Lean, Clean and Green
By Alessia Leibert and Anne Arthur
December 2010
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Three Minnesota firms have found that green manufacturing is not only good for the environment, it’s good for business.
After a long freeze, Minnesota’s economy started to thaw last summer. Manufacturing, one of the most challenged industries in the recession, began to show signs of recovery. After shedding 41,670 jobs in the state from the beginning of the recession in December 2007 to its official end in June 2009, manufacturing finally added 3,600 jobs from July to September 2010[1]
The Minnesota Department of Employment and Economic Development (DEED) is conducting a research project to explore green jobs in Minnesota. This project, funded by a grant from the Employment and Training Administration within the U.S. Department of Labor, has found early evidence that Minnesota’s manufacturing sector is in the process of reinventing itself. Concerns about rising production costs and a commitment to the environment are changing the manufacturing sector into one of the greenest sectors of the state economy.
The relative simplicity of some green practices helps explain their appeal. Changes such as reducing production waste through lean measures and installing energy-saving equipment can reduce costs for raw materials, utilities, landfill taxes and hazardous waste mitigation.
While some changes can be attributed to a difficult economy that exposed the cost of wasting resources, many Minnesota manufacturers have been committed to environmental protection for decades. This article is based on interviews with three firms that have been manufacturing green products for years.
Not Just the Wind
Is Minnesota a good place for green manufacturing businesses? The region has a natural advantage for locating wind farms and wind-related manufacturing, as well as corn-based ethanol and biomass production plants. Minnesota’s green potential, however, goes beyond the renewable energy sector.
Green products manufactured in Minnesota include:
- Energy-efficient products, including heating, ventilation and air conditioning systems (HVAC), windows and doors, furnaces, programmable thermostats, and wireless products such as smart meters and distribution automation.
- Energy-efficient transportation technologies, such as hybrid buses and vehicles powered by compressed natural gas.
- Environmentally-friendly production materials (biodegradable plastics), building materials (paints and coatings) and chemical-free cleaning solutions.
- Products and technologies for the renewable energy industry, including ethanol, biodiesel, geothermal pumps, wind turbines and advanced batteries that store renewable energy.
While green jobs appear to account for no more than 2 percent of all employment in Minnesota, there are reasons to believe they have strategic importance for the state’s economy. Preliminary research suggests that the mix of manufacturing industries reporting the most green job vacancies over the last year partially overlaps the state’s “distinguishing industries” (see Table 1). Distinguishing industries refers to business sectors that have a greater share of employment in Minnesota than in other states.
Table 1
|
Manufacturing Industries with the Largest Number
of Green Job Vacancies
|
| NAICS Code |
Industry Title |
Green Product Examples |
| 333414-333415 |
Air-Conditioning, Refrigeration, and Forced Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing |
Energy-efficient heating, ventilation and air-conditioning systems |
| 334513 |
Instruments and Related Products Manufacturing for Measuring, Displaying and Controlling Industrial Process Variables |
Instruments for measuring and controlling air pollutants; sensors and systems for efficient flow of water and chemicals in industrial processes |
| 334512 |
Automatic Environmental Control Manufacturing |
HVAC unit controls; sensors and switches for appliances and lights |
| 321911 |
Wood Window and Door Manufacturing |
Energy-efficient building supplies |
| 32721 |
Glass and Glass Product Manufacturing |
Energy-conserving glass products for windows and doors. |
| 333 |
Construction, Commercial, and Service Industry Machinery Manufacturing |
Green industrial cleaning machines; green building products; compressed natural gas-powered vehicles |
| 335911 |
Storage Battery Manufacturing |
Energy storage and energy harvesting power management solutions |
| 3261 |
Plastics Product Manufacturing |
Biobased and biodegradable products; plastic tubing for radiant floor heat systems |
| 325 |
Chemical Manufacturing
(3251 Basic Chemical Manufacturing; 3259 Other Chemical Product and Preparation Manufacturing) |
Corn-based ethanol; wind turbines |
In particular, the first five manufacturing industries listed in the table (HVAC systems, precision instruments, automatic environmental control, wood windows and doors, and glass and glass products) are all distinguishing industries. Although it is impossible to know to what degree green trends are affecting the Minnesota manufacturing sector, investments and other efforts that encourage green manufacturing seem like a natural step for helping the state’s job recovery.
Access to a talented, educated workforce is one ingredient for helping green businesses to succeed. Proximity to the University of Minnesota and other higher education institutions that have engineering programs was mentioned by the sources for this article as a factor for the growth of their businesses. Additionally, state policies, especially those with environmental incentives, make Minnesota an appealing place for green businesses.
Finally, Minnesota’s cold winters have fostered the development of an energy-efficiency industry that spans many sectors and applications, including manufacturing.
Although green businesses represent only a minority of manufacturers, Minnesota boasts several well-established national manufacturers with green-related products and services. They include Honeywell International, Rosemount/Emerson, Trane (a subsidiary of Ingersoll Rand), McQuay International, Andersen Corp., Tennant Co., GE Osmonics, 3M Co., Cardinal Glass Industries Inc., and McNeilus Truck and Manufacturing.
Green Products and Processes
Manufacturers can become greener by changing their products or processes. They can make products that are more durable, that enable end-users to consume less energy (such as smart meters) or that are more eco-friendly (such as biodegradable packaging). Process changes include reducing energy or raw materials used in production, reducing emissions, or reducing waste in packaging and shipping. Process changes are particularly promising, because energy is often the biggest operations and maintenance expense at manufacturing firms.
Minnesota has several businesses with a legacy of being green, including the three companies featured in this story: Andersen Corp., Johnson Controls Inc. and Tennant Co.
Andersen Corporation
Andersen Corp., based in Bayport, is a 107-year-old window and door manufacturer that employs 10,000 people at more than 20 locations. The company manufactures 6 million windows and doors annually, selling them worldwide.
The company’s commitment to the environment is reflected in the energy-efficiency rating of its windows and the durability of its products.
What does it mean to be green at Andersen?
“Being green isn’t a trend at Andersen, it’s a tradition,” said J Glasnapp, vice president of sustainability. “It’s been a part of our identity from day one. We have led the industry in the introduction of products that have raised the bar around sustainability and energy efficiency. We really want to reduce our environmental footprint, lead in energy efficiency and help create healthier homes.”
“We see quality and green as the same thing” Glasnapp added. “If you do it right the first time with the right materials—make a durable product—then you don’t need to build it twice, you don’t deliver it twice. We believe it’s the right thing to do and it’s good business.”
What is driving the greening of your business?
Many factors are affecting the push toward sustainability and energy efficiency in the building supplies business: price of raw materials, building codes, energy-efficiency standards, labels for products that exceed standards (such as Energy Star) and certifications.
Susan Roeder, corporate affairs manager, said the company has voluntarily sought out certifications and often has been the first in the industry to get them.
For example, in November 2008, Andersen was the first company in the window and door industry to receive Forest Stewardship Council chain-of-custody certification, in which a third party evaluates and tracks the flow of certified wood through each successive stage—including processing, transformation and manufacturing—all the way to the final product. This certification, in turn, enables Andersen customers to earn points toward U.S. Green Building Council LEED certification (Leadership in Energy and Environmental Design.[2] Andersen was a founding member of the U.S. Green Building Council and the first company in the industry to receive Green Seal certification. More recently, Andersen was named the “2010 Energy Star National Window Partner of the Year.”
The company also earned certification for indoor air quality, said Mike Koenig, manager of corporate sustainability efforts. Historically, codes have exempted windows from indoor air regulations, but Andersen voluntarily pursued standards that certified its windows met North America’s strictest indoor air emissions criteria. “And when you can hand a homeowner a certificate that says that our windows are as safe as the furniture or the cabinets in your home—in terms of air quality—that’s a big deal.”
“And the last thing that drives everything we do is the customer,” Glasnapp added. “The customer is looking for good value, durability and for ways to reduce energy. So, if we have a group of customers from the architectural community—people we respect and trust in the industry—and they believe a particular certification is important to them and their customers, we’ll pursue it.”
Are there new technologies emerging that are impacting your business?
Glasnapp said the company is committed to investing in green innovation even during difficult economic times. Andersen unveiled two energy-efficient product lines at the International Builders’ Show this year, including a new series of windows made from Fibrex, a proprietary material derived from sawdust captured from the manufacturing of other wood windows. This new series of windows consists of 40 percent reclaimed wood.
It took Andersen five years to develop the material and another 10 years to build a business around it. Fibrex is more than just a new product for Andersen. It demonstrates how a lean focus, in terms of production techniques and organizational development, can pay off for a company in terms of profits and efficiency.
“At a time when a lot of companies may be pulling back,” Glasnapp said, “we believe that continuing to invest in research and development is just the right thing for us to be doing. It’s good business.”
More details about Andersen and its products are available at www.andersenwindows.com/.
Johnson Controls Building Efficiency
Johnson Controls Building Efficiency, a business unit of Milwaukee-based Johnson Controls Inc., provides equipment and services for heating, ventilating, air conditioning, refrigeration and security in buildings. The company’s commitment to sustainability dates back to 1885, with the invention of the first electric room thermostat. Johnson is involved in more than 500 renewable energy projects— including solar, wind and geothermal—and has more than 130,000 employees worldwide, with branch offices in 150 countries. The company, which has four business locations in Minnesota, has completed about 160 public and private projects in the state in the past 10 years.
What does it mean to be green at Johnson Controls Building Efficiency?
“Our commitment to energy sustainability has been part of the corporate culture since the 1800s,” said Chris Schulken, regional vice president and general manager. “We continually work with customers to help them improve their energy efficiency, achieve their sustainability goals and reduce their carbon footprint.”
The business has experienced growth by focusing on energy-saving projects in commercial buildings, including improving energy and water usage, lighting systems, building envelopes, windows, roofs, materials, indoor air quality and facilities management.
What is driving the greening of your business?
Several factors are driving growth, primarily in the public sector, according to Schulken. The federal stimulus made funding available for facility improvements, and a variety of utility rebates have made renewable energy more affordable for customers.
“We’ve seen a lot of energy retrofitting activity come from the government sector, whether it be federal, state or local governments,” said Arif Quraishi, the company’s director of local government-energy solutions, Americas. “This sector, in particular, is actively seeking opportunities to help reduce energy and operating costs, and many solutions exist, including renewables.”
Similarly, higher education is pursuing cost-saving investments in energy efficiency as a response to budget constraints.
The commercial real estate market has some catching up to do, however. Property owners and managers tend to focus on the short-term and generally lack the capital for building improvements. Until that mindset changes, the private sector will lag behind in the greening of the economy, Quraishi said.
Are there new technologies emerging that are impacting your business?
“One of the more recent adaptations has been the embrace of wireless technologies,” Schulken said.
The majority of the company’s products now have wireless capabilities, enabling facility managers to monitor energy usage, emissions and security data from a single source.
What does “smart” actually mean when coupled with new solutions or products?
“Smart products and solutions help customers realize both economic and environmental benefits. When working with customers, in many cases, this is a muddied area,” Quraishi said. “Yet when explained correctly, it’s easy for customers to understand why these solutions are beneficial to their sustainability goals.”
He said light-emitting diode (LED) lighting is one example of a smart solution. LEDs consume less than one-quarter of the electricity of standard fluorescent lighting. For customers with thousands of lighting fixtures, LED lighting saves money and offers environmental benefits.
“Replacing the lighting in a city or in a school district can significantly help reduce energy consumption and costs,” Quraishi said. “Johnson Controls conducts an audit of existing lighting and compares current energy levels with what the new lighting will use. If current systems cost $200,000 annually to operate, a new LED lighting system that could save up to 30 percent annually could result in $60,000 in realized savings.”
More information about Johnson Controls can be found at www.johnsoncontrols.com.
Tennant Company
Tennant Co., which is headquartered in Golden Valley, makes equipment and products to maintain indoor and outdoor surfaces, such as automated floor scrubbers and sweepers, carpet extractors, floor coatings and detergents.
Tennant is an example of a quiet company that has reinvented itself in a mature industry. A few years ago, the company introduced foam-activated floor-scrubbing technology that reduces water usage by 70 percent. With this technology, after 138 years in the “non-residential floor maintenance equipment business,” the company transformed itself into an “environmental cleaning solutions company” and built a business around it.
What does it mean to be green at Tennant?
The company redesigned nearly half of its product line to incorporate the new green technology. In addition to the foam floor-scrubbing equipment, Tennant also introduced its new ec-H2O technology, an environmentally-friendly product that converts plain tap water into a cleaning agent without added chemicals. The company has more than 20 patents pending on the new technology.
While green-certified chemicals are available on the market, Stan Mierzejewski, senior manager of sustainability at Tennant, said the company’s water-based technology has more advantages.
“It can be argued it’s even better than green chemicals because to create green products you still need to take raw materials out of the ground, you have packaging costs for the chemicals, transportation costs, warehousing costs and, in the use phase, you still have OSHA [Occupational Safety and Health Administration] requirements that require the training of personnel. If you compare that process with our technology—simply starting with water, converting it momentarily to an effective cleaning agent and then converting it back to water—the need for all of the chemical extraction, management and handling is totally eliminated.”
He said Tennant strives to achieve waste reduction across all business units, including the packaging of products and the materials used to make products. “An engineer can say, ‘I need aluminum to meet these characteristics,’ and the database will show the types of aluminum available that meet those specifications and the environmental footprint of each type,” Mierzejewski said. “Then the engineer can select the best aluminum for the job by weighing performance and environmental impact.”
Many of the company’s best ideas come from employees, according to Mierzejewski. “For instance, we use big sheets of steel and—like a cookie cutter—we cut shapes out of the steel. Even though we optimize each sheet of steel, we still have leftover sheets with shapes cut out. And one of our manufacturing process leaders realized that we had been throwing all of the leftover steel into the same Dumpster even though we use different grades of steel. The supervisor realized if we sorted the leftover steel into the different grades, the recovery rate would go way up. In fact, we had a six-figure increase in our steel recovery rate just from making that simple change. So, we’re looking for ways to be more efficient, and for ways to determine which materials can go back into feedstock for our products.”
What is driving the greening of your business?
“While we have green legislation in the United States, much more can be done to protect our environment and people,” Mierzejewski said. “For example, there’s been a green cleaning bill introduced twice in Minnesota and it’s died both times. A green cleaning bill would protect both those who clean facilities and the occupants of those facilities.
“So, there are some regulations, but they don’t make a major impact. Unlike in Europe, where regulations play a big role in pushing manufacturers to reduce waste, what’s driving greenness in the U.S. is the customer. A lot of our large customers have strong sustainability agendas, and they’re saying to us, ‘We want to look holistically at our supplier relationships; we want to know what you’re doing to reduce energy and we want to know how you dispose of these products when they come back to you.’
“I think the challenge with green is that you can be really environmentally great with your product, but the customer still has to buy it. You need to have a credible product that not only works, but also creates unique benefits for the user. So, whatever we offer as green products needs to be better than what came before, and those claims need to be credibly communicated. That’s on the sales and marketing side. On the operations side, it’s really making a business case for green products or processes. What will the company accrue through green operations? Will it help reduce energy? Will it help reduce waste? Will it improve efficiencies? It needs to be more efficient and less costly. You need to also reduce exposure to unnecessary risk. You need to know what your suppliers are doing in their operations to reduce the risk of unknowingly using bad component parts. And some of the challenge is that we’re really plowing new ground.”
More information about Tennant and its green technology can be found at www.tennantco.com/solutions/innovations/.
Where are the Jobs?
A natural question to ask in a time of high unemployment is whether the state’s green economy is providing jobs. It seems unlikely that employment in manufacturing will increase significantly when production is shifted from traditional goods to more energy-efficient ones. All three companies featured in this article, however, demonstrate that embracing innovation can lead to new products, processes and technologies. Stricter regulations and changing customer demands can offer opportunities for growth.
Economic experts predict that manufacturing jobs will decline and that those remaining will require workers with higher skills than in the past. This research project has found some evidence of higher education requirements in Minnesota through interviews with human resources personnel. New engineers will be hired regardless of the conditions of the market. Although none of the respondents reported shortages of skilled workers, finding experienced engineers has often been described as “challenging.” Specifically for green companies affected by continuous technological upgrades, employers are not purely looking for an engineering degree, even though that’s a big need, but for people with the business acumen, passion and capability to learn new technologies fast and the ability to innovate when solutions are needed.
Green trends offer an opportunity to renew the manufacturing industry. Growth in green manufacturing, in turn, can boost several aspects of the local economy, due to the synergies between manufacturers of green products and other industries, such as construction, IT and consulting services.
This article has explored what it means to be green and which green trends are affecting the manufacturing sector—specifically from the technological front. The paths to greenness can be different, but investments in innovation paid off for the companies featured in this story in terms of turning concepts and new technologies into products.
Green Makes Financial Sense
“It’s not only about being green,” said Stan Mierzejewski, senior manager of sustainability for Tennant Co., “it’s also very much about reducing cost. If we re-use a packing box 10 times, we’ve not only reduced nine boxes of waste, but we’ve reduced our costs significantly. So the first filter is: How does this create a more efficient business operation? And then: How does it reduce the environmental impact? Really, it’s about the triple bottom line: environmental, social and economic impact. And you really make a difference when you hit all three of them.”
“When most people think about green, they’re thinking, ‘What are you doing about the environment?’ They think about emissions and things like that,” said Mike Koenig, manager of corporate sustainability for Andersen Corp. “But we’re interested in the triple bottom line, which is not only the planet and the environment, but also about your business. It means being concerned about your people and profitability. If you’re not profitable in a for-profit country, then you’re just a chapter in a history book. You can’t support environmental initiatives or your employees if your organization goes out of business. So here’s the key thing: We think that sustainability is good business practice.”
“When you talk about growth in Minnesota around efficiency projects, we’ve seen a 30 percent increase in our business in the last fiscal year,” said Arif Quraishi, director of local government-energy solutions, Americas for Johnson Controls. “It appears this trend will continue because the market is demanding it. Available funding like ARRA [American Recovery and Reinvestment Act] was a catalyst to get people thinking about becoming more energy efficient. Many people are realizing that energy and water efficiency are economic imperatives. They have a direct impact on reducing costs.”
|
1]U.S. Department of Labor and the Minnesota Department of Employment and Economic Development, Current Employment Statistics.
[2]The U.S. Green Building Council developed the LEED rating systems. LEED certification provides independent, third-party verification that a building project meets the highest green building and performance measures.
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