By Mike Schmidt, Director of Industry Communications, Association of Equipment Manufacturers (AEM) --
As sustainability considerations become increasingly interconnected with product development and business strategy, non-road equipment manufacturers have been presented with what can best be described as both a challenge and an opportunity:
Recognize and respect the relationship between safety and sustainability or face the very real risk of losing market access and profitability over the long term.
“Humans are apex consumers, and we’re exposed to anything we expose to the environment. Something is going to chew up what we throw away. And in some cases, it’s going to be eaten by something that’s eaten by something we eat,” said Chuck LePard, senior consultant, product engineering, manufacturing, compliance, and sustainability, at AEM member company DXC Technology. “The water, the air, it’s all now a safety consideration. These are things we must be aware of and deal with when we’re looking at our products.”
Sustainability is everyone’s business. Whether it’s through aligning with ever-evolving regulations or working to support a more viable world, the non-road equipment manufacturing industry and its future depend on its ability to maximize efficiency, minimize cost, and use natural resources responsibly. Learn more.
Why Care About Product Safety and Sustainability?
The vast majority of non-road equipment manufacturers care about product safety for one or more of the following three reasons:
- Regulations and laws require it
- It’s a means for protecting their reputation
- It’s necessary to ensure the ability to do business over the long term
“I don’t want my company to have a reputation that’s going to be harmful, that’s going to steer investors away from me, or that’s going to make somebody not want to do business with me,” explained LePard. “I want to have a good reputation, I want investment, and I want people to buy my products.”
Then there’s sustainability. Today, the term is most strongly associated with organizational efforts to ensure a company continues to remain in operation. However, it’s also relevant and important for many of the same reasons product safety is: because organizations have to “do” sustainability, it often enhances a company’s reputation, and it plays a role in ensuring a company remains in existence.
LePard cited the example of Bethlehem Steel. The once-prominent steelmaker is credited with more or less building the United States and was a longtime source for iron to build skyscrapers, railroad ties, and other infrastructure. However, the company continued to focus on making steel exclusively from iron ore, even when it became more expensive than scrap metal. Eventually and unfortunately, Bethlehem Steel filed for bankruptcy in 2001 and dissolved in 2003.
“That’s what sustainability refers to,” explained LePard. “Asking yourself, and being able to answer, the question of ‘What do I need to do, or not do, to continue to make sure that my business continues to function and operate?’”
Fortunately for non-road equipment manufacturers, some guidance and direction exist in the form of the United Nations’ 17 Sustainable Development Goals and AEM’s corresponding sustainability-related objectives.
“These are things that AEM has said, ‘These are things we can do,’” said LePard. “And, as a whole, it’s what AEM members have focused on.”
Comparing Safety and Sustainability
When comparing product safety to sustainability, it doesn’t take very long to find some interesting correlations between the two concepts and how they relate to one another. Product safety tends to be a little more focused on the short term, while sustainability often takes a longer-term view.
“If something’s going to hurt you today, it’s probably considered safety. If it’s going to hurt you over the next five years, it might be sustainability,” explained LePard. “What we do sometimes with a short-term view can have long-term consequences we don’t anticipate. So, when you look at keeping your business operating indefinitely, it often comes down to risk reductions and operation and maintenance.”
Product safety has come quite a long way in recent years. LePard said he grew up in Detroit, Michigan, hearing stories about Ford Motor Company and working on the manufacturing line in the automaker’s earliest days. According to LePard, if a worker was injured or killed, he (or his widow) received just a single day’s pay.
“That was considered product safety 150 years ago,” he added LePard.
Slowly but surely, however, manufacturers came around to the idea that:
- Employees are assets to be protected (and constantly training new people is not the best long-term business decision)
- Protections should be extended to people living around the manufacturing plant
- Whether something from the plant went out of a drain, came up a smokestack, or was released from a facility another way, it needs to be accounted for and tracked
- Not only can a facility produce emissions, but so can products as well
“This was a real mental shift for people,” said LePard. “It centered on the idea that something that I sold I had an extended producer responsibility associated with that product. Until that time, it hadn’t really been in the psyche of safety folks.”
Where Product Safety and Sustainability Stand Today
Europe recently applied the term “existential threat” to what’s happening in the environment and the world right now. That’s relevant for non-road equipment manufacturers and other industries for one main reason: So much is manufactured, but many organizations don’t possess the knowledge of what’s in those products to determine if they’re going to be safe in 50, 100, or 200 years.
“To me, that’s a safety concern,” he said. “It’s not just a sustainability topic.”
In response, laws are being passed to eliminate threats and encourage recycled content. The first law of this kind was the European End-of-Life Vehicle Directive, which applied specifically to the automotive industry. Initially, it called for manufacturers to identify harmful substances in products, reduce them, and eventually eliminate them altogether.
The requirements proved difficult for the automotive industry. OEMs discovered Tier 1 suppliers didn’t possess all the necessary answers for compliance. Tier 2 suppliers knew a little bit more, but certainly not everything. Eventually, though, a version of the directive was put in place that made sense from a compliance perspective.
Today, the European End-of-Life Vehicle Directive continues to evolve. The end goal, according to LePard, is a close-looped recycling system where OEMs can reuse content.
“The good news is, ELV worked. The bad news is, ELV worked,” he explained. “And because it worked in automative, they decided to implement this kind of rule for everybody else.”
AEM’s Heavy Equipment Declarable Substance Lists (HEDSL) provides a harmonized list of global chemicals of concern for the non-road industry to ensure manufacturers remain compliant and maintain market access. Learn more.
Where Product Safety and Sustainability are Headed
Now and in the not-too-distant future, it is reasonable to expect European government entities to only buy from companies following circular economy rules. The takeaways for non-road equipment manufacturers are notable:
- Increased risk for bringing products to market
- Barriers to market access if products aren’t safe and sustainable
- Increased pressure to recycle content
“So much of the work (related to product safety and sustainability) is happening in the design and manufacturing cycle, and it’s product safety people leading the way,” said LePard.
Convincing organizations to release information about safety incidents didn’t happen overnight. Nor will that be the case with sustainability. However, if certain information needs to be reported as part of compliance, knowing what the rules are and what needs to be done needs to be a seamless part of the product design and development process.
“Eventually, though, organizations will find a way to not only make it economically viable, but advantageous,” said LePard.
