Improving the Economic and Environmental Performance of the North American Automotive Industry Supply Chain. Operating Year(s):

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1 Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Operating Year(s): Planned Budget: C$80, C$120,000 Strategic Pririty/Objective: Greening the Nrth American Ecnmy/Imprved private sectr envirnmental perfrmance in Nrth America Prject Summary: This prject prpses t re-engage key autmtive cmpanies fr the develpment and implementatin f green supply-chain prgrams acrss Nrth America. This builds precisely n the language within the CEC Strategic Plan: building n ur success in the autmtive manufacturing sectr thrugh cntinued effrts t green critical cmpnents f supply chains acrss the cntinent and supprt the nging recvery f this imprtant sectr. Initiatives fr greening the Nrth American aut industry have been supprted by the CEC, specifically in the Operatinal Plan and Cuncil Reslutin Past CEC effrts succeeded in stimulating cmpetitiveness t the sectr and significantly reducing envirnmental impacts thrugh the Suppliers' Partnership Organizatin in the United States. Expansin f autmtive supply chain prgrams int Canada and Mexic was als near cmpletin when it was abruptly severed by the misfrtune f the ecnmic dwnturn. This prject prpses nw t extend wrk in greening the autmtive supply chain thrughut Canada and Mexic t create a "ne windw" Nrth American prgram. Cntinuing the wrk already started by the CEC in the autmtive sectr is imprtant t set up a successful cperative trilateral initiative and achieve a business-driven, self-supprted Nrth American partnership that will prmte greening f the autmtive supply chains in Nrth America. Given the success f the wrk started within the United States and the strng integratin f the aut sectr acrss all three cuntries, this prject will allw bth Canada and Mexic t benefit frm initial effrts in the United States, level the playing field acrss Nrth America, and permit trilateral cperatin. These prgrams can be the fundatin fr autmtive manufacturers and their suppliers t share infrmatin and practices that will imprve envirnmental and ecnmic perfrmance within this Nrth American sectr supply chain. Envirnmental Outcme: T reduce envirnmental impacts frm the autmtive manufacturing industry while enhancing cmpetitiveness by develping and implementing frmalized Autmtive Green Supply Chain prgrams in Canada and Mexic in partnership with the United States. Shrt Term (timeline: spring 2011 spring-summer 2012) The cmmitment f cre autmtive manufacturers and suppliers t green their supply chains in Canada and Mexic. - Measurability: the number f manufacturers and suppliers in Canada and Mexic cmmitted t the green supply chain prgram, as 1 See Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 1 f 8

2 well as their respective scale f impact in the sectr. Exchange f resurces, infrmatin, and tls within the sectr, t green the supply chain between manufacturers and suppliers. - Measurability: list f tls and resurces exchanged and perfrmance survey f hw useful manufacturers and suppliers fund them. Middle Term (timeline: starting summer-fall 2012 and cntinuing thrughut the life f this Green Supply Chain Prgram) The creatin f a business-driven, self-supprted supplier partnership in Nrth America (Canada, Mexic and the United States) t green the autmtive supply chain. - Measurability: membership and numbers f small t medium-size enterprises benefiting frm the supplier partnership prgram in Canada, Mexic, and the United States and the resurces (financial and lgistical) alltted t sustain the prgram. Reductin in envirnmental impact and imprvement in ecnmic capacity thrugh activities adpted by the supplier partnership prgram. - Measurability: list f activities adpted, such as best management practices, amunt f reduced impact, and imprved business results reprted by members, including waste reductin, lessened energy and water cnsumptin, and increased prfit margins. Lng Term (timeline: ver next five years and cntinuing nwards) The reduced envirnmental ftprint f the autmtive supply chain, alng with imprved autmtive sectr cmpetitiveness. - Measurability: survey t members n envirnmental measures and prfit imprvements, such as tnnage f greenhuse gas reductins, end-f-life cycle respnsibility, lwer txicity f end prducts and manufacturing utputs, reduced energy and water cnsumptin, increased prfit margin and business grwth. Additinal measures culd include number f stakehlders affected by supply partnership prgram and an increased verall cmpetitive market f the Nrth American autmtive industry. Tasks necessary t reach the Envirnmental Outcme: 1) Engage Canada and Mexic in develping a green autmtive supply chain prgram 2) Unite Canada, Mexic and the United States in a self sustainable Nrth American green supply chain prgram Budget: Overall timeline and budget: tw years ( $80,000, $120,000) a rate f $10,000 per mnth fr the perid f May 2011 t December 2012 fr csts and expenses t cntractr t carry ut prject. Task 1: Engage Canada and Mexic in develping a green autmtive supply chain prgram Subtask Prject utputs Hw des the subtask/utput mve the prject twards the Envirnmental Outcme? 1.1 Engage key stakehlders in Canada and Mexic in a green autmtive supply chain prgram that will wrk t imprve the envirnmental and ecnmic capacity f the autmtive sectr. The cmmitment f cre autmtive manufacturers and suppliers in Canada t participate in a green supply chain prgram Engaging Canada and Mexic in a green autmtive supply chain allws shrt-term envirnmental utcmes t be met (see Envirnmental Outcme sectin). Timing Summer 2011 Summer 2012 Budget (C$) (activities) $80,000 (activities include meetings with key stakehlders, rganizing wrking grups, designing the green supply chain prgram fr bth Canada and Mexic) Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 2 f 8

3 1.2 Build understanding f A frmatin f wrking prcesses t identify grups cmpsed f envirnmental issues and autmtive suppliers and wrk twards develping manufacturers that will envirnmental slutins initiate activities and prjects ecnmic pprtunities. that will imprve the envirnment and the ecnmic pprtunities in Canada and Mexic Task 2: Unite Canada, Mexic and the United States in a self-sustainable Nrth American green supply chain prgram Subtask Prject utputs Hw des the subtask/utput mve the prject twards the Envirnmental Outcme? 2.1 Build a trinatinal cmmunicatins gateway t create a "ne-windw," self-sustainable Nrth American green autmtive supply chain prgram. A cllabrative framewrk fr autmtive manufacturers and suppliers t mentr and share infrmatin and practices, leading t imprved envirnmental and ecnmic capacity f small and medium-size enterprises in the supply chain Develping and implementing a supply chain prgram that is Nrth American in scpe and self-sustaining allws fr middle-term and lngterm envirnmental utcmes t be reached (see Envirnmental Outcme sectin). Timing Budget (C$) (activities) 2 years $120,000 (activities include trinatinal meetings, cnference calls, strengthening wrking grup functinality, surveys, cmpiling annual CEC reprts, frming lgistics fr self sustainability) 2.2 Cllect and share f results-riented infrmatin that highlights prgress within the autmbile sectr. Annual, web-based CEC Nrth American Autmtive Supply Chain Efficiency reprts detailing hw cmpanies in the autmtive supply chain are imprving the envirnment and creating ecnmic pprtunity in the manufacturing prcess 2.3 Develp and implement a self-sustaining autmtive A self-sustained calitin f aut suppliers and Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 3 f 8

4 supply chain prgram acrss Nrth America that will benefit the envirnment, trade and the ecnmy, and encurage sustainable cnsumptin, prductin and trade. manufacturers in Canada, Mexic, and the United States, in partnership with their gvernments t imprve the envirnment and the ecnmies f their respective cuntries thrugh greening the autmbile supply chain Explain hw this prject meets the selectin criteria adpted by Cuncil in the Strategic Plan (See belw) The gal f all prjects funded by the CEC will be t supprt the effrts f the Parties t cnserve, prtect and/r enhance the Nrth American envirnment. The fllwing criteria will guide the Secretariat, Wrking Grups, Cmmittees, and ther apprpriate fficials f the Parties in cnsidering cperative activities fr Cuncil apprval under peratinal plans. These selectin criteria d nt apply t activities funded thrugh the NAPECA grant prgram. Des the prject cntribute t achieving Cuncil s strategic bjectives as described within the current Strategic Plan, r as related t ther pririties subsequently cnfirmed by Cuncil? Hw? In the Strategic Plan, Strategic Objective # 1 under the third Cuncil pririty ("Greening the Ecnmy f Nrth America") is "Imprved private sectr envirnmental perfrmance in Nrth America. This prject aims t imprve private sectr envirnmental perfrmance by frging partnerships between autmtive manufacturers and suppliers acrss Nrth America t green the autmtive supply chain. The cmpetitive advantage f the apprach is that it aims t simultaneusly reduce csts/increase prfits while saving the envirnment, ffering a sustainable business mdel that will reap lng-term benefits. In additin, it will prvide a self-sustaining frum fr cntinued imprvement, innvatin and success. In the Greening the Ecnmy in Nrth America pririty, there is als emphasis n Engaging experts and strengthening infrmatin and datasharing t assess and prmte private sectr envirnmental perfrmance in Nrth America as a tl t supprt the Strategic Objective. A Green Supply Chain r Supplier Partnership prgram initiative creates an envirnment t carry this ut thrugh engaging private sectr experts with supprt f a facilitatr t rganize, develp and implement green supply chain prgrams in Canada and Mexic in partnership with autmtive manufacturers and key suppliers. Cntinued effrts in the US will prmte frward mmentum. In establishing a trilateral platfrm fr partnership and cmmunicatin, a fundatin will be built that will allw suppliers t participate in a "ne-windw" prgram. Autmtive manufacturers and their suppliers acrss Nrth America will be able t share infrmatin and practices that will imprve the envirnmental and ecnmic perfrmance capacity f small and medium-size enterprises within this sectral supply chain. Are the prpsed bjectives Nrth American in scpe? In ther wrds, hw are the prpsed results relevant t prtecting the envirnment in Nrth America? Yes, the autmtive supply chain is a vital and integrated cmpnent f the ecnmy in Canada, Mexic, and the United States. It is anticipated that the supply chain prgrams will create a fundatin fr suppliers acrss Nrth America t participate n a level playing field, enhancing their capacity in a shared ecnmic and envirnmental cntext. It als prvides resurces t build interest and engage suppliers that are deeper in the supply chain and thus harder t reach (such as tier-3 cmpanies). In expanding cmmunicatin and interest, the supply partnership will be able t encmpass a wider embdiment f the autmtive supplier-manufacturer realm acrss Nrth America. Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 4 f 8

5 In its apprach, this initiative aims t generate measurable prgress n greening the autmtive supply chain in Canada and Mexic, and lay the fundatin fr a sustainable Nrth American autmtive supply chain rganizatin in Canada and Mexic. These new rganizatins will be given the lgistical resurces t be self-sustainable and fund future activities f their rganizatins with independent funding f the CEC. They will wrk cllabratively and supprtively with the Suppliers Partnership fr the Envirnment that is nw perating with cmpany funding in the United States. Des the prject identify specific clear and tangible results that will be achieved and hw prgress tward each result will be measured ver time? Yes, thrugh the develpment and implementatin f green supply chain prgrams, small and medium-size suppliers will cllabrate in sharing infrmatin and practices. Imprtant areas fr ecnmic and envirnmental imprvements include creating systems t identify and utilize autmtive manufacturing envirnmental technlgy pprtunities t imprve the envirnment and the financial viability f the autmbile supply chain. Furthermre, activities will be undertaken t enhance the autmtive industry and its supply chain by reducing energy cnsumptin, addressing slid waste, materials efficiency, chemicals in prducts and water sustainability issues. In rder t evaluate the success f the supply chain prgram, tw web-based annual CEC Nrth American Autmbile Supply Chain Efficiency Reprts will be created that will prvide detail n hw cmpanies in the autmbile supply chain are imprving the envirnment and creating ecnmic pprtunity in the manufacturing prcess. Measurable and identifiable results will include much f the fllwing metrics: Ecnmic Metrics Energy Metrics Envirnment Metrics - energy cnserved - energy intensity per unit f prductin - carbn reductins - carbn intensity per unit f prductin - number f manufacturers engaged - number f medium-size and small businesses engaged - percentage f small businesses engaged - jbs created - jbs retained - individuals trained - number and value f lans granted - capital dllars invested - hurs f cunseling prvided - ttal annual ptential impact identified - savings identified (envirnmental, "lean," and ther) - air emissins reduced - slid waste reduced - material intensity per unit f prductin - hazardus waste reduced - hazardus materials reduced - water pllutin reduced - water used/cnserved - water intensity per unit f prductin Is the CEC the mst effective vehicle fr the Parties t undertake the prject, cnsidering: The value-added f ding it under the CEC cperative prgram This prject precisely addresses the CEC Strategic Plan wrk directive: Building n ur success in the autmtive manufacturing sectr thrugh cntinued effrts t green critical cmpnents f supply chains acrss the cntinent and supprt the nging recvery f this imprtant sectr. Previus effrts by the CEC have prven the success f reducing envirnmental impacts by the autmtive industry in the United States. In cntinuing its invlvement with greening the autmtive supply chain it will allw the mmentum t cntinue and expand int Mexic and Canada, leveling the playing field and allwing the industry t build a trilateral fundatin upn which it may cntinue t flurish. Therefre, this is an excellent pprtunity fr The CEC t be the catalyst fr expanding a supplier partnership acrss Nrth America. Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 5 f 8

6 Any ther public, private r scial rganizatins that wrk n such activities In its effrts t date, the CEC has supprted the Suppliers Partnership as a vehicle t build partnership with the industry and implement activities within the autmtive sectr; a direct gal utlined in the Cuncil Reslutin This rganizatin is unique as it is a grup that benefits all autmbile suppliers, is member-driven, practive, and self sustained. It is als the nly autmbile envirnmental supply chain entity that directly cllabrates with the federal envirnment agency (US EPA). The principles f this grup had been the fundatin n building a green autmtive supply chain prgram in bth Canada and Mexic in that had nearly succeeded befre the ecnmic crisis hit the sectr. In rder t successfully carry-ut the gals in this prject and build partnership with the autmtive industry, wrk will cntinue t fcus n with the principles and fundatins f the Suppliers Partnership. Opprtunities t cperate and/r leverage resurces with such rganizatins Opprtunities t cperate and leverage resurces exist in cntinuing previus CEC wrk with the Suppliers Partnership. This rganizatin has engaged the US Envirnmental Prtectin Agency, large OEM s in the Nrth American market, and thusands f medium-size and small suppliers and manufacturers. Furthermre, as the tasks invlved in engaging Canada and Mexic, and creating a Nrth American prgram require delicate and strategic executin, it is recgnized that expertise required and available t implement these targets will include a series f unique skills including: knwledge f the autmbile industry and the supply chain; relatinships with key leaders within the autmbile manufacturing industry, the supply chain, and the gvernmental units represented in the CEC; the ability t facilitate and execute the results f strategic planning activities in Canada and Mexic; the ability t wrk seamlessly with Canadian, Mexican and United States aut-related supply chain rganizatins; and the capacity t enable Canada and Mexic the ability t facilitate, create and supprt wrk grups activities that will address issues with measurable results that will meet the bjectives f the CEC's greening the autmtive sectr. Thrugh arduus wrk previusly supprted by the CEC, the apprpriate cperatin and expertise has been established. Given the pprtunity t cntinue with this initiative and the ability t rely n these resurces t build upn, a green autmtive supply chain can emerge int Canada and Mexic and be achieved acrss Nrth America. Des the prject prpse a clear timeline fr implementatin f the activities, including a target end date fr CEC s invlvement? Where applicable, describe hw the wrk will cntinue after CEC invlvement ends? Yes there is a clear timeline fr implementatin f the activities including the target end date fr the CEC s invlvement. The Supply Chain prgram develpment and implementatin requires tw years. This tw-year prpsal aims t establish invlvement in greening the autmtive supply chain within Canada and Mexic and strengthen partnership between Canada, U.S.A. and Mexic t frge a calitin that will take n challenges and sprut slutins fr key envirnmental issues impacting the autmbile supply chain in Nrth America. These initiatives will cntinue n thrugh industry participatin and fee structures t be self sustainable. Where applicable, des the prject identify with reasnable specificity: Linkages with ther relevant CEC prjects, past r present, in rder t create synergies, capitalize n experience, r avid duplicatin? This prject builds n previus CEC autmtive and small and medium-size "lean and clean" activities that ccurred in Mexic. Hwever, the ecnmic dwnturn brught t a standstill the Green Supply chain activities that had ccurred in Mexic, and were beginning in Canada. This is reflected in the language n page 11 f the Strategic Plan f the CEC: building n ur successes in the autmtive manufacturing sectr, thrugh cntinued effrts t green critical cmpnents f supply chains acrss the cntinent and supprt the nging recvery f this imprtant sectr. Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 6 f 8

7 In additin, the CEC Radmap was a key deliverable frm the Greening the Nrth American Aut Industry prject in the Operatinal Plan. This radmap identified practical insights int the sectr s drivers and barriers and innvative elements that wuld prvide cmpetitiveness and envirnmental sustainability t the autmtive supply chain. This prject, in cntinuing t engage Mexic and Canada t create a Nrth American green supply chain rganizatin, will be able t draw frm the cncepts envisined in the CEC Radmap twards cmpetitiveness and imprved envirnmental perfrmance. On a brader scale and larger timeframe, this prject gives CEC the ptential t cntinue t hnr the Strategic Pririty, Greening the Ecnmy in Nrth America, by applying a similar prject apprach t different sectrs. The apprach utlined in this prject will lay the fundatin fr the aut-sectr supply chain t mve frward with their wn rganizatins and als then allw the CEC t identify anther business sectr t fcus resurces and strategies. Therefre, it will be pssible fr CEC t systematically prvide resurces fr different business sectrs each f which will fcus n ways t green their sectr specific supply chains in Nrth America. The target audience, as well as its receptivity and capacity t use the infrmatin that may be prduced as a result f the prject? The autmtive manufacturers and the autmtive supply chain the target audience - are receptive t this prject in frming partnership t green the autmtive supply chain while reducing csts/making mney. In 2009, the target audience was receptive t frming a green autmtive supply chain prgram. While activity has since ceased due t the unexpected ecnmic crisis, receptivity has cntinued. Autmtive manufacturers and suppliers have been receptive in recent discussins, expressing interest in the elements f the Radmap and the dynamics f the Suppliers Partnership frmed in the United States t green the autmtive supply chain. Infrmatin that may be prduced by this prject thrugh Wrking Grups, reprts, surveys, and verall knwledge sharing, is intended t be shared and used by the target audience wh will directly benefit frm it. The beneficiaries f capacity building activities that the prject may include? The autmtive industry and the small and medium suppliers f the three cuntries will be direct beneficiaries. Cnsumers f autmtive prducts and ultimately, all citizens within Nrth America will subsequently benefit frm the resulting imprvement in the supply chain bth by the reduced envirnmental impact and availability f imprved autmtive prducts. The relevant stakehlders, with particular attentin t cmmunities, academia, NGOs and industry, and their invlvement and cntributin t a successful utcme. The relevant stakehlders include: - the Nrth American autmtive manufacturers and the thusands f small and medium-size suppliers within the sectr, wh may be invlved in, r benefit frm, the green supply chain prgram t imprve their envirnmental and ecnmic perfrmance capacity. - business assciatins, whse members wuld benefit frm the supply chain prgrams. Fr example: the Canadian Autmtive Parts Manufacturers Assciatin, and the Asciación Mexicana de la Industria Autmtriz (AMIA). Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 7 f 8

8 - envirnmental gvernment agencies, wh will wrk in partnership with the green supply chain prgram t prvide infrmatin, tls and resurces. Envirnment Canada Secretaría de Medi Ambiente y Recurss Naturales (Semarnat), Prcuraduría Federal de Prtecciòn al Ambiente (Prfepa) Envirnmental Prtectin Agency (EPA) - trade assciatins with cmmn gals in envirnmental prtectin and greening the autmtive supply chain (currently in the United States, the Green Suppliers Netwrk and the US Suppliers Partnership fr the Envirnment). - NGOs, green technlgy prviders, and ther entities that wuld benefit frm invlvement in the supply chain prgram Fr example: Gd Will and Green Tree Prducts Technlgies are active members in the Suppliers Partnership in the United States It is anticipated that supply chain prgrams will be fee-structured initiatives nce CEC supprt ends. Imprving the Ecnmic and Envirnmental Perfrmance f the Nrth American Autmtive Industry Supply Chain Page 8 f 8