Automakers Enter the Circular Economy
Industrial companies, including automotive firms, are among those reinventing how businesses find, use, and dispose of the resources and materials that make up global trade.
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Today, with concerns mounting over the environment and high materials costs, automakers are turning toward “circular integration” as a means to not only initiate sustainability programs, but also create jobs and save costs. In fact, global professional services company Accenture concluded in its 2016 report entitled “Automotive’s Latest Model: Redefining Competitiveness through the Circular Economy” that automotive companies could realize $400 billion to $600 billion in revenue from circular business economy business models by 2030.
While automakers have historically resisted utilizing recycled parts, the practice is catching on. For several years a wide host of car manufacturers like Subaru, Volvo, Audi, Mercedes-Benz, BMW, Nissan, Cadillac, Chrysler, Ford, and General Motors have been running sustainability programs to find ways to be more earth-friendly. An article that appeared in Edmunds in 2015 pointed to Nissan using recycled soft drink and water bottles in seat cover fabric for its Leaf model; Mercedes, using recycled plastics in 52 components including wheel well liners, bumpers, and air and water baffles; Cadillac using recycled tires in its under-hood air and water baffles; and GM using employee recycled water bottles for noise-reducing fabric insulation for the Chevrolet Equinox V-6 engine.
“There’s a tremendous amount of opportunity in the circular economy, which means the utilizing of materials in a better way,” says John Bradburn, former GM Global Manager of Waste Reduction. “It’s not just about traditional recycling, but taking a byproduct and repurposing or reusing it in a way that helps targeted applications, particularly if materials are generated locally and processed in a way that helps the community.”
The World Business Council for Sustainable Development (WBCSD), which promotes sustainability through its Factor10 circular economy initiative, sees the overall global circular economy as a $4.5 trillion opportunity. Factor 10, a CEO-led organization, brings companies together to reinvent how businesses find, use, and dispose of the resources and materials that make up global trade. The BMW Group, Ford, Honda, Volkswagen, Renault, and tire manufacturers Goodyear, Bridgestone, Continental, Kumho Tire, Hankook, Michelin, Pirelli, Yokohama Tires, and Toyo Tires are among the leading private companies that support the effort.
Case in Point
But there’s a good example here in the United States. Bradburn, who worked as GM’s environmental guru for 40 years, points to the Flint, Mich., water crisis that came to a head in late 2015 and how carmakers, OEMs, and other manufacturers came together to rethink manufacturing processes, participate in today’s circular economy, and help the local economy.
During the Flint crisis, the community consumed water in millions of plastic bottles, all of which would have most likely ended up in a landfill if it weren’t for Schupan Recycling, one of the largest independent processors of used beverage containers in the country. Schupan supported the cause by installing collection points in Flint for used water bottles where the bottled water was being distributed.
“Schupan collects the bottles from deposit boxes located near water distribution points in Flint,” explains Schupan Sustainable Projects Manager Roger Cargill. Since Schupan began the program, recycling has quickly increased in Flint.
GM, which operates a manufacturing plant in Flint (although downsized substantially due to automation), partnered with Schupan Recycling and has since used millions of recycled water bottles from Flint in three of its products: Chevrolet Equinox V-6 engine covers, air filters for 10 GM plants to clean air inside its factories, as well as insulation for The Empowerment Plan coats for the homeless.
There’s a tremendous amount of opportunity in the circular economy, which means the utilizing of materials in a better way. John Bradburn, former GM Global Manager of Waste Reduction “The goal was to put together a team that included GM and Schupan to process the water bottles from that Flint community into other products,” Bradburn says. Sixty percent of the material comes from deposit boxes in Flint. “And since the plastic is not mixed with trash or other things, our product comes out flawlessly clean,” Cargill comments.
GM calls the project “Do Your Part.” “It’s one example of keeping things local, generating jobs, and utilizing available resources,” Bradburn says. “The alternative to these water bottles, which are quickly becoming a symbol of waste worldwide, is to put them in a recycling container and ship them to who knows where — probably overseas.”
When discussing the use of materials, most companies refer to supply chain management. But Bradburn maintains there’s more value to a supply web since it involves building and interconnecting business relationships, jobs, and economic activity. “We are trying to accomplish this with the Materials Marketplace and others — introducing companies for providing ideas for sustainability.”
The Materials Marketplace operates as a cloud-based platform where traditional and nontraditional industrial waste streams are matched with new product and revenue opportunities. The goal is to enable a culture shift to a circular, closed-loop economy in which waste is diverted from landfills and generates significant cost and energy savings, as well as creating new jobs and business opportunities. It maintains that, on a global scale, the circular economy has the potential to create 100,000 new jobs by 2019.
Over the past 20 years, Materials Marketplace projects, spearheaded by the United States Business Council for Sustainable Development (US BCSD) and scale-up partner Pathway21, have engaged hundreds of companies, including large and small academic institutions, nonprofits, and entrepreneurs around the world. The group has many projects in the works that address ecological issues such as wildlife preservation, soil erosion and control, jobs, as well as economic development.
“This should resonate with any company that wants to operate into the future,” says Bradburn, who now serves as chief materials officer for Pathway21. “Companies will do their best when they participate in these sorts of projects.”
It seems that states with substantial auto manufacturing sectors are embracing the circular economy concept. In April 2017, Ohio EPA’s Division of Environmental & Financial Assistance (DEFA) launched a new online platform that allows continuous reuse of products and materials that might otherwise be destined for disposal in landfills. The platform is the result of a partnership with the Materials Marketplace. “With statewide access to thousands of Ohio’s businesses, communities, and other organizations, DEFA is well positioned to bring members together in this modern online marketplace,” commented Ohio EPA Director Craig W. Butler in a press release. He described the service as positioning Ohio as a leader in the circular economy, helping remove materials from the waste stream, promoting jobs, and allowing for better efficiency and savings in the processes of creating goods and services.
It’s not just about traditional recycling, but taking a byproduct and repurposing or reusing it in a way that helps targeted applications, particularly if materials are generated locally and processed in a way that helps the community. John Bradburn, former GM Global Manager of Waste Reduction Ohio was the first state in the nation to adopt a circular economy program of this scope and scale. Tennessee joined in August 2017. The only U.S. city to do so to date, Austin, Texas, joined in 2014. Andrew Mangan, founder and executive director of the US BCSD, reported in a press release, “Many businesses and organizations in Tennessee are challenging the traditional take-make-dispose model; the Materials Marketplace is an important enabler to move this new circular thinking into action.”
The automotive sector is one of the most prolific user groups on the Tennessee Materials Marketplace, and includes GM; Volkswagen; Nissan North America, Inc.; Bridgestone Americas Tire Operations; and major automotive suppliers. According to the program’s website, “The Tennessee Materials Marketplace is an ideal platform for the automotive sector in Tennessee to actively engage in the circular economy and discover reuse, remanufacturing, and recycling solutions for waste and byproduct materials.”
And this year, Michigan launched its Re:Source program, an initiative that promotes the use of recycled materials in economic and business opportunities across the state. “Its purpose is to connect businesses looking to recycle with businesses that can process those materials through a Recycled Materials Market Directory,” explains Matt Flechter, a recycling market development specialist at the Michigan Department of Environmental Quality.
Flechter explains that the Department of Environmental Quality has been working on the project for a number of years. “The Governor’s Office has challenged us to triple the recycling rate in Michigan by making sure companies have increased access for participation and to businesses to recycle,” Flechter says. “We want to make sure people know how and where to recycle and also make sure there are markets for those materials.”
The goal is to develop those markets either regionally or locally by creating partnerships. The department has a contract with the US BCSD to help implement the Materials Marketplace, which is scheduled to launch in September. The effort could take on an even greater significance given President Trump’s recent tariffs on steel and aluminum that observers say will impact the U.S. automakers — big buyers of such materials. Flechter points out that material being buried in landfills can be turned into new materials right in Michigan.
“We, as the Department of Environmental Quality, are working with recyclers to talk about hauling materials and composting facilities,” he says. ”We have a direct connection to those users through environmental regulatory space and technical assistance.”
To connect with manufacturers looking to expand, the department also has created a partnership with the Michigan Economic Development Corp. “We recognized that to be successful, we needed to connect the two pieces of the puzzle.”
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