Driving forward with green manufacturing

Transcription

1 Driving forward with green manufacturing March 2013

2 The automotive industry is considering various ways to reduce operational costs while also mitigating its carbon, water, and energy footprint. The industry is already doing quite a bit of innovation to "green" the vehicle itself, which may entail the use of alternative propulsion technology to lower emissions or lightweight composites to improve fuel economy. However, OEMs and suppliers are beginning to realize that being environmentally conscious also means being financially savvy, which has spurred a shift towards leaner, greener manufacturing. To illustrate this trend, we look at how three automotive manufacturers have made different types of plant-level investments to green their manufacturing processes and operations. As you will see, advances in various types of renewable energy as well as other clean technologies have given the industry plenty of options to transform their facilities, streamline their operations to reduce costs, and even turn green into an incremental revenue source. Ford Motor Company: A living roof and innovative cooling Ford is spending $2 billion 1 to transform its River Rouge manufacturing complex, including the Dearborn Truck Assembly Plant, into a symbol of environmental responsibility. Part of its investment has been used to create the world's largest living roof, which absorbs up to 4 million gallons of stormwater each year 2. The roof was built out of necessity and was a wise financial decision for Ford. Runoff from the company's factory and parking lots, which includes oil, grease and chemicals, was polluting the nearby Rouge River and causing harm to its aquatic life 3. Forced with having to abide by Environmental Protection Agency standards, Ford could either build a green roof for about $18 million or spend approximately $50 million to build a conventional water management system. 4 In addition to reducing stormwater runoff, Ford's green roof provides insulating qualities that decrease energy use for heating and cooling, reducing energy costs at the factory by 7 percent per year 5. At its Lima Engine Plant, Ford has taken a different approach to being "green." The Ohio plant is using an innovative geothermal project to chill 1 Ford Corporate," Ford's Rouge Complex is known as an industrial trend-setter in both the 20th and 21st centuries." Historic Sites 2 Ford Media, "Ford Installs Word's Largest Living Roof on New Truck Plant." 3 Healing Our Waters-Great Lakes Coalition, "Ford Motor Co.'s Green Roof: Saving Money While Protecting the Environment." Healthy Lakes: Healing our Waters, 4 Ibid. 5 Ibid.

3 the plant's air. The system uses water from two limestone quarries located on the plant grounds, leading to the elimination of 4,300 metric tons of CO 2 annually. The system cost $300,000 less to install than a traditional cooling tower and is expected to save millions of gallons of waters annually as well as reduce operating costs by about $300,000 each year 6. It's another sustainable manufacturing project that makes sense from an environmental and economic standpoint. Ford is employing many more strategies for achieving manufacturing sustainability at other plants, but let's look at what some other companies are doing. General Motors Company: Reducing waste and using landfill gas General Motors (GM) is taking a different route to being "green", with a focus on waste reduction. A recent press release from the OEM indicates its intentions on making 125 facilities adhere to a zero waste mandate by 2020, meaning "all production waste generated is reused, recycled, or used to create energy" 7. When GM began its landfill-free program in the US, it invested about $10 for every ton of waste reduced. 8 Over time, it has reduced program costs by 92 percent and total waste by 62 percent. 9 Today, the company recycles 90 percent of its worldwide manufacturing waste and has over 100 landfill-free facilities worldwide. 10 Perhaps just as interesting, all by-products are regarded as useful and marketable; as such, GM counts about $1 billion in revenue annually from by-product recycling and reuse. 11 GM is also the second largest industrial user of landfill gas 12, a cleanburning fuel created from the incineration of refuse that would otherwise be idle and wasted. GM's Orion assembly plant saved $1.1 million annually in energy costs from powering 40 percent of the production of the 2012 Chevrolet Sonic and Buick Verano with landfill gas 13. In addition to its use of landfill gas, GM was named the top automotive user of solar energy in the US. In 2011, GM committed to doubling its global solar output to 60 megawatts in the next three years, and to increase 6 Ford Corporate, "Renewable Energy." Sustainability 2011/12, 7 GM Media, "GM Makes the Business Case for Zero Waste." News, gm/news.detail.html /content/pages/news/us/en/2012/oct/1019_landfill-freeblueprint.html

4 renewable energy use to 125MW by As of 2012, the company had solar arrays on a variety of plants, distribution centers, and EV charging canopies; in total, they generated enough power for 800 homes, a number that is expected to double in Volkswagen: Achieving Platinum LEED certification Volkswagen (VW) has also demonstrated its commitment to green manufacturing, but has done so in a different way. VW's recently opened Chattanooga plant achieved an esteemed honour by obtaining platinum certification from the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) 16. The Chattanooga plant is the only automotive manufacturing plant globally to achieve platinum certification through a combination of energy efficient equipment and machinery, storm water collection and reuse, and renewable power generation through a local hydroelectric dam 17. For example, its sustainably designed paint shop saves more than 50 million gallons of water each year, while a combination of lowflow water closets and urinals as well as a rainwater harvesting system save 1.7 million gallons of potable water each year. 18 In addition, superior insulation, including a white, reflective roof, results in 720,000 Kilowatts per year in energy savings, while the use of LED lighting on the exterior of the plant results in 68% less energy used. Conclusion The initiatives undertaken by Ford, GM and Volkswagen are demonstrative of the benefits of meeting higher ecological standards in manufacturing. The positive impact of their actions reaches beyond simply obtaining "green" status. They have identified various clean technologies and strategies that help streamline their operations, minimize their impact on the environment, and ultimately, increase profitability. Impact of green manufacturing While the depth and variety of these manufacturers' investments are indicative of the automotive industry's movement towards greater use of renewable energy sources and "greening" manufacturing processes, there is still a tremendous amount of untapped potential, both for the industry, and Environmental Operational Economic 14 GM Media, "GM Named Top Solar User in U.S. Auto Sector." News. /en/gm/ news. detail.html/ content/pages/news/us/en/2012/sep/0912_solararray.html 15 Ibid Volkswagen Media, "Volkswagen Chattanooga Earns LEEDS Platinum." VWoA Top Stories, wagen-chattanooga-earns-leed-platinum 17 Ibid Ibid 16.

5 for the nation as a whole. To realize this potential, companies need to take a holistic approach to updating their facilities and define a comprehensive sustainability strategy that is scalable, replicable, and economically viable. Simply "greenwashing" a facility is not sustainable; the automotive industry needs to focus on the environmental impact of its decisions as well as the operational and economic impact of its investments in clean technologies. Contacts Debi Gerstel US Cleantech Chief of Staff (408) debi.gerstel@us.pwc.com Douglas Gilman Senior Associate (313) douglas.gilman@us.pwc.com Terese-An Nguyen Senior Associate (313) terese.nguyen@us.pwc.com