Great Lakes Pollution Prevention Roundtable Program Overview

March 14, 2007Karen Wan

Agenda

• Introduction • Project Partners• History of By-Product Synergy• Chicago Hybrid Model• Status of the Network• Chicago Strategy for Growth• Collecting Success Stories

Introduction - the questions leading to the network

• What do environmental technical assistance providers do with manufacturers and other businesses after you’ve done everything you know to make them lean?

• How do you tackle bigger environmental problems than your own business can handle on its own?

• If you’re a public entity, how do you promote sustainable economic development?

What is the Chicago Waste to Profit Network?• The goal of the network is to improve the

financial and environmental health of the Chicago region by transforming outputs (wastes) to industrial inputs (profits)

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How did we develop the Chicago Waste to Profit Network?

• Timing was good . . .

• City of Chicago, Department of Environment was looking for ways to assist Chicago industry to become greener AND promote economic development

• CMC and USBCSD had an idea for a Chicago-based by-product synergy project

• The EPA Great Cities program and the State of Illinois Recycling Energy Modernization (REM) Program supported the City’s leadership

• CMC was able to apply NIST matching funds to this project

Chicago Waste to Profit Network Funding

• City of Chicago• EPA Great Cities• State of Illinois Recycling Energy Modernization

(REM) Grant• NIST• Company matching fees

• $2500 – companies under 500 employees• $5000 – companies over 500 employees

Delivery Partners

• World Business Chicago • Chicagoland Chamber of Commerce – company

targeting• Waste Management Research Center• UK NISP

Goals of the Chicago Waste to Profit Network

• Demonstrate City of Chicago leadership in green business - Mayor Richard M. Daley is a project champion

• Track the economic and social value of by-product synergy in the Chicago region

• Create a by-product synergy culture in our region• Lead by example - model implementation of this

concept for cities and regions around the country – tie into EPA, MEP and USBCSD networks

• Build the case for expanded public funding for this initiative

Benefits

• Revenue from new product offerings

• Public Good

• Improved Environmental Measures

• Reduced Waste to Landfill

• Creates New Jobs

• Create New Companies

• Industry

• Reduced raw material costs

• Reduced disposal costs

• Increased Efficiencies

100

90

70

80

60

40

50

10

30

20

Jan

Feb

Mar

Ap

r

May

Jun

e

July

Au

g

Sep

Oct

No

v

Dec

WASTE

PROFIT

Why have businesses joined the network?

• Add legitimacy to “sustainability” or “green” claims

• Reduce or eliminate cost for waste disposal• Transform waste into a revenue stream• Approach product and process design differently• Create new markets• Share environmental expertise with the network

Value to CMC (and other MEP Centers)

• Naturally expands upon lean manufacturing core competency

• Plays into strengths of being part of a national MEP network

• Creates short-term, mid-term, and long-term innovation opportunities for the manufacturers that we serve

History of By-Product Synergy

• This is not a new concept – the EPA and others have been promoters of this idea since the early 1990’s

• By-product synergy implementations• Kalundborg, Denmark – since the 1970’s – several

businesses within a short proximity from each other• USBCSD – small networks around the U.S. – less than

100 companies• United Kingdom – National Industrial Symbiosis

Programme (NISP) – since 1999 – 4000 companies

Company A

Company B

Company C

Company D

Products

Co-Products

By Products

Products

Co-Products

By Products

Co-Products

By Products

Products

Co-Products

By Products

Products

Revenue Source

Disposition

Target Customers

Revenue Sources

Disposition

Target Customers

Revenue Sources

Disposition

Target Customers

Revenue Sources

Disposition

Target CustomersReturn

Return

Return

Return

Lost Opportunity

Lost Opportunity

Lost Opportunity

Lost Opportunity

Lack of Inter-Company and Inter-Industry

Collaboration is a

hindrance to innovation

and realization of

new revenue.

By Products are often misconstrued as “waste” instead

of opportunity. Without dedicating resources to finding alternatives for disposition, a company may

miss opportunities.

Lost Opportunities do not come

cheaply! Disposition of By Products is also associated

with landfill tipping,

treatment, recycling, and storage costs.

The environmental impact of disposition can impact business, too: landfill tipping fees and the cost of raw

materials are on the rise.

Traditional Material Flow Process

Company B

Company A

Company D

Company CINNOVATIONINNOVATIONTHROUGH THROUGH

COLLABORATION!COLLABORATION!

Products

Co-Products

Co-P

rod

ucts

Pro

du

cts

Co-P

roducts

Pro

ducts

Co-Products

Products

$

$ $

$

Through the by-product synergy

and implementation processes,

companies can reduce disposition costs and create

new revenue streams—possibly even new product

lines and businesses.

Through the sustainable cycle of inter-industry

materials management, Chicago Industry, as a whole, can reduce its

impact on the environment, and the

environment’s negative impact on profitablilty.

By Products

By Products

By Products

Through the Waste to Profit Network,

innovative synergy opportunities

emerge during and following

collaborative company

discussions of material streams.

By Products

Waste to Profit Material Flow Process

BPS Sister Networks

MilwaukeeChicago

•NW Indiana•Kansas City

•Gulf Coast

•United Kingdom

•Pacific Northwest

•Tampico Mexico

•North Texas•Fort Bragg

Ohio•SE Michigan

Alberta

•Montreal

Chicago’s Network will tie into possible Milwaukee, NW Indiana, and SE Michigan Networks

Industrial Symbiosis

Business Opportunity

Landfill ↓

Jobs ↑

New Business ↑

Sales ↑

CO2 ↓

Costs ↓

Learning ↑

Transport ↓

Pollution ↓

Asset Utilisation ↑

Innovation ↑

Key Achievements (audited)

Apr 2005-June 2006

• 1,483,646 tonnes diverted from LF (Hazardous 29%)

• 1,827,756 tonnes virgin materials saved

• 1,272,069 tonnes CO2 savings

• 386,775,000 litres potable water savings• £36,080,200 additional sales• £46,542,129 cost savings• 790 jobs• £32,128,889 private capital investment

Regional implementation strategy

Coordinator sphere of influence

IS network engagement pool

Strategic

Cluster

Local

Data collection

Site visits

Synergy workshops

IS projects/outcomes

Coordinator sphere of influence

IS network engagement pool

Strategic

Cluster

Local

Data collection

Site visits

Synergy workshops

IS projects/outcomes

‘Funnel Effect’

Self-selecting network

Regional Focus: West Midlands

• Most ‘mature’ NISP region• 3 years experience• Today <1000 members• Team grown from 3 – 8• Skills mix: Director (project management),

Technical & Admin Support• Trialed and developed IS toolkit (training, data

collection…)• Sector and geographic sector based: aggregate

replacement materials, biomass & biofuels, water & effluent, automotive & automotive supply

Waste to Profit NetworkObjectives

Create:• One principal network of between 10 and 25

companies• One community network of 25-50 companies• Deliverables:

• 5 working meetings in 2007 for principal network• 1 working meeting for community network

• Metrics:• 20,000 tons diverted from landfill• 30 jobs new or retained• Cost savings for network companies

Chicago Hybrid Model

• Incorporate the best practices from around the world into a model that works for an urban industrial region in the U.S.

• Apply MEP knowledge of how to assist small and midsize manufacturers into this model

• Focus on two key areas:• Short and Long-term innovation• Serving communities in the City of Chicago

Quantify value in business terms

Coordinate implementation assistance

Perform BPS assessments and map inter-company synergies

Facilitate business helping business

World class organizations develop public/private partnership in Chicago

2007-2008

Five Steps from Waste to Profit

Network of 10 to 20 founding members

Retain or Grow 30 Jobs

Reduce 20,000 tons of waste to landfill

Measure profitability to Chicago business

Innovation Network Strategy

• Targeted Approach:• Seek out Industry Leadership: Both small and large

manufacturers in Chicago region

• Assist network participants:• Understand the concept through kickoff and individual

targeting meetings• Agree to contract terms for confidentiality, fee based

network• Understand basic material flows: preliminary data

collection

Innovation Structure

• Series of five facilitated meetings throughout the year

• Development of subgroups and focus areas• Focus on collecting metrics of success in an

ongoing process

Status - Innovation Network

26 Member Companies:

• Abbott • Acme Refining• Akzo Nobel• Baxter International • Christy Webber Landscaping • Cloverhill • Computers for Schools • Cook Composites & Polymers • Curb Appeal • East Balt • Endres • Engineered Glass Products• General Iron

• Goose Island Brewery• Hydrodec • Kimball International• Kraft Foods• Lafarge • Mittal Steel• Naylor Pipe• S&C Electric• Sara Lee • Schulze Burch • Sherwin Williams • Smurfit • USG

City of Chicago Departments

• Demonstrate leading by example• Department of Environment staff coordinating by-

product synergy implementation with:• Aviation• Fleet• General Services• O’Hare Modernization Program• Streets and Sanitation• Transportation• Water

Innovation Network – Results to Date

• Innovation Network Node 1 has held one working meetings – January 25, 2007

• 3 by-product synergies are being implemented - in process of collecting ROI and environmental metrics

• Anticipate about 10 subgroups • Such as: Plastics, Construction & Debris, Food waste,

Energy, Chemicals, Pallet Recycling• Will define and prioritize subgroups at next working

meeting on March 29, 2007

Community Network Approach

• Adapt UK process of engagement• Bring together economically, industrially,

geographically diverse group of companies• Enlist most engaged companies to serve as

network leaders and diplomats• Discover company material flows• Add company information into database • Bridge to Innovation Network

Targeting Communities and Companies for the Community Network• First community meeting will be held on June 21,

2007 at the City of Chicago Center for Green Technology

• Focus on two communities -- near west and south side industrial corridors

• Introduce by-product synergy concept to over 100 smaller companies in the Chicago area

• Companies will be knowledgeable, engaged and prepared prior to the June meeting

Facilitation Process

• Plant a Seed: Quantify company byproducts and feedstock

• Watch it Grow: Group all products by material type and need association

• Pick the Low Hanging Fruit: Identify of the obvious synergy opportunities

• Don’t Leaf anything Hanging: Identify of what needs are yet unmet

• Branch Out: Brainstorm ways to fulfill these needs

Community Network Status

• In process of targeting companies• Several companies are creating waste profiles:

• PortionPac Chemical Corporation• Lincoln Park Zoo• Republic Glass and Windows• Chicago Gear

• Will add 40 more companies in next two months identified in surveys from fall 2006

ID Task Name Start

1 Waste to Profit pre- project development Thu 10/20/05

2 Phase I - Targeting companies Wed 5/17/06

3 Prepare Project Information Mon 6/5/06

4 Initial scoping meeting with USBCSD, CMC, City of Chicago Wed 5/17/06

5 Ten signed commitments to Waste to Profit Network Wed 11/1/06

6 NiSP Meeting in Chicago - compare to international programs Wed 8/9/06

7 Educational Material development Tue 6/20/06

8 Mayor Richard M. Daley Kick-off Meeting Tue 10/31/06

9 Phase II - Data Collection and Analysis - Principal Network Thu 1/25/07

10 First working meeting Thu 1/25/07

11 Outreach-Plant visits and reporting Fri 2/16/07

12 Second group working meeting Thu 3/29/07

13 Project Team Review of Synergies Fri 5/25/07

14 Community Network Meeting Thu 6/21/07

15 Phase III - Implementing the Network Thu 5/24/07

16 Company by-product synergy implementation Mon 7/16/07

17 USBCSD Meeting in Chicago Tue 7/17/07

18 Advisory Council review of Synergies Fri 7/27/07

19 Third group working meeting Thu 5/24/07

20 Fourth group working meeting Thu 8/23/07

21 Fifth group working meeting Thu 10/25/07

22 Partnering and Networking Fri 6/1/07

Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 42005 2006 2007 2008

Pilot Project Timeline

Chicago Growth Strategy

• Attract more companies to participate• 10-12 companies provides limited synergies based on

EPA analysis of New Jersey by-product synergy effort

• Track economic value to member companies on a constant basis

• Pursue new public funding for FY08-09 while growing fee income in 2007

• Grow more aggressively than the current project requires – beat expectations

• Work closely with Illinois EPA and Region V EPA

Proposed growth strategy benefits

• Increases likelihood of success:• Increases potential of implementing synergies• Increases cumulative cost savings for network members

150% to 300% average ROI for each incremental $10,000 cost savings per company (based on UK results)

100 companies = $1,000,000 vs $200,000 for 20 companies

• Develops a viable long-term business model for managing the network, while public funding investment is pursued

Collecting Success Stories

• Environmental Benefits• Adhere to EPA metrics collection through WMRC• Separately and in Triple bottom line reporting

• Economic Benefits• Gather information continuously, report bi-monthly• Create metrics that are useful to our members• Economic Development focus – creation of new jobs

• Social Benefits• Possibly more qualitative• Gather information continuously, report bi-monthly• Assessing the social impact of collaboration

Progress Report ExampleSolution: Recycler to Reprocess By-Product for Re-Sale to Member Company

Rough Estimate of Materials Savings =100,000Rough Estimate of Reduction of Disposal Costs =26,000Rough Estimate of Reduction of Associated Costs

=50,000

-Initial Investment = 2,500_________________________________________

Estimate of Total First Year ROI = 173,500Five Year ROI = 877,500Ten Year ROI = 1,757,500

0

50

100

150

200QTY Purchased

Cost of Purchase

QTY Disposed

Cost of Disposal

QTY Stored

Cost of Storage

Quality of Product

Good for Business:Elimination of Disposal,

Transportation and Storage Costs

Good for the Environment:Positive

environmental impact, creation of zero-waste stream

Good for Shareholders:Reduction in Cost of Raw Materials

Without compromising quality

Current State

Reclaimed and Repurchase By-

Product

100% of By Product is

diverted from landfills

Transportation Provided

eliminating disposal

Fees

Stability of pricing

eliminates the need to stock

and store large

quantities of raw materials

Raw material costs decreased by 50%

Triple-Bottom Line Benefits

Added Benefits from Sustainable Marketing

66% Noted Green Aspects While

Purchasing

Influence of Sustainable Marketing on Alpha Consumer

Behavior

42% Believe Companies Carry Responsibility for Social Problems

Importance of Corporate Social Responsibility Practices to

Consumers

0

5

10

15

20

25

1 2 3 4 5 6 7 8 9

Years since 2000

Billions of Pounds Sterling

Recent Growth in Market Share of Green Products

Green Industry Growth Continues

Unabated at 30-50% Annually

The Sustainable Marketing Opportunity Gap

Current Market Share

of Green Goods

Consumers Who Notice Green Goods but Are

Not Yet Consumers

Market Share of Non Green Goods

A 30% Market Share Will be

Gained or Lost on the Basis of

Marketing Value of Green

Products or Services!

Synergy Implementation Status ReportOriginal Process Current Status of Synergy Final Process

Material 1:

Material 2:

Material 3:

Synergy Impact MetricsCompany:

Material Stream:

Baseline from Data Collection Current Working Meeting03/29/07

Total Improvement

Quantity Disposed (Tons/ Month)

Monthly Cost of Disposal

Quantity Collected

Monthly Cost of Acquisition

Monthly Cost of Transportation

New Monthly Revenue

Synergy Partnerships

Created

CO2 EmissionsReduced

Jobs Created

Additional Qualitative Analysis

What was the baseline impact? What is the current state? What improvements have occurred?

Business Impact

Social Impact

Environmental Impact

Company:

Material Stream:

Social Benefits

Environmental Benefits

Business Benefits

Reduced Costs

New Revenue Created

Jobs Created

New Businesses

Created

Solid Waste Diverted

from Landfill

CO2 EmissionsReduced

The Chicago Waste to Profit

Network Benefits the Triple Bottom

Line

Chicago Waste to Profit Network Contact Information

Karen WanDirector of Sustainability and CompetitivenessProject Manager of Chicago Waste to Profit NetworkChicago Manufacturing Centerkwan@cmcusa.org312.542.0430