In order to survive – let alone thrive – in the 21st century, management must proactively cope with ceaseless waves of change. One way to proactively approach the future (which doesn’t yet exist) is to examine existing conditions that are likely to drive change as the 21st century unfolds. There are a daunting number of current realities that, jointly or severally, are likely to drive change. For convenience of organization, this blog groups change drivers as:
Demographics & Trends
This series of posts examines a few especially significant change drivers in each of the four categories. This post focuses on Technology and two of the change drivers it generates:
Technology and Manufacturing
Technical innovations, evolutionary as well as revolutionary, can drive change in every aspect of manufacturing; including materials choices, product design techniques, transportation options, process technology, staffing requirements, back office capabilities, even marketing and financing options. Technological innovations can be disrupt entire industries. Technical innovation also often provides the single best response to challenges to your firm’s competitive posture.
Sunshine and Negawatts
As this post was being written, Peabody Energy Corporation filed for bankruptcy. Peabody, America’s largest coal producer, joins a growing parade of coal producer bankruptcies. “Fracking”, an innovative Technical development, led to the availability of large amounts of low cost natural gas here in the United States. Climate change, a Sustainability – induced concern, has led to an increasing stream of expensive regulatory requirements that coal fired electrical power plants must meet. A substantial decrease in China’s economic growth rate, hence China’s coal requirements (a Globalization – induced phenomenon), triggered a sharp decrease in global coal prices.
So, changes associated with Technology, Sustainability and Globalization have combined to disrupt the coal production industry. However, coal still provides about a third of America’s electricity. The remainder of America’s coal fired power plants face an accelerated, but hopefully orderly retirement schedule. Natural gas fired plants will likely be the first choice for replacement electrical generation capacity in the near term. But “fracking”, hence natural gas, has its own Sustainability concerns.
Almost all of America’s vast fleet of electric power generating facilities will be replaced over the next several decades. Natural gas fired facilities will likely be first choice, at least initially, for large scale facilities. Natural gas, however, isn’t the only real, practical possibility. There are other increasingly viable options, especially photovoltaic solar energy and “negawatts”.
Photovoltaic (PV) solar energy means arrays of solar panels on rooftops or elsewhere. PV solar installations can be of sizes comparable in electricity generation capacity with utility – scale power plants, or as small as a desk calculator. PV solar needs no fuel, except sunshine. It is also passive, requiring little maintenance human attention. The cost build and operate a new utility scale PV solar power generation facility is already close to that of a coal or natural gas fired facility, and dropping fast.
On the other hand, PV solar generation capacity is only available when the sun is shining. From the point of view of an electric power utility, demand for electric power varies continually, 24/7. The utility needs to react to changes in demand as they occur. The utility needs access to sufficient immediately available generation capacity to meet demand, regardless of the weather or the time of day.
The answer to PV solar’s capacity availability issue lies in energy storage technology. Storage in innovative batteries is already being used by utilities and by end users to balance the sunshine to power demand. Tesla, the electric car manufacturer, was amazed at the demand for their new line of batteries introduced last year. Speaking of Tesla, if electric cars do become as ubiquitous as pre-sales of Tesla’s new Model 3 suggests, it may well be practical to create of a “cloud” of electric power storage capacity in interconnected automobile batteries, similar to the “cloud” of digital data storage that exists in interconnected file servers.
Batteries aren’t the only possibility. Electric power can be stored for later use by pumping water uphill while the sun shines and recovering that energy by releasing the water through turbines when power demand requires. Compressed air storage devices work similarly. The list of possibilities goes on.
“Negawatts” is a tongue-in-cheek term referring to electric power not supplied because the need for that power has been eliminated. Quick example: a 60 watt incandescent light bulb can be replaced by an LED bulb that draws only 11 watts. Bingo – 60 minus 11 equals 49 “negawatts” of electric energy that doesn’t need to be generated.
There are a lot of “negawatt” opportunities, from high tech innovations like LED light bulbs, to high efficiency motors and compressors, to better insulation and building design. As it turns out, the cost of “negawatts” often compares favorably to the cost of building and operating the electric generation capacity it doesn’t need. As you can from the chart labeled “Figure 19“, the Energy Information Agency (a U.S. government agency) projects that energy consumed to produce a (constant) dollar of GDP declines by half from 2013 to 2040! That’s the power of “negawatts”!
This post mentions only a few of many new technologies now emerging in the manufacturing world. There are many more. Because of the scale of these matters, the resulting conditions as they specifically affect your business may prove to be surprising. In the 21st century, it is absolutely necessary for even small businesses to follow and understand these zoomed-out, big picture change drivers, so that proactive steps can be taken.
Thoughtful comments and experience reports are always appreciated.
… Chuck Harrington
P.S: Contact me when your organization is serious about surviving and thriving in the 21st century … CH
This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.
Images: Globe and Chart – Dreamstime.com; “Figure 19” – Annual Energy Outlook 2015