Recycling the Circular Economy

Recycling is at the heart of the Circular Economy. Embracing the Circular Economy, a post from 21 March 2016 discuses the concept of a Circular Economy, especially as it applies to smaller manufacturers. Embracing the Circular Economy is worth recycling — so here it is:


Embracing the Circular Economy

The Circular Economy

In an industrial sense, the term circular economy refers to a systemic view of resources utilization. It replaces the linear one pass take (from the natural world) … make (something incompatible with the natural world) … and dispose of (that is, burden the natural world with) production wastes along with the product itself at the end of its useful life. Instead, the circular economy envisions closed loop production which minimizes impacts on the natural world. Circular economy begins with products designed with multiple cycles of reuse and recycling in mind. Corresponding industrial processes are designed to minimize interactions which degrade the natural world, including interactions which occur anywhere along the product’s value chain.

Cutting to the Chase

It is readily apparent that a circular economy mindset might lead to lower costs, as well as a better world. The question becomes how to improve on what you are already doing to improve resource utilization. Here are some comments and examples to stimulate your thinking:

BMW i3 Press Kit Photo

BMW i3 Electric Vehicle

>> BMW i3 – The BMW i3 all-electric city car is an example of a circular economy product. Attention to sustainability is obvious in just about everything about the design and construction of the BMW i3. Recycled materials are used extensively.  Plans are in place for disposal of each component of the i3 at the end of its useful product life. For more on the i3, see BMW – A Case Study in Sustainability. [1]

>> Waste Management Corporation – Waste Management makes more than half of its money on recycling and upcycling refuse that people like you and me pay them to take from us. Sustainability – especially the circular economy aspect – Is integral to Waste Management’s business model. For more on how this works, see Waste Management Corp – A Case Study in Sustainability [2] and Waste Management’s 2015 Sustainability Report Update (which is entitled “The Circular Economy Revs Up”!) [3]

>> USBCSD – The United States Business Council on Sustainable Development is a not for profit business association that, among other projects, seeks to match bi-product streams with firms – often in other industries — that can use those bi-products as raw materials. In other words, one firm’s waste becomes another firm’s feedstock, to the benefit of both. See USBCSD’s website [4] for more on their work.

Scrap Tires 350pxh>> Tires – Where Waste Management Corporation seeks to find uses with the broad range of wastes it collects from residences, commercial facilities and industry, the tire industry focuses on new uses for its hard to dispose of product. Tire Recycling: An Industry Success Story was one of the first posts to this blog, almost five years ago. This lightly edited version still provides a useful example today: 


Tire Recycling: An Industry Success Story

(From 29 June 2011) 

American motorists discard a lot of tires; roughly one tire per capita or around 310 million used tires annually. On the average, tire carcasses weigh about 37 pounds, so that’s something like 11 billion pounds of waste rubber and metal every year. In the past, most of these used tires went to dumps, where they were ugly, mosquito – breeding fire hazards. Today, the recycle rate is sufficient to handle this year’s carcasses, while also significantly drawing down inventories at tire dumps nationwide.

Tire dealers add a state–mandated “tipping fee”, usually around $4.00, to each new tire sold. The “tipping fee” is passed on to the tire reclaim firm when the tire reclaimer collects carcasses from the tire dealer. The tire reclaimer converts the scrap tires into some useful form, usually by shredding the scrap tires and separating the rubber from the steel tire cords. The rubber scrap may be processed further, depending on the intended application. 

More than half of the recovered scrap rubber is used as tire–derived fuel, burned as an alternate to coal, primarily to fuel cement kilns. Ground rubber has a multitude of uses, ranging from landscaping mulch, to athletic fields, to molded rubber products, and on to de-vulcanized rubber, which can be used to produce new tires. Those who are interested can download a free report chock full of information on scrap tire products and markets at www.rma.org/scrap-tires. 


One take-away for all manufacturers is that the conversion of billions of pounds of scrap from dangerous eye-sore to useful products came to be through the efforts of a trade association. Trade associations offer a particularly useful vehicle for addressing many of the industry-wide problems and opportunities that Sustainability presents. 

>> Learning from Nature – Proponents of the Circular Economy point out that there are no wastes in biological processes. Everything eventually becomes food for something else. Actually, it is better than that. Biological processes operate at or near ambient pressures and temperatures, as opposed to the energy intensive demands of many industrial processes. I was surprised to learn that the Department of Chemical Engineering where I studied is now the Department of Chemical and Biomolecular Engineering – a strong indication of the growing importance of bio – based products and processes.

>> Books – Consider the entire value chain for books and other printed matter. Start with cutting forests, then the environmental concerns with paper making, ink chemistry, collecting end of useful life products, transportation costs across the value chain, and recycling or disposal costs. Compare all of that that with a Kindle. Replacing a tangible product – or a component of a tangible product, such as the operating instructions – with a virtual (digital) product changes everything!

For Smaller Manufacturers

The ideas behind the Circular Economy are quite powerful and potentially disruptive. Every manufacturer needs to consider how to modify its business model to embrace those ideas. As you can see, there are a lot of ways to approach this – new product development / new manufacturing processes / teaming with somebody like Waste Management or USBCSD / through a trade association / even virtualization – are just for starters, there are many more possibilities.

Chuck - FranceThoughtful 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] http://jerasustainabledevelopment.com/2014/10/04/bmw-a-case-study-in-sustainability/

[2] http://jerasustainabledevelopment.com/2015/01/30/waste-management-corp-a-case-study-in-sustainability/

[3] Download for free at http://wm.com/sustainability

[4] www.usbcsd.org

 

Manufacturing in 21st Century America

The global economy, which includes the U.S. and its manufacturers, is in a whirlwind of transformational change. The scope and dimensions of this is difficult to grasp. We’re Not in the 20th Century Anymore, Toto, a post to this blog from a year ago, offers some thoughts on where to start. … C.H.


We’re Not in the 20th Century Anymore, Toto – from 1 May 2015

An Emerging View of Manufacturing in the 21st Century

Dreamstime - Crystal BallThe 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. Globalization, Sustainability and Demographics & Trends 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.

Chuck ReadingThoughtful 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.

Photo Credit: © Shutter999 | Dreamstime.comCrystal Ball With A Bar Chart Photo


[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/

 

 

Welcome to Jera’s New Site!

Featured

Jera Sustainable Development

A Pragmatic Approach to Sustainability for Smaller Manufacturers

 

Jera Logo white with caption centeredWelcome to Jera’s new blog-centered website. New essays are posted weekly, as in the past. All of the 250+ essays posted during the past five years are still available. Scroll down to see past posts, most recent first 

… Chuck Harrington

Thinking Big Enough?

5 June 2014

The Giga-factory

Elon Musk’s announcements about a 10 million square foot, $5 billion giga-factory have certainly raised eyebrows. As you have probably heard, the giga-factory will produce batteries for use in Tesla electric automobiles and for use as storage devices for photovoltaic (solar) electric power. Two or three southwestern States are expected to be selected to commence site development and permitting sometime this year (2014). The first to be ready to break ground will build the giga-factory. Start-up, with its promised 6,500 manufacturing jobs, is scheduled for 2017.


All of this is certainly exciting. However, the giga-factory is designed to produce about 500,000 batteries a year. That’s about double the existing global capacity for lithium ion batteries. Tesla built and sold less than 25,000 cars last year. There is a lot of grass between 25,000 and 500,000, especially in an all-electric vehicle market that just barely exists today. There are plenty of skeptics and nay-sayers. And there is a well established conventional automobile industry that doesn’t want its business model disrupted.


About 70% of the capacity of the giga-factory is presently penciled in for Tesla, especially with the much anticipated launch of a smaller, less expensive Tesla model timed for giga-factory start-up.


The remaining 30% is expected to be used for electric power storage, especially in conjunction with solar and wind powered electrical generation. Obviously, solar and wind produce power only when the sun shines or the wind blows. Power storage allows solar and wind power production to be balanced with demand. [1]


Tesla’s Chief Technology Officer


J. B. Straubel, Tesla’s CTO, talked batteries as keynote speaker at a recent energy storage symposium in Silicon Valley. He pointed out the rapid rate of improvement in lithium ion battery technologies and economics, which, I suppose, sounded like the second coming of Moore’s Law to a Silicon Valley audience. Rather than being awed by the magnitude of the giga-factory’s output, Straubel opined “Maybe this whole group isn’t thinking in large enough scale for the market size of energy storage”.


Tesla model S - SedonaStrange as that may sound, Straubel has a point. Even 500,000 Teslas would be only 3.3% of 2014’s U.S. automobile market. Tesla is already selling well abroad, where petrol is much more expensive than in the U.S. and Green is an even bigger issue. Given a smaller model with a significantly lower price point and continued government inducements for zero emissions vehicles, 70% of 500,000 = 350,000 Teslas worldwide in 2017 might just be a bit easier to believe.


Keep in mind that, with Elon Musk’s firms, we are talking about people who design and build space ships, along with electric cars — rocket science is no barrier. And these folks do think big, like going to Mars. Straubel said that the plan for Tesla has always been “EVs for the mass market. We weren’t founded to make sports cars; we were founded to drive a revolution.”

Today (3 June 2014), Musk mentioned that he might do something dramatic with Tesla’s patents in order to jump start the global EV market — thinking millions of electric vehicles, rather than tens of thousands. [2][3]


Straubel also sits on Solar City’s board. Solar City, as you probably know, designs, installs and arranges financing for solar power generation systems for residential and commercial buildings. Solar City is a market leader, with over 12,000 installations here in Arizona alone (including my house). Still, solar is a small fraction of the U.S. energy production capacity. However, solar did account for 74% of all new U.S. electric power generation capacity installed in the first quarter of 2014.[4]


With the new EPA restrictions on CO2 emissions from coal fired power plants that President Obama announced last week (2 June 2014), solar and wind power capacity can be expected to continue to grow. Quickly. And storage capacity — the ability to balance power production with demand — is necessary to make that capacity really useful. With Solar City’s position in the solar generation industry and access to the battery costs advantage the giga-factory provides, placing 30% of that capacity in U.S. domestic stationary storage applications isn’t so preposterous for 2017.


Enter Mr. Modi


Last month (on 16 May 2014), India elected a new government. Narenda Modi, who will lead that new government, has announced plans to provide solar-generated electricity to the roughly 400 million Indian people who don’t have access to electricity, and do so by 2019. The plan is for each home in India to have at least enough electric power to light two bulbs, operate a solar powered cooker and a television. Now imagine that those 400 million people not only want two light bulbs, they want to turn the lights on at night. That makes it easy to appreciate the necessity for electric power storage to make Mr. Modi’s plan viable.


400 million people, by the way, are more than the populations of the U.S. and Canada combined. As a rough guess, assume that these Indians live, on the average, four people to a home. That’s 100 million homes to be electrified over roughly five years. 100 million is a pretty big number, unless you are talking about dollars in Washington D.C.


Should Mr. Modi’s plan actually happen, that would be a lot of solar panels and a lot of stationary storage capacity. I don’t know where that stationary storage capacity would come from. But I do know who would have the low cost half of the world’s lithium ion battery capacity.
[5]


For Smaller Manufacturers


It would be hard to overstate the rate of change in today’s global business climate. That change represents serious risk of business model disruption. It also offers opportunities on an incredible scale, as Elon Musk’s ventures illustrate.


Entrepreneurial initiative always involves risk. But, in this business climate, so does playing defense. My view is that managers should do some serious zoomed out thinking about their industry and its future potentials, then make a conscious choice.

Chuck - SedonaOstriches are in danger of extinction.

Thoughtful comments and experience reports are always appreciated.


…  Chuck Harrington
(Chuck@JeraSustainableDevelopment.com)


P.S
: Contact me when your organization is ready to pursue 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 on Wednesday evenings.


 [1] Much of the specific information in this section is from: Steve LeVine, The Cold Logic Behind Elon Musk’s $5B Gigafactory Gamble , Quartz, http://qz.com/214093/tesla-elon-musk-5-billion-gigafactory-gamble/

 

[3] Elon Musk’s comment at the Tesla Shareholders’ meeting from: Dana Hull, Five Takeaways from Tesla’s Shareholder Meeting, Silicon Beathttp://www.siliconbeat.com/2014/06/03/five-takeaways-from-teslas-shareholder-meeting/

 

[4] … solar did account for 74%… is from Mike Munsell, A PV Market First: Residential Solar in the U.S. beats Commercial Installations, Greentech Media, https://www.greentechmedia.com/articles/read/A-PV-Market-First-Residential-Solar-in-the-US-Exceeded-Commercial-Installa

 

Holiday Time


I am taking the rest of the year off to enjoy the Holidays with my family. I hope that you will do the same.

Very best wishes for peaceful and prosperous New Year!


 … Chuck

P.S. The next post will be on Wednesday evening (western U.S. time), 4 January. I think that you will find it worth waiting for.

Scrap Tires: An Industry Success Story





American motorists discard a lot of tires; roughly one tire per capita, or around 310 million used tires annually. On the average, tire carcasses weigh about 37 pounds, so that’s something like 11 billion pounds of waste rubber and metal every year. In the past, most of these used tires went to dumps, where they were ugly, mosquito – breeding fire hazards. Today, the recycle rate is sufficient to handle this year’s carcasses, while also significantly drawing down inventories at tire dumps nationwide.




Tire dealers add a state–mandated “tipping fee”, usually around $4.00, to each new tire sold. The “tipping fee” is passed on to the tire reclaim firm when the tire reclaimer collects carcasses from the tire dealer. The tire reclaimer converts the scrap tires into some useful form, usually by shredding the scrap tires and separating the rubber from the steel tire cords. The rubber scrap may be processed further, depending on the intended application.




More than half of the recovered scrap rubber is used as tire–derived fuel, burned as an alternate to coal, primarily to fuel cement kilns. Ground rubber has a multitude of uses, ranging from landscaping mulch, to athletic fields, to molded rubber products, and on to de-vulcanized rubber, which can be used to produce new tires.




Generally, tires are made from a mixture of natural rubber and synthetic (SBR) rubber. Natural rubber and synthetic rubber prices are currently near all–time highs, due to high crude oil prices and strong demand, especially in Asia. So, scrap tires offer a big, cost – advantageous and convenient source for rubber products raw materials.
Those who are interested can download a free 105 page report chock full of information on scrap tire products and markets at
www.rma.org/scrap_tires.




The take-away for all manufacturers is that the conversion of billions of pounds of scrap from dangerous eye-sore to useful products came to be through the efforts of a trade association. Trade associations offer a particularly useful vehicle for addressing many of the industry-wide problems and opportunities that Sustainability presents.




As always, your thoughts and comments are appreciated.



… Chuck


Beach Combing



I’m vacationing this week. My grand-daughter, Carolina, has new sandals to vacation in. They have LEDs that flash red when she runs. Also, a tag with the sandals proudly boasts that “the insole board in this shoe contains 70% recycled content. Of that 70% recycled content, 80% is from recycled plastic bottles and the remaining 20% is from recycled post-industrial material.”



A large sign in the window of a Billabong leisure apparel shop near my hotel announces that 14,500,000 plastic bottles have been recycled to produce a line of sports clothing. Used bottles to surfing gear. Pretty cool.




A half – liter bottle of Aqua Fina brand of drinking water tells me that redesign of the bottle about 10 years ago has resulted in cumulative savings of 70 million pounds of plastic. 70 million pounds is a lot of plastic pellets – something like 500 railroad cars full. If one approximates virgin molding at $1 a pound, the math is real easy.




A Green StripeTM brand plastic beverage glass from the hotel bar boasts that the plastic is made from corn rather than from some petroleum derivative, that the beverage glass is recyclable, and that the beverage glass is compostable!




The point for manufacturers is that the entire life cycle value stream for entire classes of manufactured products is changing rapidly, along with the associated costs. The array of viable materials alternatives available to manufacturers is expanding, sometimes in surprising ways. “Recycled material” is no longer a four – letter word. Rather it means either reduced effective materials cost, a revenue stream from the selling the recyclable scrap or, at worst, no cost of disposal. Moreover, recycled material content in finished products can be a significant marketing advantage. Product design, even with something as simple as a plastic bottle, can have enormous cost consequences, especially when value stream transport costs are considered along with reduced usage. And, new materials alternatives, with very different cost bases can result in competitive advantage (or disadvantage). Consider, for a moment, that the price drivers for corn at any given time may be very different from the price drivers of petroleum derivatives, especially in a global economy.




Comments anyone? Opinions? Relevant experiences?




… Chuck


 

Mission Zero?

Imagine a billion-dollar manufacturing firm that sets a goal to take nothing from the earth that cannot be replaced by the earth – that is, to become truly Sustainable — and to do so by 2020. Interface, a manufacturer of petrochemical – based commercial carpet products, has set such a goal, and is well on the way to achieving it!




Since establishing this goal in 1994, Interface has increased sales by 66% and doubled earnings while:




> Reducing fossil fuel consumption by 60%

>
Cutting waste by 66%

>
Reducing water usage by 75%




> Cutting greenhouse gas emissions by 82%




> Inventing new machinery and manufacturing processes



That which has been done must be possible, and that which has been done at Interface is truly amazing. That which Interface has done vividly demonstrates that pursuing Sustainability can yield substantial competitive advantages.

Any manufacturer who has an interest in Sustainability needs to read Interface CEO Ray Anderson’s book Confessions of a Radical Industrialist (terrible title – remarkable book). Ray’s book spells out what Interface has done and how to go about doing likewise.




Comments, opinions and actual experiences are always welcome.




… Chuck