Does it have a future in manufacturing?
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1 Sustainability Does it have a future in manufacturing? Steve Hope GM Environmental Affairs and Corporate Citizenship Toyota Motor Europe July 2015
2 What does sustainability mean to Manufacturing Industry? (1) The word sustainability is derived from the Latin sustinere (tenere, to hold; sus, up). Dictionaries provide more than ten meanings for sustain, the main ones being to maintain, support, or endure. Sustainable development is the kind of development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (Gro Harlem Bruntland - Our Common Future 1987) The common focus = Environmental Sustainability. The Circular Economy.the rate of renewable resource harvest, pollution creation, and non-renewable resource depletion that can be continued indefinitely. Moving away from. Take, Make, Consume, Dispose Towards. Extending Life, Reusing, Refurbishing and Recycling (picture image: Ellen MacArthur Foundation)
3 What does sustainability mean to Manufacturing Industry? (2) However society is expecting more from industry A balance of all three factors :- Economic Social Environment For competitive manufacturing industries all three factors must be respected!! Must satisfy the increasing demands and expectations of customers and society The consequent demands of regulation Must do all of this whilst respecting the environment But whilst also remaining profitable, delivering tangible value to shareholders / society (tax)
4 What does sustainability mean to Toyota? Following the recall crisis and tsunami. Akio Toyoda looks forward to the next 100 years of profitable business We are now more attuned to the importance of sustainable growth. an increase in production does not necessarily equate to growth. On February 24, the 5 th anniversary of when I attended the U.S. congressional hearing, we were able to take the first step towards innovation for the next 100 years with an event celebrating the line-off of the Mirai, our new fuel cell vehicle. (Akio Toyoda 2013 Sustainability Report) 1) Application of Toyota s Guiding Principles Monozukuri (Sustainable Manufacturing / Craftsmanship) Toyota Production System (Minimisation of Waste) Meiruka (Visualisation) A Comprehensive Vision. Better Cars Better Lives Better Business 2) Challenging Goals and relentless follow up Ambition = Aim Zero Emissions 3) Continuous innovation and application of science & technology (Akio Toyoda 2015 Shareholders meeting)
5 What issues should manufacturing industry consider? (1) Examples only :- Society Population increase Urbanisation Social equity / equality Poverty Health and Safety Mobility Aging Population Healthcare Education Climate Change Air Quality Human Migration Employment Social Contribution Congestion Tax contribution Smart City Smart grid Geo-Political Fuel Scarcity Fuel Poverty Fuel Security Material Scarcity Material Security Biofuels / Renewables Conflict Materials Industrial Migration Free Trade Land-use Social Responsibility Tax avoidance Regulation Emissions Trading Energy Efficiency Chemical Management Producer Responsibility ECO Design Safety Air / Water Emissions Waste regulation Product specific Circular Economy Product Passport Product Env t Footprint Org n Env t Footprint CCL / CCD /REO Congestion Charging Low Emission Zones Air Quality Energy Policy Customer Quality of life Specification Consumerisation Digital transition Connected society Big Data Value for Money Fashion and taste Quality Use vs Ownership Service Level BUT there are many potential conflicts requiring balance and compromise
6 What issues should manufacturing industry consider? (2) Some examples of potential conflicts - Automotive Industry Environmentally Friendly Products vs Use of Rare Earth / Precious Metals Just In Time vs Logistics Mode Personal Mobility vs Environmental Impact Water Based Paints vs Energy Use Chemical Management vs Use of Recycled Materials Labour Cost vs Production Location Range Anxiety vs Pure Electric Power Composite Materials vs Recycling Extended Life vs New product efficiency gain Centralised vs Distributed Production EV, PHEV and FCEV vs Primary Energy (CO 2 ) New Technology vs Productivity / Cost Biofuels vs Land Use Safety / Quality vs Reused Parts Lightweight / Economy vs Safety
7 What issues should manufacturing industry consider? (2) Some examples of potential conflicts - Automotive Industry Environmentally Friendly Products vs Use of Rare Earth / Precious Metals Just In Time vs Logistics Mode Personal Mobility vs Environmental Impact Water Based Paints vs Energy Use Chemical Management vs Use of Recycled Materials Labour Cost vs Production Location Range Anxiety vs Pure Electric Power Composite Materials vs Recycling Extended Life vs New product efficiency gain Centralised vs Distributed Production EV, PHEV and FCEV vs Primary Energy (CO 2 ) New Technology vs Productivity / Cost Biofuels vs Land Use Safety / Quality vs Reused Parts Lightweight / Economy vs Safety
8 How Toyota Typically Manages Sustainability Conflicts Two examples :- Environmentally Friendly Products vs Use of Rare Earth / Precious Metals A paradox.. Environmentally friendly products need to use potentially undesirable materials from a sustainability view point Typical Toyota Countermeasures :- Develop recovery and recycling technologies taking life cycle responsibility and thinking beyond the core business Minimise the use of materials at source by the continuous application of Monozukuri EV, PHEV and FCEV vs Primary Energy (CO 2 ) A shift of environmental impact from tailpipe to fuel supply (well to wheel) out of Toyota s traditional scope Typical Toyota Countermeasures :- Develop partnerships as an integrated or comprehensive approach (Gov t / Fuel Producers / Distributors etc) Create demand signals to fuel supply partners by sharing IPR to stimulate technology uptake
9 Hard Examples of Toyota s Efforts (1)
10 Hard Examples of Toyota s Efforts (2)
11 So can there a future for sustainability in manufacturing? A personal view :- Potentially yes over a mid to long term basis Recycling & pollution prevention solutions are advancing improved methods to handle negative impacts Companies show some flexibility in business models But it remains unclear if societal behaviour will change dramatically in the short term But - energy could be the major bottleneck!! Supply side challenges Climate Change regulatory reduction in CO 2 (fossil fuels) Shift away from Nuclear power Resistance to renewables Variation / instability of supply solar (day only) wind (variable) etc Lack of large scale renewable storage / need to strengthen infrastructure Demand side challenges Energy efficiency Population increase / Increase in developed economy Climate change increased cooling demand Direct / Indirect product electrification (Vehicles, Fuel cells, Heat Pumps, Planes) Net result is likely be :- efficiency improvement < demand increase
12 So can there a future for sustainability in manufacturing? What conditions will be necessary? Supportive regulation and consumer signals Education and Awareness Modify society expectations and behaviours Global harmonisation and standardisation Enlightened investors / shareholders Collaboration and integrated / comprehensive approaches across sectors Chicken & Egg Toyota Mirai available in Europe Autumn 2016 Air Liquide Hydrogen Filling Station An open question to the audience :- How will / can your sector or company respond?
13 The Ideal car? Watch this space The Lexus Hoverboard is coming! Thank you for your attention
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