Great Lakes Pollution Prevention Roundtable Program Overview March 14, 2007 Karen Wan
Agenda • • Introduction Project Partners History of By-Product Synergy Chicago Hybrid Model Status of the Network Chicago Strategy for Growth Collecting Success Stories
Introduction the questions leading to the network • What do environmental technical assistance providers do with manufacturers and other businesses after you’ve done everything you know to make them lean? • How do you tackle bigger environmental problems than your own business can handle on its own? • If you’re a public entity, how do you promote sustainable economic development?
What is the Chicago Waste to Profit Network? • The goal of the network is to improve the financial and environmental health of the Chicago region by transforming outputs (wastes) to industrial inputs (profits) =
How did we develop the Chicago Waste to Profit Network? • Timing was good. . . • City of Chicago, Department of Environment was looking for ways to assist Chicago industry to become greener AND promote economic development • CMC and USBCSD had an idea for a Chicago-based byproduct synergy project • The EPA Great Cities program and the State of Illinois Recycling Energy Modernization (REM) Program supported the City’s leadership • CMC was able to apply NIST matching funds to this project
Chicago Waste to Profit Network Funding • City of Chicago • EPA Great Cities • State of Illinois Recycling Energy Modernization (REM) Grant • NIST • Company matching fees • $2500 – companies under 500 employees • $5000 – companies over 500 employees
Delivery Partners • World Business Chicago • Chicagoland Chamber of Commerce – company targeting • Waste Management Research Center • UK NISP
Goals of the Chicago Waste to Profit Network • Demonstrate City of Chicago leadership in green business - Mayor Richard M. Daley is a project champion • Track the economic and social value of by-product synergy in the Chicago region • Create a by-product synergy culture in our region • Lead by example - model implementation of this concept for cities and regions around the country – tie into EPA, MEP and USBCSD networks • Build the case for expanded public funding for this initiative
Benefits • Public Good • Improved Environmental Measures • Reduced Waste to Landfill 100 • Creates New Jobs 90 • Create New Companies 70 WASTE 80 60 PROFIT • Revenue from new product offerings Dec Nov Oct Sep Aug July June May 10 Apr • Increased Efficiencies 20 Mar • Reduced disposal costs 30 Feb • Reduced raw material costs 40 Jan • Industry 50
Why have businesses joined the network? • • • Add legitimacy to “sustainability” or “green” claims Reduce or eliminate cost for waste disposal Transform waste into a revenue stream Approach product and process design differently Create new markets Share environmental expertise with the network
Value to CMC (and other MEP Centers) • Naturally expands upon lean manufacturing core competency • Plays into strengths of being part of a national MEP network • Creates short-term, mid-term, and long-term innovation opportunities for the manufacturers that we serve
History of By-Product Synergy • This is not a new concept – the EPA and others have been promoters of this idea since the early 1990’s • By-product synergy implementations • Kalundborg, Denmark – since the 1970’s – several businesses within a short proximity from each other • USBCSD – small networks around the U. S. – less than 100 companies • United Kingdom – National Industrial Symbiosis Programme (NISP) – since 1999 – 4000 companies
Traditional Material Flow Process Products Lack of Inter. Company and Inter-Industry Collaboration is a hindrance to innovation and realization of new revenue. Disposition Target Customers Co-Products Revenue Sources By Products Disposition Products Company C Revenue Source Products Company B Co-Products By Products Company A Target Customers Co-Products Revenue Sources By Products Disposition Lost Opportunity Return Lost Opportunity The environmental impact of disposition can impact business, too: landfill tipping fees and the cost of raw materials are on the rise. Products Company D Return Lost Opportunities do not come cheaply! Disposition of By Products is also associated with landfill tipping, treatment, recycling, and storage costs. Target Customers Co-Products Revenue Sources By Products Disposition Return Lost Opportunity By Products are often misconstrued as “waste” instead of opportunity. Without dedicating resources to finding alternatives for disposition, a company may miss opportunities.
Waste to Profit Material Flow Process Through the byproduct synergy and implementation processes, companies can reduce disposition costs and create new revenue streams— possibly even new product lines and businesses. $ Products Company A By Products Co-Products By Products Company B $ Products INNOVATION THROUGH COLLABORATION! Co-Products $ By Products Company D Through the sustainable cycle of inter-industry materials management, Chicago Industry, as a whole, can reduce its impact on the environment, and the environment’s negative impact on profitablilty. Co-Products $ Company C By Products Through the Waste to Profit Network, innovative synergy opportunities emerge during and following collaborative company discussions of material streams.
BPS Sister Networks Alberta • United Kingdom Chicago’s Network will tie into possible Milwaukee, NW Indiana, and SE Michigan Networks • Montreal • Pacific Northwest Milwaukee • SE Michigan Chicago Ohio • NW Indiana • Kansas City • Fort Bragg • North Texas • Gulf Coast • Tampico Mexico
Industrial Symbiosis Business Opportunity Landfill ↓ Learning ↑ Jobs ↑ New Business ↑ Innovation ↑ Transport ↓ CO 2 ↓ Pollution ↓ Sales ↑ Costs ↓ Asset Utilisation ↑
Key Achievements (audited) Apr 2005 -June 2006 • • 1, 483, 646 tonnes diverted from LF (Hazardous 29%) 1, 827, 756 tonnes virgin materials saved 1, 272, 069 tonnes CO 2 savings 386, 775, 000 litres potable water savings £ 36, 080, 200 additional sales £ 46, 542, 129 cost savings 790 jobs £ 32, 128, 889 private capital investment
Regional implementation strategy ‘Funnel Effect’ Self-selecting network
Regional Focus: West Midlands • • • Most ‘mature’ NISP region 3 years experience Today <1000 members Team grown from 3 – 8 Skills mix: Director (project management), Technical & Admin Support • Trialed and developed IS toolkit (training, data collection…) • Sector and geographic sector based: aggregate replacement materials, biomass & biofuels, water & effluent, automotive & automotive supply
Waste to Profit Network Objectives Create: • One principal network of between 10 and 25 companies • One community network of 25 -50 companies • Deliverables: • 5 working meetings in 2007 for principal network • 1 working meeting for community network • Metrics: • 20, 000 tons diverted from landfill • 30 jobs new or retained • Cost savings for network companies
Chicago Hybrid Model • Incorporate the best practices from around the world into a model that works for an urban industrial region in the U. S. • Apply MEP knowledge of how to assist small and midsize manufacturers into this model • Focus on two key areas: • Short and Long-term innovation • Serving communities in the City of Chicago
Five Steps from Waste to Profit 2007 -2008 Quantify value in business terms Coordinate implementation assistance Perform BPS assessments and map inter-company synergies Facilitate business helping business World class organizations develop public/private partnership in Chicago
Innovation Network Strategy • Targeted Approach: • Seek out Industry Leadership: Both small and large manufacturers in Chicago region • Assist network participants: • Understand the concept through kickoff and individual targeting meetings • Agree to contract terms for confidentiality, fee based network • Understand basic material flows: preliminary data collection
Innovation Structure • Series of five facilitated meetings throughout the year • Development of subgroups and focus areas • Focus on collecting metrics of success in an ongoing process
Status - Innovation Network 26 Member Companies: • • • • Abbott Acme Refining Akzo Nobel Baxter International Christy Webber Landscaping Cloverhill Computers for Schools Cook Composites & Polymers Curb Appeal East Balt Endres Engineered Glass Products General Iron • • • • Goose Island Brewery Hydrodec Kimball International Kraft Foods Lafarge Mittal Steel Naylor Pipe S&C Electric Sara Lee Schulze Burch Sherwin Williams Smurfit USG
City of Chicago Departments • Demonstrate leading by example • Department of Environment staff coordinating byproduct synergy implementation with: • • Aviation Fleet General Services O’Hare Modernization Program Streets and Sanitation Transportation Water
Innovation Network – Results to Date • Innovation Network Node 1 has held one working meetings – January 25, 2007 • 3 by-product synergies are being implemented - in process of collecting ROI and environmental metrics • Anticipate about 10 subgroups • Such as: Plastics, Construction & Debris, Food waste, Energy, Chemicals, Pallet Recycling • Will define and prioritize subgroups at next working meeting on March 29, 2007
Community Network Approach • Adapt UK process of engagement • Bring together economically, industrially, geographically diverse group of companies • Enlist most engaged companies to serve as network leaders and diplomats • Discover company material flows • Add company information into database • Bridge to Innovation Network
Targeting Communities and Companies for the Community Network • First community meeting will be held on June 21, 2007 at the City of Chicago Center for Green Technology • Focus on two communities -- near west and south side industrial corridors • Introduce by-product synergy concept to over 100 smaller companies in the Chicago area • Companies will be knowledgeable, engaged and prepared prior to the June meeting
Facilitation Process • Plant a Seed: Quantify company byproducts and feedstock • Watch it Grow: Group all products by material type and need association • Pick the Low Hanging Fruit: Identify of the obvious synergy opportunities • Don’t Leaf anything Hanging: Identify of what needs are yet unmet • Branch Out: Brainstorm ways to fulfill these needs
Community Network Status • In process of targeting companies • Several companies are creating waste profiles: • • Portion. Pac Chemical Corporation Lincoln Park Zoo Republic Glass and Windows Chicago Gear • Will add 40 more companies in next two months identified in surveys from fall 2006
Pilot Project Timeline
Chicago Growth Strategy • Attract more companies to participate • 10 -12 companies provides limited synergies based on EPA analysis of New Jersey by-product synergy effort • Track economic value to member companies on a constant basis • Pursue new public funding for FY 08 -09 while growing fee income in 2007 • Grow more aggressively than the current project requires – beat expectations • Work closely with Illinois EPA and Region V EPA
Proposed growth strategy benefits • Increases likelihood of success: • Increases potential of implementing synergies • Increases cumulative cost savings for network members § 150% to 300% average ROI for each incremental $10, 000 cost savings per company (based on UK results) § 100 companies = $1, 000 vs $200, 000 for 20 companies • Develops a viable long-term business model for managing the network, while public funding investment is pursued
Collecting Success Stories • Environmental Benefits • Adhere to EPA metrics collection through WMRC • Separately and in Triple bottom line reporting • Economic Benefits • Gather information continuously, report bi-monthly • Create metrics that are useful to our members • Economic Development focus – creation of new jobs • Social Benefits • Possibly more qualitative • Gather information continuously, report bi-monthly • Assessing the social impact of collaboration
Progress Report Example Solution: Recycler to Reprocess By-Product for Re-Sale to Member Company Rough Estimate of Materials Savings =100, 000 Rough Estimate of Reduction of Disposal Costs =26, 000 Rough Estimate of Reduction of Associated Costs =50, 000 -Initial Investment = 2, 500 _____________________ Transportation Provided eliminating disposal Fees Estimate of Total First Year ROI = 173, 500 Five Year ROI = 877, 500 Ten Year ROI = 1, 757, 500 Good for Shareholders: Reduction in Cost of Raw Materials Without compromising quality Stability of pricing eliminates the need to stock and store large quantities of raw materials Current State Reclaimed and Repurchase By. Product Good for Business: Elimination of Disposal, Transportation and Storage Costs Good for the Environment: Positive environmental impact, creation of zero-waste stream Triple-Bottom Line Benefits 100% of By Product is diverted from landfills Raw material costs decreased by 50%
Added Benefits from Sustainable Marketing Influence of Sustainable Marketing on Alpha Consumer Behavior Green Industry Growth Continues Unabated at 30 -50% Annually Billions of Pounds Sterling 66% Noted Green Aspects While Purchasing 42% Believe Companies Carry Responsibility for Social Problems Years since 2000 Importance of Corporate Social Responsibility Practices to Consumers Recent Growth in Market Share of Green Products
The Sustainable Marketing Opportunity Gap A 30% Market Share Will be Gained or Lost on the Basis of Marketing Value of Green Products or Services! Current Market Share of Green Goods Consumers Who Notice Green Goods but Are Not Yet Consumers Market Share of Non Green Goods
Synergy Implementation Status Report Original Process Material 1: Material 2: Material 3: Current Status of Synergy Final Process
Synergy Impact Metrics Company: Material Stream: Baseline from Data Collection Quantity Disposed (Tons/ Month) Monthly Cost of Disposal Quantity Collected Monthly Cost of Acquisition Monthly Cost of Transportation New Monthly Revenue Synergy Partnerships Created CO 2 Emissions Reduced Jobs Created Current Working Meeting 03/29/07 Total Improvement
Additional Qualitative Analysis Company: Material Stream: What was the baseline impact? Business Impact Social Impact Environmental Impact What is the current state? What improvements have occurred?
Reduced Costs Jobs Created Social Benefits Business Benefits New Revenue Created New Businesses Created The Chicago Waste to Profit Network Benefits the Triple Bottom Line Environmental Benefits Solid Waste Diverted from Landfill CO 2 Emissions Reduced
Chicago Waste to Profit Network Contact Information Karen Wan Director of Sustainability and Competitiveness Project Manager of Chicago Waste to Profit Network Chicago Manufacturing Center kwan@cmcusa. org 312. 542. 0430
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