GM, Steelcase see a web of opportunity in the circular economy
Slashing corporate waste and upping investment in reuse is a big market opening — and one that could unlock new supply chain value and job opportunities at companies that can get out ahead.
At furniture designer and manufacturer Steelcase, for example, designing for the circular economy is increasingly seen as an "entrepreneurial gig." All told, the company sees potential to double the value of the $3 billion business, said Director of Global Sustainability Angela Nahikian.
"This could double the size of our company," Nahikian said late last week at the GreenBiz 17 conference in Phoenix, Arizona. "Each of these opportunities has to be stitched together with competencies that we already have and investments that need to be made."
To date, she said Steelcase is focused on inventorying existing capabilities and pinpointing gaps. While sustainability is important, Nahikian said the company also recognized an opportunity to create products that can change, grow or shrink with evolving corporate needs.
Circular goods can be re-purposed or taken apart at end of life, then used for materials to make new products — a design challenge that involves a deep knowledge of chemistry and detailed life cycle assessments. Steelcase also already sells cradle-to-cradle certified products, which means these chairs and stools are assessed for the ability to be safely taken apart and recirculated into the economy.
"For us, sustainability has been a really good trip, but it’s going to get more exciting from here," she said. "Circular economy is a manifestation of our purpose."
The long road
Nailing new models on the first try also isn't easy when a company has a 100-year history and operations in the Americas, Europe, the Middle East, Africa and Asian Pacific countries.
The journey has taken seven years so far for Steelcase. Dan Dicks, global director of end-of-use services, said that gradually building momentum towards circularity has been an advantage, as it didn’t require immense up-front investment.
"Because of the research and development that we had to do, we couldn’t have compressed it," Dicks said at the conference last week in Phoenix. "It’s not a big financial investment we’re asking for, but proof points allow us to ask for resources incrementally. That allows us the right runway."
Steelcase’s journey towards the circular economy stimulates change without abruptly disrupting the business or taking large financial risks. It has also allowed Nahikian to build relationships within the company and plan for its growth.
"It’s a migration strategy," she said. "The business [Dicks] is building has to involve each of the subsequent businesses we add, like subscriptions and manufacturing. That means something different for scaling."
Nahikian advises businesses interested in evolving circular products to cultivate patience, tenacity, resilience and agility.
"Know your treasury organization, know your strategy organization. Spend the time up front and really think it through," she said. "Now is the time we start quick-stepping."
Developing internal and external advocates is a must, too, Dicks said.
The supply web
For General Motors, finding advocates for the circular economy means weaving a mutually beneficial "supply chain web" among organizations. For John Bradburn, GM's global manager of waste reduction, the pursuit amplifies value and creates opportunities to help society — the very challenges that businesses exist to solve.
"A supply chain is only as strong as its weakest link," Bradburn said at the GreenBiz 17 conference. "Waste is just a resource out of place."
He described the circular supply chain web that allows recycled plastic to circulate among Detroit-based businesses GM, William T. Burnett & Co. and Filtration Services Group. The companies are working together to turn plastic bottles sourced from Flint, Michigan into fleece, car parts, air filters for businesses and even insulated coats for the homeless.
The supply web organized by Bradburn — who has been nicknamed the "MacGyver" of the circular economy — sends the recycled bottles to Unifi in North Carolina, which produces dense plastic flake that can be used in textiles and yarns.
The flake is later sent to William T. Burnett & Co., a foam and non-woven materials manufacturer, where it is turned into fleece. A few steps along the web, the fleece is die-cut and sent to Filtration Services Group, where it is manufactured into HVAC filters that are sold to GM’s manufacturing facilities.
"If a bottle made in Flint goes to a recycling plant and sent overseas, then goes back into our economy and sold to us … we lose value and harm communities," said Bradburn, who was born in Flint. "This is about American jobs."
Filtration Services Group collaborates with St. Luke N.E.W. Life center, an organization that provides life skills and job training, to employ formerly homeless employees to sew the filters. In the process, insulation created by M.T. Burnett & Co. is sewn into jackets for the homeless. According to Dean Weston, Filtration Services Group's president, 20 women are at work making these coats while receiving job training.
Price pressure points
For GM, the main obstacle in linking this chain was overcoming the low prices offered in Asian plastic recycling centers.
"Even in the U.S., coming from Detroit to North Carolina, flake is expensive," said Bradburn. "Going to Asia cuts our costs by half."
Sabrina Kilmer, global specialty account manager at William T. Burnett Co., said that there were hidden savings in the circular web that weren’t immediately obvious.
"Finding use for fiber scraps as insulation means that scraps don’t have to go to the landfill, which saves money," she said. "It’s a lighter part for GM, which means it is fuel efficient and creates better ratings. It’s cost-effective in the end."
Building supplier relationships is a strategy aspect, borrowed from biomimicry, that is integral to the circular economy web.
"You have to take care of your suppliers when they go out on a limb for you, or when you’re competing with other fabrics coming in overseas," said Bradburn. Learning how to use recycled fabrics in an environmentally conscious way and repurpose extra fabric is a skill that pays off; other companies "will now come to Sabrina [at W.T. Burnett & Co.] and want her to do it for them."
If supply webs are dynamic and interconnected, the circular economy can help solve many social and economic issues at once, including business resilience.