A PERFECT STORM

How Green Manufacturing Practices Can Help Profits, Help Planet: Besides recognizing the importance of preserving/enhancing our precious natural resources through green energy practices, most manufacturers are beginning to realize that this altruistic perspective, unlike many, can positively impact their bottom lines and deliver cost-saving benefits.

It’s a perfect storm, but a positive one. Two strong forces today are converging in the U.S. manufacturing sector that can deliver a whirlwind of benefits for manufacturers and the environment.

First, at long last, American industrial executives are recognizing the importance of preserving and enhancing the use of our precious natural resources through green energy practices in a vast array of manufacturing applications. Second, it’s now apparent to most manufacturers that this altruistic perspective, unlike many, can positively impact bottom lines and deliver cost-saving benefits short term and long term.

A new study of manufacturing professionals confirms this perspective. When asked by IFS North America, Inc. (Itasca, IL) what’s driving their companies to adopt and implement green initiatives, “it’s a management directive” shared top billing, cited by 54 percent of respondents. “It’s a social responsibility” was cited by 54 percent of the manufacturers, followed closely by “customers are demanding it” (50 percent). Furthermore, a 2011 study by the Material Handling Industry of America (MHIA; Charlotte, NC)) reveals that a whopping nine in 10 executives surveyed say their companies believe that sustainable initiatives have the potential to both save money and resources.

The U.S. manufacturing sector can play a significant role in meeting the energy demand challenge. According to The Manufacturing Institute (Washington, DC) and the U.S. Department of Labor, the industrial sector accounts for nearly one-third (31 percent) of total end-user consumption in the United States, surpassing, transportation (28 percent), residential (22 percent) and commercial (19 percent). This means green practices employed by manufacturers will impact a large percentage of energy use.

Greener, more energy-efficient manufacturing environments represent the ultimate win-win. A recent study by Aberdeen Group Inc. (Boston, MA) on sustainability initiatives conducted by more than 200 companies, many of them in manufacturing, illustrates the benefits of green manufacturing practices. Those deemed “best in class” achieved an impressive 9 percent reduction in carbon footprint while cutting energy costs 6 percent, facilities costs by 7 percent, paper costs by 10 percent and transportation/logistics costs by 7 percent.

This movement transcends politics. Both sides of the political spectrum have addressed the energy challenges that the U.S. and the world face. As noted in his new book Make It in America, Andrew Liveris, the chairman and CEO of the Dow Chemical Company (Midland, MI), writes, “Energy, clearly, is one of the megatrends defining this century. It is only going to grow in importance as global demand increases.”

MAJOR “CATCH-UP” NEEDED
The greening of manufacturing is starting to permeate U.S. factories, but America has some major catching up to do when compared to other countries. China significantly outpaces the U.S. in the green manufacturing arena. In 2008 China nearly doubled the amount of installed capacity of renewable electricity when compared to the U.S. According to Liveris, China invested $34.6 billion in the renewable energy sector in 2009, almost twice the amount that the U.S. spent. China also became the world’s biggest maker of wind turbines in 2009 and the largest solar panel manufacturer in 2010, accounting for one-third of the world’s solar panels.

Admittedly, China is not a democracy and can mandate initiatives that America likely would not. Yet it is difficult to dispute that China has made the greatest strides globally in instituting renewable, environmentally-friendly energy initiatives. 

Perhaps a more “apples to apples” example is Germany, a mature western European economy. Initially fueled in part by passage of its Renewable Energies Act in 2000, which paid any company or individual who sold back renewable energy to the grid, Germany quickly achieved rather ambitious goals. In 2000, the government set an objective to generate 12.5 percent of its electricity from renewable sources by 2012. It attained that level five years early. A new goal to achieve a 20 percent level by 2020 likely will be achieved this year, according to Liveris. Also, the surging number of Germans employed in the renewable energy sector would make other countries green with envy.

Despite America’s need to take longer and faster strides in this critical area, a plethora of recent developments has sparked greater participation from manufacturers in green initiatives. Countries such as China and Germany have achieved such dramatic success in the industrial green arena due, in great part, to the substantial national programs that make energy efficiency commitments easier and financially rewarding within their borders. Many U.S. pundits voice frustration with the lack of any comparable U.S. national policies. That issue will not be debated here.

But what can be stated with certainty is the existence of a number of new “assistance” programs established by government agencies to help manufacturers create sustainable programs. One growing in popularity is the Green Suppliers Network established by the U.S. Environmental Protection Agency (EPA) in collaboration with the U.S. Department of Commerce. Its mission is to help small and medium-sized manufacturers stay competitive and profitable while reducing their impact on the environment. 

This is accomplished via the network’s “Lean and Clean Advantage.” The program works with large manufacturers to engage their suppliers in low-cost technical reviews to identity strategies to improve process lines, use materials more efficiently and eliminate the root causes of waste.

Of course, there is a host of U.S. Department of Energy (DOE) initiatives. For example, DOE offers the Industrial Technologies Program Save Energy Now that aims to drive a reduction of 25 percent or more in industrial energy intensity in 10 years. Also, do not forget the very prominent Leadership in Energy and Environmental Design (LEED^®) rating program created by the U.S. Green Building Council that awards projects based on their use of sustainable materials and highly efficient equipment.

The newest program is the Economy, Energy and Environment Initiative, known as E3, a coordinated federal and local technical assistance program that provides manufacturers with customized, hands-on assessments of production processes and assist with the implementation of energy-saving projects. In October 2010, the DOE, EPA, U.S. Department of Commerce, U.S, Small Business Administration and U.S. Department of Labor signed a memorandum to support this worthy initiative.

One example of how this works in real life is Milwaukee’s new ME3 program that will invite local manufacturers to participate in a new sustainability program to drive down waste in their production processes and cut costs. Federal agencies and local partners, such as universities and the state’s focus on energy program, will provide technical assistance.