Sustainability Projects Provide Win-Win for Companies and State
Randy Bertram, director of sustainability services with the Wisconsin Manufacturing Extension Partnership (WMEP), cites the U.S. Department of Commerce’s definition of sustainable manufacturing to help explain the benefits of the organization’s Profitable Sustainability Initiative (PSI).
But, for those who participate in the program, the only one of its kind in the country, its value is summed up in a single exclamation: “Aha!” Obtaining that moment of clarity requires a team of experts, a proven process, and a company commitment to see the projects through to completion.
The payoff? For the 102 participating small and midsized Wisconsin manufacturers to date, operational cost savings of $14.8 million per year and $147.7 million in increased or retained sales.
Wisconsin leading the way
A 2011 study by the Manufacturing Performance Institute (MPI) showed that manufacturers in Wisconsin lead the nation not only in recognizing the importance of sustainable practices but also in progress toward meeting world-class sustainability standards.
Bertram attributes this heightened interest in sustainability to the density of the manufacturing industry within the state and the exacting standards of its supply chain participants. Yes, the program helps manufacturers reduce their environmental footprints, but, in so doing, it increases their competitiveness.
It’s profitable being green
“We’re all environmentalists when it adds money to our bottom line,” says A.J. Gordon, president of Gordon Aluminum Industries, Inc. in Schofield, Wis.
Gordon Aluminum has a history of working with WMEP and its northern Wisconsin partner organization, the Northwest Wisconsin Manufacturing Outreach Center (NWMOC), on supply chain efficiency projects. Gordon approached WMEP in early 2012 to seek input on energy tax credits. That conversation led to a discussion about PSI.
Gordon was skeptical. As an aluminum extruder who re-alloys 15,000 pounds of scrap metal per day, he didn’t feel there was much more he could do from a recycling standpoint to appreciably affect his bottom line. Some equipment could be updated, but the return on this investment from an energy-saving standpoint did not justify the cost.
Discussions with WMEP led Gordon to his “Aha!” moment. He knew reducing scrap would bring his energy costs down across the board—gas, electrical, lighting and HVAC. “We need to keep the scrap truck from coming back around,” he explains. While he already had a team working on this, Gordon and WMEP decided the effort would benefit from PSI’s systematic approach.
The project challenged the company to give up long-held assumptions, including accepted company standards for product failure and the root causes of such failures. “It was a complex problem that needed a team approach,” Gordon says.
He explains the PSI program creates opportunities to systematically address challenges and uses data to find the best solutions. Through controlled experimentation, the company increased its product yield rate by 18 percent with a $1,200 die design change. The company’s analysis also identified inconsistent temperatures as another cause of product failure. Certain oven types were replaced to address this problem, leading to even better yields. Gordon estimates the company earned back its roughly $300,000 capital investment in less than one year.
While Bertram from WMEP estimates that 70 percent of the PSI projects are energy related, he says the diagnostic tool uncovers many performance enhancement opportunities. “We don’t come in with preconceived notions about where an engagement is going to take us,” he says.
With Quality Packaging, Inc., a Fond du Lac, Wis.-based turnkey packaging supplier, the PSI project helped the company identify market needs for a new product. RePaq uses a vac-form (blister) made from recycled water bottles and overcomes customers’ frustrations with other plastic packaging by providing an easy-open solution. It also gives companies increased messaging opportunities with a fibrous card that allows double-sided printing.
After developing RePaq in 2007, Quality Packaging lacked a plan for bringing the product to market. The company also wondered whether it could meet customers’ expected turnaround time. With WMEP’s help, Quality Packaging confirmed a market need for RePaq and identified the operational requirements to produce the product.
“WMEP made us do our homework,” says President Ken Wills, whose “Aha!” moment came after establishing five-year hard sales projections. Wills credits PSI with increasing sales of RePaq from 6 million units in 2009 to a projected 25 million in 2013.
Funding provided to WMEP for PSI by WEDC helps reduce the risk a company takes in pursuing sustainability and encourages implementation of projects that provide cost savings and increased profitability.
Bertram says the majority of projects undertaken cost companies less than $25,000, with 70 percent costing less than $75,000. “We address cost with each company upfront and take into account the capital each business is prepared to invest.”
On average, participating companies broke even on their investment in 9.5 months.
Seeking new participants
With WEDC’s commitment to a third PSI phase, WMEP is recruiting an additional 32 manufacturers for the program. Applications are open to small and midsized manufacturers throughout Wisconsin and are reviewed for alignment with program goals and objectives as well as the applicant’s commitment to sustainability.
Interested manufacturers should contact Randy Bertram at WMEP. Applications will be processed on a first-come, first-serve basis.
For more information
Wisconsin Manufacturing Extension Partnership
Director of Sustainability Services
Wisconsin Economic Development Corporation
VP of Business & Industry Development