Much has been said about the downturn in U.S. manufacturing over the past few decades and lots of fingers have been pointed. Offshoring, regulations, taxes, unions, and many other issues have been hoisted up as the reasons for the U.S. losing much of its manufacturing base.
After reading a report from the Delta Institute, a center of innovation focused on environmental sustainability and economic development, I’m beginning to think another significant cause of the manufacturing decline in the U.S. may have been our own inertia and complacency.
So just what exactly am I talking about here? The report from the Delta Institute describes energy efficiency measures commonly recommended for manufacturers in Illinois and Cook County and the frequency of their implementation. The analysis is based on Delta Institute’s insights from 39 energy audits of manufacturing firms in Cook County, completed in 2011 and 2012, in addition to data collected over a 10-year period from 2002-2011 by the Industrial Assessment Center (IAC).
Illinois may not be the whole of U.S. manufacturing, but with the state being home to nearly 20,000 manufacturers, it certainly serves as a representative microcosm of the whole.
As it followed up with manufacturers as part of the audit process, Delta says that manufacturers’ attitudes to the energy audits ranged widely, with some businesses even refusing even to take a follow up visit to discuss the audit findings. Others, however, implemented all energy efficiency measures within two weeks of receiving their audit findings.
The energy savings measures outlined by Delta were not complex (see accompanying graphics) and most—following years of energy efficiency discussions in manufacturing—are now considered by many to be common business sense. We’re talking about things like sealing leaks and insulating pipes, improving fuel/air mix and burn efficiency, and using more efficient motors or mechanical components.
In the Delta report, it is noted that within twelve months of the audit, businesses chose not to implement such basic energy efficiency measures between 33 percent and 46 percent of the time. Though the majority of manufacturers did take steps to make these improvements, the fact that such a large number of businesses basically ignored this basic set of proven money-saving advice speaks to the larger issue of inertia.
For its part, Delta contends that more research is needed to get to the heart of why so many manufacturers are ignoring this simple advice. The additional research is required, according to Delta, because the obvious reason for not following these proven money-saving methods—cost—has been revealed to not always be the deciding factor for manufacturers who do not follow the advice.
There is no clear correlation, the Delta report says, between the size of the payback or the cost of implementation, and the implementation rate. Around half of companies adopted recommended measures with costs of over $18,000 and with paybacks of over two years, while half of the businesses failed to implement measures that cost less than $1,000 and had paybacks of close to six months.
Though numerous issues are considered by Delta for this disconnect between cost and implementation, one of the most revealing factors that points to simple inertia as being the root of the problem is this: Only 53 percent of businesses receiving the recommendation to turn off equipment when not in use actually implemented the measure. Despite having one of the best payback periods (less than six months) this simple piece of advice ranked seventh in frequency of implementation.
Compounding the problem for manufacturers is that when Delta offered 12 audited companies $2,000 each in grant dollars to fully fund the implementation of certain low-cost measures, only one company took advantage of the grant, despite the clear identification of the measure and reminders of the grant opportunity in follow-up visits.
The most telling example in the Delta report as to why inertia and complacency are most likely to blame comes from interviews conducted by Delta with the manufacturing staff at the audited plants. The staff at many of these plants explained that certain practices—even those that are counter-intuitive, like leaving unused equipment running—often continued unquestioned because “that was how things had always been done.”
While there is little doubt that a multitude of factors contributed the decline of manufacturing in the U.S., I think there is equally little doubt that we also share a large part of the blame.
To access the Delta Institute report, visit: http://www.delta-institute.org/manufacturingreport.
