissions 1,320 tCO2e
Total greenhouse gas emissions over the review period 9,243 tCO2e
Table 32. Greenhouse gas emissions associated with the “non-use” scenario for Use-2 Nota: tCO2e = equivalent carbon dioxide ton
63 https://www.cma-cgm.fr/produits-services/conteneurs
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Taking into account the increase needs in terms of transportation alone, the “non-use” scenario will generate the emission of around 9,243 equivalent carbon dioxide tons. This amount corresponds to the cumulated average annual greenhouse gas emissions of around 2,000 citizens of Portugal64.
5.3. Social impact
5.3.1. Impact on employment
5.3.1.1. Loss of employment The number of jobs affected by the “non-use” scenario for Use-2 was estimated by FN Herstal and Browning, with the following figures:
NB OF JOBS LOST JUSTIFICATION Employees concerned by hard chromium FN Herstal, Herstal 18 plating, maintenance and support activities for Use-2 Employees concerned by hard chromium Browning, Viana 2 plating activities Overall Use-2 20 -
Table 33. Loss of employment in the context of the “non-use” scenario for Use-1
5.3.1.2. Individual cost of unemployment The individual cost of unemployment was estimated from the point of view of the loss of revenues for the State related to unemployment benefits, i.e. direct unemployment benefits but also guidance and administrative costs as well as potential loss of revenue for the State related to social contributions and taxes:
64 Considering an average carbon footprint of 4.7 tCO2e per capita for Portugal (source : Source: World Bank, CO2 emissions (metric tons per capita), 2015)
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TYPE OF COSTS BELGIUM PORTUGAL(*) Unemployment benefits € 9,493 € 8,464 Public intervention Guidance and administrative costs € 1,683 € 1,725 Subtotal for public intervention € 11,176 € 10,189 Loss in social contribution of employers € 8,474 € 6,804 Loss in social contribution of workers € 4,104 € 2,994 Potential loss of Loss in direct taxation € 8,240 € 3,812 public revenues Loss in indirect taxation € 1,177 € 1,641 Subtotal for potential loss of revenue € 22,267 € 15,250 Total average annual cost of an unemployed person € 33,443 € 25,439
Table 34. Average individual social cost of an unemployed person in Belgium and Portugal, 201065 (*): Average of values for Belgium, UK, Germany, France, Spain and Sweden
Please note that, due to the lack of specific data concerning the cost of unemployment in Portugal, it was chosen to rely on the average value for the following countries cited in Ideas Consult’ study: Belgium, UK, Germany, France, Spain and Sweden. An uncertainty analysis of this value is provided in section 5.6. In what follows, the values of € 33,443 and € 25,439 will be used to monetise the costs of unemployment in Belgium and in the UK, with the following adjustments: - Adjustment for inflation based on the change in consumer price index: 8.6% in Belgium and 7.0% in the Portugal on average over the 2010-2015 period66; - Correction for the average duration of unemployment in Europe: 15.3 months67. Taking these corrections into account, the final average individual present values of unemployment are € 46,264 in Belgium and € 34,705 in Portugal.
5.3.1.3. Total cost of unemployment for Use-2 The overall cost of unemployment, in relation with the actual number of job losses foreseen in the context of the “non-use” scenario and the individual cost of unemployment are synthesised in the following table:
65 Idea Consult, on behalf of European Federation for Services to Individuals (EFSI), Why invest in employment? A study on the cost of unemployment, 2012 66 Ibid. 3 67 OECD Stat, Average unemployment duration in Europe
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PARAMETER HERSTAL VIANA TOTAL
Number of jobs lost 18 jobs 2 jobs 20 jobs Individual cost of € 46,264 € 34,705 - unemployment Total cost of unemployment € 0.8M € 0.1M € 0.9M Total cost of unemployment, € 0.7M € 0.1M € 0.8M discounted(*)
Table 35.Total cost of the loss of employment for Use-2 (*): considering a 4% discount rate over the 2016-2018 period
5.3.2. Indirect impact on employment A quantitative assessment of indirect employment impacted by the “non-use” scenario is complex to achieve. It is however reminded that industrial relationships involve partners all along the supply chain and are therefore based on a network of suppliers and subcontractors. A study68, based on data issued by the Belgian State69 estimates at 1.83 the multiplicative coefficient for indirect employment in the armament industry sector. In other words, based on this study, it can be estimated that, on average, one job in the armament industry triggers 0.83 indirect jobs. An estimate of the costs related to this indirect impact on employment of the “non-use” scenario for Herstal is provided in the table below:
PARAMETER HERSTAL
Number of jobs lost 23 jobs
Individual cost of unemployment € 46,264
Total cost of unemployment € 1.1M
Total cost of unemployment, discounted(*) € 0.9M
Table 36. Detail of the assessment of indirect job losses foreseen for Herstal in the context of the “non-use” scenario (*): considering a 4% discount rate over the 2016-2018 period
The “non-use” scenario will generate indirect job losses in the supply chain of FN Herstal and Browning. Since the knock-on effect can hardly be characterised, the figures obtained for such indirect costs have not been taken into account in the risks-benefits ratio for the AfA.
68 GRIP (Groupe de Recherche et d’Information sur la Paix et la Sécurité), Les rapports du GRIP – Répertoire des entreprises du secteur de l’armement en Belgique, 2014. 69 Bureau Fédéral du Plan, Les multiplicateurs de production, de revenu et d’emploi 1995- 2005 – Une analyse entrées-sorties à prix constants, September 2013
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5.3.3. Complementary element of analysis: total cost of the loss of employment for the AfA As a complement to the values obtained for Use-2, an assessment of the global loss of employment in the context of the “non-use” scenario for the overall AfA (i.e. cumulated for Use-1 and Use-2) was also carried out, with the following results:
PARAMETER VALUE
Number of jobs lost 48 jobs
Total cost of unemployment € 2.2M
Total cost of unemployment, discounted(*) € 1.9M
Table 37. Global direct loss of employment and associated costs for the AfA (i.e. cumulated for Use-1 and Use-2 (*): considering a 4% discount rate over the 2016-2018 period
5.4. Wider economic impact
5.4.1. Economic stakes of hunting Economic stakes of hunting within the European Union was estimated in 2008 to be € 16B annually70. This figure was estimated by scaling up individual hunter expenditures from various EU countries; more precise studies have been conducted on a country level, e.g. - In France, the economic flux associated with hunting in 1992 was estimated to be close to that of the film industry contributing € 1.9B and 23,000 jobs71 ; - Research in Ireland shows that hunters contributed € 111M to the Irish economy in 2007 of which 80 to 90% of this figure was spent within rural areas72. - In the UK, hunters and target shooters spent an estimated £ 2.5B in 2014 on goods and services. The total gross added value related to sport
70 Kenward, R. & Sharp, R. (2008) Use Nationally of Wildlife Resources Across Europe, 117- 132.: in Manos, P. & Papathanasiou, J. [eds.] (2008) GEM-CON-BIO: Governance & Ecosystems Management for the Conservation of Biodiversity. Thessaloniki 71 Pinet J.M. (1993). Les chasseurs de France : organisation, typologie, économie, horizon 2000. Union nationale des Fédérations départementales de chasseurs. In: Chardonnet, Ph., des Clers, B., (1), Fischer, J., Gerhold., R., Jori, F., and Lamarque, F. (2002) The Value of Wildlife. Rev. Sci. Tech. Off. Int. Epiz., 21 (1), 15-51. 72 Scallan, D. A Socioeconomic Assessment of Hunting in the Republic of Ireland. Report for the Federation of Field Sports of Ireland and the National Association of Regional Game Councils. February 2013
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shooting is estimated at £ 2B. It is further estimated that a total of 35,000 full-time equivalent jobs are directly dependent on sport shooting73. - In Italy, the annual total costs incurred by 850,000 official hunters is estimated at € 3.2B and hunting and shooting further create a little less than 43,000 jobs in total74. Aside from direct economic stakes described by these figures (notably: direct hunting expenditures), hunting can be associated to wider economic, environmental and cultural stakes such as species conservation and management, habitat restoration and land management: - In the UK, nearly £ 250M is spent on conservation activities by shooting providers each year. Such activities are labour-intensive accounting around 3.9 million conservation work days, equivalent to 16,000 jobs75. - In Finland, 40,000 hunters took part in voluntary hunting activities in 2008, which ranged from game monitoring and other conservation activities to assisting with traffic accidents involving wildlife. The value of these activities is estimated at € 7.176. - In Greece, a proportion of the hunters’ annual contributions directly finance the activities of 400 Game Guards in environmental management and the tackling of illegal activities estimated at € 7M annually77.
Even though the exact contribution of Browning toward the global economic ecosystem related to hunting and recreational activities in Europe cannot be precisely characterised, it can be anticipated that the “non-use” scenario will have wider impacts, notably regarding economic activity and ecological services.
5.5. Distributional impact No distributional impacts (international trade, competition and economic development) are considered in this AfA, even though consequences on the overall territory’s dynamism and attractiveness are to be foreseen.
73 Public and Corporate Economic Consultants (PACEC), The Economic, Environmental and Social Contribution of Shooting Sport in UK, 2014 74 Università degli Studi di Urbino "Carlo Bo", La produzione di armi e munizioni per uso civile, sportivo e venatorio in Italia. Imprese produttrici, consumi per caccia e tiro, effetto economico e occupazionale, 2011 75 Public and Corporate Economic Consultants (PACEC) (2014). The Economic, Environmental and Social Contribution of Shooting Sport in UK. 76 FACE, The Economics of Hunting in Europe Towards a Conceptual Framework, 2014 77 Papadodimas, N. (2011) How do Hunting Organizations in Greece contribute in law enforcement mechanisms. European Conference: Illegal Killing of Birds Cyprus, Larnaka, 6 – 8 July 2011.
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5.6. Uncertainty analysis for both the “applied for use” and the “non-use” scenario
5.6.1. “Applied for use” scenario
5.6.1.1. Preliminary observation: uncertainty of exposure and risk values The assessment of exposure to Cr(VI) is mainly based upon ART modelling. In order to reduce the uncertainty on these values, it was chosen to rely on values for the 90th percentile of exposures. The exposure data and therefore the excess of risk of cancer used all along this AfA for the monetisation of impacts are considered to reflect the actual exposures of workers; no further uncertainty analysis was carried out concerning these parameters.
5.6.1.2. Uncertainty analysis of the Value of a Statistical Life-Year Uncertainty analysis of the costs associated to mortality and morbidity was carried out using the lower and upper bounds of Value of a Statistical Life-Year defined by NewExt78: respectively € 27,240 and € 225,000. Please note that these two values are considered as less robust than the central value used for the assessment because they are based upon survey results derived from smaller sample sizes. Taking into account the correction for inflation over the 2003-2015 period, the total costs associated to mortality and morbidity for these two values amount to:
COSTS ASSOCIATED TO MORTALITY AND MORBIDITY Considering the upper bound of € 449 Value of a Statistical Life-Year (€ 225,000) Considering the lower bound of € 54 Value of a Statistical Life-Year (€ 27,240)
Table 38. Uncertainty analysis for mortality and morbidity, Use-2
5.6.1.3. Other parameters: qualitative uncertainty analysis A qualitative uncertainty analysis of the main hypothesis, assumptions and parameters used for the assessment of the “applied for use” scenario is provided below:
78 Ibid. 47
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APPLICATION PARAMETER UNCERTAINTY ANALYSIS
- Standard life expectancy Medium uncertainty: data used are based on the - Mean age of lung cancer death situation in France and therefore do not directly Mortality and - Mean age of lung cancer diagnosis relate to the situation in Belgium and Portugal. morbidity Low uncertainty, since the value used is specific - Disability weight to lung cancer Medium uncertainty: the value used is specific for - Costs of medical treatment Medical lung cancer in France treatment Medium uncertainty: the values used are specific - Survival rate for lung cancer in France
Table 39. Qualitative uncertainty analysis of the main parameters of the “applied for use” scenario
5.6.2. “Non-use” scenario
5.6.2.1. Uncertainty analysis of the loss of profits: growth of profits over the review period As stated in section 5.1.1, the assessment of the loss of profits associated with the “non-use” scenario is based on a zero growth hypothesis over the review period. In order to carry out uncertainty analysis over this value, a secondary assessment was carried out taking into account a positive growth rate of revenues for FN Herstal and Browning over the review period. This assessment is based on the average annual growth rate of FN Herstal over the 2011-2014 period (12%). Considering this hypothesis and 4% discount rate, the overall loss of profits foreseen over the review period amounts to € [10- 100M](#1o-1).
5.6.2.2. Uncertainty analysis of the unemployment costs in Portugal As stated in section 5.3.1, and due to the lack of specific data, the assessment of unemployment costs for the site of Viana in Portugal was based on the average of individual costs of unemployment for Belgium, UK, Germany, France, Spain and Sweden. In order to better assess uncertainty regarding this impact, an uncertainty analysis was carried out on the basis of the upper bound and lower bounds of values available for European countries, with the following results:
UNEMPLOYMENT COSTS FOR THE SITE OF VIANA Considering the upper value of annual cost of an € 81,151 unemployed person ( i.e. Belgium: € 33,443) Considering the lower value of annual cost of an € 43,697 unemployed person ( i.e. United Kingdom: € 18,008)
Table 40. Uncertainty analysis for unemployment costs for the site of Viana
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5.6.2.3. Uncertainty analysis of the loss of profits and the impact on employment: alternatives assumptions for the “non-use” scenario As stated in sections 5.1.1 and 5.3.1, the estimate of the loss of revenues and the impact on employment in the context of the “non-use” scenario is based (a) on the hypothesis of a 3-year loss of revenues during the relocation process and (b) the assumption that the loss of employment will only concern workers directly related to the hard chromium plating line. In the light of the “non-use” scenario and the criticality of Use-1 for the activity of FN Herstal and Browning, these two assumptions appear very conservative. In order to put into perspective the monetised results obtained on the basis of these assumptions, two alternatives scenarios are outlined in what follows: - Alternative scenario 1: 3-year loss of revenues and temporary unemployment of 30% of FN Herstal and Browning employees; - Alternative scenario 2: inability to maintain a financial balance during the three years required for the relocation and bankruptcy of FN Herstal and Browning.
Alternative scenario 1 The alternative scenario 1 is based on the fact that, in order to optimise personal expenses, a 3-year loss of the majority of FN Herstal’s and Browning’s revenues would be accompanied by temporary unemployment of a significant share of FN Herstal and Browning employees. In the context of this uncertainty analysis, the figure of 30% of workers temporarily unemployed is considered. On the basis of these hypotheses, the total costs of unemployment would amount to € 51.5M. This figure will be added to the economic impacts of a 3-year loss of revenues already calculated.
Alternative scenario 2 The alternative scenario 2 considers that the “non-use” scenario generates a too strong discrepancy between the strongly degraded financial incomes and the maintained operational costs to ensure the overall sustainability of the activity of Browning. In this scenario, it is estimated that 90% of the activity of Browning will be lost and 90% of the employees will have to be laid off. Under these assumptions, and considering a 4% discount rate, a loss of revenues of € [100-1,000M](#1o-2) (i.e. € [100-1,000M](#1o-3) of profits) over the review period and unemployment costs of € 12M are foreseen.
5.6.2.4. Other parameters: qualitative uncertainty analysis A qualitative uncertainty analysis of the main hypothesis, assumptions and parameters used for the assessment of the “non-use” scenario is provided below:
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APPLICATION PARAMETER UNCERTAINTY ANALYSIS FN Herstal - low uncertainty: the values used to estimate the loss of revenues are based on a comprehensive inventory of the categories of products concerned by the AfA, on average over the 2000-2015 period as well as on the average of - Revenues impacted by the the revenues of FN Herstal over the 2011-2015 AfA period Loss of revenues, Browning - low uncertainty: the values used to profits and orders estimate the loss of revenues are based on the average of the revenues of Browning related to Use-2 over the 2010-2014 period FN Herstal - low uncertainty: the value used is based on the financial data of FN Herstal. - Operating margin Browning - medium uncertainty: the value used is the one for FN Herstal FN Herstal - low uncertainty: the values used are Loss of - Average individual cost of specific for Belgium employment an unemployed person Browning - medium uncertainty: the values used are average for several European countries
Table 41. Qualitative uncertainty analysis of the main parameters of the “applied for use” scenario
5.6.3. Conclusion
The results of both the quantitative and qualitative uncertainty analysis presented above do not seem to invalidate the overall results of the AfA: the variability for the parameters assessed does not call into question the order of magnitude of the risk-benefits ratio for the AfA.
5.7. General conclusion on the impacts of granting an authorisation A synthesis of the monetised impacts of the “non-use” scenario is provided below:
MONETISED IMPACTS
Loss of profits € 10-100M](#1p) Economic impacts Loss of investments € 0.5M Relocation costs € 12.1M Social impacts Loss of employment € 0.8M Total monetised impacts of the “non-use” scenario € 10-100M](#1q)
Table 42. Synthesis of the monetised impacts of the “non-use” scenario
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As a complement, other impacts of the “non-use” scenario are synthesised in the table below:
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IMPACTS ORDER OF MAGNITUDE The “non-use” scenario will have a knock-off effect on the sales of other Browning Indirect loss of revenues Tens of millions of Euros products and thus generate an indirect loss of revenues for the company.
The “non-use” scenario will have negative impacts on the goodwill of Browning Impacts on brands’ goodwill Tens of millions of Euros Economic and Winchester. impacts The “non-use” scenario will generate a significant increase of transportation costs, Increase in operating costs Not assessed packaging costs as well as other costs related to insurance and licensing fees. The ‘”non-use” scenario will impact the reliability of Browning firearms and Customer duties Not assessed therefore generate an increase in customer duties and guarantee-related costs From a global point of view, the “non-use” does not involve an overall reduction of Impacts on human health - Human health or risks for workers. Environmental Taking into account the increase needs in terms of transportation alone, the “non-
impact Greenhouse gas emissions use” scenario will generate the emission of around 9,200 equivalent carbon 9,200 tCO2e dioxide tons. Along with direct loss of employment, indirect job losses (suppliers, sub- Social impacts Indirect employment Not assessed contractors) are foreseen in the context of the “non-use” scenario. Even though the exact contribution of Browning toward the global economic ecosystem related to hunting and recreational activities in Europe cannot be Wider impacts Economic stakes of hunting Not assessed precisely characterised, it can be anticipated that the “non-use” scenario will have wider impacts and notably regarding economic activity and ecological services.
Table 43. Other impacts of the “non-use” scenario
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6. CONCLUSIONS
6.1. Comparison of the benefits and risks On the basis of the foregoing assessment, the socio-economic benefits outweigh the risks arising from the use of the substance by a factor of approximately [100,000- 1,000,000](#1r). It is reminded that this ratio only covers monetised impacts and is based on underestimating hypothesis, notably in terms of loss of revenues and loss of employment. In addition to these monetised impacts, the “non-use” scenario will generate significant other impacts, including: an increase in operating costs, stringent regulatory issues and safety of supply issues, impacts on human health, greenhouse gas emissions as well as indirect revenues loss, guarantee costs and impact on the goodwill of Browning.
6.2. AoA-SEA in a nutshell
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APPLICATION FOR AUTHORISATION
APPLICANTS: FN Herstal and Browning USE: Use-2 Industrial use of chromium trioxide in the hard chromium coating of civilian firearms barrel bores and SUBSTANCE: Chromium trioxide auxiliary parts subject to thermal, mechanical and chemical stresses, in order to provide a low friction coefficient as well as heat, corrosion and wear resistance properties
ANALYSIS OF ALTERNATIVES
The main functional properties sough-after by FN Herstal and Browning with chromium trioxide include: low friction coefficient, heat resistance, corrosion resistance, surface hardening and wear resistance, chemical barrier properties, adhesion properties as well as efficient coverage of complex or inner shapes and preservation of components tolerance.
A significant work of research carried out internally and through partnerships with external research centres led to identify three potential alternative processes to hard chromium plating for Use-2 : thermomechanical modification (Alternative 1), deposition of chromium from a Cr(III) electrolyte (Alternative 2) and vacuum process with Physical/Chemical Vapour Deposition process(Alternative 3)
No potential alternative will be developed and industrialised before the sunset date of chromium trioxide and a four-year review period is Use-2 needed to achieve substitution.
SOCIO-ECONOMIC ANALYSIS
Mortality and morbidity As per Art. 60(4) concerning the Socio-economic assessment route, evidence 97% (#1u) was provided that the socio-economic benefits outweigh the risks arising from the use of the substance by a factor of approximately [100,000-1,000,000](#1s) Medical treatment 3% Non-monetised impacts of the “non use” scenario involve an increase in operating costs, stringent regulatory issues and safety of supply issues, impacts on human health, greenhouse gas emissions as well as indirect revenues loss, guarantee costs and impact on the goodwill of Browning.
Monetised impacts of the "applied for use" scenario: Monetised impacts of the "non use" scenario: € 115 € [100-1,000M](#1t)
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6.3. Information for the length of the review period
On the basis of the arguments put forward, and in order to develop and implement a substitution process, FN Herstal and Browning apply for a seven-year review period.
6.4. Substitution effort taken by the Applicants if an authorisation is granted If an authorisation is granted, FN Herstal and Browning will pursue the substitution process described in section 4.4.
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7. REFERENCES
Alberini and Ščasný, Stated-preference study to examine the economic value of benefits of avoiding selected adverse human health outcomes due to exposure to chemicals in [Alberini, 2014] the European Union, FD7. Final Report - Part III: Carcinogens, Charles University in Prague (Environment Center), September 2014 Allemani, Global surveillance of cancer survival 1995–2009: analysis of individual data for [Allemani, 2015] 25 676 887 patients from 279 population-based registries in 67 countries (CONCORD-2), Lancet, 385: 977–1010, 2015 Allsop and al, Brassey’s essential guide to military small arms - Design principles and [Allsop, 1997] operating methods, p89. Londres: Brassey’s, 1997 Anand, Hanson, Disability-adjusted life years: a critical review. Journal of Health [Anand, 1997] Economics, 16:695-702, 1997 [Audino, 2006 Audino, Use of Electroplated Chromium in Gun Barrels - US Army RDECOM-ARDEC-Benet Laboratories, DoD Metal Finishing Workshop Washington, DC 22-23 May 2006
[Benaben] Benaben, Chrome et chromage, Techniques de l’ingénieur, Référence M1615 Bielewski, Replacing Cadmium and Chromium, Institute for Aerospace Research National [Bielewski, 2011] Research Council Canada Ottawa, Ontario CANADA- RTO-AG-AVT-140, NATO Science and Technology Organization, 2011 [Bureau Fédéral Bureau Fédéral du Plan, Les multiplicateurs de production, de revenu et d’emploi 1995- du Plan, 2013] 2005 – Une analyse entrées-sorties à prix constants, September 2013 Braud et al, Direct treatment costs for patients with lung cancer from first recurrence to [Braud, 2003] death in France, Pharmacoeconomics. 2003;21(9):671-9. Chouaïd et al, Economics of the clinical management of lung cancer in France: an analysis [Chouaïd, 2004] using a Markov model, British Journal of Cancer (2004) 90, 397–402. doi:10.1038/sj.bjc.6601547 Desaigues, Rabl, Ami, Boun My Kene, Masson, Salomon, Santoni, 2007a. Monetary Value [Desaigues, 2007] of a Life Expectancy Gain due to Reduced Air Pollution: Lessons from a Contingent Valuation in France. Revue d’Economie Politique 117 (5), 675–698, 2007 [ECHA, 2008] ECHA, Guidance on Socio-Economic Analysis – Restrictions, May 2008 ECHA, Applying socio-economic analysis as part of restriction proposals under REACH - [ECHA, 2008] Workshop proceedings, Helsinki, 21-22 October 2008 ECHA, Guidance on the preparation of socio-economic analysis as part of an application [ECHA, 2011] for Authorisation, 2011
[European European Commission, G. Technology readiness levels (TRL), Horizon 2020 – WORK Programme 2014-2015 General Annexes, Extract from Part 19 - Commission Decision Commission, 2014] C(2014)4995 [Eurostat, 2015] Eurostat, Mortality and life expectancy statistics, June 2015 [EurovaQ, 2010] EurovaQ, European Value of a Quality Adjusted Life Year, Final Publishable Report, 2010 [Griffin, 2015] Griffin, Shotshell Reloading Handbook, 5th Edition; Lyman Products Corp. 2015 GRIP (Groupe de Recherche et d’Information sur la Paix et la Sécurité), Note d’Analyse – [GRIP, 2010] Radiographie de l’Industrie de l’Armement en Belgique : mise à jour 2010, 2010. GRIP (Groupe de Recherche et d’Information sur la Paix et la Sécurité), Les rapports du [GRIP, 2014] GRIP – Répertoire des entreprises du secteur de l’armement en Belgique, 2014. [Holeczek et al, Holeczek, Kölle, Metzner, Report on inclusion of chromium trioxide (CrO3) in Annex XIV - 2011] Fraunhofer IPA-Institut für Produktionstechnik und Automatisierung, 2011 [Hyder, 1998] Hyder, Rotllant, Morrow, Measuring the burden of disease: healthy life years. American
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Journal of Public Health, 88:196-202, 1998 [IDEA Consult, Idea Consult, on behalf of European Federation for Services to Individuals (EFSI), Why 2012] invest in employment? A study on the cost of unemployment, 2012 ILO/IMF/OECD/UNECE/Eurostat/The World Bank, Consumer price index manual: Theory [ILO, 2004] and practice Geneva, International Labour Office, 2004 INSERM, INVS/CépiDC, 2012. In: Institut National du Cancer, Mortalité nationale des [INSERM, 2015] cancers, 2015 [Institut National Institut National du Cancer, Prévalence et survie nationales du cancer du poumon, 2015 du Cancer, 2015] [Institut National Institut National du Cancer, Cancer du Poumon – Quelques chiffres, Les cancers en du Cancer, 2014] France en 2014 Mathers, Stein, Fat et al, Global Burden of Disease 2000: Version 2 methods and results, [Mathers, 2002] Global Programme on Evidence for Health Policy Discussion Paper No. 50: World Health Organization, 2002 Mc Guire, Treatment cost of non-small cell lung cancer in three European countries: [Mc Guire, 2015] comparisons across France, Germany, and England using administrative databases, Journal of Medical Economics Vol. 18, No. 7, 2015, 525–532 [Migrin] Migrin, A Review and Meta-Analysis of Utility Values for Lung Cancer, U.S. EPA
[Montgomery et Montgomery, Watervliet, Interaction of copper-containing rotating band metal with gun bores at the environment present in a gun tube - Weapons. Laboratory, Watervliet al, 1974] Arsenal, WVT-TR-74026, 1974 [Morisset, 1993] Morisset, Chromage dur et décoratif, publication Cetim, 1993 Murray, Rethinking DALYs. In: Murray, Lopez, eds. The global burden of disease. Geneva, [Murray, 1996] World Health Organization, Harvard School of Public Health, World Bank, 1996 Murray, Lopez, Progress and directions in refining the global burden of disease approach. [Murray, 1999] Geneva, World Health Organization (GPE Discussion Paper No 1), 1999 Murray, Salomon, Mathers, A critical examination of summary measures of population [Murray, 2000] health. Bulletin of the World Health Organization, 8(8):981-994, 2000 Murray, Salomon, Mathers, Lopez, Summary measures of population health: concepts, [Murray, 2002] ethics, measurement and applications. Geneva, World Health Organization, 2002 National Defense Research Committee, Hypervelocity guns and the control of gun [NDRC, 1946] erosion, Washington, 1946 NewExt, New Elements for the Assessment of External Costs from Energy Technologies, [NewExt, 2003] 2003 [OECD] OECD, Main economic indicators, Consumer Price Index – data and methods [République République française, Bulletin officiel des annonces des marchés publics, Avis n°14- française, 2014] 70321 publié le 14/05/2014, May 16th, 2014. Simrova et al, The costs and reimbursements for lung cancer treatment among selected [Simrova, 2014] health care providers in the Czech Republic, 2014 [Rheinmetall, Rheinmetall Gmbh, Handbook on Weaponry, 1982 1982] US Army Materiel Command, Interior ballistics of guns, Engineering design handbook – [US Army, 1965] Ballistics series, 1965 Weinstein, Stason, Foundations of cost effective analysis for health and medical [Weinstein, 1977] practices. New England Journal of Medicine, 296:716-721, 1977
[WHO, 2003] World Health Organisation, Environmental Burden of Disease Series, No. 1 - Introduction and methods, Assessing the environmental burden of disease at national and local levels,
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2003 Williams, Calculating the global burden of disease: time for a strategic reappraisal? [Williams, 1999] Health Economics, 8:1-8, 1999 [Yin et al, 1999] Yin, Wang, Surface and Coatings Technology 114, 213–223, 1999
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8. ANNEX – JUSTIFICATIONS FOR CONFIDENTIALITY CLAIMS
Confidential business information was blanked out in the public version in order to preserve the confidentiality of strategic data of the present AfA. The following table provides a justification for confidentiality of the blanked out data of this document.
BLANKED OUT PAGE JUSTIFICATION FOR CONFIDENTIALITY ITEM REFERENCE NUMBER 8, 63, 65, 66, Strategic data: the blanking of these data is made #1 67, 78, 79, necessary by the blanking of data concerning the 80, 83, 84 profits of the Applicants. Strategic data: the blanked out data concern future #2 51, 52 innovations and cannot be publicly disclosed. Strategic data: the blanked data characterise the #3 24 level of performances of Browning’s products; their public disclosure may harm Browning business.
Table 44. Justifications for confidentiality claims
Please note that, wherever possible, and in order to not affect the understanding of the application, an effort was made to provide range of values for key confidential data. These data ranges are presented in square brackets, e.g. [10-100].
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9. APPENDIXES
9.1. Focus on barrel failure modes The decreased hit probability may arise from three types of barrel fatigue failure modes79,80,81: - forcing cone wear, - copper deposit, - Muzzle wear. These three failure modes are illustrated in Figure 9 below and described in what follows:
Figure 16. Barrel fatigue failure modes
❶ Forcing cone wear The forcing cone is the beginning of the rifling in the barrel bore and the interference between the projectile jacket and the barrel (called swaging). The main purpose for rifling the barrel is to stabilize the projectile by rotation when it exits the barrel. Before the forcing cone, the projectile has a “free” fly; it is not constrained and hence it is accelerated without being guided. In case of wear of the forcing cone, the projectile is not sealed anymore in the barrel. Combustion gases can escape around the projectile, resulting in a decreased projectile velocity at the muzzle. Additionally, since the projectile is not constrained and has a “free” fly, when the rifling eventually starts it is possible that the projectile is not aligned anymore with the barrel axis. Hence, when exiting the muzzle, the projectile rotation is not aligned with its symmetry axis and the projectile loses stability. At short striking distance, it is noticed by an obliquely striking mark. At longer range, the projectile drag coefficient increases rapidly and the projectile is not stable anymore. This phenomenon is best described by barrel diameter measurements and barrel endoscopic pictures.
79 Allsop and al, Brassey’s essential guide to military small arms - Design principles and operating methods, p89. Londres: Brassey’s, 1997 80 Hypervelocity guns and the control of gun erosion, Washington: National Defense Research Committee, 1946 81 Handbook on Weaponry, Rheinmetall Gmbh, 1982
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Barrel diameter is measured with reference (diameter 0) at muzzle. As described in Figure 17 below, the barrel wear is progressing from the chamber towards the barrel muzzle.
Figure 17. Barrel wear as a function of barrel length, for new and end-of-life barrels
The corresponding barrel bore pictures are represented below.
Figure 18. Barrel bore pictures, for new barrel (left) and end-of life-barrel (right)
This failure mode encompasses nearly all barrels fatigue failures encountered.
❷ Copper deposit Copper deposit is related to the composition of the projectile jacket, made of brass. Due to the high temperature flame, the brass sublimates from the projectile jacket and deposits on the barrel. The deposits preferably fill the barrel groove, and could lead to a reduced bore diameter. Because the copper is filling the grooves, the rifling is not effective anymore. Projectile stabilisation by rotation is harmed. A similar phenomenon to the one described in “① Forcing cone wear” occurs, projectile becomes unstable.
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This phenomenon is best described by the following pictures (copper deposit is the blue part of the picture).
Figure 19. Copper deposit (blue part of the picture)
Barrel failure due to copper deposit is very rarely encountered. The main parameter that leads to excessive copper deposits is ammunition characteristics: brass and powder composition. It can also be avoided by appropriate barrel maintenance.
❸ Muzzle wear Muzzle wear occurs when the projectile centrifugal forces become very important, when the projectile jacket is hard or when the projectile jacket is worn out and the hard projectile core rubs the barrel. The centrifugal forces are proportional to the projectile velocity. The projectile velocity is at its maximum at the muzzle. When the muzzle erodes at a faster rate than the rest of the barrel, the conical shape of the bore is inversed: the projectile is not guided (swaged) when exiting the barrel muzzle. Similar phenomenon to the one described in “① Forcing cone wear” occurs and projectile becomes unstable. Muzzle wear occurs for hard jacket projectiles with velocities larger than 950m/s. These velocities are never encountered for the ammunition calibers used at FN Herstal. Hence, barrel muzzle wear is not relevant for this AfA.
9.2. Exploded views of firearms concerned by Use-2, and identification of hard chromium plated parts
Browning A5
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Figure 20. Browning A5 exploded view. In red, parts concerned by Use-2
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BAR
Figure 21. BAR exploded view. In orange, parts concerned by Use-2
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ShortTrack
Figure 22. ShortTrack exploded view. In orange, parts concerned by Use-2
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Winchester SX3
Figure 23. Winchester SX3 exploded view. In red, parts concerned by Use-2
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Winchester SXR
Figure 24. Winchester SXR exploded view. In red, parts concerned by Use-2
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