Via blogs.wsj.com, 20/10/2011

Many manufacturers are eager to go green, but doing so is particularly tough for smaller firms.

Fifty-seven percent of small manufacturers said they have little or no strategy to become sustainable, compared to 39% of larger manufacturers, according to a recent survey by the Manufacturing Performance Institute, an industry-research and strategy firm in Shaker Heights, Ohio. The study was commissioned by the American Small Manufacturers Coalition.

About 60% of 824 manufacturers surveyed by the group recognized the importance of environmental sustainability – up from 35% in 2009.

But for the smallest manufacturers – those with less than $10 million in annual revenues – progress is slower. For instance, 42% of small firms said they have no measurement or review system to track sustainability efforts, compared to only 25% of the largest firms.

What’s striking is that the disparity between the largest and smallest firms is growing, says John R. Brandt, chief executive of The MPI Group.

Years ago, when sustainability was a relatively new concept, it was easier for the smaller firms to be on par with their larger counterparts, he said.

But now, with customers, regulations, and energy prices all putting pressure on manufacturers to be environmentally friendly, the largest firms are able to adapt more quickly. “Large firms are extending their advantage,” he says. “They’ve got larger talent pool internally and more money to spend on information technology and capital equipment.”

Mary Isbister, president of GenMet Corp. in Mequon, Wisc., says small firms have a harder time making an upfront investment that could make them more sustainable because the payoff could take a while. GenMet, a metal fabricator with some $15 million in annual revenues, has made some efforts to go green but doesn’t yet have a system in place for measuring the results.

“The [return on investment] for waste reduction and energy reduction can be long, and it can be hard to justify it over purchasing new equipment or some other capital improvement,” she says. In addition, she notes, the importance of being sustainable “crept up rapidly” and “small firms don’t typically have that knowledge base” to react quickly.

Isbister thinks small firms are more apt to reduce energy, use recycled materials and produce reusable products if there is an external impetus. For instance, GenMet switched to high-efficiency lighting when Isbister realized there was a financial incentive offered by the state. Likewise, she is on track to put a wind turbine on the firm’s premises within the next two years because there is a state cost-sharing plan available. She hopes the turbine will offset increasing energy prices.

“It’s something we’ve wanted to do,” she says of using wind energy. “But we wouldn’t have been able to do it on our own.”



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