Managing waste for success

Posted on 27 Oct 2009 by The Manufacturer

Manufacturers are playing an important role in moving Britain towards a resource-efficient low carbon economy. But, as Colin Chinery reports, this transition is not without major barriers and support deficiencies.

Prevention, re-use, recycle, energy recovery — the resource efficiency mantra is clear.

Yet over 90% of materials used to make goods are not present in saleable products and 80% of products are discarded after first use.

And the cost of this waste to a typical manufacturer is as high as 4% of annual turnover, says Envirowise, the government-supported free environmental consultation and advice body.

Yet while Envirowise estimates environmental best practice could cut these costs by as much as 50%, Britain is missing out on resource efficiency savings of £6.4bn a year, according to the manufacturers organisation EEF.

“Many companies underestimate the true cost of inefficient business processes because of a lack of understanding of environmental costs,” says EEF ’s senior climate and environmental policy adviser, Vanessa Fandrich.

And to be uninformed is damaging, perhaps critically so when raw material and energy costs, and uncertainties over future supplies, are serious challenges to competitiveness. Factor in increasing waste disposal charges and antipollution measures, and companies miscalculate waste costs at their peril.

Challenge and opportunity

Yet out of this threat come great opportunities; big cost savings plus market edge. Firms taking a lead on implementing a resource-efficient business model are benefiting from increased competitive advantage, differentiation from rivals, and better access to markets, contacts and capital.

Other gains include reduced risk through legislative compliance, and a closer relationship with suppliers procured through waste management can lead to reduced risk of supply chain failures.

As a 200-year old manufacturing company, one of the biggest challenges facing the management of the new look Sheffield Forgemasters International Ltd (SFI L), following a management buyout in 2005, has been to create new manufacturing procedures to increase efficiency, reduce the cost of production and lower energy consumption.

“Success in achieving this wholesale revision across our key manufacturing departments — materials and components for the power generation industry — has enabled us to capitalise on and compete within key international markets,” says chief executive Graham Honeyman.

From bankruptcy and near-closure in 2003, followed by the MBO, SFIL now has a record profit performance, a sales turnover of more than £100m and a £120m order book.

Meanwhile a heavy investment programme post-MBO has seen all company profits reinvested into the plant to create more economical production processes.

“Measurable returns include investment in new pulse-fired burners to upgrade the company’s furnaces, which use natural gas to heat steel components, providing up to 30% more efficiency than other types of burners and reducing a key production consumable,” says Honeyman.

Looking into the glass

For Dr Alan McLenaghan, managing director of Saint- Gobain Glass UK, a Sunday Times Green Company* in 2008 and 2009, manufacturing sustainably is a priority “of absolute and utmost importance.” Based near Selby, North Yorkshire, Saint- Gobain Glass UK (SG) pioneered the return of broken glass from customers for use in its furnace, reducing the use of raw materials and gas consumption.

Its resource efficiency strategy ranges from waste segregation colour-coded bins and maximising the reuse of glass, to the use of energy efficient lights and educating its 191 staff in green behaviour via emails, notice boards and the intranet.

“It’s not just about what we do, it’s about our products and minimising the overall impact. Waste has been cut from seven thousand tonnes a year to less than 500 tonnes, based on the performance of the first eight months of 2009. This is partly the economy and the slow down, but mainly more about re-use, and recycling.

“But that’s just one element. The second is the actual products we are producing; primarily saving energy or resource.” McLenaghan cites examples such as self cleaning glasses — saving water and using less detergent — and low emissivity glasses that reduce the need for heating (emissivity is the power of a material to emit heat relative to its surface area).

Lean initiativesScrap = profit

As McLenaghan says, instead of a cost SG is now paid for its scrap metal, which this year totals over £45,000. “A seven tonne skip costs about £100 to have on site. The landfill tax continues to rise, and if we had done nothing, generating the same levels of waste now as we were in 2001/2002 our annual waste management bill would be £600k. In fact it’s £100k, the same as in 2001, but we are generating less than 10% of the waste we did then”.

The major barrier to greater resource efficiency in manufacturing is often a lack of this vision of internal environmental costs, according to a recent report from EEF and Barclays Commercial, ‘Resource Efficiency — Business Benefits from Sustainable Resource Management.’ Inefficiencies in the ways in which waste is produced and energy and water consumed are frequently overlooked.

Simple steps, Big rewards

Yet a recent Defra study shows British industry could save £6.4bn annually through good housekeeping, low cost or no cost resource efficiency, with the biggest opportunities in energy efficiency and waste. The Carbon Trust, for example, estimates that 30%-50% of energy used by compressed air systems is caused by air leakage that could be prevented through better maintenance.

“We recently worked with a company that, through a few comparatively simple steps, was able to reduce waste disposal costs from £750,000 per annum to £200,000,” says John Wilkinson, manufacturing consultant and Phil Seeney technology consultant at PA Consulting Group. “And there was the added bonus of further savings on purchased materials, i.e. over £500,000 straight to the bottom line. None of the steps was complex, but each required management focus, some simple analysis and sustained cross-functional implementation.”

Aisin Europe Manufacturing UK of Birmingham saved £59,000 in a year by a 10% cut in scrap produced from its car door frame production process. Minimising the material length used for bending and saw tooling to grip cut material costs by 5p per part net of lost scrap value.

And one North West England pharmaceutical manufacturer cut costs by more than £100,000 after waste and environmental management company Remsol discovered that stainless steel manufacturing vessels were washed and sanitised when each one still contained up to five litres of valuable product, instead of being cleaned when empty. The cause? Incompatibility of lids and tanks.

With the correct lids fitted to the correct tanks, only minor residues of finished product were lost to waste. And capturing larger quantities of finished product led to more and earlier seasonal product placements in key markets, with opportunity cost savings of more than £1m a year.

Suffolk brewer Adnams’ companywide recycling scheme is a relatively simple measure, embracing paper, packaging, electrical equipment, vehicle batteries and tyres, mobile phones and glass. Cooking oil from its hotel kitchens is converted into biodiesel and spent grains from the brewing process recycled as pig and cattle feed.

Optimise existing processes

Adnams created an innovative lightweight bottle that was recognised as a big step forward in beer packaging. This change alone represents a reduction of 415 tonnes of CO 2 per year — the equivalent of 138 cars off the road, which almost offsets employee car use.

“Operating in values driven way is not a soft option and like all commercial organisations we have to make tough decisions,” says Wood. “It’s how we handle the inputs to, and outputs from, those tough decisions that sets us apart from many of our competitors.” Wood argues there is little excuse for businesses not to act responsibly.

“A little investment of time and resources can make a significant and sustainable impact. At the same time businesses can enhance their reputation, strengthen brand and shareholder value while improving business performance.”

New, leaner, more efficient processes

Sheffield Forgemasters’ new automated burning booth reduces the time for processing forging discards and foundry heads, as well as general recyclable scrap for re-melting. “Previously, limited processing capacity meant scrap was re-used three or four times a year,” says Graham Honeyman.

“This has increased to more than 20 cycles per year, reducing the amount of inventory held and raw materials that need to be bought in,” A programme of process re-engineering has increased manufacturing efficiency at SFI L.

Hollow ingot development, for example, will enable an ingot to be cast in a near-final state.

This reduces subsequent forging operations and the number of heating cycles for ingots, saving natural gas and lowering carbon emissions.

At the same time, internal benchmarking monitors strategic supplies: energy, scrap and alloys. From 1999 to 2008, SFI L reduced its energy consumption by 20% per tonne of output, with a corresponding reduction in its carbon footprint. Quantifiable CO ² savings are in excess of 50,000 tonnes.

Production at Ford Dagenham topped a million engines last year and the company’s aim is to send zero used fluids off site for waste treatment. “To help achieve this we converted to vegetable oil-based machining coolants over five years ago,” says Ford UK’s Oliver Rowe.

“As well as being from a renewable source, a lower concentration is required and the sustainable oil is less hazardous to handle. The vegetable oil’s re-useable, swarf [waste metal from the machining process] is filtered out and compacted to produce briquettes for resale, with potential savings of up to £400,000 a year.”

Design and customer demand

“Designing products for re-use, recycling, re-manufacturing, all this is growing in the UK and there are great opportunities not only from resource efficiency and environmental perspectives but also in business opportunities through customer relations,” says EEF ’s Vanessa Fandrich.

But green product design opportunities can be “limited, and an incredibly difficult thing” to achieve. Manufacturers, says Fandrich, deliver what the customer asks for and consumer demand is driven by price.

“Given the choice of a £50 product that is energy efficient over a period of time, and one that is not energy efficient and costs £10, the majority will go for the latter.

Upfront costs, especially during a recession, are the main drivers. With greater consumer awareness of the lifetime costs of a product, manufacturers will very quickly follow and innovate. But without demand then it is very difficult. Companies may need support and we think WRAP or the new body providing umbrella advice next year, need to focus on this far more.” WRAP is the Waste and Resources Action Programme.

The EEF/Barclays study sees a great disparity between drivers on equal design and drivers on end of life management. “There is no incentive for companies to re-design their products, and legislation could be better used. What we see, particularly with this focus on end of life, is the assumption that one size fits all.

We say that by encouraging equal design and fostering innovation we have real opportunities to become world leaders in some of these areas.”

Energy — a wasting opportunity

While the potential for energy from waste is acknowledged as a key tool in managing the issue of landfill, together with the development of a sustainable energy infrastructure, it continues to face enormous economic, technical and social challenges.

The production of biofuels from waste in a combustion plant or by composting or chemical processes is popular in other European countries.

But there are only around 50 plants in Britain, a shortfall criticised in a recent report from the Institution of Mechanical Engineers, which argues that biomass technology could provide a fifth of the nation’s electricity.

It is, says IMechE, “absolutely crucial” for waste to be used for energy if Britain is to meet its target of getting 15% of all energy from renewable sources by 2020. But public opposition to incineration remains fierce.

Landfill – Big stick, little carrot

Each year Britain produces some 272 million tonnes of waste, 40% of it from industry and commerce.

Almost half of all waste goes to landfill. But while local authorities have a statutory responsibility to ensure that all municipal waste is managed effectively, there is no such duty on any public body to provide such facilities for commercial and industrial waste.

“The lack of supportive infrastructure on waste is very bad in many areas,” says EEF ’s Fandrich. “We see a lot of companies wanting to get engaged and do more and just not getting cost-effective services.

So many companies tell me they would re-cycle if there was an available service in their area. All too often there is no alternative to landfill with all its rising cost implications.

The incentives to do something different are simply not there.”

Astonishingly, the definition of waste and resultant complexity and confusion are such a form of barrier to recycling and recovery, making it in the words of the EEF, “uneconomic to recycle materials even when they have a potential value as a fuel or feedstock for other industries.” So while the benefits of effective waste management and resource efficiency are accepted, a deficient infrastructure of support, funding and advice is a big factor that is frustrating its objectives.

Government-sponsored delivery bodies have helped several companies identify improvement opportunities, but as EEF argues, these need to be better co-ordinated to achieve the maximum affect at lower costs for companies and taxpayers.

Many products are now covered by several pieces of legislation that each address different product aspects. For example, an electrical equipment manufacturer might be covered by WEEE, the RoHS Packaging and Batteries Directives, and now the Eco-design of Energy-using Products Directive and the REACH regulations.

Better co-ordination a must

“There is an urgent need,” says EEF “for greater coordination between these regulations to remove unnecessary burdens on business and to provide clarity to facilitate investment.” It is a complaint amplified in a recent survey of their membership. While manufacturers in general are seeing a positive environmental impact on performance, compliance is immensely costly and time-consuming.

“What we want is the environment and regulation policy framework targeting outcome, and focused on achieving environmental improvements in line with economic objectives,” says Fandrich.

“One of the biggest barriers especially for smaller companies is the lack of knowledge. At present they are often struggling to keep their businesses afloat, struggling with environmental legislation, and spending increasing time on the paperwork and associated administrative burden.

“And yes there is a positive effect in many areas but it is not necessarily focusing attention on the greatest opportunities possible through environmental improvement.” In reality, and despite ministerial rhetoric, UK policy on waste takes the form of a largely policing and enforcing operation with minimal innovative encouragement. As the EEF/Barclays study points out, the regulatory framework needs to incentivise resource efficiency, “not just increase the cost to business.”