For many companies, the cost of water — compared to the overall cost of production —hardly makes a blip on the radar screen. Yet clean water, or lack thereof, can cause a whole factory to suddenly have to shut down or, even worse, lead to a company losing its social license. In mid-June, Coca-Cola had to learn that the hard way when one of its bottling plants in India got shut down by the authorities because it was extracting too much groundwater.
“The price of the water is not significant at the moment, but it is getting a little more noticeable as a operating expense,” said Will Sarni, director and practice leader for enterprise water strategy at Deloitte Consulting in a recent GreenBiz Group webcast titled "Manufacturing in an Age of Water Scarcity."
“But what happens if you don't have water?” Sarni asked. “What does it mean if you don't have water for a week and you cannot make automobiles?” Sudden regulatory changes can be equally as challenging for companies.
As a result, some are starting to recognize water supply as a fundamental business risk that has to be part of a growth strategy. “How does water – no pun intended – fuel that growth strategy? That is really the right way to think about it,” said Sarni, who urged managers to get in front of the issue as opposed to being defensive about it.
Ford Motor Company is one example of an entity that has recognized the risk early on and took on the challenge. “Water scarcity and water quality degradation rank among the biggest threats facing our planet,” said Ford's John Fleming, executive vice president of global manufacturing & labor affairs. “Some of our facilities are located in regions where water supplies are already scarce.”
As early as 2000, Ford began to set year-over-year reduction targets and developed a corporate water strategy, building on the success of a manufacturing water strategy. “We've moved beyond merely reducing the water footprint of our facilities,” Fleming said. “We are addressing water concerns in our supply chain and in our broader communities.”
According to him, Ford reduced its global water use by 61 percent, which equals more than 10 billion gallons. Its most recent sustainability report also reveals that Ford reached its target for water use per produced vehicle two years early. Instead of reducing it by 30 percent until 2015 (2009 being the baseline), the target was achieved last year. The new target set this year is going to be minus 2 percent per vehicle produced compared to 2013.
To illustrate how it can be done, Fleming used the example of the Ford factory in Cuautitlán, Mexico. It was built 1964 in a region where water was already scarce. Since then, many other international corporations established factories there too. Today the underground water table is dropping by 3 to 4 meters per year, according to Fleming, and water has to be pumped in from other regions. Since the 1990s there have been limits on water withdrawal.
Ford adapted to the situation by reducing the water use per vehicle by 58 percent from 2000 to 2013. “The plant developed many creative ways to save water,” Fleming said, citing as example:
- dedicated piping for portable water to ensure it is used only for human consumption
- recycling all other water used at the plant
- introducing three-wet paint technology that saves water
- chemical treatment when vehicles are prepared for painting that saves water and energy
- replacing asphalt with ecological concrete, which allows rain to re-enter the ground
The ecological concrete is a good example for implementing a win-win technology. By letting rain water pass, it recharges 9.700 square meters, allowing 7.5 million liters to penetrate the ground. At the same time, the concrete is less expensive and easier to maintain, which saves Ford $40,000 in maintenance per year. But Fleming stresses that the problem is too big to be tackled just by one company. As a result, Ford collaborates with other organizations, both public and private.
“What Ford is doing really illustrates how water is now becoming more and more a business issue within other industry sectors,” said Sarni, and cited oil and gas, power and utilities, heavy manufacturing and semiconductor manufacturing. In his view, thinking about water should not just be a management issue, but should result into thinking about stewardship.
One of the big challenges is how to implement the right strategy given that at the moment the price for water does not reflects its real value. “We are addressing water not from a pure price standpoint but as a scarce resource,” said John Viera, Ford's global director of sustainability & vehicle environmental matters in the webcast. “A resource that we absolutely need, and if we don't embed the proper and efficient use of water now, it will cause a big problem in the future.” Fleming stressed that many improvements can be made with relatively small investments: “The first part of anything is getting the usage measurement and then relating it to something. What we are able to measure today is easier than it ever was before.”
And things are progressing fast. Asked by GreenBiz's Joel Makower what a manufacturing and water management might look like in two years, Viera said: “For us and for many, I think, this is still a relatively new space. I think two years from now we are going to be talking about things from a water standpoint that we might not even know about today. That is the exciting piece.”