As a manufacturer in the U.S., a common misconception is that focusing on sustainability is a result of government involvement and leads to decreased performance and profitability. While government does play a hand in moving many industries toward sustainable practices, this doesn’t have to be a negative nor costly move.
We’ve all seen the headlines from the auto industry, particularly Volkswagen, who falsified reporting metrics to make their products appear to meet imposed regulation when in real-world conditions the vehicles polluted greatly in excess of mandated acceptable range. While this particular situation is not cut and dry, what is clear is there was a misunderstanding between policy makers and manufacturers both on timeline and expectations, shifting the focus from innovating solutions to deception.
Is There An Alternative?
Innovation always comes at a cost, with the goal being future profits—be it financial, good will/public benefit, or capacity. In the recent example the cost may have been too high or regulation outpaced innovation, but adopting sustainable, or “green” practices doesn’t always mean loss. While in certain industries governmental regulation plays a heavier hand than others, by and large, the [frequently unseen] role regulation plays in business is intended for the benefit of the constituents—including the business. This doesn’t mean it’s always spot-on, but go with me here.
Leveraging Sustainability For Profits
Imagine for a moment you produce silicone wafers for electronic applications and over the course of 5 years your R&D department develops an additive for the silica to reduce energy consumption required to melt and form the ingots by 20%. The cost of developing the formula was over $3M, however the energy savings over 10 years would be in excess of $7M, would you do it? Or perhaps the innovation speeds the manufacturing process by 8%, generating revenues of $12M over 7 years and profits of $4M with a Net 0 increase in pollution. I realize this is a bit utopian and a stretch for some industries, so to those in such industries, also consider the scarcity of resources, and what that means for costs in the future.
Adopting sustainable processes generally does have it’s costs, and if those costs involve an investment in new equipment, let us help you fund your lease or purchase. Our finance experts can design a finance plan that meets your organizational needs and explain the Section 179 tax benefit for capital equipment investments. Contact and ENGS representative today for more information on our equipment finance products.