improving the economic and environmental performance of
TRANSCRIPT
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Improving the Economic and Environmental Performance of the North American Automotive Industry Supply Chain Mid-Project Report June 2011 – May 2012
Prepared for:
Commission for Environmental Cooperation (CEC)
Prepared by:
Navista Inc. Kellen Mahoney
May 31, 2012
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TABLE OF CONTENTS
INTRODUCTION ................................................................................................................................................ 3
ORGANIZATIONS ENGAGED IN CEC AUTOMOTIVE SUPPLY CHAIN ACTIVITIES ACROSS NORTH AMERICA TO DATE ..... 4
PROJECT ACTIVITIES AND ACHIEVEMENTS ........................................................................................................... 6
UNITED STATES ..................................................................................................................................... 6
MEXICO ................................................................................................................................................. 6
CANADA .............................................................................................................................................. 10
RECOMMENDATIONS FOR POSSIBLE FOLLOW-UP BY THE AUTO INDUSTRY AND POLICY TRACK FOR
GOVERNMENTAL SUPPORT ........................................................................................................................... 11
NEXT STEPS ................................................................................................................................................... 12
CONCLUSION ................................................................................................................................................. 12
CEC NORTH AMERICAN AUTOMOTIVE INDUSTRY SUPPLY CHAIN PROJECT CONTACTS .......................................... 13
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INTRODUCTION
The CEC embarked on this project of “Improving the Economic and Environmental Performance of the North American Automotive Industry Supply Chain” with the objective of re-engaging key automotive companies for the development and implementation of green supply-chain programs across North America. This builds precisely on the language within the 2010–2015 CEC Strategic Plan of: “building on our success in the automotive manufacturing sector through continued efforts to green critical components of supply chains across the continent and support the ongoing recovery of this important sector.”
Initiatives for greening the North American automotive industry have been supported by the CEC in the past, specifically in the 2009–2010 Operational Plan and Council Resolution 06-06. Past CEC efforts succeeded in stimulating competitiveness to the sector and reducing environmental impacts through collaboration with the Suppliers Partnership for the Environment (SP) organization in the United States. Expansion of an automotive supply chain program into Canada and Mexico was also near completion when it was suspended by the misfortune of the unexpected economic downturn.
This project proposes now to extend work in greening the automotive supply chain throughout Canada and Mexico to create a "one window" North American program. Continuing the work already started by the CEC in the automotive sector is important to establish a successful cooperative trilateral initiative and achieve a business-driven, self-supported North American partnership that will promote greening of the automotive supply chain in North America.
Given the success of the work already underway within the United States and the strong integration of the auto sector across all three countries, this project will allow both Canada and Mexico to benefit from existing efforts in the United States, level the playing field across North America, and permit trilateral cooperation. These programs can be the foundation for automotive manufacturers and their suppliers to share information and practices that will improve environmental and economic performance within this North American sector supply chain.
In June of 2011, CEC announced the launch of this new project on “Improving the Economic and Environmental Performance of the North American Automotive Industry Supply Chain” at the National Environmental Sustainability Summit (NESS) in Detroit, Michigan, United States. Following the launch, the CEC has worked to engage automotive manufacturers, suppliers and government representatives in the United States, Mexico and Canada in its mission to develop green automotive supply chain programs in both Mexico and Canada. The following report summarizes the project activities of June 2011 – December 2012 and March - May 31, 2012 as the CEC worked to engage a core of key stakeholders in the initiatives in each country; support the exchange of existing tools, resources and information of relevance to the sector; identify unique opportunities and activities that could be addressed in each country; and, build the foundation for the creation of business-driven self-supported green automotive supply chain programs in North America.
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ORGANIZATIONS ENGAGED IN CEC AUTOMOTIVE SUPPLY CHAIN ACTIVITIES ACROSS
NORTH AMERICA TO DATE
UNITED STATES
2V Industries, Inc. Haley & Aldrich, Inc.
Aevitas Specialty Services Heritage Interactive Services
Albemarle Corporation Hyundai America Technical Center, Inc.
American Honda Motor Co Inc. ICL-IP
ARCADIS Johnson Controls Inc.
Asset Recovery & Management Group LTD Lear Corporation
Atwater Steel Trading Co Marketing for Green, LLC
BAE Industries Mercedes-Benz
Bridgestone Americas, Inc. Michigan Department of Environmental Quality
Chemico Systems, Inc. Mobile Fluid Recovery, Inc.
Chrysler Group LLC MPS Group
Covanta 4Recovery Nissan North America Inc.
Crystal Filtration NIST
DEKRA Certification Oemeta
DENSO International America, Inc.
Office of Recovery for Auto Communities and Workers, US DOL
EDSS Performance Environmental Services
Electricfil Corporation Peter Feamster & Associates, Inc.
Environmental Quality Company Quaker Chemical
ERA Environmental Management Solutions RTI Laboratories
Federal-Mogul Corporation State Government of Victoria (Australia)
Flex-N-Gate Subaru of America Inc.
Ford Motor Company Sustainable Research Group
FTS Technologies
Tennessee Automotive Manufacturers Association (TAMA)
Gage Products Company TestAmerica Laboratories, Inc.
Gayle Technologies, Inc. The Goodyear Tire & Rubber Company
GDC Inc. The Polar Companies
General Motors U.S. Environmental Protection Agency (EPA)
Global Automakers US Industrial Technologies, Inc.
Goodwill Association of Michigan VMX International Inc.
Goodwill's GreenWorks
Work Force Network Inc.
Green Tree Products and Technologies LLC
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ORGANIZATIONS ENGAGED IN CEC AUTOMOTIVE SUPPLY CHAIN ACTIVITIES ACROSS
NORTH AMERICA TO DATE (CONTINUED)
MEXICO
Arneses Electricos Condumex
Canacintra
ChemicoMays
Chrysler de Mexico SA de CV
Continental Guadalajara Services
Decoplas Magna
DELPHI
DENSO Mexico
EQ – The Environmental Quality Company
Faurecia
Ford Motor Company SA de CV
Gayle Technologies, Inc.
General Motors de Mexico
Heritage Interactive Services
Lear Corporation
Nemak
Profepa
Robert Bosch México S.A.de C.V.
Semarnat
U.S. Environmental Protection Agency (EPA)
Vitesse Motors
Vitro Automotriz
CANADA
Aevitas Specialty Services Corp
ARCADIS
Association of International Automobile Manufacturers of Canada (AIAMC)
Automotive Parts Manufacturers' Association (APMA)
Canadian Vehicle Manufacturers' Association (CVMA)
Chrysler Canada
Environment Canada
FTS Technologies
General Motors Canada
Heritage Interactive Services
PFA Recyling
Woodbridge Group
Diverse Range of Participating Organizations Including
Vehicle Manufacturers
Parts / Components Suppliers
Federal / State Government Agencies
Chemical Manufacturers / Distributers
Environmental Laboratories
Environmental / Energy Service Providers
Recycling / Waste Management Specialists
Automotive Trade Associations
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PROJECT ACTIVITIES AND ACHIEVEMENTS
UNITED STATES In 2011, CEC sponsored two project meetings in the United States. As a launch to the project, the CEC hosted a Special Panel at the National Environmental Sustainability Summit (NESS) on June 7, 2011 in Detroit, Michigan “On Improving the Economic and Environmental Performance of the North American Automotive Industry Supply Chain”. The Panel of North American government and auto industry representatives provided an overview of CEC’s automotive supply chain project and reviewed ongoing efforts in their country that created potential opportunities for the project. On September 7, 2011 the CEC hosted a Workshop on Environmental Assistance Programs and Resources for Automotive Original Equipment Manufacturers (OEMs) and Suppliers in Spring Hill, Tennessee in conjunction with the 3
rd Quarter Membership Meeting of the Suppliers
Partnership for the Environment (SP) and the Tennessee Automotive Manufacturers Association (TAMA). The Workshop provided an opportunity for government and industry participants to provide and share existing tools, resources and voluntary programs available to manufacturers in the US, Mexico and Canada to improve the environmental and economic sustainability of their operations. Participants shared relevant national experiences on environmental issues impacting the automotive supply chain across North American as well as identified opportunities to expand and develop collaborative programs to improve the environmental and economic performance of the North American automotive supply chain.
In addition, project team members continue to provide updates on the project at the quarterly membership meetings of the Suppliers Partnership for the Environment (SP). Information on the CEC project activities is also shared with SP’s members and industry stakeholders through the SP Newsletter and website.
MEXICO In 2011, CEC sponsored several project meetings in Mexico. During the week of September 26, 2011 the CEC Project Team organized a series of stakeholder meetings in Mexico City designed to lay the foundation for a larger meeting of automobile OEMs and their suppliers to kick off the project in Mexico. The team met with major automotive manufacturers, government agencies in Mexico with responsibility for the environment; and a service provider to the automotive industry to discuss and seek feedback on the project. On November 17, 2011 CEC sponsored a Strategic Planning Discussion at Ford Mexico’s Headquarters in Mexico City to identify opportunities to best support the CEC project in Mexico and develop the foundation for the creation of an automotive industry supply chain organization in Mexico modeled after the Suppliers
Benjamin Teitelbaum, CEC at the September 2011 Workshop
Pictured: Benjamin Teitelbaum, CEC; Luis Lara, Ford Mexico; Evan Lloyd, CEC; Delia Rivas, Chrysler Mexico; Arnulfo
Berlanga, GM Mexico
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Partnership for the Environment (SP) in the United States. Participants identified key opportunities for the project to address and developed a conceptual framework for the new organization. The meeting included representatives from CEC, Chrysler Mexico, Ford Mexico, GM Mexico and Navista. As a follow up to the Strategic Discussion, the CEC sponsored a Roundtable Discussion of Alianza Verde Automotriz (AP Mexico) at the Headquarters of General Motors in Mexico City, Mexico on December 7, 2011. The meeting included a diverse group of participants including representatives of automotive OEMs, suppliers and government agencies in Mexico. The Roundtable participants agreed to the following vision and mission for Alianza Verde Automotriz:
In addition, the participants agreed that AVA Work Groups would be formed in 2012 focused on three key issues: Water Efficiency and Use; Energy Efficiency; and Materials and Waste Management & Resource Creation. As a follow up to the December 7, 2011 meeting of AVA the project team set to work establishing each of the three AVA Work Groups. An initial set of suppliers with a commitment to the Work Group efforts was identified, and best practices & activities related to each focus area were documented for discussion with the full group. On May 24, 2012, the second meeting of AVA was organized at Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in Mexico City. Participants at the meeting shared environmental sustainability activities and practices currently underway within the auto industry in North America, as well as established a program of new value-driven projects and activities that AVA would address in 2012. Presentations from the May 24 meeting will be made available on the SP-US and CEC project websites. Luis Lara and Dionisio Menchero, Ford Motor Company, led the AVA Water Efficiency Work Group discussion and provided an overview of a number of projects now underway at Ford to address water resource challenges and opportunities. In addition, Work Group participant Oscar Cross, Gayle Technologies discussed new water efficient technologies that are now available to the auto sector that can provide reduced use of water within the automobile manufacturing process.
Vision: To be a private sector leadership organization that will provide automobile original equipment
manufacturers and their suppliers the opportunity to address new, innovative and voluntary
environmental sustainability projects and activities that will improve their environmental performance
while providing value throughout the automobile supply chain in Mexico with the foster and support
of the Mexican Government.
Mission: Identify, develop, promote and offer tools, as well as identify and foster synergies through
cooperation, providing competitive advantage through projects and activities that will provide
economic and environmental value throughout the automobile supply chain for issues identified by
participants within Alianza Verde Automotriz.
Participants at May 24, 2012 AVA Meeting
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Mr. Menchero shared with the participants a case study on water conservation from Ford’s Chihuahua Engine Plant. The facility has its own wastewater treatment plant, which has been updated and modified to recycle and reuse as much water as possible. About 80 percent of the treated water goes back into the industrial process; the rest is used for land irrigation around the plant. The plant, which has zero discharge to the municipal sewer system, won the 2010 Environmental Leadership for Competitiveness Award from the Mexican government for projects that are saving more than 32,000 cubic meters of water a year. At CHEP, some of these initiatives include:
Using reverse-osmosis-treated gray water from the city’s water system, instead of drinking quality water, in the cooling towers of compressor machines and other manufacturing processes, such as washing machines and coolant systems. This system saves more than 3,500 cubic meters of water per year and more than 290,000 pesos per year, equivalent to about $25,000.
Using more reverse-osmosis-treated water, rather than drinkable water, for washing equipment and floors in the facility. This saves an estimated 28 cubic meters of fresh water per year and approximately 475,000 pesos ($40,500) in reduced water, labor and cleaning costs.
Implementing a new floor cleaning system that saves another 112 cubic meters annually1.
Arnulfo Berlanga, General Motors Mexico, led the AVA Energy Efficiency Work Group discussion and
shared a number of energy efficiency activities that GM Mexico currently is engaged in. Mr. Berlanga
discussed strategies, tools and technologies to save energy, such as the concept of an Energy
Sufficiency Plan, a proactive plan to reduce consumption, demand and energy costs with the commitment
and participation of ALL employees. He also discussed Plan Zero Energy, an initiative focused on
maintaining minimum energy use during periods of shutdown. Work Group member Pedro Zuviri, Nemak
then provided a presentation on activities at Nemak that have resulted in both environmental and
economic success related to Energy Efficiency.
Delia Rivas, Chrysler Mexico, led the AVA Materials, Waste Management and Resource Creation Work Group discussion and provided several case examples of current projects and activities at Chrysler Mexico. Ms. Rivas discussed a project at Chrysler Mexico’s Toluca complex, where a high amount of cardboard waste was identified due to incorrect inventory, incorrect RDR´s and improper use of CMS. Ms. Rivas reported that Chrysler worked with its suppliers to implement a disciplined control and verification process of inventory including RDR´s & CMS to address the identified issues. As a result, cardboard waste at the complex decreased by 58.4% resulting in a total elimination of 34,418 kg of cardboard. In another waste reduction project at Chrysler’s Toluca complex, the company sought to find an
innovative solution to reduce waste solvent and waste oil streams that were being disposed of by
conventional methods. Ms. Rivas reported that Chrysler identified a supplier who could reuse the waste
solvent and oil, as well as use the byproducts as an input in the manufacture of conventional paint. As a
result Chrysler reduced its disposal and transportation costs for the two waste streams to zero, and is
disposing of 120,000 liters/year of the wastes in an environmentally friendly manner.
Following Ms. Rivas’ presentation, Work Group members Miguel Velasco, Continental Guadalajara
Services, Ben Cano, Heritage Interactive and Don Harris, ChemicoMays discussed projects and activities
1 Ford’s 2010/11 Sustainability Report, Page 152, http://corporate.ford.com/doc/sr10.pdf
Ford Chihuahua Engine Plant
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in the supply chain related to waste management and resource creation. Mr. Velasco shared
Continental’s waste management programs and corporate social responsibility initiatives with local non-
profit groups in Mexico to promote increased recycling. Mr. Cano shared Heritage’s innovative by-product
management process that it uses to reduce its clients waste to landfill. Mr. Harris discussed
ChemicoMays’ work to reduce and manage chemical use and increase chemical reuse among its clients.
The meeting participants were engaged in strategic discussions directed toward identifying three specific
activities/projects that each AVA Work Group could address, and the following set of activities was
agreed to by the participants:
AVA Water Efficiency Work Group
Chair: Luis Lara and Dionisio Menchero, Ford Motor Company, Mexico
1 Establish a vision for the Work Group that will focus on collecting and sharing information among all participants that will enhance the ability of companies in the automobile supply chain in Mexico to improve their use and potential re-use of water in their manufacturing activities.
2 Work Group activities should focus on measurement of water as a diagnostic tool, in order to control its use recognizing that continuous improvement can be used to improve water efficiency.
3 Find a way to utilize voluntary audit verifications to affirm progress made on identified Key Performance Indicators (KPIs).
AVA Energy Efficiency Work Group
Chair: Arnulfo Berlanga, General Motors Company, Mexico
1 Create a process for suppliers to better understand where they are in relation to energy efficiency and its corresponding impact on the environment.
2 Create a tool or identify existing tools that can be utilized and scaled for various sizes of suppliers that will help those suppliers address energy efficiency opportunties that will improve the environment and economic opportunities for their companies.
3 Establish clear goals and objectives relating to improved, quantifiable success relating to energy efficiency activities and projects, recognizing the difference between goals and objectives.
AVA Waste Management and Resource Creation Work Group
Chair: Delia Rivas, Chrysler Mexico
1 Identify a list of wastes that we collectively want to “disappear.”
2 Challenge ourselves to find better solutions and uses for materials that can provide economic value for our companies.
3 Invite other stakeholders to work with and collaborate with us toward a common vision committed to creating economic opportunity out of what has been historically considered wastes.
It was agreed that Work Group conference calls would be organized to move forward with the identified objectives as a follow up to the meeting, and the next meeting of AVA was scheduled for September 5, 2012 in Mexico City. In addition it was agreed that an active effort would be made to continue to expand
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the number of companies participating in the project, with each company assigned to identify 3 new companies that should be invited to join AVA.
CANADA
On December 13, 2011 the CEC sponsored a Strategic Planning Session at the offices of the Automotive Parts Manufacturers’ Association (APMA) to begin identifying key issues and approaches for the Canadian portion of the CEC Auto Industry Supply Chain project. The meeting was designed to establish the groundwork for a larger project launch meeting in 2012 that would include a broader range of participants including OEMs, suppliers and government representatives in Canada to continue discussion of the identified topics. The meeting continued discussions from two preceding meetings held in Toronto with automotive OEMs and suppliers in November 2010 and January 2011 with the support of Environment Canada. Throughout the meeting participants identified potential opportunities that a new automotive supply chain organization could address to improve the economic and environmental performance of the auto industry supply chain in Canada. A draft concept paper for a new auto supply chain initiative in Canada, the Suppliers Partnership for the Environment – Canada (SP Canada) was reviewed at the meeting, including the following key elements:
As a follow up to the December 13, 2011 meeting, the project team engaged in targeted outreach efforts with key stakeholders in Canada, including organizations such as the Automotive Parts Manufacturers Association (APMA) and the Canadian Vehicle Manufacturers Association (CVMA). Discussions focused on communicating the unique value of innovative supply chain environmental initiatives like the Suppliers Partnership and key differentiating factors between the project and existing activities in the country. Feedback received from these stakeholder discussions indicated:
There is a preference that SP-US extends its program to Canada, rather than create a new, separate entity in order to avoid duplication of efforts.
There is an opportunity for SP to provide a venue for increased dialog between OEMs and suppliers on EHS topics in Canada.
The voluntary, innovative environmental project activities that SP focuses on appear to be a unique niche in the association marketplace in Canada.
Vision: Create a member driven organization that will provide automobile original equipment
manufacturers and their suppliers the opportunity to address new, innovative and voluntary
environmental sustainability projects and activities that will improve environmental performance
while providing value throughout the automobile supply chain in Canada with the Government of
Canada in a technical resource and departmental liaison capacity.
Mission: Create and provide tools, identify and support synergies through collaboration and
cooperation, and provide competitive advantage through projects and activities that will provide
economic and environmental value throughout the automobile supply chain for issues identified
by participants within SP Canada.
Potential Key Issues:
• Energy Efficiency
• Technology and Innovation
• Waste Management and Resource Creation
• Water Sustainability
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Working in collaboration with OEM and supplier members of the Suppliers Partnership for the Environment (SP) in the United States, the project team is now organizing the next meeting of SP Canada for June 12, 2012 at Chrysler’s Brampton Assembly Plant in Brampton, Ontario. The June 12 meeting will focus on sharing environmental sustainability activities and practices currently underway within the auto industry in North America, as well as establishing a program of value-driven activities that SP Canada will address in 2012. The meeting is designed to highlight examples of successful innovations and provide a forum to discuss strategies and solutions to global challenges, such as:
Waste Challenges and Strategies to Achieve Landfill Free
Supporting Small Business Environmental Innovation
Energy Efficiency & Energy Management
Providing Tools to Facilitate Environmental & Economic Achievement It is expected that as a result of the meeting, a follow up meeting will be planned in Canada in late 2012
provide an update on agreed program activities and establish next steps for the project.
RECOMMENDATIONS FOR POSSIBLE FOLLOW-UP BY THE AUTO INDUSTRY
AND POLICY TRACK FOR GOVERNMENTAL SUPPORT
North American Automobile Supply Chain Dialogue and Strategy:
Improving Environmental and Economic Opportunities In North American
With support from the CEC, there is an opportunity to organize a conference to bring together North
American auto industry project stakeholders before the end of the year. It is proposed that this conference
be held in Detroit, Michigan.
Vision:
Bring together business, governmental and other key stakeholders at a conference to explore
opportunities, challenges and strategies within the automobile supply chain that can improve the
environment, promote creative technologies within the automobile sector, stimulate collaboration
between the private and public sectors and increase business opportunities and job creation for the
North American automobile supply chain.
Key Audiences:
North American Automobile Original Equipment Manufacturers (OEMs), small, medium and large
automobile suppliers, governmental entities from Canada, Mexico and the United States, representatives
of the investment community and technological innovation entities and organizations from outside the
automobile industry
Agenda: Key Speakers to get Attendees Thinking Creatively and then break out Conference
Tracks:
Incentivizing environmental technology opportunities for companies within the supply chain: The
challenges and opportunities of technological innovation icebergs
Energy efficiency: Finding ways to share and learn from each other?
Water sustainability: How do we make sure it doesn’t disrupt our supply chains?
Materials Efficiency: Creative and income producing ways to zero waste
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Bottom Line:
Highlight and share success across North America, create relationships among supply chain leaders,
provide collaborative opportunities that can grow into strategies that can be executed in all three countries
to enhance economic and environmental opportunities in North America.
Conference Management:
Create a conference organizing effort comprised of auto supply chain representatives from Mexico,
Canada and the United States with representatives of CEC and the Chair of the Auto Suppliers
Governmental Partnership Ad Hoc Advisory Group.
NEXT STEPS The following next steps have been proposed for the project through the end of 2012:
SP Canada will meet on June 12, 2012 at Chrysler’s Brampton Assembly Plant in Brampton, Ontario to provide a forum to share environmental sustainability activities among industry partners, as well as establish a program of value-driven activities for the initiative.
Alianza Verde Automotriz (AVA) will meet on September 5, 2012 at a location to be determined in Mexico City to provide a forum for strategic discussions between manufacturers and suppliers on key topics and environmental issues identified by Working Groups, as well as continue to advance project goals established at the May 24, 2012 session. Work Groups will continue to meet by conference call to prepare for the meeting.
SP Canada will meet in the 3rd
Quarter of 2012 at a location to be determined in Canada to provide a forum to share environmental sustainability activities among industry partners, and continue to advance program activities established at the June 12, 2012 session.
Alianza Verde Automotriz (AVA) and SP Canada propose to work with the Suppliers Partnership for the Environment (SP) and the CEC project team to organize a North American Automobile Supply Chain Dialogue and Strategy.
SP will plan to work with AVA and SP Canada to create an industry driven self-supported SP North America (integrating Canada, Mexico and USA) to sustain ongoing programs in Canada and Mexico by December 31, 2012.
CONCLUSION CEC’s Project on “Improving the Economic and Environmental Performance of the North American Automotive Industry Supply Chain” has made solid progress in engaging a core of stakeholders in green supply chain programs in Canada, Mexico and the United States; identifying unique environmental challenges and opportunities impacting the automotive supply chain ideally suited to the project; supporting the exchange of existing tools, resources and information of relevance to the automotive sector; and, building the foundation for the creation of business-driven self-supported green automotive supply chain programs in North America. Program activities and recommended next steps have been developed by stakeholders in each country to continue to drive the project towards its goal of developing and implementing automotive green supply chain programs in both Mexico and Canada. The CEC looks forward to continuing this important work with the automotive sector in 2012.
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CEC NORTH AMERICAN AUTOMOTIVE INDUSTRY SUPPLY CHAIN
PROJECT CONTACTS
393 St-Jacques Street West Suite 200 Montreal (Quebec) H2Y 1N9 www.cec.org
Benjamin Teitelbaum Special Projects' Coordinator
514-350-4334
Steve Hellem President & CEO
Navista [email protected]
202-530-5910
Alejandro Sosa Director
Navista Mexico [email protected]
Kellen Mahoney Assistant Director, Client Services
Navista [email protected]
202-530-5910