This Issue
 
Recent American history is littered with the skeletons of shuttered manufacturing plants. But two production giants are doubling down on domestic manufacturing with investments in sustainable facilities and operations.


WRITTEN BY Calvin Hennick

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At Intel’s manufacturing facilities, gray water from reverse-osmosis systems is reclaimed for landscaping irrigation and toilets, increasing total cycles of on-site water reuse. Photo: George Tenney

Procter & Gamble and Intel want to be in business for a long, long time. Officials at both companies know that means they’ll need to incorporate sustainable practices at a fundamental level, preparing for a time when manufacturers will no longer be able to rely on the nonrenewable resources that fueled industry during the last century.

But they also know something else: In order to be in business decades into the future, they need to keep making money today.

 

“Because of our size and the extent of our company, sustainability is something that’s very important to us, both for our current business, and to ensure that we grow sustainably into the future,” says Len Sauers, vice president of sustainability for Procter & Gamble. But, he adds, “Sustainability has to stand up from an economic standpoint, similar to any other thing we do as a corporation. We’re not going to accept any tradeoffs, either in cost or performance, as we go down this sustainable path.”

 

“We don’t just [adopt sustainable practices] because it’s the right thing to do and it feels good and it saves the planet,” says Linda Qian, Intel’s communications manager for corporate social responsibility. “A lot of times [managers] talk about it in ‘lean’ terms. They might not even think about it as sustainability. It is absolutely critical to our business success. If we weren’t able to continuously improve and reduce our resource use, that would be a business cost.”

 

Forward-thinking companies like Intel and Procter & Gamble have been paying close attention to sustainability for years, but the combination of new technologies, lowering price points, and creative thinking are helping them to continue to fine-tune their operations. At the same time, more manufacturers are starting to realize that going green doesn’t just mean saving the environment, but also saving money.

“When companies are sustainable, they’re lean, they’re tight, they’re productive,” says Kate Bachman, content editor for the Sustainable Manufacturer Network. “And they can compete more readily in the global marketplace.”

 

The State of Domestic Manufacturing

The reports of the death of American industry, it turns out, were greatly exaggerated.

 

Things looked bleak during the Great Recession. In the run-up to the 2008 presidential election, there seemed to be wide agreement that the U.S. had moved beyond an industrial economy and that lost manufacturing jobs weren’t “coming back.” Any turnaround, many argued, would be spurred by service- and knowledge-based jobs, rather than the manufacturing jobs that had long been the foundation for the very existence of America’s middle class.

 

In fact, though, many of those manufacturing jobs have come back. Between 2005 and 2010, the number of U.S. manufacturing jobs dropped from 14.3 million to 11.5 million. But since then, the number has bounced back up to 12.3 million. That’s still not what it was a decade ago, but it’s a number that has crept up steadily for the last five years—a far cry from the continued hemorrhaging that some feared.

 

It’s difficult to overstate the importance of these jobs to places like Albany, Georgia (where Procter & Gamble has a manufacturing plant and distribution center), and Chandler, Arizona (where Intel has manufacturing and other facilities).

 

“Intel definitely led the way in Chandler,” says Micah Miranda, economic development director for the city, where Intel is the top employer. The city has a population of around 250,000—almost 10 times what it was in 1980—and Miranda says Intel is responsible for much of that growth. “They are a magnet, not only for the companies that do business with them, but other companies who are looking for a similar workforce.”

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Far left: Dorothy Hubbard, Mayor of Albany, Georgia, outside the P&G facility. Middle: Vince Falcione, external relations manager for Procter & Gamble’s Albany plant. Photos: Chris Hamilton Right: Len Sauers is vice president of sustainability for Procter & Gamble.

Albany, where Procter & Gamble is the fourth-largest employer, knows the pain that accompanies a factory shutdown, having experienced several in recent decades. “That is a huge loss,” says Dorothy Hubbard, mayor of the 77,000-resident city. “People come to Albany to do things—to work, to shop, to eat out. When things happen to Albany, that affects the entire Southwest Georgia area.” Hubbard adds that Procter & Gamble is “a good corporate citizen, in addition to providing jobs.”

 

“The employees are part of our community,” Hubbard says. “Many of them serve on boards. They work with nonprofits.” The company also contributes heavily to the local United Way campaign.

 

“When you think about manufacturing, it’s a wealth-building job,” says Vince Falcione, external relations manager for the Albany plant. “It’s not taking money from this community and just re-disbursing it. The money is getting spent here. For every Procter & Gamble job, there’s another three or four jobs that are created to support the plant.”

 

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Taimur Burki, Intel’s global green building program manager. Photo: Fawn DeViney

Intel and Procter & Gamble make very different types of products, of course, and therefore have different reasons for keeping a strong U.S. manufacturing presence. Intel makes high-tech chips that power people’s smartphones, laptops, and computers, and the company relies on America’s highly trained technical workers to produce them. Although Intel sells about three-quarters of its products outside the U.S., the company does three-quarters of its manufacturing here.

 

By contrast, Procter & Gamble makes household products so familiar that they blend into the background in the lives of many consumers, who place Tide, Charmin, Pantene, and Scope in their shopping carts almost unconsciously. It doesn’t make economic sense to ship these products, many of which are heavy or bulky, across the world, and so the company generally produces them near the markets where they’re going to be sold.

 

Reducing shipping is an environmentally friendly measure, obviously, but it’s one that companies have enacted for cost reasons since the dawn of the Industrial Revolution. Today, says Bachman, other sustainable processes are similarly helping companies to keep costs down—and, possibly, to keep from moving jobs overseas. “Manufacturers that incorporate sustainability are more cost-competitive,” she says. “They can enter a market despite the fact that their labor costs are higher.”

 

Money Matters

In highlighting their sustainability efforts, companies typically emphasize their commitment to “doing the right thing.” They’re no doubt sincere in this desire, but the fact is, right and wrong can’t be a company’s only considerations when weighing business decisions. If new sustainability features are so costly that they turn a profitable business into an unprofitable one, that business won’t be around for long, and any environmental benefit of the changes will quickly be lost when competitors swoop in and reinstate previous practices.

 

Emissions abatement systems and cooling towers benefit from recycled water with improved efficiency, lower operating costs and cleaner air emissions. Photo: George Tenney

The changes that are truly sustainable are the ones that also provide a company with a competitive edge—either in cost or quality—because those are the changes that other companies will race to implement, as well. While industries have at times resisted various environmental regulations out of fear that the restrictions would increase their costs, no business leader has ever lobbied against measures that save them money.

Landfill diversion is a prime example of an effort that has both environmental and bottom-line benefits. Intel has begun selling its ammonia-based waste, which it had been paying to recycle, to businesses that can use it as an ingredient in fertilizer—saving the company several million dollars a year. The company has a goal of recycling 90 percent of its solid waste by 2020. “If you can avoid landfills, oftentimes you can save money,” says Taimur Burki, Intel’s global green building program manager. “You might even make some in your recycling. You have a very large positive return on investment.”

 

Procter & Gamble’s huge and diverse product line provides ample opportunity for the company to get creative about repurposing its waste materials. A waste product from the Metamucil manufacturing process is used for soil retention in landscaping projects; scrap materials from a feminine care plant in Budapest are shredded and sold to a cement maker, which burns the material in its kilns; the company donates scraps and defective materials from brands like Swiffer, Pampers, and Bounty to a nonprofit that employs brain-injury survivors, who turn the materials into industrial spill pads; and not-to-specification laundry detergent, which was once sent to landfills, is now sold to carwashes.

 

“We get revenue from that, and then we’re also not paying the landfill fee,” says Sauers. “Whatever we do has to be local,” he notes. “If you start shipping your waste, you start losing the environmental sustainability aspect of it.”

 

Consumers are also starting to demand that companies engage in sustainable practices, says Bachman. “They get cleaner products that don’t make them sick, that don’t cause them problems, that maintain clean water and breathable air.” Also, she says, large companies like Intel and Procter & Gamble are increasingly demanding that their suppliers follow sustainable practices—creating a powerful financial incentive for those smaller companies to green their operations.

 

“I’d say it’s really picked up speed in the last five years,” Bachman says. “And the expectations are getting firmer. Instead of saying, ‘We want you to be more sustainable,’ people are saying, ‘We want you to achieve a 20 percent reduction in your energy consumption.”

Clean manufacturing

The term almost sounds like an oxymoron. The word <i>industrial</i> conjures greasy overalls, polluted air, and the smell of petroleum products, rather than solar tubes and wind turbines.

 

While it’s true that manufacturing facilities are large users of energy, that also means they present great opportunity for reductions, as well as the use of renewable energy.

 

Intel, says Burki, has long prioritized sustainability in its facilities, but only began perusing LEED certification several years ago when he saw that another tech company had received the designation at one of its facilities. “I said, ‘Wait a second, we’ve been doing this all along,’” Burki recalls.

 

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Gopi Krishnan is an Intel systems engineer. Photos: Fawn DeViney

He started by registering the company’s Ocotillo campus in Chandler, which features a large solar installation and a high recycling rate, and also uses nonpotable water for irrigation and in its cooling tower. In 2011, 12 of the campus’s 14 buildings qualified for LEED Silver designation or higher. “I did not invest any capital,” Burki says. “I just wanted to see, as it stands today, how’s it doing?”

 

Today, Intel has 12.5 million square feet of LEED-certified space globally, and is constantly striving to improve the performance of its facilities. Currently, Burki is exploring ways to reduce energy consumption in the company’s kitchens. “I was walking by one day and just looked up at the exhaust and said, ‘I wonder how the kitchens are,’” he explains. “I’m very inquisitive. Annoying, some might call me.”

 

Like commercial office buildings, manufacturing facilities can improve their energy performance by upgrading lighting, heating and cooling, and other systems. But they also use an enormous amount of energy to run their manufacturing tools, and Intel has begun to take a hard look at how the efficiency of these tools can be improved, as well.

 

“We’ve thought about energy conservation in tools [in the past], but it’s never been our biggest priority [until recently],” says Gopi Krishnan, an Intel systems engineer. “We’re held accountable for yield and capability and stability. But we haven’t done a full-fledged optimization based on energy consumption or resource consumption. Now that every factory is looking to reduce costs, this is definitely an opportunity.”

 

Using connected sensors, Intel has determined that it can save several hundred thousand dollars a year by optimizing the performance of a specific type of batch oven used in its manufacturing plants, Krishnan says. “We identified a real opportunity without impacting yield or quality. Now we’re looking at other tools.”

 

Procter & Gamble has 11 LEED-certified facilities, including six manufacturing plants, and around half of the company’s manufacturing facilities send zero waste to landfills. The company has a long-term goal of powering its manufacturing facilities with 100 percent renewable energy; so far, that number sits at just 8 percent, but that will nearly double to 15 percent after the construction of a new energy facility at Procter & Gamble’s Albany site.

 

The Albany site already has a biomass boiler that produces some of the steam needed for the making of Bounty and Charmin products. That boiler will soon be decommissioned, and the company has partnered with Baltimore-based Constellation to build a larger $200 million biomass power plant on Procter & Gamble’s property. Constellation will own and operate the facility, which will provide all of Procter & Gamble’s steam, and will also produce electricity to be sold to the local utility company.

 

The biomass facility burns thousands of tons of chips made from woody pulp each year. Georgia has a large logging industry, and the pulp will come from discarded treetops, bark, and branches, along with landscaping and crop waste.

 

“There’s a huge cost difference,” with biomass fuel costing much less to obtain and burn than natural gas, says Mats Bergquist, principal program manager at Constellation. However, he adds, the upfront capital cost for a biomass facility is much higher, and it can be difficult to find reliable long-term supplies of the biomass material. “But,” he says, “the fuel savings are so substantial that, under the right circumstances, you can reap the benefits.”

 

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Linda Qian is Intel’s communications manager for corporate social responsibility. Photo: Fawn DeViney

Involving Employees

Most workers will never feed wood chips into a biomass boiler or test the energy efficiency of manufacturing tools, but companies can find other ways to invest their employees in corporate conservation efforts. Workers at Procter & Gamble’s Albany plant participate in community cleanup and recycling days, and Falcione says that a sustainable ethic pervades the plant. “If you leave your office, we’re expecting you to shut your lights off,” he says. “Or, if I leave my lights on when I leave, you feel free to shut them off.”

 

At Intel, employees can feel the impact of their company’s sustainability efforts in their wallets. Bonuses for every worker in the company are tied to a number of different goals, including one each year focused on corporate social responsibility, such as increasing recycling or reducing energy consumption. “It’s a small portion of the total bonus,” says Qian. “But it’s there, and it’s highly visible, and employees see it.”

 

Krishnan coordinates a speaker series focused on sustainability at Intel, drawing an average of 140 attendees for the monthly lunch talks. Employees have begun using the series’ 2,800-person email distribution list to connect with one another to launch sustainable initiatives of their own, Krishnan says. “If people have ideas, but they don’t know how to execute them, we’ve used the speaker series to bring them together with others.”

 

Intel supports and recognizes these employee-driven efforts through grant and award programs. The company has funded employee projects ranging from a bike share program to a honeybee farm to wetlands conservation. Awards winners include a pair of employees who reconfigured the energy flows in a central utility building in a way that reduced carbon dioxide emissions by 27,000 tons per year, as well as a team that found a way for the company to recover tantalum, an element used to manufacture a number of Intel’s products.

 

“It reduced the amount of tantalum that we have to purchase, which is a cost savings for us,” Qian says. “Not only is it relatively expensive, but it’s a conflict mineral, which has been a huge issue for our industry.”

 

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Sustainability Driving Development

Investments in sustainable manufacturing can lead to additional development in the communities where companies are located—another counterpoint to the idea that what’s good for the planet is bad for business.

 

In Chandler, for example, Intel paid for a portion of the cost to expand a wastewater treatment facility. The company needed the additional capacity to accommodate its own growth plans, but the larger facility also allows the city to send out more treated water for things like irrigation.

 

“That saves our potable water,” says Doug Toy, water regulatory affairs manager for the city. “We’re all benefitting. When they reuse the water, we don’t have to go out and secure additional rights for more water.”

 

“Intel’s investment in reclaiming and reusing water was critical for our economic development,” says Miranda, the economic development director. “It allows us to recruit other industries. We have a finite level of water that can be delivered. So if we can capture and reuse that water, we’re able to allow new businesses to come in and thrive.”

 

In Albany, the new biomass facility is expected to create up to 500 new jobs during the two-year construction process, with another 50 to 70 permanent local jobs for ongoing operations. Hubbard, the mayor, notes that the new $200 million clean-energy facility is a strong sign that Procter & Gamble plans to keep manufacturing its products in Albany long into the future. “We are so happy,” she says, unable to stifle her delighted laughter. “That’s why we did everything we could to help them.”

 

“We want to continue to make sure this plant is successful, and this boiler is going to help with that and help us take care of business,” says Falcione. “We want to keep this relationship going for a long time.”