Rochester Business Journal
02/20/01
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.
-30-
Sidebar:
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:
www.reman.rit.edu
www.epa.gov/dfe
www.epa.gov/epr
www.epa.gov/wastewise/wastepre.htm