Manufacturers benefit from cost-saving measures in a slow economy
There is a clear business case for investment in organisational sustainability – smart adaptations that save manufacturers money while cleaning up their environmental act – when slow growth releases pressure on the production line.
Sustainable production: a global issue
Increased demand and technical advances over the last century raised production levels, often with very little consideration for the environmental ramifications. This century is a watershed, where population growth, consumption patterns and production methods threaten the natural system that has buttressed our road to social and economic wealth.
Environmental policy revision, corporate reform and consumer activism share the objectives of accountability and sustainable development. A greener global economy requires industrial development that assures economic growth and increased standard of living, whilst at the same time reducing resource use, pollution, waste and its impact on nature and communities.
The business case: industrial sustainability in Africa
A taxing economic climate fuels the urgency to sharpen any organisation’s competitive edge, thereby liberating resources for investment in growth and job creation. South Africa’s Department of Trade and Industry (the dti) believes Africa’s growing domestic markets – 1 billion plus consumers – must be served by boosting local manufacture and free trade.
With African manufactured output doubling over the last decade, the pressure is on for local producers – big contributors to carbon emissions and massive users of water and energy resources – to realise the investment opportunities presented by improved efficiencies in energy and water conservation, waste and GHG reductions.
International and South African authorities have put attractive incentives and support mechanisms in place to aid manufacturers keen on investing in positive change. In short, it is prudent to ‘clean house’ while the economy is slow.
Support mechanisms: industry aided
The United Nations’ Industrial Development Organisation (UNIDO) and Environment Programme (UNEP) have been establishing national cleaner production centres (NCPCs) in developing economies since 1994. These NCPCs roll out resource efficiency and cleaner production (RECP) programmes that equip emerging economies with improved competitive technologies sensitive to best-practice environmental and natural resource use. So far, RECP programmes exist in 47 developing and transition countries to harmonise productivity, environmental and social imperatives. The network, known as RECPnet, provides a useful platform for sharing success stories, policies and best practices.
In South Africa, the National Cleaner Production Centre of South Africa (NCPC-SA) is funded by the dti as its key industrial sustainability programme for the manufacturing industry focused on energy, water and materials efficiency, as well as waste management.
The NCPC-SA actively engages producers on resource efficient business practices, and offers support through in-plant assessments and training programmes using the RECP toolkit.
RECP assessments are carried out at participating companies targeted using a sector approach, aligned to government’s Industrial Policy Action Plan (IPAP). The process includes energy, water and material assessments to gauge current consumption levels and opportunities for reduction; as well as waste assessments, to benchmark existing waste generation against reduction targets.
Proven cost savings: material drop in energy use
By implementing innovative energy-saving measures, resource-intensive manufacturers find that they can meet the growing demands of consumers for more and cheaper goods, whilst migrating to cleaner production processes and methodologies, reducing their carbon footprint and liberating capital for investment in growth.
This is not pure theory, with many South African success stories in the bag. Businesses adapting in a timely manner through innovative and more efficient methodologies have demonstrated remarkable resilience by developing new business models that recognize the need to do more with less.
Profitability: a steamy return on energy investment
Stanger-based manufacturer Gledhow Sugar Company runs a factory 24/7 nine months of the year to process 1.5 million tons of sugar cane into refined white sugar, fibre for paper production and molasses.
Although Geldhow generates enough steam power for internal use by burning coal and bagasse during harvesting, the factory relies on electrical power from the local municipality out of season, three months of the year.
In 2011, Gledhow Engineering Manager, Barry Parkin, commissioned the NCPC-SA’s Industrial Energy Efficiency (IEE) Project to conduct a baseline study into the factory’s energy and mass balance, keen to improve the factory’s energy efficiency, reduce
the amount of coal used and to increase profitability.
Numerous opportunities were identified to improve Gledhow’s steam distribution network, leading to improvements in thermal insulation, boiler controls and the introduction of a steam trap and steam leak maintenance programme. This saved the company R500,000 in energy costs during 2012 alone!
Gledhow invested R210,000 into cleaner production methods, which included courses in energy management; motors; and steam, compressed air and fan system optimisation for the engineering manager, mechanical and electrical engineers, and electrical technician. After attending the courses, the engineering team were equipped to actively champion energy optimisation technologies and initiate energy optimisation projects at the factory, with the tools and insight to ensure success.
Because the investment cost was recouped within six months, Gledhow possessed capital to invest a sizeable R2,25 million into four more energy-saving projects during 2013. This year, Gledhow also installed soot blowers and automated boiler blow down systems on its coal-fired boiler.
To boot, Parkin not only became on of the country’s first Expert Level Steam Specialists, but Gledhow now operates as a Training Host Plant with the IEE Project, fast-tracking advanced energy efficiency implementation for future gain.
As a spin-off, improved energy efficiency may enable GSC in future to bid for renewable energy cogeneration in the Department of Energy’s Renewable Energy Independent Power Producer (REIPP) Procurement Programme.
Put your energy behind smarter savings
The Industrial Energy Efficiency Project (IEE Project) teaches South African industries how to use available energy resources more productively, so that energy-intensive industrial stakeholders (such as mining, automotive, metals, chemicals and agro-processing plants) can implement and optimise energy management systems.
Now in its fourth year, the IEE Project (run by the NCPC-SA, in collaboration with UNIDO) focuses on implementation of energy saving interventions and training energy experts to drive and manage the processes.
To date, 31 experts have been trained and 111 more are undergoing expert level training in energy management systems (EnMS) and/or energy systems optimisation (ESO) – the optimisation of energy systems, including fan, motor, steam, compressed air and pump systems.
An increasing number of companies are signing up as demonstration plants, where energy experts practice their newly acquired skills, implementing energy efficiency interventions that result in substantial energy savings and carbon emission reductions.
To date, EnMS and ESO interventions at demonstration plants have resulted in energy savings of over 270 GWh, which translates into a cost saving of R 229 million and carbon emission reductions of almost 255 000 tons of CO2.
Incentivising savings: return on investment
To support industrial sectors in enhancing their competitiveness and job creation targets, the South African government offers a suite of incentive schemes to bolster cleaner and more resource efficient production with financial support. The dti’s Manufacturing Competitiveness Enhancement Programme (MCEP), launched in May 2012 as a key driver of the Industrial Policy Action Plan (IPAP) 2012/13 – 2014/15, helps manufacturers to upgrade their production facilities and methods through one of two mechanisms, co-managed with the Industrial Development Corporation (IDC):
• the Productivity Incentive (PI) and
• Industrial Financing Loan Facilities.
In granting financial assistance for new technology and advanced manufacturing, the dti makes sustainable transformation more accessible to companies, particularly small and medium enterprises, in sectors under threat from international competition, low margins and increased compliance requirements.
Call to action: the buck starts here
For South African industry to compete in an increasingly environmentally aware global marketplace and on a Continent geared for growth, local companies cannot afford to exclude resource efficiency and cleaner production from their business mandate. And in the face of increasing energy and resource prices, efficiency is now a business imperative – not a nice-to-have…
By committing to implementing sector-relevant adaptations and by increasing awareness among employees and supply chains of this imperative, manufacturers can realise substantive downstream business opportunities – not only in garnering customer and industry reputational mileage, but tangible financial benefits at this time while the focus and feasibility for change is at its greatest!