John Caddell's blog

In yet another example of the power of constraints to create innovation, there’s a fascinating article in the recent Wall Street Journal Business Insight section entitled “Greener and Cheaper.” In it, authors Alan Robinson and Dean Schroeder describe the decade-long effort by the managers and workers at the Subaru of Indiana plant to reduce their use of energy and decrease waste. One accomplishment: the plant has not shipped any waste to a landfill in nearly five years.

The findings of the authors is that sustainable practices can go along with cost reduction and efficiency improvements. But it’s a long process and requires constant focus, attention, and executive support. For example, the Subaru plant has had the objective to be environmentally sensitive since its construction 20 years ago.

It’s not all easy money–many of the projects required process redesigns and/or upfront investments that ate up savings for a while. But there are numerous stories in the Subaru experience where the objective to reduce waste led to sustained creative thinking:

In another case, a series of process redesigns that first increased costs ultimately produced lower costs, less waste — and better quality work. The plant used to weld its steel auto frames in a way that produced lots of sparks, which, in turn, left lots of a waste-metal byproduct known as slag on the floor. Subaru started looking for a company that might want the slag for the base metals it contained. It found a company in Spain that wanted to recover copper from the slag. So, Subaru started shipping the slag to Spain — and paying the Spanish company to take the material. Thus, for a while, Subaru was reducing its environmental impact, but at increased cost.

This led it to consider a previously unrecognized waste: excess sparks. The plant devised a new welding process that produced fewer sparks and less slag, lowering electricity and materials costs. Its consumption of copper welding tips plunged 75%. Subaru still ships some slag to Spain, but not as much. The new welding process also shows how attention to the minutest environmental details can lead to savings that a purely cost-driven organization might miss.

Customers are talking, every day, about their concern for the environment and “reducing the footprint.” With thinking like Subaru’s, we learn that environmental sensitivity does not have to be a premium product. It can, in fact, be cheaper.