Rochester Business Journal
It Isn’t Easy Being Green
With a few notable exceptions, managers of many American manufacturing and service businesses rank dealing with environmental regulations on a par with root canals and colonoscopy. But one thing is certain. It’s only going to get worse. And, therein lies a compelling tale, one with some impressive local connections.
But, first we look to Europe where recent European Union (EU) initiatives may serve as models for the future in the United States. The issues there include, a radical paradigm shift wherein responsibility for the disposal of a product at the end of its life reverts to the maker. No longer will the costs and logistics of disposal be the community's problem, rather manufacturers will be mandated to take back their products and deal with disposal issues. As some American manufacturers, especially the automobile industry, look on in horror at these producer responsibility initiatives, others see them as a potentially cost saving, profit enhancing, socially responsible innovation long overdue.
A consultant and close observer of the EU producer responsibility directives is Nail Nasr, director of the Rochester Institute of Technology’s National Center for Remanufacturing and Resource Recovery, (REMAN). Dr. Nasr recently returned from France where he met with members of the European Commission charged with coming up with the language and logistics for enforcement provisions of the new laws.
“What they are saying is the manufacturer of the equipment is responsible for the product’s end of life, that it’s no longer society’s problem. You know what went into this product, you know what material was used, you know how you put it together, you are the best one to take it back and deal with it. This take back policy is the European way of dealing with disposal issues,” Nasr says.
“We have a program here in the U.S., with the EPA [Environmental Protection Agency] called extended producer responsibility. Unlike the European model-- the philosophy there is ‘we’re going to regulate’-- in the US we say ‘this is the right thing.’ Industry must figure out a way to deal with it.”
Nasr is both an innovator and champion of regenerative design, a term he coined which, he admits, is nearly synonymous with the better-known term “sustainable design.” Regenerative design encourages building into a product up front materials and components that can be remanufactured and reused. Also an advocate of Design for the Environment principles, another EPA initiative, Nasr and his Center works with many local companies eager to be ahead of the curve in design and implementation of end-of-life disposal methodology. His center tries to match local companies with available state and federal funding to help identify and implement innovative sustainable design principles and practices.
“Sustainable design,” Nasr says, “ is a holistic approach that looks at product design and tries to accommodate and incorporate all aspects of product life and take that into consideration up front in design so we are not just looking at a product to perform a certain function, we try to go beyond that looking at the use phase, how the product is serviced, all the activities associated with the product, and how the end of life issues are dealt with.
“If you look at it from a business perspective it makes sense,” Nasr says. “The producer knows what went into it [the product], [and] knows how it was put together. They’re the best ones to take it back and deal with it. Because of the threat of take back programs and other regulations, business people unprepared to address these issues are at high risk. If they don’t understand the impact of their product up front they will encounter big spending issues later on and if their competitor has addressed it up front in design, it becomes a survival issue.”
Perhaps the most outstanding and successful example of sustainable design anywhere in the world is found at our own, hometown, Xerox Corporation. Back in 1990, Xerox engineer John Elter, a pioneer in remanufacturing and resource recovery initiated the LAKES program which he describes as a “clean sheet” design, meaning it was a brand new product, without precedent. As Elter says, “...there was no cookbook for how to do this.”
What Elter did, following an inspiration after touring a small remanufacturing facility in Holland, was to propose a radically new design for a machine that would use remanufactured parts, be committed to resource recovery and a “zero to landfill” goal. As Elter explains, “What LAKES did, is it internalized the environment to a much greater extent than any other program ever had at Xerox. It became one of our design objectives; it wasn’t looked on as any kind of constraint as much as an objective.”
“After I started the project I made a commitment to my boss: Not only would we meet the government regulations, we would actually exceed them. Exceeding the requirements put a value on how important design for the environment was meant to be.”
Elter and his engineering team took advantage of the fact that Xerox’s business has a large customer base that leases their products and, at the end of the lease, or at the end-of-life, returns them. Early on, through market research, Xerox also found out that customers hated having old parts needing disposal left behind by repair technicians. Taking back quickly became part of Xerox’s marketing strategy. The logical next step was to refurbish and reuse those parts, especially copier and printer cartridges. Even today Xerox enjoys a 60 percent return rate on print cartridges, the highest in the industry, at a substantial cost savings to the company and to the consumer.
Anne Stocum, Xerox’s Environmental Manager for Market Access and Support says, “ Implementing sustainable design principles actually benefits Xerox three ways: they satisfy our customers, particularly those who are environmentally committed; they save the company several hundred million dollars annually, and they help us fulfill a long-standing corporate commitment to protecting the environment.”
When Elter’s team set out to radically alter the way Xerox built its products, by designing components that could be remanufactured, reused and recycled, they didn’t realize that it would take nearly ten years and half a billion dollars.* “When you talk about a single product, you’re talking about a one-off, Elter says, you design it, you build it, you manufacture it and then it has its end of life and it goes away. When you’re talking about a platform product, which is what we did, you’re talking about a family of products that can be produced off the platform for 10 years or more. It’s worth the investment because you don’t have to reinvent everything, you can reuse.”
Each year, Xerox takes back over one million parts to its remanufacturing plant in Webster alone. Each remanufactured part goes through a signature analysis, tested for noise, vibration, heat, energy efficiency etc. Any remanufactured part that does not perform identically to a newly manufactured part is rejected. Today, 80 percent of Xerox products are remanufactured; 90 percent of each product is recyclable.
Xerox, and most other business using sustainable design principles, claim the only downside to marketing remanufactured products is consumer reluctance-- they may think a ‘used’ product is not as good as a new one. But, as Xerox points out, their customers are buying the ability to make copies. So long as they stand behind them and their machines provide that service, it doesn’t matter whether the components of the machine are new or old.
Resource recovery is another aspect of sustainable design, one with which Michael Whyte, president of Rochester Computer Recycling and Recovery has plenty of experience. He ran three Boston area recycling centers for Waste Management for several years before returning to Rochester and setting up RCRR. Whyte’s company is riding the wave of interest in recycling and reusing information technology and electronic equipment.
“We’ve been working with RIT trying to develop a system that will help us better identify material value and reuse value. Because the best way to recycle is to reuse, I have the satisfaction that we designed this business to legitimately handle this equipment in an environmentally sound way This is a serious waste stream issue and RCRR is at the forefront of designing this system”, Whyte says.
His business has four revenue streams:
Fee-based environmental services whereby PCs and other electronic equipment from area businesses, schools and institutions, are disposed of according to DEC regulations, relieving clients of having to deal with the hassle and paperwork required by the DEC. (The DEC classifies old computers as hazardous waste. A typical PC monitor, for instance, contains 5-7 lbs. of lead.).
Wholesale market sales—of reusable parts to computer maintenance and service centers. Typical salvageable components include, hard drives, circuit boards, network cards and hubs and certain high-end monitors.
A retail store (at 395 Central Avenue)—where refurbished, internet ready, multi-media PC systems can be purchased for as little as $200, and
Materials marketing—bulk sale of scrap metals, plastic and glass.
Starting out in 1995, RCRR had two employees annually handling not quite 200,000 pounds of scraped computer equipment. Today, 10 employees handle 3 million pounds per year at their 20,000 sq. ft. facility in the old Post Office garage off Cumberland Street.
But, as the experience of Honeoye’s Stone Construction Equipment, Inc. shows, remanufacturing is not for everybody. The CEO of the $50 million a year, 100% employee owned company is Robert Fein. He says, “We’ve worked a lot with folks at RIT on several projects. We wanted to pursue remanufacturing not only of our products, but we wanted to take back our competitors products too. But we found the market conditions were such that it was very difficult to do.”
Stone Construction sells mixing equipment, concrete finishing gear, asphalt rollers, and other equipment priced from $3,000 to $100,000. It was on the low end that Stone Construction wanted to use sustainable design and remanufacturing techniques. But, his engineering staff, working with RIT, too low-cost to be made with remanufactured parts and still sell for a profit, deemed the $3,000 hand held compactor, called “The Stomper,”
Fien says, “I think there is a role for remanufacturing in our business…and on bigger equipment we might save between 20 and 60 percent. Market conditions will change and I think the competitive situation will make remanufacturing more attractive to us as we go down the road.”
Despite Fein’s need, because of market conditions, to move cautiously to sustainable design practices, he is, according to Dr. Nasr, moving in the right direction.
“We see a lot more consumers more inclined to buy green products as long as the price difference is not huge, when a product is only a slightly higher cost wise then the consumer is known to favor the green product,” Nasr says, “I think the awareness level that is in Europe is just wonderful for green products and people demand it. It is growing. Green marketing is a big advantage.”
Whether businesses implement sustainable design practices now or later is, according to Dr. Nasr, a matter of judgment. “I think being proactive and not just meeting minimum requirements is important. What we see some leaders of industry do today is that they are looking ahead and trying to go beyond meeting the minimum requirements. It’s going to be a safeguard for them, they won’t be surprised by any regulations that limits the use of this material or that material or any form of take back programs that, if implemented, would be a challenge for companies. But being ready for that would make it much easier for them to deal with the issues. “
A concluding homily comes from of one of the gurus of Xerox’s LAKES project, Peter M. Senge, a Senior Lecturer at the Massachusetts Institute of Technology.
“I believe the Industrial Age has been, and continues to be, an age of harvesting natural capital and social capital to produce financial and productive capital. In so doing, we are destroying cultural as well as biological diversity. We are achieving ever-higher levels of material standards of living, at the expense of quality in living. In our headlong lust for financial wealth, we are warming the planet, destroying forests and increasing social inequity and unhappiness. This process cannot continue indefinitely. We wouldn’t expect engineers to build bridges that defy the law of gravity. Why do we expect people to build enterprises that defy the law of zero waste or the principles of human happiness?”
As John Elter says, it’s more than just getting a copier out; it’s more than promotions, more than money. It has something to do with life.”
The Document Center 265 was unveiled in late 1997 by CEO Paul Vallaire, in New York City. At the time, he called the new machines the “flagship of Xerox’s digital transition.” Today, the 265 has been superceded by the Document Center 340, recognized by the EPA for its sustainable design, energy efficiency, returnable and remanufacturable toner cartridges, organic photoreceptor free of toxic heavy metals and the capacity to set two-sided copying as the default—a feature that saves paper.
When asked what advice Xerox had for small businesses struggling with efforts to adopt and finance sustainable design and Design for the Environment principles, Xerox’s Anne Stocum said,
Plan ahead; don’t sacrifice quality or performance. We are pleased to share what we have learned. In addition to sustainable manufacturing, we believe that businesses have other opportunities for reducing their environmental impact through their waste management practices. On our Website (www.xerox.com/environment.html) we posted a 143-page book, complete with worksheets, that gives businesses a blueprint for developing their own recycling program. It also offers some general Design for the Environment principles…It’s called “A Business Guide to Waste Reduction and Recycling,” and it can be downloaded for free.
Other useful Websites include: