Probably more than most businesses, industrial facilities and manufacturers focus on the bottom line. In most cases, changes to business practices and operations are implemented only because they can save money, improve worker productivity (another form of cost savings) or help a manufacturer produce products less expensively.[pullquote]
Until recently, rarely would an industrial facility or manufacturer consider incorporating green or sustainable practices as a way to reap financial benefits. After all, it wasn’t that long ago that building a green, more sustainable facility could cost as much as 20% more than constructing a comparable conventional facility. Further, operating a green facility could be more costly, as well.
While this cost differential between green and conventional practices has narrowed significantly or often been eliminated completely, there are some sustainable building practices that might not prove to be a significant cost savings or offer a significant return on investment (ROI) for several years to come. For instance, the ROI for retrofitting a facility with a green roof depends greatly on whether the facility can claim tax credits for installing it, the overall cost of the project, the life expectancy of the current roof, the type of green roof selected, the age of the building, the climate and geographic location of the facility, and so on.
Although the return on the installation of a green roof might have several variables, other sustainable measures and installations are more likely to prove their value in cost savings more quickly and significantly. In some cases, these returns might be quite tangible, for instance, a reduction in utility bills. In other cases, the returns might be less noticeable, at least initially, but prove valuable in the long run. There are three noteworthy sustainable measures that are relatively economical and financially beneficial.
- Systems and strategies that save energy
- Products and procedures that conserve water
- The adoption of green cleaning systems.
However, before discussing these sustainable practices, let’s concentrate on the issues confronting plant managers as they consider the entire concept of building, retrofitting, and operating a facility in a more sustainable manner. Conducting a rigorous analysis of the issues and options now can help ward off mistakes and potential problems down the road.
Complex questions and issues
According to the U.S. Green Building Council (USGBC), a property's value increases by $12.50/sq. ft. for every $1/sq. ft. saved in operating expenses as a result of incorporating green and sustainable measures. While this highlights the benefits of sustainability, deciding on which practices or programs to select can be daunting. One way to move forward is to ask the following:
- What are the costs associated with each green or sustainable alternative?
- Will there be a payback or ROI for the greener choices, and how much will this likely be?
- What are the most sustainable options and choices for the facility?
- What choices most significantly reduce the facility’s carbon footprint?
Based on the answers, plant managers form specific conclusions as to which equipment, building materials, products and procedures should be replaced, installed or implemented to make the facility more sustainable and show a worthwhile ROI. Rather than embarking on a broad range of sustainable initiatives, focus efforts on key areas, such as water, energy and green cleaning that will likely produce the most immediate, cost-effective results.
Cost savings and sustainability through energy savings
The costs of oil and natural gas and related petroleum-based products have risen significantly during the past decade. Although there’s been some dip in these costs lately because of the downturn in the economy, you can bet that almost as quickly as world economy shows signs of improvement, the charges for oil and gas also will rise.
These increasing costs have a negative effect on companies around the world, in good times and in bad, but they’re becoming especially harsh for U.S. manufacturers at a time when many are just now starting to show economic life and profitability. A study by the National Association of Manufacturers (NAM) in 2004, when the U.S. economy was relatively robust, found that U.S. manufacturers have a 22% cost disadvantage compared to their overseas competitors in a number of areas, with the cost of energy being one of the chief culprits.
Any controls or systems that aggressively reduce energy consumption now, at least until less expensive alternatives are viable, can improve any bottom line. For example, Steris of Mentor, Ohio, manufacturer of products and services for health care, pharmaceutical, scientific and industrial facilities achieved significant energy savings by:
- Installing additional insulation to existing facilities
- Upgrading or replacing older HVAC, steam or compressed air systems
- Retrofitting lighting throughout and increasing use of day lighting systems
- Installing or upgrading building control and management systems.
While the costs for these upgrades weren’t revealed, the company indicates that cost savings from these and other improvements total nearly $1 million annually. Although the ROI for Steris' improvements can’t be determined precisely, one thing is certain: As the cost of energy increases in years to come, the savings will likely increase, as well, making these sustainable measures a worthwhile investment.
In another case, when the National Renewable Energy Laboratory in Golden, Colorado, invested $10,000 in day lighting systems, which turn lights on and off based on the amount of sunlight entering the facility, it saved more than $4,000/year in energy costs.
Cost savings and sustainability through water savings
The word “sustainability” is bantered around quite a bit these days, causing some confusion as to what the term really means. The best definition of sustainability, and the one that most professionals use, was coined in 1983 by the United Nations Commission on Environment and Development. It defined sustainability as “meeting present needs without compromising the ability of future generations to meet their needs.”
In recent years, the concept of sustainability, as it applies to businesses, has evolved into the “triple bottom line.” This refers to economic, social and environmental benefits for businesses when they operate their facilities in a more sustainable manner.
We should also clarify that in an office, school or industrial setting, Green typically refers to products whereas sustainablity refers to business operations.
Even though some studies indicate that water use in industrial facilities is actually on the decline, estimates indicate the amount of water used in plant, industrial and manufacturing facilities amounts to about 10% of total U.S. water use. Water reuse and conservation practices — along with measures to reduce water disposal and the energy necessary to pump, heat, chill and distribute water to and throughout a facility — can result in significant savings.
In some cases, non-potable water can be reused for landscaping and irrigation, which can prove to be a significant water savings. Low- and no-flow faucets and fixtures in restrooms also can prove to be a source of significant water savings. For instance, the state of Massachusetts wanted to know what would happen if it replaced conventional urinals with waterless urinals in its state facilities and how much water and money it would save. It determined that if waterless urinal systems were installed, there would be a water savings of approximately 1.6 million gal annually for every 1,000 male workers. Additionally, for every 1,000 male workers there would be a cost savings of approximately $21,000 in water and sewer costs (based on June 2008 charges).
Other ways industrial facilities reduce water use is through the use of new cooling towers that minimize drift and evaporation. Further, many facilities are now collecting rainwater runoff from rooftops, using it for plants and landscaping.
Cost savings and sustainability through green cleaning
At one time, green cleaning products cost more than conventional cleaning products. However, with new technologies, greater product concentration and other improvements, any additional costs for green cleaning products are negligible, making them cost-neutral.
Oftentimes, any additional costs for the green products are offset, in many cases significantly, by savings in other areas. For instance, a University of San Diego study released in September 2009 found that employees working in green buildings are more productive than their counterparts in non-green facilities.
The study involved more than 2,000 workers employed or working in 154 green buildings. A green building was defined as one that was LEED-certified or Energy Star-labeled, meaning it was designed to use considerably less energy than a comparable facility. Formerly, these staffers worked in conventional, non-green facilities. The researchers looked at two key measurements to compare productivity: the number of sick days the workers took and self-reported productivity percentage changes.
Among the key findings were that 45% of respondents reported an average of 2.9 fewer sick days in the new green location. Further, nearly 43% of the employees agreed they were more productive in green buildings, and 12% strongly agreed they were more productive in the greener, more sustainable buildings.
At first sight, these cost savings aren’t as obvious as, say, a reduced utility bill resulting from additional building insulation, yet they can be just as significant. Employers know that fewer sick days and greater worker productivity are like money in the bank, especially in a manufacturing or industrial setting.
As plant managers gain greater insight into the green and sustainable opportunities available to them, and with mounting pressure to operate facilities in a more sustainable manner, they’re likely to discover many ways to embrace sustainability while realizing cost benefits. Going green has evolved into a win-win-win situation: natural resources are protected; facilities are operated in a more efficient, healthier manner; and the bottom line experiences a positive kick.
Stephen P. Ashkin is president of The Ashkin Group in Bloomington, Ind. Contact him at [email protected] and (812) 332-7950.