Manufacturing Focus: Our Weekly Feature Article on Topics Related to Manufacturing Management  
 
 
  - October 30, 2007 -  

Manufacturing News: PPG CEO says Going Green Makes Sense for Business, not just the Environment

 
 

Rising Energy Costs Hurting U.S. Competitiveness

 
 

 

SCDigest Editorial Staff

The green movement is gaining momentum across broad sectors of U.S. companies – and it’s no coincidence that the interest is growing as the intersection of greenness and the bottom line becomes clear.

SCDigest Says:
PPG has set targets for increasing energy efficiency by 5% per year... With the rising cost of natural gas and oil, those goals add as much to the bottom line as they do to the environment, providing a lasting incentive.

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This was apparent in a recent interview of Charles Bunch, CEO of chemical company PPG and also current president of the National Association of Manufacturers.

In the Wall Street Journal piece, Bunch notes that energy costs are really impacting many types of US manufacturers, and that less expensive sources must be found.

“Today, we've taken what had been an advantage for an industrial company like PPG -- our use of natural gas -- and now we're paying higher prices for natural gas here in the U.S. than the Chinese are paying, or the Russians or the Europeans, who all have access to cheaper Russian gas,” Bunch told the WSJ. “This is why energy is a real competitive issue for us.”

He notes that due to a lack of clear energy policy or development of alternative energy sources, the use of natural gas has soared over the last 10 years, driving market prices higher.

The impact is also greater than just rising costs, Bunch says – it’s causing some U.S. manufacturers to go offshore.

Until recently, cheap labor was the driving force in companies in the apparel and electronics industry moving production offshore. But increasingly, it may be a search for cheaper energy that causes another wave of manufacturers, in different industries, to adopt similar strategies.

“For the first time, you are seeing companies like Alcoa closing facilities here, and they are going to Trinidad, Iceland or other parts of the world,” Bunch said. “I think Alcoa, like a lot of other high energy users, had access to natural gas and lower-cost energy and that's no longer available here.”

 
 
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Bunch also says U.S. manufacturers need to take action, because if they don’t, laws and regulations that are far worse for business may be put in place.

“What we don't want as an industry is to have to deal with 50 different policies or hundreds of different policies of cities or states or regions,” Bunch added.

PPG has set targets for increasing energy efficiency by 5% per year, objectives Bunch says they have been exceeding. With the rising cost of natural gas and oil, those goals add as much to the bottom line as they do to the environment, providing a lasting incentive.

Is it clear business and environmental interests are now aligned? Let us know your thoughts at the feedback button below.

 
     
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