Post-Paris Pragmatism

The Paris Pact

In December 2015, an international agreement was reached whereby almost 200 nations, along with other political and commercial entities, agreed to significantly reduce annual greenhouse gases (principally carbon dioxide). Many also agreed to participate in a US$ 100 billion U.N. administered fund, intended to help less developed nations reduce emissions and abate damages due to climate change*. The sizes of each entity’s commitments vary widely.

President Obama’s commitment was for the U.S. to reduce greenhouse gas emissions to 25% – 28% below 2006 levels (the highest ever) by 2025, and to make substantial contributions to the U.N. administered fund. Neither the agreement nor President Obama’s commitments were submitted for ratification by the U.S. Senate; hence lack the obligatory nature of a formal international treaty.

Earlier this month (June 2017), President Trump announced that the U.S. will withdraw from the Paris agreement, apparently after substantial discussions with many people. The President’s decision was greeted with both applause and cat-calls, as one might expect. International reaction was almost entirely negative, since withdraw of U.S. support greatly weakens the viability of the Paris agreement.

The properness of the President’s decision has been widely discussed in the media. No need to add to that here. Rather, this post attempts to assess the pragmatic realities going forward, especially as those realities affect smaller manufacturers.

Going Forward

Regarding Emissions Reduction:

>> I think that achieving President Obama’s commitment for the U.S. to reduce emissions by 25% by 2025 is going to happen, Paris or no Paris. The advent of “fracking”, advances in renewable energy technologies and improvements in energy utilization efficiency all have too much momentum. The economics of power generation are rapidly favoring replacing the old with the new.

As you can see from this graph labeled “Energy-related carbon dioxide emissions”, U.S. emissions peaked near 6 billion annual metric tons about 2006. A 25% reduction by would mean emissions near 4.5 billion tons by 2025. The graph projects emissions around 4.9 – 5.3 billion tons for 2025, considering eight different cases. However, these extrapolations specifically exclude technical advances not already in place (or required to be in place by regulation or legislation) at the end of 2016.

CO@ Emissions Projections

Global CO2 EmissionsNevertheless, even if the U.S. and everybody else achieve their emissions reductions commitments in full, the concentration of greenhouse gases in the global atmosphere will continue to increase, not decline. This occurs because increasing populations and increasing per-capita incomes in the developing world will generate additional emissions well in excess of emissions declines in the economically developed nations.

The graph labeled “Figure 9-1”, where “OECD” refers to economically developed countries, illustrates this.

Projected Global Emissions>> President Trump has reversed the EPA’s Clean Power Plan, meaning that some coal fired electric generation plants will stay on stream longer than they would have otherwise. However, “fracking” (cheap natural gas) and rapid advances in renewable energy are making coal fired plants increasingly less economically attractive here in the U.S. However, “fracking” and cheap natural gas are not generally available worldwide, so, in many places globally, coal will remain a low cost choice for years to come. The graph labeled “ES-8. World energy related carbon dioxide emissions by fuel” illustrates this. Coal is dying, and has been dying since around 1950. But coal isn’t dead just yet.

>> You may recall that, prior to the election last November, then-candidate Trump chastised Ford Motor Company about Ford’s plans to move small car production (and jobs) from the U.S. to Mexico. Ford reversed their decision. Then, early this year, Ford’s then-CEO Mark Fields asked President-elect Trump to reconsider the EPA’s Corporate Average Fuel Economy (“CAFE”) program that mandates a series of increases in miles per gallon fuel economy for automobiles. Ford’s problem is that small cars are expensive to produce in the U.S. – and Ford needs to produce and sell a lot of them in order to sell a lot of large (and profitable) SUVs (the “corporate average” part of “CAFE”). To date, there has been no change in the CAFE requirements, nor do I, speaking personally, expect any.

>> It was the Obama administration’s policy to actively support research and development for emissions reduction technology. The Trump administration is expected to be less aggressive in doing so. Government supported R&D is, in my view, best applied to fundamental research and I expect that to be where most government R&D dollars will spent in the next several years. So, most practical, year over year advances in technology will continue to come from the private sector. 

The U.S. contribution to the U.N. climate change relief fund.

>> Take another look at the graph labeled “Figure 9-1”. Total global emissions are equal to the sum of the two lines. For 2012, for example, the sum of the two lines is about 13 + 19 = 32 billion metric tons. In order to reduce the concentration of greenhouse gases in the atmosphere, the sum of the two lines has to decrease year after year, not increase. Even if the U.S could somehow eliminate its entire 5 billion tons of emissions, that would not, by itself, be sufficient to stop the sum of those two lines from increasing.

>> Quite obviously, any viable solution lies requires substantial mitigation of expected future increases in emissions everywhere in the world. That is the purpose of the fund. However, there seems to be very little public discussion of how the fund will actually work: for example: what types of projects will be funded, on what basis the money will be dispersed, and how transparency of the disposition of the money will be assured.

The U.S. withdraw from the Paris agreements have likely confounded expectations as to who pays and how much. It is not clear how the less economically developed nations are actually going to reduce emissions, rather than continue to increase them. Perhaps the international private sector will take the lead in doing so.

So What?

The point here for pragmatists is that, Paris pact or no Paris pact, efforts to reduce greenhouse gas emissions are going to continue, regardless of individual views on the reality of Climate Change. The Trump administration is expected to be considerably less aggressive than its predecessor in forcing emissions reductions. Still, there is substantial pressure from governments abroad, from the U.S. private sector and from other interested groups to continue to push for reductions.

As usual in business, dangers and opportunities – of which there will be many, in operations and in marketing — are two sides of the same coin. Operate your business.

Chuck & Joan in ParisThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

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.


* “Climate Change”, as that term is used in the Paris agreements and almost everywhere else, refers to a set of negative events (changes in the global climate) caused by increases in the mean temperature of the Earth’s surface (“Global Warming”). The Paris pacts are predicated on efforts to restrain temperature increase to two degrees Celsius (2o C) compared to temperatures before the beginning of the Industrial Revolution, about 250 years ago. Increases in atmospheric greenhouse gas concentration are regarded as causing Global Warming.

Graphs are from the 2016 International Energy Outlook (IEO 2016) and the 2017 Annual Energy Outlook. Both are published by the U.S. Department of Energy and are available free on line at www.eia.gov

 

Another Look at Continuous Improvement

Dreamstime - Crystal BallEverybody knows that the reality of globalized manufacturing is a continuous spiral of faster, better, cheaper. Regardless of how good your processes, practices and products are, it is essential to keep improving. On Continuous Improvement, a post from November 2015, takes a pragmatic look at continuous improvement, with some thoughts on how that might actually be accomplished. Another look at On Continuous Improvement is always timely. — C.H.


On Continuous Improvement (from November 2015)

Remaining Competitive

Everybody understands the need to be truly competitive in this globalized economy. What’s more, since everybody knows, everybody is trying to improve – so the bar is continually being raised. The 5th of Dr. Edwards Deming’s famous 14 points is characteristically blunt: [1]

“Improve constantly and forever the system of production and service.”

In practice, there are two ongoing modes of improvement. The first mode consists of numerous incremental improvements to existing products, processes and practices. The second mode involves fewer, larger improvements such as new products, new equipment, or R&D advancements. This essay focuses on the first ongoing mode of improvements.

What to Improve Continuously?

Rereading Deming’s 5th point clearly answers the “what to improve” question: “the system of production and service”. The “system of production and service” means the entire assemblage of manufacturing and processes, procedures and practices, along with their interactions and inter-dependencies, through with your organization functions. It is necessary to appreciate that Deming’s use of the term “system” is not an accident.  A “system”, as Deming intends that term, is assembled in order to serve a specific purpose (Deming prefers the term “aim”, rather than “purpose”).

Deming says that the aim (purpose) of a business is to “stay in business, create more and more jobs”. To me, that means a sustainable business that can continue to grow indefinitely.

To be more specific, it is necessary to constantly improve our products, our manufacturing processes, procedures and practices; as well as our business processes, practices and procedures. Further, it is necessary to do so in a manner that advances the overall aim of the system. Improvement in one component of the system at the expense of another component is counterproductive. Usually, most improvement efforts focus on diminishing variation and waste.

How to Improve Continuously?

Deming tells us that wanting to improve is not sufficient. It is necessary to have a method for doing so. Fortunately, there are several methods that are widely used by manufacturers, each with many books, publications, courses and consultants ready to assist. Generally speaking, my personal preferences are Lean Manufacturing (especially for reducing wastes), Shewhart Cycles with control charts (for reducing variation) and Theory of Constraints (for prioritizing improvement efforts).

Lean Manufacturing

Competitiveness starts with the systematic elimination of waste in all of its many forms. “Waste in all of its many forms” includes losses due to hazardous working conditions, unsafe work practices, emissions to the environment, inefficient use of energy, and on and on. Lean Manufacturing provides a proven, readily available means to do that.

Lean Mfg Text Box

Just about everybody in manufacturing has heard about Lean Manufacturing, or about the stunning success of the Toyota manufacturing system, which serves as Lean’s global model. The fact is that Lean Manufacturing is good sense, systematically applied. Lean doesn’t require computers, robots or big capital outlays. It does require access to the know-how, a willingness to apply that know-how, and a person experienced with Lean implementations to lead the effort.

Shewhart Cycles

Dr. Deming was a statistician. Early in his career, Deming met Walter Shewhart, a pioneer in statistical quality management. He learned of Shewhart’s work with control charts and PDCA improvement cycles. Control charts provide a ready method to plot process outputs and, importantly, to distinguish variation due to the process itself (common causes) from variation due to other causes (special causes).

Variation can be reduced by identifying and eliminating special causes. Shewhart Cycles, more commonly called PDCA Cycles, provide a way to do that. Shewhart Cycles consist of four steps:

Deming PDCA CycleStep 1: The first step is to study a process, to decide what change might improve it. Organize an appropriate team. Do not proceed without a plan.

Step 2: Carry out the tests or make the change, preferably on a small scale.

Step 3: Observe the effects.

Step 4: What did we learn? Repeat the test if necessary. Look for side effects.

Theory of Constraints (TOC) [2]

TOC regards a manufacturing facility as a system consisting of interacting and interdependent processes. Those processes are not all equally important to increasing throughput. A few, usually one, process limits — constrains — the system. TOC focuses on identifying the limiting process and addressing that limitation. “Addressing that limitation” means increasing the capacity of that process, such that it no longer bottlenecks the facility. In addition, TOC uses a buffer before the constrained resource and a raw materials release system to prevent overproduction at non-constrained resources.

Once a constraint is addressed and throughput increases, another constraint will be revealed — otherwise, throughput would be unbounded. So, TOC is an ongoing process of identifying and addressing constraints. As production capacity increases, the constraint to increasing revenues eventually moves from the factory to the market or to some business practice or policy.

Concisely, Theory of Constraints provides a convenient way to prioritize opportunities for improvement so as to improve the aim of the system.

Chuck - Red Rocks3Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

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.

Image: PDCA Cycle ID 46845201 © Raducomes | Dreamstime.com


[1] Understanding continuous improvement starts with Dr. Deming. For those not familiar with Deming’s work, I suggest Mary Walton’s The Deming Management Method, Perigee Books (1986)

[2] To learn more about the Theory of Constraints, see Appreciating the Theory of Constraints, this blog, http://jerasustainabledevelopment.com/2015/06/27/appreciating-the-theory-of-constraints/

Energy Utilization Efficiency and LEDs

Energy Utilization Efficiency

AEO 2015 Figure 19The graph labeled “Figure 19” [1] projects energy use in the U.S. per person (blue line) and per dollar of GDP (green line). The right hand portion of the graph (2013 – 2040) projects that annual energy consumption per American will remain rather constant, although well below consumption in 2005. Annual energy consumption per dollar of GDP, on the other hand, is projected to continue to decline. If this projection holds, only half as many watts of energy will be required to produce a constant dollar’s worth of GDP in 2040, as compared to 2005. Said another way, American energy utilization efficiency is projected to double over the period 2005 – 2040!

This improvement is a global phenomenon. The International Energy Agency (IEA) states its importance this way: [2]

“Energy efficiency in IEA member countries improved, on the average, by 14% between 2000 and 2015. This generated energy savings of 450 million metric tons of oil in 2015, enough to power Japan for a full year. These savings also reduced total energy expenditure by 540 billion United States Dollars in 2015, mostly in buildings and industry.”

$540 billion in efficiency savings sounds pretty good to me. But that’s for the whole world. Here is a more up close and personal example of what energy utilization efficiency can mean:

Lighting Industry Disruption

I have recessed lighting in the kitchen of my home. There are three ~ 5” diameter (BR-30) recessed fixtures and ten ~ 2.5” diameter (GU-10) recessed fixtures. I replaced the three 75 watt halogen bulbs from the larger fixtures and the ten 50 watt halogen bulbs from the smaller fixtures with size – equivalent LED bulbs. The larger LED bulbs each draw 9 watts, while the smaller bulbs each draw 5 watts. Right: a total of 77 watts of power draw replaces a total of 775 watts – nearly a 10 to 1 improvement.

LED Lighting DisplayActually, there is a lot more to LEDs beyond reducing your electric bill, welcome as that is. The LED value proposition offers at least these features:

  • Bulb prices are now competitive with older technology. [3]
  • Bulb service life expectancy is several times longer than older technology.
  • Significantly lower power requirements.
  • Much less heat generation.
  • Bulbs are readily available in many form factors.
  • Available in several color spectra.
  • Available with an increasing number of intelligent control alternatives – bulbs and fixtures.

The case for LEDs is so strong that Greentech Media, [4] referencing a report from Goldman Sachs, says:

“The financial institution calls LEDs one of the fastest technology shifts in human history. While wind and solar are challenging the traditional electric generation sector, they have not upended it yet the way LEDs have overtaken the lighting industry. By 2020, LEDs will make up 69% of (lighting) sales and close to 100% by 2025, up from nearly nothing in 2010.”

Best of all, LEDs are an emerging technology, which will continue to evolve. Expect continuing improvements in energy utilization efficiency (it can, and will, get considerably better than the 10 to 1 improvement in my kitchen lighting). Even more importantly, expect completely new ideas as LEDs evolve from replacements in existing sizes and forms to become the creative media of the lighting industry.

Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

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.


[1] “Figure 19” is from the 2015 Annual Energy Outlook, published by the Energy Information Agency, a service of the U.S. Government.  www.eia.gov

[2] Energy Efficiency Market Report 2016, International Energy Agency, page13. https://www.iea.org/eemr16/files/medium-term-energy-efficiency-2016_WEB.PDF

[3] As the snapshot of an LED retail display at my local Home Depot indicates, common residential replacement bulbs are readily available for a few dollars.

[4] See www.greentechmedia.com/articles/read/led-not-solar-have-transformed-their-industry , which refers to a Goldman Sachs report at www.goldmansachs.com/our-thinking/new-energy-landscape/future-of-clean-energy/index.html

On Trucks, Fuels and Cost

Transport and Your Value Chain

Value Chain Diagram

A manufacturer’s value chain usually begins in the natural world, where ultimate raw materials like iron ore, pulp wood or petroleum originate. The value chain then proceeds through some number of processing steps (often with branching steps and recycling loops) all the way through the final disposition of the finished product at the end of its useful life. Between each processing step, there is a transfer — usually a physical transport – of the work in process or finished product.

Heavy TruckThis post examines transfers between facilities, especially transfers using highway trucking. It is useful — and sobering – to construct a rough diagram of your Value Chain, starting with the origin of your ultimate raw materials and passing through the many steps through ultimate disposition. The distances involved can be mind boggling, and even a rough guess at the rolled costs of all of the transports involved even more so. Those costs are directly or indirectly reflected in your costs, and the ultimate customer’s cost. Clearly, the costs of trucking matter.

Transport Costs – Fuel Consumption and CO2 Emissions

Transportation represents about 27% of America’s primary energy consumption. The overwhelming majority of that energy comes from petroleum. Access to petroleum (crude oil) has been a major constraint to the American economy and a key determinant of American foreign policy for over four decades. Carbon dioxide (CO2) emissions to the atmosphere from the combustion of fuels derived from petroleum are believed to be a primary driver of climate change.

CO2 Emissions - Transportation

The chart labeled “Carbon Dioxide: Transportation” projects CO2 emissions from transportation sources through 2040. To good approximation, CO2 emissions can be taken to be proportional to petroleum–based fuels consumed.

The blue line indicates that light-duty vehicles (automobiles and small trucks) are the largest source of emissions (hence petroleum consumed). As you can see, the blue line crests around 2018, then declines rather smoothly. This projected decline is primarily attributed to improvements in vehicle fuel utilization efficiency.

The green line represents emissions (hence fuel consumption) by freight trucks – the vehicles primarily used in schlepping your raw materials and finished goods across your Value Chain. Unlike the blue line, the green line projects rather uniform annual increases into the future. This increase is largely attributed to increasing freight volumes.

Accordingly, for 2016, emissions from light vehicles are about 2½ times those from freight trucks. By 2040, that ratio drops to 1½ times. So, the relative importance of emissions (and petroleum consumption) by freight trucks increases rapidly.

Then What?

The projections behind the chart just discussed represent the U.S. Energy Information Agency’s “Reference Case”. The “Reference Case” is based on demographic, economic and technical projections. These projections assume timely compliance with applicable laws and regulations, such as the CAFE fuel consumption requirements for light vehicles. On the other hand, the projections do not include compliance with laws and regulations not yet finalized by the time the projections were made. Nor do the projections anticipate future technical developments, apart from those incorporated into existing laws or regulations.

So, there is a lot of good news here for manufacturers:

>> The U.S. government is projecting sustained increases in freight shipment volumes in the years to 2040, entailing increasing manufacturing activity.

>> The Government has recently finalized a second phase of its CAFE regulations on fuel consumption efficiency that will reduce fuel consumption in freight trucks by about 45% by 2027, compared to 2010 figures.

>> Possible future technical innovations, such as the use of natural gas as truck fuel, hydrogen fuel cell powered vehicles or electric (or hybrid) vehicles may prove to be practical.

All in all, manufacturers may look forward to increasing freight volumes and falling per ton-mile fuel costs (with corresponding CO2 emissions reductions) in the coming years.


Chuck & Joan in ParisThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

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.

Truck image licensed through www.dreamstime.com

Energy Notes from the EIA

The Energy Information Administration (EIA)

The EIA, part of the U.S. Government, compiles and projects statistical data on energy production and consumption. Among the EIA’s many regular publications, the Annual Energy Outlook (AEO) and the International Energy Outlook (IEO) are probably the most comprehensive. The 2016 editions of both publications have recently become available (for free). This post draws on both.

Both publications project data out to 2040. The basic set of projections is labeled the “reference case”. The reference case is a “business as usual” case that projects current trends in view of government demographic projections (like population projections), financial projections (like GDP and inflation rates) and laws / regulations already in place. The reference case does not anticipate technical break-throughs, other than those necessary to meet established laws or regulations. For example, the reference case projects that new automobiles will meet the fuel consumption levels required by the existing C.A.F.E. regulations in the years to 2025, never mind how, technically, that is accomplished.

Fueling Our Past – and Future

Energy Consumption in the US

The graph labeled “Energy Consumption in the United States (1776-2040)” is from the home page of the EIA’s website (www.eia.gov).  Comments:

>> Energy consumption is measured in quadrillion BTUs (“Quads”). One quad is a heck of a lot of energy. As the graph indicates, all of the hydroelectric dams in the U.S., taken together, produce only about 3 Quads annually. Over recent years, the total energy consumption in the U.S. has been around 100 Quads per year.

>> As you can see, the AEO 2016 reference case projects that, over the next 25 years, about 12 Quads of energy from coal will be replaced with an almost equal amount of energy from natural gas. This would cut the use of coal as fuel in this country by about half between now and 2040.

>> Energy production from petroleum is projected to remain almost constant through 2040.

>> Renewable energy (“other renewables”), especially solar energy, is projected to increase rapidly, to almost 10 Quads by 2040. Still, 10 Quads are projected to be less than 10% of the U.S. total energy consumption in 2040.

Energy Consumption Trends

The green line on the graph labeled “Total Energy” projects that total energy consumption in the U.S. will increase slowly between now and 2040. Total energy production (blue line), however, is projected to increase somewhat faster. That means that the U.S. will swing from being a net importer of energy to becoming a net exporter of energy about ten years from now. This, if it happens, will be great news.

US Energy Balance

In my view, the America’s chronic international trade deficit in petroleum has been a huge burden on the U.S. economy. The improvement in U.S. petroleum production rates over the last few years has dramatically lowered world petroleum prices. Those lower prices have resulted in many fewer U.S. dollars going abroad to pay for fuel, and in a nice chunk of change for everybody with every tank full. Moreover, I regard these improvements as the major causal factor in the recovery (such as it is) in the U.S. economy over the last two years.

But wait, there’s more. America’s international relations and foreign policies over the last several decades have been excessively influenced by the need to assure safe access to imported energy, especially petroleum.

So, better global and domestic economics, plus considerably more latitude in foreign relations (including military affairs) – would be great news indeed for America!

Carbon Dioxide Emissions

Carbon Dioxide Emissions Projections

Concerns about global warming / climate change / carbon dioxide (CO2) emissions have been at the forefront of Sustainability issues in recent years. This graph uses figures from the IEO to project reference case annual carbon dioxide emissions through 2040. As you can see, carbon dioxide emissions are projected to rise over the coming years.

 This is in sharp contradiction to almost everything we hear from the media and elsewhere. To be clear: given the “business as usual” conditions upon which the reference case is constructed, carbon dioxide emissions are not going to decline in the coming years. Net reductions in CO2 emissions will require significant changes in policies and / or technologies, in the U.S. and in the rest of the world.


Chuck at the Pacific

 

 

Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

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.

 

Whither Sustainability?

Sustainability

Sustainability, as that term applies to manufacturing, owes its origin to Limits to Growth, [1] which was published in 1972. Limits to Growth describes a systems 3P Graphicanalysis of trends in the earth’s population, industrialization, pollution, food production and resource depletion, with projections into the future. In essence, Limits to Growth emphasized that humanity’s increasing demands for economic development are overwhelming the natural world, and that industry is the primary agent for doing so. So begins the quest for sustainable economic growth and for the technology and practices that enables economic development without destroying the natural world upon which all of us rely.

Mission Zero

In 1994, some customers were asking Interface Corporation, a manufacturer of carpet tiles, about Interface’s vision regarding the environment. Ray Anderson, founder and CEO of Interface Corporation, recognized that the usual response – that Interface was in full compliance with all applicable environmental laws – just wasn’t good enough. His response was to redirect his billion dollar company toward a goal of zero environmental impact.

“I wanted Interface, a company so oil intensive that you could think of it as an extension of the petrochemical industry, to be the first enterprise in history to be truly sustainable – to shut down its smokestacks, close off its effluent pipes, to do no harm to the environment, and to take nothing from the earth not easily renewed by the earth.” [2]

Moreover, Ray Anderson proposed to accomplish this by the year 2020, and to make a profit while doing so. Consequently, Interface established a system of yearly milestone objectives toward Anderson’s vision. Today, 20 – odd years later, Interface remains roughly on course.

Climate Take Back

However, the recent global financial crisis severely impacted the construction industry, Interface’s primary market. In 2011, Ray Anderson passed away. As a result of hard economic times and the loss of their visionary leader and founder, Interface lost some of their some of its edge. The direction continued, but the audaciousness faded.

Now, Interface is renewing its initiative by redefining what Sustainability means in industry. Interface’s new mission — Climate Take Back – builds on and goes beyond Mission Zero’s “do no harm” initiatives: Climate Take Back is proactive. Climate Take Back includes four bold commitments:

>> To bring carbon home and reverse climate change – That is, to remove carbon compounds already present in the atmosphere.

>> To create supply chains that benefit all life – That is, to insist on proactivity from entire supply chains.

>> To make factories that are like forests – That is, to create manufacturing processes and entire factories that mimic nature.

>> To transform dispersed materials into products and goodness – That is, to recover and reuse widely dispersed refuse materials on a global scale.

On 6 June 2016, Joel Makower of GreenBiz published an insightful article on Interface’s new initiatives. It is well worth reading for anyone interested in both manufacturing and sustainability, and well worth careful study for those who want to make a difference.

Here is the link:

https://www.greenbiz.com/article/inside-interfaces-bold-new-mission-achieve-climate-take-back

For Smaller Manufacturers

Interface has long been a champion of, and roll model for, Sustainability in manufacturing. The switch from “do no harm” to “make the world a better place” significantly raises the bar. Beyond that, Interface’s actions and corresponding results dramatically demonstrate the power of visionary leadership.

Chuck - Red RocksThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

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.


[1] Donella (“Dana”) Meadows, et al, Limits to Growth, Signet Books (1972)

[2] To learn more about Ray Anderson and Interface, Ray’s book is a good read:

Ray C. Anderson, Confessions of a Radical Industrialist, St. Martins Press (2009)

Solar Energy’s Solstice Problem

The Global Solar Power Explosion

By any count, solar electric generation is a huge success. Solar cells, like the ones on the roof of my house, are being installed in accelerating numbers by residences, public buildings, commercial facilities, industries and electric power utilities around the world. The cost of solar installations continues to decline, while environmental concerns affect the operational viability of existing fossil fueled electricity generation.

AEO 2016 ER Solar Power GenerationThe graph to the right, from the U.S. Department of Energy, [1] projects that solar generation capacity will increase by about ten times from 2015 to 2040, without considering any new technology, laws, regulations or other factors that may well accelerate the rate of solar installation further over the coming years. Solar power generation capacity in countries other than the U.S. – including less economically developed countries – is likewise increasing.

Closer to Home

My Home Viewed from Space

My home, as viewed from Space

My home is in the high desert of central Arizona, about as far north as Los Angeles or Atlanta. Climate here is sunny and dry almost year around – almost optimal for solar power. Here is a Google Earth picture of my house, as seen by a satellite. The solar panels, which you can see in the picture, have been in service for three years now.  My solar power system has on-line data collection, so I now have some pretty reliable performance numbers.

The graph below, from my actual experience, demonstrates solar’s “solstice problem”. The blue curve indicates the total electric power consumed at my house, by month. The red curve indicates the amount of solar electric power generated at my house, by month. The green curve indicates the net amount of electricity I purchase from my local electric power utility, again by month.

Home Solar Power Graph

My solar power system is designed to produce 70% of my electric requirements, taken over a full year (which it does). However, as the blue curve indicates, my total power consumption varies widely from month to month, with strong peaks in mid-summer (air conditioning) and mid-winter (electric heating).

However, my solar power generation (red curve) also varies strongly from month to month, with high peaks during the long days of mid-summer and low peaks during the short days of mid-winter.  As you can see, my solar system produces about half as much power in mid-winter months as it does in mid-summer months, near the solstices.

The Solstice Problem

To appreciate the impact of the solstice problem, it is useful to zoom out from considering a single solar installation (like my house) to thinking from the perspective of a power utility or the perspective of the power grids. Solar power is going to continue to grow as a fraction of total electric generating capacity. But, solar power facilities only generate electricity while the sun shines. At the same time, residential customers like me and you, as well as commercial and industrial customers, expect all of the power they need to be available whenever they need it.

Obviously, the sun doesn’t shine at night. But nights only last a few hours. Batteries and other technologies are available to manage the overnight problem. The solstice problem – generating capacity varies dramatically over weeks and months from solstice to solstice – is another matter. The solstice problem is just that – a problem that needs to be solved for solar energy to become truly practical on a massive scale. There are lots of possible avenues toward a solution, or sets of solutions for different geographic areas. These avenues might include demand management and innovative large scale energy storage technologies. Or, there may be approaches that nobody has thought of yet.

For Smaller Manufacturers

The electric power industry is in a state of transition. Manufacturers, especially those with substantial electric power requirements, need to remain aware of your utility’s situation and your own options. You might consider producing some or all of your own power (solar, of course). In any case, develop and maintain an on-going rapport with your utility’s customer service engineers.

Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

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.


[1] This graph is from Energy Information Administration’s Annual Energy Outlook 2016, Early Edition, published 17 May 2016. Available for free download at: http://www.eia.gov/forecasts/aeo/er/index.cfm

 

Toward Proactive Management – Technology

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:

Globalization

Sustainability

Technology

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

Dreamstime - Crystal BallTechnical 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”.

PV Solar

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”

“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.

AEO 2015 Fig 19There 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.

Chuck at ReneThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

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

Toward Proactive Management – Sustainability

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:

Globalization

Sustainability

Technology

Demographics & Trends

This series of posts examines a few especially significant change drivers in each of the four categories. This post focuses on Sustainability and two of the change drivers it generates:

Sustainability and Manufacturing

3P GraphicIt is not always clear what “Sustainability” really means in a given context. For manufacturing managers, “Sustainability” refers to a greatly expanded scope of concern – a scope of concern that encompasses an entire value chain. As the diagram to the right indicates, manufacturing lies between the natural world, where your raw materials are ultimately sourced, and humanity (which includes your employees, your customers and your customers’ customers). Here in the 21st century, it is necessary to be constantly aware of your firm’s interactions with the natural world and with humanity (with all of humanity’s foibles) in order to remain “sustainable” – meaning “capable of continuing to exist”. Manufacturing’s scope of concern certainly does not start and end at the loading dock.


Global Warming > Climate Change

Climate Change is currently Sustainability’s primary issue. In essence, the assertion is that substantial and dangerous changes to the earth’s climate are in the process of taking place, due to a warming trend in the Earth’s atmosphere (i.e. Global Warming). The warming trend is mainly due to increasing carbon dioxide concentration in the Earth’s atmosphere, mainly due to combustion of carbon based fuels.

That certain common atmospheric gases, including carbon dioxide, can have a “greenhouse” effect that can raise atmospheric temperature is well established fact. That the carbon dioxide concentration in the Earth’s atmosphere has increased in recent times is a matter of recorded measurement. And humanity does burn one heck of a lot of carbon based fuel every year.

However, the Earth’s atmosphere is a large and complex system. Complex systems are prone to respond to changes in inputs or changes in conditions in surprising non-linear ways. Adding humanity’s participation adds another major element of indeterminacy. Consequently, predicting future responses of a large, complex system to changes such as an increase in greenhouse gas concentration over time measured in decades is challenging at best, if not a fool’s errand.

Repeated polls by reputable organizations like the Pew Charitable Trusts and the Gallup organization suggest that only about 50% of Americans believe that human caused climate change actually exists. The latest available Gallup poll, for example, holds that while 69% of Americans polled agreed that 2015 was an abnormally warm year, only 49% believed the cause of that warmth to be human-generated. [1]

The Pragmatic View

So, views on human induced global warming – hence climate change – are polarized. But, for a manufacturer, it really doesn’t matter which side you favor.

Why? Three quick reasons:

>> A continuing stream of increasing governmental regulations is coming, like it or not. The CAFE standards for decreasing vehicle fuel consumption and President Obama’s Clean Power Plan, which limits carbon emissions from electrical generating facilities are just a two of a growing crowd.

>> Actions to cut power usage across your firm’s value chain are simply good business, regardless of your views on Climate Change.

>> Actions that reduce atmospheric emissions respect both human well-being and the natural world that we all depend on.

Materials Utilization Efficiency

There are three primary approaches to improving materials utilization efficiency:

Recycle Moibus>> Recovering and reusing waste materials – Recycling, in its many forms, is the first thing that comes to mind: recycling of waste streams generated in the manufacturing process itself (recycled in-house or by others) and general recycling by third parties in the resources recovery industry (recycling of packaging materials, for example).

>> Improving production processes – Reducing waste in any guise, including materials waste, is a primary area for continuous improvement projects, especially by using Lean Manufacturing and Six Sigma techniques.

>> Designing (or redesigning) your products – Product design now encompasses your entire value chain. Product design starts with sourcing materials, continues through materials sensitive manufacturing processes, design for product performance, design for durability and ultimately design for end of product life reuse or disposition.

The key to all three of these is attention to your entire value chain, including waste in transportation at each step along the value chain. [2]


These are only two of many fundamental changes already occurring in response to Sustainability. 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.

Chuck - California CoastThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

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.


[1] http://www.gallup.com/poll/190319/americans-believe-2015-record-warm-split-why.aspx?g_source=CATEGORY_CLIMATE_CHANGE&g_medium=topic&g_campaign=tiles

[2] For more on materials utilization efficiency, see Embracing the Circular Economy, a recent post to this blog available at: http://jerasustainabledevelopment.com/2016/03/21/embracing-the-circular-economy/

 

Toward Proactive Management – Part 1

Ceaseless Waves of Change

Doing business in the 21st century entails coping with relentless waves of change. Much of this change will be at the most fundamental level. To survive, let alone to thrive, requires a proactive mindset on the part of management. It is essential to identify the primary underlying change drivers affecting your business, and to establish management processes to proactively adapt to the corresponding changes.

Four Change DriversAs a convenience, this blog groups change drivers as Globalization, Sustainability, Technology and Demographics & Trends. These four groupings not exclusive – many changes your business may face will be driven by combinations of these. For example, many of the changes constituting Globalization depend on changes in Technology.

We’re Not in the 20th Century Anymore Toto, a post to this blog from a year ago, provides an introduction to these change drivers as they apply to your business:


We’re Not in the 20th Century Anymore, Toto  (From 1 May 2015)

An Emerging View of Manufacturing in the 21st Century

The Industrial Age in America – a time in which the mass production of goods provided the economic focus of the country – declined during the final decades of the 20th century and swooned as the 21st century began. This isn’t a cyclic matter: 20th century manufacturing isn’t going to come back. Instead, the end of the Industrial Age in America is part of a transformation that is as sweeping as the Industrial Revolution was, when industry replaced agriculture as this nation’s economic focus.

Keep in mind that, in 1870, 70% – 80% of America’s working population was employed in agriculture. As of 2008, less than 2% was directly employed in agriculture. [1] Never the less, America’s farms today produce much more than ever before. America will continue to manufacture tangible products – lots of them. The way that America manufactures those products will change as dramatically as farming has changed.

“… right now we are going through a once-in-a-century transformation in business that is throwing out all of the existing rules.” [2]

This transformation is powered by a confluence of potent change agents, which might be loosely grouped as Globalization, Sustainability, Technology and Demographics & Trends. These four, individually and in combination, provide insights as to the rapidly expanding context within which even quite small manufacturers must operate. Technology provides the means for transformation.

A few thoughts on the globalized context within 21st century manufacturers must operate:

>> Competition – Competitors and potential competitors exist worldwide, with more coming every day. So do suppliers and potential suppliers. Likewise, customers and potential customers. And these competitors / suppliers / customers are quickly becoming increasingly sophisticated in all aspects of globalized business.

>> Population – Since the advent of truly viable birth control, birth rates have dropped significantly, especially in economically developed nations. As a result, populations are aging. At the same time, the participation on women in all aspects of commerce has increased dramatically. Per capita GDP is increasing, notably in developing countries, resulting in more global middle class buying power.

>> Commerce is global / Politics are local – While competition is global, governments everywhere have incentive to favor their own. Issues including jobs, access to resources, taxation, entitlements and property rights continue to be contentious.

>> Financial System – The global financial system, as it exists today, is a hodge-podge of remnants from the Bretton Woods accords, socialist notions from the soviet era as well as from western nations, fiat (rather than hard) currencies, instantaneous globalized trading in currencies and financial derivatives, not to mention a diverse array of banking institutions. All of this is hardly a recipe for international financial stability.

Some thoughts on 21st century manufacturing operations:

Atomic physicist Niels Bohr once said that “prediction is very difficult, especially about the future”.  Actually, it’s the being correct part that is difficult. The following are extrapolations from American manufacturing’s current situation. We’ll all see what actually happens as the 21st century unfolds.

>> Products: To beg the obvious, labor related costs in economically developed countries are much higher than in less developed countries. To be globally competitive, products manufactured in developed countries will require significantly greater intangible aspects, as opposed to the simply tangible. Above all, products need be clearly differentiable.

>> Emphasis on Return on Capital Employed (RoCE): Manufacturing is capital intensive, especially concerning fixed assets, when compared to other modes of enterprise. Accordingly, financial viability depends on sustainable RoCE, taken across the business cycle, rather than on profits per se. This change in point of view fosters longer term thinking in many respects. Organizational structure and financing are not least of these.

>> The Electro-Mechanical Spectrum: A recent essay [3] discussed a trend in machinery from the mechanical to the electronic. The Tesla automobile serves as a familiar example. Unmanned space vehicles offer another. The more electronic machines offer obvious advantages, including reliability and Moore’s Law initial costs. Perhaps the most important advantage is that electronic machines have a significant software component. For this reason, machines can be improved, or even retasked, through software changes. Such machines can actually improve over time, rather than just depreciate.

>> Innovation: There is nothing static about the future. 21st century manufacturers must consistently offer differentiable products that please customers while generating satisfactory returns. This requires continuous and systematic innovation in products, operating processes and, especially, business models. A prior essay looks at all three of these modes of innovation. [4]

There is a lot more to manufacturing in the 21st century than a single essay can even hint at. The changes involved in this “once-in-a-century transformation” are of almost seismic magnitude. And change will beget more change, even more rapidly. Stand by — subsequent posts to this blog will focus individually on each of the four change drivers.


Chuck - Red RocksThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about pursuing Sustainability … 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.


 

[1] Figures from Wikipedia, http://en.wikipedia.org/wiki/Agriculture_in_the_United_States

[2] Tien Tzuo, CEO of Zuora, quoted in Fortune magazine. http://fortune.com/2015/04/27/tien-tzuo-starting-your-own-business/. Zuora is a start-up business that is pioneering subscription based business models. For more on Zuora, see www.Zuora.com.

[3] http://jerasustainabledevelopment.com/2014/11/15/the-electro-mechanical-spectrum/

[4] http://jerasustainabledevelopment.com/2014/11/29/three-modes-of-innovation/