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Euro profit billions from new manufacturing model

LONDON: Sustainability strategy advisor Lavery Pennell says the adoption of a new manufacturing model in Europe could produce €100 billion in additional corporate profits, create 168,000 new jobs and reduce CO2 emissions by 1.2 billion tons a year - or 14.6 percent of the region's total.

The so-called New Manufacturing Revolution (NMR) – already adopted by Unilever, the Body Shop, Patagonia, Ecover and Interface – is based on creating shared value with suppliers and customers and capturing all internal value. Lavery Pennell says these companies have begun this process by implementing supply chain collaboration, energy efficiency, process waste reduction, packaging optimisation, circular resource use and transport efficiency.

Patagonia DONTBUYTHISJACKET1The new model involves three stages including improving non-labour resource efficiency; reinvesting some of the efficiency savings in sustainable inputs such as materials and renewable energy; and developing innovative new products and capturing market share growth.

Carpet tile producer Interface says its European operations have reduced energy and yarn usage per unit of production by 40 percent and 12 percent respectively since 1996; switched to 100 percent renewable energy for its Netherlands-based Scherpenzeel site; and replaced 43 percent of its raw materials with bio-based or recycled alternatives.

The result is an annual cost reduction of €7.6 million, a cut in greenhouse gas emissions by 35,500 tons and enabled the company to remain the world's leading manufacturer of carpet tile in a highly competitive industry.

Rob Boogaard, current CEO of Interface Europe, says all European manufacturers should adopt a similar model: "The 'new industrial model' demonstrates that there is a better way and we have the evidence to prove it."

Lavery Pennell says 11 percent of the expected new profits and 20 percent of the additional jobs and greenhouse gas reductions can be achieved if just the top 20 European manufacturers applied NMR to their global operations.

According to Cambridge University's Institute for Manufacturing, one of the architects of NMR, when revolutions occur, the economic benefits to the early adopters are disproportionate: "Profits increase, new industry leaders emerge with strong competitive positions that can last for decades and host countries' jobs, economies and exports all benefit. This next manufacturing revolution will also bring societal and environmental benefits which are a consequence of addressing today's opportunities; the 'green economy' is an integral part of the next manufacturing revolution that will also, for some sub-sectors, bridge the cost difference between producing onshore and outsourcing to other nations with lower labour costs."

New-Industrial-Model-report.pdf

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