Reducing global impact is no longer a case of environmental responsibility, it’s rapidly becoming a pillar for customer acquisition and profitability. But for companies that have a longstanding, effective operation in place, making the move to sustainable manufacturing will come with challenges, regardless of the positive intent.
Britt Erler, Quartz Network Executive Correspondent hosts a roundtable discussion with Mark Whitten, President and CEO of Spartanburg Steel Products, Brad Nelson, Director of Quality and Regulatory Operations at Basic American Foods, and Chad Raynes, Vice President of Business Development and Engineering at Spartanburg Steel Products to discuss:
- The rapid push towards sustainable manufacturing
- The biggest hurdles to achieving sustainable manufacturing
- How to implement sustainable sustainability
Quartz Network: Chad, can you begin by introducing yourself and your thoughts on sustainable manufacturing?
Chad Raynes: My name is Chad Raynes. I started out as an engineer out on the floor in the automotive industry in Detroit. And from there moved up to several operations roles. I’ve been in business development engineering here for 12 years. My primary focus right now is on winning new work and launching that work to meet the customer requirements. Being in automotive, most of my background, in terms of sustainability and environmental has been around ISO 14,001, which is an environmental compliance that our customers require us to have. It focuses more on regulatory compliance, and we’re seeing a big shift in that right now from our customer base. A lot of our customers were talking about sustainability. Now they’re talking about reducing and reusing, moving towards renewable energy, much more than we previously were tasked with in terms of just simply complying with regulations. I think another big piece of the automotive industry is lean manufacturing and focusing on waste. We traditionally hear it focused on the seven types of waste. And maybe there’s an eighth if you include getting recommendations and ideas from employees. But I think one of the big changes moving forward is that the entire lean manufacturing structure will add pollution and sustainability as one of the wastes that we’re focused on eliminating.
Quartz Network: Mark, can you please tell us a little bit about yourself?
Mark Whitten: Sure. I’m President and CEO of Spartanburg Steel Products. My perspective on sustainability has changed over the course of the last year. What I’ve learned with respect to a sustainability program is that it’s all-encompassing of world-class manufacturing. And one of the things that that we did a year ago was having wildly important goals and a strategy to be a world class company. And I truly believe that in order to do that, sustainability is a major component. And what we’re learning is that it’s not just from an environmental aspects perspective, but its health and safety programs, its diversity and inclusion, legal compliance, supplier code of conduct, internal codes of conduct—it’s so many different things. And I really believe, like Chad mentioned, it’s the lean manufacturing movement of 15-20 years ago, now it’s shifted to sustainability. And it’s really the same thing. We’re at the infancy stages of launching that. And I think there’s a long way to go, but ultimately, to be a world class company, or to be a great company, I think you have to be willing and subscribe to sustainability to survive in the future. I truly believe that.
Quartz Network: Brad, what would you like to add?
Brad Nelson: Within the food industry we have similar challenges and the same desires. A lot of our focal points are around how we eliminate waste. How do we focus on the future? How do we do right by the environment? And how do we do right by our customer base? Our business is very much focused on values being a privately held organization. One of the values that we have is around the environment, and how we work within the footprint of the communities that we operate in. Being a pillar of that community, we have a fairly large impact on both the natural resources, the employee base, and the folks that we interact with. So, everything from looking at wastewater to looking at fossil fuel usage to looking at all these different facets and aspects of environmental, and tailoring in some of the problem-solving tools that my counterparts have talked about with lean manufacturing. How can we use some of these tried-and-true tools in the marketplace to help solve long-term sustainability problems, not just as part of the profit, but because it’s the right thing to do. And at the end of the day, we all know what the right thing to do is when it comes to sustainability.
Quartz Network: Chad, how is sustainable manufacturing part of your strategy to grow revenue?
Chad Raynes: It starts with partnering with customers who share our vision. A lot of the automotive OEMs right now are designing and building electric vehicles. And that fits right into the sustainability vision. And internally, we’re breaking that down into three different buckets.
The first is the products that we make. We think a big part of our sustainability strategy is around the products that we make and ensuring those products are going into sustainable end-use items.
We’re also focused on the process and really trying to minimize our impact on the environment, eliminate waste, and get to renewable energy. Renewable energy is a big topic right now between us and our customers.
Last and probably most important is the people piece of sustainability—to have a culture here that’s based on dignity and respect. One that’s focused on safety and diversity being active in the community. Really, that entire three-piece bucket of sustainability is our strategy to grow with our customers.
Quartz Network: And in your opinion, what are the competitive advantages of sustainable manufacturing?
Chad Raynes: I think it comes back to the people. I think having an effective sustainability program gives the organization a higher purpose. It gives us the belief that that we can make a difference, and we are making a difference in the community and in the world. That translates into the people, it translates into being easier to recruit talent, and easier to retain talent. And we know that a talented team is what delivers best-in-quality products and best-in-quality service. Sustainability is really an opportunity for us to strengthen our brand.
Quartz Network: Mark, what does sustainability mean to you as the CEO of Spartanburg Steel Products?
Mark Whitten: Building off of what Chad said, to me it’s in a competitive advantage. If you truly subscribe to the things that Chad just mentioned, that is the pursuit of world class. And whether it’s the lean focus, or a sustainable focus, being subscribed to that and driving that is what will divide or make you. It’ll separate companies in the future. I truly believe that. So, it’s a competitive advantage. I really think you must think about it differently in terms of sustainability because, again, we’re talking about sustainable energy and manufacturing, but a part of that is the code of conduct and ethics. It’s legal compliance, there’s a bunch of other things that will drive world class and best-in-class business. And I truly think that’s the most important part of it. And lastly, I think it’s a necessity to do business. Going forward, I do believe we have to be focused on the environment, and the right things for our employees.
Quartz Network Do you have a specific strategy around sustainable manufacturing?
Mark Whitten: Yes, we’re building that as we go. We have many different pieces of the puzzle. So, we have a health and safety program. We do training on code of conduct and ethics with our people. We’ve got an environmental program and other things like that. But we don’t think of it inclusively. And I think this is where, as we move forward, it will be one of our three wildly important goals. And we really want to focus on the building of our sustainability program. It’s capturing some of the things that we do. But it’s also adding things that we don’t necessarily do. For example, code of conduct for suppliers. Right now, we don’t require that of our suppliers and we don’t look for it. But our customers are looking at us to be the ones that have a sustainability program. We need to make sure that those who we partner with have the same. So there are things that we need to do. So, we’re working on that strategy. By 2022 we will have and deploy a strategy that will capture all of the pieces of the puzzle that go with sustainability.
Brad, with current pressures from the EPA for PFAS substances in landfills and their usage in the food industry, how are you handling this escalating situation for future sustainability?
Brad Nelson: This has been something that has come up in the past within our industry and other industries with these PFAS. They have been seen by the EPA in previous years as not necessarily a source of concern. In recent studies, there has been more publication with these making their way to landfill. But there’s also been research around effects with human health and these pervasive compounds inside the human body for too long.
What’s happened is through this research with both the EPA and other government regulatory agencies, we have found that there has been conversation among Congress and with the regulatory bodies that these could likely be outlawed or very extremely limited within their capacity for landfill, and even their usage in the industry. So, if you think about everything from hitting your local fast-food joint to what you pick up off the shelf at the local convenience store or grocer, the limiting factor for PFAS and how far they go is quite pervasive in the industry. We’re trying to find ways to either go with greener packaging, packaging that does not contain PFAS or has alternate components to it. We’re also checking with all of our suppliers, making it a mandate on our supplier quality programs to avoid these chemicals, as we look at our procurement strategies down the road.
Quartz Network: Another major issue is the use of fossil fuels, which is always a hot topic in most industries. What are you doing at Basic American Foods to reduce and eliminate the use of fossil fuels,
Brad Nelson: We have a couple of key initiatives or projects in the works. One of them is fairly new, and one of them has been around for a while. What we do primarily within our industry or as a business is dehydrate. Dehydration normally occurs through burning of fossil fuels of some natural gas, or other fossil fuel sources to create steam, or other drying mechanics, which use quite a bit of energy. What we have looked into is either creating efficiency with our equipment, making sure it’s running in optimum condition, and ensuring that the maintenance and predictive maintenance is ensuring it’s working at peak efficiency. This ensures for every pound of natural gas we’re burning, we’re getting as much as we possibly can for dehydration. We’re also looking at alternative drying methodologies such as microwave technology. We’re looking at using technologies to help perforate food cells at a microscopic level, so the food actually dries faster. But from a quality and performance standpoint, the customer still gets what they expect at the end of this. So those are a couple of initiatives we’re working on to address the growing concern about fossil fuel and the carbon footprint that it creates.
Quartz Network: Chad, what challenges have you faced in creating a more sustainable manufacturing industry?
Chad Raynes: The biggest challenge is all around renewable energy. Our customers are driving us to get to 100% renewable energy by 2026, which is an incredible challenge for us. All of our energy right now comes from nuclear, and we don’t have a big choice in terms of where we get our energy from. So, it’s really pushing us to think outside the box, to look at solar as a potential source of energy, obviously to look at wind and hydro also. And then that creates another set of challenges that being a relatively small, independent company, we have a limited amount of resources and capital. And, putting together a long-term plan, a 10, 15, 20-year plan to achieve renewable energy through solar installations at this factory is a big challenge for us.
Quartz Network: Mark, would you like to follow up on that?
Mark Whitten: I’ll just build off what Chad said. It is a challenge. Technology is a big piece of it as well. The capital funding, but I would also say buy-in, you know buy-in in the community, buy-in with employees. This has been a rapid movement towards sustainable manufacturing, renewable energies in the last year. And I think we’ve seen a major ramp curve as we look at companies like General Motors, Mercedes, and BMW making full commitments to build 100% electric vehicles five years from now. I think buy-in is one. I also think a lot of people will be critical of the movement being so quick and whether or not it’s achievable via the amount of funding, the capital, the technology that can support it. So, although Chad and I for sure believe it is absolutely the right thing to do, it’s a matter of how long it will take, and what will be the challenges in terms of buy-in.
Quartz Network: Brad, if you would like to go ahead and follow up with the challenges that you have faced in your industry.
Brad Nelson: Within the industry we work in and the places we do business, a couple of the high-level challenges we’ve been facing is water rights and what we have to do to maintain our water rights. And how can we decrease the amount of water that we’re using within our industry, because some of our factories may use 1.5 million gallons of water a day. So, when you think about that over the course of a year, times half a dozen plants across the western United States, that’s a lot of water. What do we do with all that water because it may be one-time use? And so, dealing with water usage is a forefront item for us. And we found ways through that by reusing grey water and things like that. So that’s one element that we found a challenge with.
There’s also some buy-in for renewable energy. Energy where we where we live, where our factories are located, is fairly cheap because there’s a lot of hydroelectric power, which in the grand scheme of things is fairly cheap. So, cost analyses on going with solar energy and those things haven’t been first and foremost for us. But there’s still some pressure from our customer base in the consumer-packaged world to be making sure that we’re headed in the direction towards renewable energy.
One of the more recent ones is around packaging material. A lot of the packaging material in the food industry is not recyclable, it is not reusable. Moving in a direction toward greener packaging is one of our challenges. We’re looking to make it compostable or make it recyclable. And that’s a challenge that presents some serious headwinds. We’re trying to navigate and work with our vendors to come up with solutions on how to do it.
Quartz Network: The biggest elephant in the room for a lot of executives is what does the future of sustainable manufacturing look like in the next five to 10 years? Chad, if you would like to go ahead and kick us off with your thoughts.
Chad Raynes: I’ll start by saying I think it’s a must. More and more customers we talked to were using this as part of their decision process to source business. When they come to visit our company, it’s one of the things they will notice. They will notice whether a sustainability program is evident or not evident, and automatically view us as either being ahead of the curve or behind. I think the progress in terms of renewable energy will be slow, but I think it’ll be steady. I think there’s a lot of growing support in our area to try to create demand through customer requirements. And I think as that demand increases, the solutions and the technology around renewable energy will follow suit. So, it’s really about building a nice groundswell of support to get the technology kicked off.
Quartz Network: Mark, if you would like to continue.
Mark Whitten: I agree with Chad entirely. I believe it’s absolutely necessary. To me, it really mimics the lean manufacturing movement of 15-20 years ago. You know, I think it’s slow to start, but ultimately it will separate the good from the great. It’s a necessity. It’s the right thing to do for so many different reasons. But it will be slow. I think the challenges will be around the buy-in and the people believing in it. And then of course the technology. As Brad mentioned about the cost of energy, there’d be a lot of headwinds. But ultimately, I absolutely believe that that is the way of the future. It’s just, again, a matter of time.
Quartz Network: Brad, would you like to wrap us up on this question?
Brad Nelson: I absolutely agree with what Chad and Mark shared on the challenges, the headwinds that we’re going to be facing, and the customer buy-in that’ll be coming our way at some point. That customer demand is really what drives the market and I think we’re starting to see that. Our industry is starting to see the same customer demands Chad and Mark mentioned in their industry. I think it’s going to become table stakes, and table stakes are going to come through channels like political pressure. There’s going to be cost pressures, there’s going to be customer pressures, and all of that is going to start to shift the industry. And to Mark’s point about separating the great from the good, it comes down to who’s going to be on the front end of it? Do you have a strategy? Are you executing and putting resources behind that strategy? You’ve got to make sure you have answers when those questions come in from your customer base or from the politicians, whether at the national level or the local level. You’ve got to show them that you’ve made progress. I think that’s what’s going to separate the good from the great.
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