Technology Forecasters, Inc.
Global Consulting and Research for Outsourcing and the Environment
You’ve seen the footage–in a recent TFI blog and elsewhere–of shockingly hazardous recycling methods by poor people in China, India, Ghana, and elsewhere around the world. And if the emotional appeal doesn’t sufficiently motivate your company’s management to double ensure that your products are recycled safely, then consider that yours and your customers’ labels are intact when spotted by reporters, non-government organizations, and other watchdogs. An electronics company’s hard-earned positive brand can be blistered faster than a hand-burned circuit board by “casual recyclers” mining $5 of copper.
Earlier this year, Morgan Johnson of Sims Recycling Solutions (with headquarters in the UK, US, and Australia) spearheaded the purchase of an Internet-based software system that tracks and traces recycled electronics regardless of where products originate, get recycled, or are “touched” en-route. From this WebView Overview, you can see how electronic products in regions as far flung as Malaysia, New Zealand, and Germany are traced by customer, product type, and recycling result.
If you read our blogs at all you know that TFI has been monitoring and forecasting manufacturing outsourcing for the electronics industry, now for 21 years. It’s time that the industry turns its attention to the outsourcing of electronics recycling. Someone in France gives end-of-life electronics to his brother in law, who gives it to…and then…, and now where is your logo lurking?
“Sims doesn’t outsource as much as some other recyclers,” says Morgan Johnson. “Many electronics companies are far flung and are going even further. Normally, insufficient control is asserted over these distant facilities’ e-waste practices; it’s handled locally and not centrally controlled. Better is a consistent service around the globe.”
This blog’s title comes from WNYW’s 10 O’Clock News, which years ago each night began with the simple, but now-famous announcement: “It’s 10:00 p.m. … Do you know where your children are?” Well, it’s 2008 and with responsible recyclers and tracking software available, let’s never again have to wonder where our used electronics end up.
We’d like to hear from you: Do you think it is responsible to have your company’s electronics recycled, without knowing where in the world they are going? And what can be done about it?
P.S. Do you want to take a survey on product reuse and recycling, and receive 2 reports for having done so?
If you need it, here’s more evidence that it is time to get on the bandwagon and develop a roadmap to reduce your company’s environmental impact. The most recent report on quarterly venture capital investment from Dow Jones Financial Services shows that, while VC investing in general was down quarter to quarter over last year, investing in clean technologies matched last year’s first quarter pace.
That’s good news because last year saw a record level of VC investment in “cleantech,” as Dow Jones calls it. A total of $3 billion of VC investing went to cleantech startups in 2007, a 43 percent increase over the previous year.
Dow Jones explains: “Although ‘cleantech’ cuts across all industries, the majority of these companies can be found in the energy, agriculture, and advanced specialty chemicals and materials segments.”
The individual technology matters less than the bigger message implicit in this high-risk investing. VC investors often see the handwriting on the wall before others do. Although these investors take a shotgun approach – recognizing that many bets will fail and a few will pay off big– their investments are a leading indicator of technological trends.
If VC investors are more interested in clean and green than ever, then it can be argued that it is time for companies to confront reality and develop plans for more environmentally sustainable processes and products. OEMs, EMS providers and ODMs that wait to develop roadmaps to reduce their environmental impact risk remaining behind the curve.
As TFI Environment has shown in the past and will continue to show, green (sustainability) can be green (profitable). OEMs and others that have not done the analysis on their processes and products to see where clean/green can also be profitable, are hurting themselves and their shareholders by continuing to lag this growing trend.
As always, we’re interested in your thoughts.
Here’s a situation we often encounter when we work with OEMs to create roadmaps for reducing the environmental impact of their companies and products.
The financial analysis of the roadmap inevitably shows a significant return on investment (ROI), and largely on that basis the top executives readily sign off on it. When we discuss the roadmap with mid-level managers and rank-and-file employees (the best source of specific environmental initiatives, by the way), we get a different reaction.
They often want to know if ROI is the only reason the executives are making a commitment to reduce waste and develop more efficient products. Many workers hope the company is going green because it is the right thing to do, whether it improves the financial picture or not.
From our perspective, neither dollars nor sentiment is the right or wrong motivation. In fact, the two are a potent combination, as I explored in my book on the topic. What could be better than to improve the financial picture and help the environment? Has there ever been a better win-win situation?
Yet we understand that an environmental roadmap is important to the company’s internal brand. If employees believe the only reason the CEO is doing this is to improve financials - which is likely to boost his or her own compensation as well - then their cynical attitude can hurt the internal brand. We tell employees the company has decided to eliminate waste, design products for environmental improvement, and take other measures for both reasons.
Executives must maintain a delicate balance. They are constantly under bottom line pressure. But they sure want employees to feel good about the corporate social responsibility of the place they work. At TFI Environment, we think it best to acknowledge both motivations openly and honestly, while keeping in mind the one may mean more to rank-and-file workers than the other.
I was shocked (a phrase I don’t often use) to learn recently that the African nation of Ghana has become a dumping ground for Silicon Valley’s old computers. Maybe you already knew this, but I did not.
It came to my attention when I saw a TV report, with video footage showing mountains of discarded electronics gear sitting next to a village near Accra, Ghana. As the reporter strolled through piles of this stuff, she stopped to read labels and ownership tags. The discarded computers represented virtually every major and minor brand, and the former owners were a who’s who of Silicon Valley. The villagers were burning the circuit boards and other pieces to extract the copper — and polluting their air in the process. Runoff sludge from the site would find its way into a river that ran into the ocean.
It is worth four minutes of your time to watch the report, or alternately read the script. Some in the electronics industry are working to solve the recycling problem. Based on this report, they can’t solve it soon enough.
Another recent media piece is also worth a look by anyone interested in environmental sensitivity. The New Yorker magazine investigated carbon footprints; the title says it all – “Big Foot.” It explains that while reducing excessive carbon footprints is the right thing to do, doing it is a huge task. Just accurately calculating any product’s carbon footprint is a complicated order. Most of the examples were in food products, but the findings generalize to any and all products.
To end on a positive note, the New York Times reports this week on several new media players that run on solar power. This is the kind of inventive electronics design for environment that Technology Forecasters has been promoting for years.
The TV report and the two articles are all worth reading for those who want to get real – and find some hope – for the challenge of design for environment.
Two weeks ago I wrote about Nokia’s efforts to reduce its environmental impact as presented at the Green Manufacturing Expo, a conference I chaired in Anaheim, Calif. I promised one more report from the event: This one on Hewlett-Packard.
During the conference, HP announced an engineering development that allows it to use post-consumer recycled plastics to make new Original HP inkjet print cartridges. As of the announcement, more than 200 million cartridges had been manufactured with the process. HP says it used more than 5 million pounds of recycled plastic in its inkjet cartridges last year, and the company is committed to using twice as much in 2008.
What the press release doesn’t tell you is how H-P makes breakthroughs like this happen. Its internal processes were explained in a presentation by Jay Celorie, a manager of HP’s social and environmental responsibility efforts. More than most companies, HP understands that environmental responsibility starts at the top of the organization and must be nurtured throughout. It will not happen without specific goals, objectives and commitment to attain them.
HP has been a pioneer in environmental and other socially responsibility. According to the environmental sustainability segment on its web site, HP launched product recycling in 1987, and launched product design for environment in 1992. HP’s approach is worth studying by companies genuinely committed to the greening of their practices. And it is also worth remembering that even HP – and it would acknowledge this – is just part way along the journey to the kind of environmental sustainability the industry needs.
According to Celorie, HP manages its impact by adopting environmentally responsible practices in product development, operations and supply chain. When it begins to design products, it systematically considers the energy efficiency of the design, the materials that will have a lower impact, and how the device and its components can be recycled at end of life. It establishes goals, just as it does for sales. And it monitors and audits progress toward those goals, including the efforts its suppliers make toward choosing and producing environmentally sustainable parts and materials.
These practices follow the same roadmap TFI Environment uses to support our clients. Does your company have a compass to guide you toward environmental sustainability?
I’ll be chairing the next Green Manufacturing Expo, organized by Canon Communications, on September 22 and 23 in Rosemont, Ill. If you’re interested in attending, please write to Melanie.Cruz@CanCom.com.
From time to time, we hear some version of the following story. Maybe you do, too.
With the best corporate social responsibility (CSR) intentions, an OEM tells its Chinese contract manufacturer to limit workers’ overtime to the amount prescribed under law. Then many of the workers quit and go to another manufacturer that doesn’t follow the law.
Electronics manufacturers and others face the dilemma of breaking the law to offer as much overtime as possible to workers, or complying and losing workers to employers who don’t play by the rule. Chinese labor law stipulates that workers cannot work more than 36 hours of overtime in a month, but does not enforce the rule, and workers want as much overtime as they can get.
We hear the stories, but rarely see any documentation of the problem. So shame on us for not noticing sooner: A study group from the Foreign Investment Advisory Service of the World Bank and Business for Social Responsibility, with financial support from various organizations, including the Electronics Industry Code of Conduct group, recently researched CSR, including the overtime problem, in Shenzhen’s electronics sector and published its finding last summer.
Entitled “Corporate Social Responsibility in China’s Information and Communications Technology (ICT) Sector,” the report examines CSR issues based on interviews with several EMS companies, including Celestica, Flextronics and Foxconn, and several OEMs, including Hewlett Packard, Motorola, Nokia, and Philips.
Here’s a sample of its findings, from section 2.2.7, “Complexity of the overtime issue:”
“Since employee retention is a major challenge in Shenzhen, factories are extremely concerned with losing workers due to insufficient overtime. Among the suppliers interviewed, turnover ranged from 3% to 20% per month. Many suppliers felt that workers demanded at least 60-80 hours of overtime per month, and that overtime only became unwelcome above 100 hours per month.”
No single electronics company can begin to resolve the gap between law and reality. The existing law may be too restrictive, but there is likely an appropriate level of overtime that all parties—the industry, the Chinese government, and the workers – could agree to if they were to negotiate, which the study group recommends.
CSR is important to electronics companies, so it is time for all parties to get together and iron out a resolution, one the Chinese government will enforce. The report recommends stiff fines for companies that break the law and incentives for those that abide by it.
What’s your experience with the Chinese overtime dilemma?
I recently attended two presentations by electronics companies at the Green Manufacturing Expo, a conference I chaired in Anaheim, Calif., that ought to inspire even those who are most skeptical that green can be profitable.
In one, a Nokia manager explained how it had reduced its environmental impact by down-sizing cell phone packaging. In the other, a Hewlett Packard manager discussed its product stewardship initiative. I’ll report on Nokia today and on HP in a future post.
Two years ago, Nokia reduced by half the size of the box for its cell phone. According to David Conrad, head of environment for Nokia North America, about 250 million phones – half the total sold from February 2006 to the end of 2007 – have been shipped in the new box, for a savings of $150 million in materials and transportation.
Nokia can put 1,100 new boxes on a shipping pallet, compared with 480 old boxes, which results in 5,000 fewer tractor trailers on the road. The new packaging, made entirely of recycled paperboard stock containing 55 percent post-consumer recycled content, has saved about 855 trees, eliminated nearly 5,000 pounds of waterborne waste, and diverted more than 77,000 pounds of landfill waste – to name just some of the environmental advantages to date.
Conrad said the only way to have a substantial environmental impact is to challenge convention. Nokia had to get diverse thinking involved in the process. For example, whatever marketing people might lack technically, they more than make up for with creativity. “You have to challenge convention, re-ask questions that have been answered again and again, to make people rethink the way products can be designed, manufactured, and packaged,” he said.
Nokia has been a leader in the green movement in other bold ways. For example, it recently released a cell phone with a case made of plant-based plastic, not petroleum based. Conrad explained the reason for Nokia’s commitment: “Corporate sustainability and environmental sustainability are not mutually exclusive or mutually agreeable; they are mutually dependent.”
That’s exactly the point we’ve been making for 10 years at Technology Forecasters. How do you see it? Do you want to make corporate sustainability and environmental sustainability mutually dependent at your company?
Another Green Manufacturing Expo, organized by Canon Communications, is scheduled for September 23 and 24 in Rosemont, Ill. Let me know if you are interested in attending.
For a number of years, I’ve been predicting how the path to greener electronic products and facilities would unfold through the next decade. We’ve published TFI’s “Electronics Industry Environmental Timeline” on our web site to give clients context about key directives and other regulatory events since the 1970s, and to forecast environmental trends above and beyond the imposition of any single compliance standard.
For example, by 2010 I expect we will see moderate use of alternative, non- or less toxic materials throughout the electronics, and that this trend will accelerate to widespread use by 2015. Some of this will be compliance driven and some of it will be driven by the fact that electronics companies will come to see that using fewer and non-oil-dependent materials can be profitable.
I elaborated on these projections in a recent podcast with Design News.
Though the European Union’s Restriction of Hazardous Substances (RoHS) Directive loomed large for the industry in recent years, even RoHS will be nearly forgotten in time.
What will be remembered is how the electronics industry seized this moment to make bold and significant changes in the way it designs and manufactures products using drastically reduced carbon footprint, with fewer toxic chemicals, and wasting virtually nothing – using or recycling everything from the raw materials except the squeal (as the meat industry used to say about pigs).
The point is to get out in front of the timeline for business benefit. Learn how by attending the Green Manufacturing Expo next week in Southern California (which I am chairing) or by asking me about our high-return environmental and social responsibility partnerships with electronics companies. A good place to start is to take a look at the road map.
As always, we’d like your thoughts here, too.
Has your company made any New Year’s resolutions yet? If you need some ideas, try one of these offered by Technology Forecasters consultants. Or share your own with us.
Think Lean: In 2008, wherever your company is in its adoption of Lean principles, extend them. If one manufacturing site is already Lean, take Lean to other sites. If all plants are Lean; bring Lean to non-manufacturing operations. If you’re 100 percent Lean, globally and every other way, start applying Lean to your supply chain—pick a key supplier or three and Lean the processes among yourselves.
Go Green: Keeping in mind that Green (the environment) is Green (profitable, competitive, etc.), take stock of your State of Green, and establish a five-year roadmap for eliminating waste and becoming more environmentally efficient, including at least three Green goals to accomplish this year. (We’ll have more to say about environmental roadmaps in the months ahead.)
TCO: This one’s especially for OEMs. Location is everything in real estate, but not in electronics manufacturing. Total cost of outsourcing (TCO) is. With the dollar weak and the price of oil high, TCO is a moving target. Resolve to consider each individual outsourcing decision on its own merit, based on TCO. (Need help with TCO? See TFI’s Outsourcing Navigator).
Rising markets: This one’s for EMS companies. Resolve to investigate at least one new market where outsourcing penetration is still relatively low — medical, defense, industrial, instrumentation, etc.
Outreach: Reach out once a week to a customer, supplier or supply chain expert. This regular effort may help with your own supply chain challenges, create an opportunity to help a partner resolve a challenge and build a diverse pipeline of inputs for a stronger supply chain.
If you’ve got your own resolutions, we’d like to hear from you.
Compared to recent years, 2007 was quiet in regard to product environmental regulations. Aside from China’s Restrictions on Hazardous Substances taking effect, there were few new governmental requirements or actions. There were no major RoHS or WEEE enforcements, and a bill to expand California’s RoHS legislation was vetoed.
Unfortunately, 2007 was also the “quiet before the storm.” As we enter 2008, it would be prudent to expect a tumultuous year - and a tumultuous next 10 years - for many reasons.
First, we have crossed the “greening of industry” tipping point. One example: Several thousand scientists participated in a Nobel Prize-winning scientific consensus when they produced material for the Inter-Governmental Panel on Climate Change’s Fourth Report. Hundreds of corporate executives are calling for mandatory caps on greenhouse gas emissions. Virtually every leading company is launching energy-related initiatives in regard to products, facilities and logistics.
Second, it appears that we will finally see China RoHS’s Phase 2 Catalogue. An initial public meeting to discuss it was set for this week. Products in the catalogue will be required to undergo pre-market testing.
Third, we will see the first wave of implementing legislation from the European Union’s Energy-Using Products Directive. For covered products, there will likely be requirements for energy reductions and for life-cycle analysis.
Fourth, results of the E.U.’s review of the RoHS regulation will be published. It is likely that at least some medical devices and control and monitoring instruments will be included in the directive’s scope. Certain exemptions may be removed, and additional substances may be added.
Finally, the E.U.’s Registration, Evaluation and Authorization of Chemicals (REACH) will kick into high gear with a 2008 pre-registration period and subsequent registration deadlines over the next 10 years. In my estimation, REACH will be to “toxicity in products” what climate change is to “energy use in products.”
Why? Because REACH addresses tens of thousands of substances for which health and environmental testing is scarce; because it will require companies to obtain authorization to use the most detrimental 1,500 of those substances; and, most importantly, because it is an unequivocal statement: “No data. No market. No E.U. sales revenue.”
For companies that see the green handwriting on the wall, design innovation is the key. Gathering full-disclosure substance data is a must. Capturing new business from slower movers is the reward.
Happy New Year to all and rest up for the wild ride ahead.
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