Manufacturing

The environment is the source of materials and energy for manufacturing, as well as the limiting factor.  While humans have invented and created extraordinary compounds and technologies, at source, they all come from constituents found in our natural environment.  Given that our planet is a closed system, from which nothing save the sun's power enters nor exits in any appreciable quantities, the environment is a factor in each part of the manufacturing process:  siting a plant; sourcing materials; ensuring energy; distributing materials and products; managing emissions and waste; meeting consumers’ desires, and providing a habitable planet.  As a consequence, company stakeholders, including investors/shareholders, Boards and directors, should assess the strategic impact of the environment on their businesses.

In this article we will look at how the environment affects each part of the manufacturing chain. 

1. Siting factories and offices:

Security of the environment is a critical factor:  is the land susceptible to flooding / extreme weather systems / earthquakes?  Are water tables sinking to the point that they endanger both the stability of the land, and access to water?  Conversely, are rising water levels in the oceans posing a threat?   Are local energy sources sufficient and guaranteed? 


Similar questions can be asked in terms of logistics and the reliability of logistics: does energy scarcity affect whether you have a central manufacturing and distribution system, or a distributed system? Do more extreme weather conditions endanger distribution networks?


2.  Sourcing inputs

Availability of materials, energy and labour are also critical factors in the process.  Each of which is determined by, or at least affected by, the environment:  Where do the sources of raw materials come from?  Are they being managed in a way that ensures the manufacturer will have continued access to them?  Is there sufficient material to enable the technology to function at scale? Are the inputs of sufficient quality or do they need to be treated?  Is the climate conducive to human habitation?

Often scarcity leads to requirements for greater and more expensive processing.  This can be due to smaller seams of valuable metals, for example, which are more contaminated with undesirable contaminants; or from water sources that have become contaminated by social or industrial processes.  Furthermore, the ability to source desired ingredients such as "organic" or otherwise labelled and differentiated ingredients can be compromised by practices in abutting locations or aquifers.  Finally, technologies that require rare materials – such as batteries – that require rare earth metals, may find that they cannot source sufficient materials to develop their market.  Some fish processors have gotten out of the business altogether in light of the dwindling stocks of fish, for example.


3.  Processing/manufacturing

The environment plays a direct part in processing and manufacturing not only as source of energy and materials (and thus also for the manufacturing equipment), but also in terms of remediation and containment of the waste products from the process:  emissions, effluent and solid waste.  Nature can manage a great deal of the pollution society has created, but the invention of compounds that are foreign to nature has led to systematic increases in their quantities: e.g. DDT and PCBs.  Furthermore, the rate at which nature is being required to manage waste is often exceeding its capacity in part because of the increase in waste and also in part because we are decreasing nature's capacity to process waste.

Thus it is inevitable that, as in the case of DDT and PCBs, rights to create and produce compounds that are foreign to nature will be reduced, while the cost for the service nature provides will increase.


4.  End of Life:  Extended producer responsibility

As the planet has become more populated, and difficulties siting waste management facilities such as landfills and incinerators have increased, holding manufacturers responsible for the end-of-life of what they put on the market has become more common.  Thus brand-owners are expected to pay for the recovery and recycling of the used packaging associated with their products.  This has been considered a form of internalization of costs that had previously been externalized onto society.  Other environmental costs that have been spread worldwide – such as CO2 and other greenhouse gasses – will also be priced.


5.  Nature providing manufacturing processes & innovation

The City of New York had the choice some years ago: pay farmers to grow trees and farm using fewer chemicals, or build a wastewater treatment plant.  In the end, paying the farmers cost them 10% of what the treatment plant would have.  The environment can provide services that have been perfected over a longer period of time, and are cleaner and more productive than human solutions.  Manufacturers can be well served by using natural processes directly, or mimicking natural processes and construction:  cost-free temperature-regulation based on termite mounds, for example, or surfaces that prevent microbes from colonizing based on nature’s construction of shark skin.  At Interface Flor they used observation of forests to create new product lines based on variation rather than 6-sigma  uniformity – a bestseller in the year it was launched. 

Manufacturing + The Environment

Each year 70 million people will enter the global “middle class” in purchasing power terms. Over two billion people by 2030.  If they consume as today’s middle class does, in the same percentages, we will need three planets worth of resources to supply them. (World Economic Forum)


54 of the 65 greatest oil producing countries in the world have declining production as they have passed their peak production - the United States (1970), Indonesia (1997), UK (1999), and Norway (2001).  There are various projections about global peak oil, with some estimating it has 'already peaked', to 2035. (Energy Bulletin)

Stats + Figures

Resources

Translator: Caroline Rennie (La Conversion, Switzerland), Managing Partner, ren-new

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