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RE: Size of Market for P2 Services-Reply



Steve-

Sorry I couldn't get back to you sooner. I see that in the meantime you've
had some excellent responses.

First some background. I work for the Pennsylvania Technical Assistance
Program, part of Penn State University. I've been doing this for nearly 4
years and have developed a number of useful approaches that have benefitted
my clients. Unfortunately, because PENNTAP's services are at no cost to the
client, they also must be necessarily limited in scope. This has been a
frustration to me in that I perform an assessment, make recommendations,
many having significant merit, but can not spend the time with the client
assisting him or her with implementation (our guideline is 20 hours per
"case").

We send an evaluation form out after the case has been completed. Sometimes
I get good evaluations, but all to often, I get comments such as "have not
implemented yet" or "did not follow up on your suggestions". On the other
hand there are some clients who have made major changes top their
manufacturing processes, but I have not followed up to learn how much they
spent, how much they saved, whether their productivity is higher and
whether the quality of their product has improved (because they did it
after sending back the evaluation). At some point I will do this and, when
I do, I expect to have some big economic benefit numbers to report.
Reported economic benefit during 1997 from my PENNTAP activities (115
cases, 60 of which were environmental / pollution prevention) was over
$400,000, but I know its higher.

There is a paradox here. My services are free. I spend less than 20 hours
per case. I am extrremely busy-I average more than 100 cases per year. More
than half of these are environmental and P2. I have bonafide feedback from
my clients that they benefitted by in excess of $400,000 in 1997 and in
excess of $500,000 in 1996. Yet I don't believe that many of my clients
would be willing to pay for what I do. Here's why.

I am located in Southcentral Pennsylvania, a region with a strong
manufacturing tradition and a conservative financial (and political)
tradition among these manufacturers. The manufacturing landscape here is
covered with small and medium sized manufacturers. There are very few large
manufacturers (AMP, Armstrong, Grove, York International and Harley
Davidson are the notable exceptions). Many are family owned. The majority
of the companies that contact PENNTAP for my services are in the 30 to 150
employee category. They call for environmental assistance (usually for
regulatory compliance). Some are interested in an assessment. None inquire
about pollution prevention. When I help them, I always make P2 suggestions.
I put a section in my report entitled Pollution Prevention. Usually my most
valuable suggestions are located there. Yet, because they asked me for
compliance assistance (which they might not pay for either), I couldn't
possibly charge them for something that they didn't want in the first
place.

In 1996, along with the Environmental Engineering Department at Penn State
-  Capitol (Harrisburg) Campus I wrote a grant request to EPA Region III
for a 2 year P2 grant which we were awarded and which we are 18 months
into. We have been working with two companies, a food company and a
titanium reprocessor. Our study team made 11 P2 recommendations to the food
company. They are implementing 9 of these. The titanium reprocessor has
implemented a number of P2 ideas and are considering more. These have been
the first two companies that I have worked with through the implementation
phase. It's been gratifying, but the effort extended by the study team has
been extensive.

Neither company, I believe, would have paid for their respective studies,
nor for the assistance with implementation. The food manufacturer, though
in a growth mode, appears to have periodic cash flow problems. The titanium
company, though profitable has tied a lot of cash up in a new plant. We
plan to rebenchmark each firm to quantify the improvements. I'm sure they
would not pay for this either. The hours spent with each were significant.
At normal consulting rates, neither firm would have paid for our services.
Perhaps, were we consultants (as I was in one of my past lives) we would
have been more efficient. Even then, either we would not have sold the job
(too expensive) or we would have put in significantly more hours than our
contract was based on and may have lost money.

Now, to get more to the point. Mark Haveman's (Hi!, Mark) and Michael
James' comments were both quite apropos. As Mark implied, there is a
problem selling P2. As his boss at the Waste Reduction Institute states
"You've gotta sell the benefits, not the process" (excellent seminars they
put on, by the way). P2 is a process. The cost savings, the improved
manufacturing efficiencies, the higher quality, the fewer environmental
regulations that apply, the lower the environmental liability, the improved
utilization of raw materials, etc., etc.-those are the benefits. Those are
things consultants can sell, not P2 (the process). I can't sell P2 and I'M
GIVING IT AWAY!

So we have a lot of difficulty with this whole concept of selling P2.
Regulators, environmentalists, service providers and others in the public
sector talk a different language than manufacturers. We expect them to
understand us. Yet why would they understand us any more than we understand
them-few of us know about MRP, MRP II (they are different, you know),
cellular manufacturing, factory floor layout issues, QC); why should they
know about P2, common sense initiatives, Green Lights (or green anything
else), TQEM, environmental cost accounting or whatever the latest focus
(and buzzword) is from those of us in the public sector. Nor do many of
them care. They're too busy trying to get a quality product out the door,
trying to meet payroll, closing that next big contract, dealing with
machine breakdowns and impacts upon their operation by things they can and
can't control.

Michael James and others made the point that large manufacturers have staff
that identify and implement P2 projects. Undoubtedly they do. They're not
doing this because of an innate sense of ultruism, however. They are doing
it because it makes dollars and sense. These projects don't have a prayer
of seeing the light of day unless they are financially viable (i.e. meet
the corporation's hurdle rate for return on invenstment, payback or net
present value) or are considered a necessity (e.g. enable regulatory
compliance, avoid penalties, ill will, enable plant expansion, etc.). So
internally, most are not calling them P2 projects (some might), but from a
PR perspective, they are smart enough to know to couch their achievements
in P2 terms in their press releases, speeches, etc. (because they are
trying to impress those in the public sector who speak that language).

Smaller companies have fewer resources, fewer people, may not benefit from
diverse perspectives, backgrounds, or areas of expertise. That they have
even one individual with a diverse enough background to understand P2 on
any level (let alone the multiple levels many of us in the public sector
think of it) is unlikely. That's the first hurdle. The second is being able
to quantify the benefit (even innately, let alone doing a full blown
financial analysis) and allocate resources to implement it. And the third
is being able, then, to measure the actual benefits and translate them into
P2 terms to gain public recognition and good will. This doesn't mean that
we are still in the dark ages. Companies are making improvements daily to
their operations. They are doing this to maintain and gain customers, to
improve quality, to improve productivity, to lower costs, to stay in
business. They do it for the requisite business reasons and, around here,
anyway, do it without fanfare-the way they do many other things in their
public and personal lives. But they're not doing it "because its P2".

Some of them ARE understanding the P2 ramifications, however, as there are
hundreds of applicants for Governors Awards here in PA as there are in many
other states. But they are applying for the Governor's Awards, not because
they implemented a P2 project, but because they got an invitation in the
mail from the Governor and were told to submit an application to win an
award. The individual then evaluates the amount of his time it will take
for him (or her) to complete the application and whether he did anything in
the recent past that might possibly qualify. He also evaluates the benefits
(to himself and to the company, but more for himself-there's a Dilbert
cartoon in here somewhere). If he has the time, or if the personal benefit
outweighs the personal risk, he'll take the internal project description,
twist it around into P2 terms (he gets guidance from the application form),
puts any financial data from the beancounters into it, slaps a stamp on it
and beats the deadline for submissions. Then if he wins, he goes to the
awards ceremony, gets a free meal, gets his picture taken with the
governor, shows the award to his boss and co-workers, hangs it in his
office and goes back to work. Six months later he gets a bigger than
average raise. (Sorry for the digression.)

To answer your question about manufacturers using free P2 programs, they
are-as evidenced by the fact that I'm quite busy (but then I'm selling
compliance assistance, environmental assessments, materials productivity
assessments and even safety & health assessments and assistance and
slipping the P2 in as a no cost extra). A point that others have made is
that there is a dearth of viable P2 service providers. It is very difficult
to make P2 recommendations (or any other kind of recommendation for that
matter) about a manufacturing process that you,ve never seen before. And P2
service providers cannot be experts in every industry. After 4 years, I'm
only now getting to the point that I can gain enough trust during the plant
visit to have suggestions I offer to the majority of my clients (but not
all of them) considered as valuable. Aand as a former consultant and
employee for manufacturers in three different industries, I have a diverse
background (ideal for this type of work) and had been in hundreds of
different manufacturers in those previous lives.

Re the issue of trust, not only are many of them skeptical of the process,
but they are skeptical of the purveyor of the process as well. Think about
it this way. Many are in a niche market where they know who all of their
competittors are, they know their customers, they know their vendors,
they're harried with their work and some "guy" they don't know from Adam
(or Eve) comes in to sell them someting they don't understand. And if that
individual is a consultant looking to make a buck, often times he's back
out on the street without a sale. I have better success because, though he
doesn't like the fact that his exorbitant taxes paid my salary, at least
I'm not costing him anything extra to talk to him. Even so, my main
opportunity is to help him understand his compliance issues, something he's
quite uncomfortable with, knows he could get in deep trouble over and,
because I'm affiliated with a University and appear to be halfway
trustworthy, he's willing to take a chance on me writing him a report about
his compliance issues (he knows he can ignore it if he doesn't like it).
That I "sneak" P2 recommendations into the report is of little concern to
him. With luck, I can get him to think that there might even be some value
in the suggestions.

So trust is an issue. If (or when) they put the trust issue behind them,
and if the consultant or service provider is worth his salt, he can begin
to get the manufacturer to understand the benefits of P2, though he may
never mention the term. The folks at the Waste Reduction Institute have
taken to calling P2 "Materials Productivity". These are both words that
manufacturers understand on many levels. WRI has added a slightly different
dimension. This is very effective, though some would view this as a sheep
in wolfs clothing.

You asked some very good and thought provoking questions, Steve. I'd like
to know more about you and what you do for TVA, what successes you've had
and how you are learning from your failures. Call me or e-mail me some
time.

wjw/

PS: Do you work with the folks at U of Tenn Center for Industrial Services?
They have some pretty savy P2ers.

PPS: I hope this dissertation was useful to others of you out there. I hope
you all don't take offense (look at my characterizations of manufacturers
as gender neutral, by the way). I do hope to stimulate some dialog and I
will try to answer as many of your questions as possible, but like I said
before, I am plenty busy.

wjw5@psu.edu

Warren J. Weaver
PENNTAP
227 W. Market St.
York, PA 17401

fax 717-854-0087


ph 717-848-6669

PENNTAP website:
           www.penntap.psu.edu



>At 02:19 PM 2/2/98 -0500, you wrote:
>>I agree.  But can you offer any insight into why many would not be
>>willing to pay?  Why are more industry not using free P2 programs and
>>paying P2 consultants to show them where savings are in reducing their
>>wastes.  Do they not trust the concept?  Is there not value in the
>>service?
>>
>>Steve Hillenbrand
>>Industrial Waste Reduction Engineer
>>Synterprise Group, Division of Tennessee Valley Authority
>>(423) 632-8489; (423) 632-3616 (fax)
>>sjhillenbrand@tva.gov
>>TVA IWR HomePage  http://www.tva.gov/orgs/iwr/iwrhome.htm
>>
>>>----------
>>>From:         wjw5@psu.edu[SMTP:wjw5@psu.edu]
>>>Sent:         Monday, February 02, 1998 1:56 PM
>>>To:   Hillenbrand, Steve
>>>Cc:   p2tech@great-lakes.net
>>>Subject:      Re: Size of Market for P2 Services?
>>>
>>>Virtually every manufacturer, though the majority would not (yet) be
>>>willing to pay for these services.
>>>
>>>wjw/
>>>
>>>>Does anyone have information on the size of the potential market for
>>>>Pollution Prevention services?
>>>>
>>>>Steve
>>>>Industrial Waste Reduction Engineer
>>>>Synterprise Group, Division of Tennessee Valley Authority
>>>>(423) 632-8489; (423) 632-3616 (fax)
>>>>sjhillenbrand@tva.gov
>>>>TVA IWR HomePage  http://www.tva.gov/orgs/iwr/iwrhome.htm
>>>
>>>wjw5@psu.edu
>>>
>>>Warren J. Weaver
>>>PENNTAP
>>>227 W. Market St.
>>>York, PA 17401
>>>
>>>fax 717-854-0087
>>>
>>>
>>>ph 717-848-6669
>>>
>>>PENNTAP website:
>>>           www.penntap.psu.edu
>>>
>>>
>>>
>>>
>>
>>
>Michael R. James
>James Environmental Management, Inc.
>2007 N. Mays  Suite 101
>Round Rock, TX  78664
>512-244-3631
>512-244-0853 fax

wjw5@psu.edu

Warren J. Weaver
PENNTAP
227 W. Market St.
York, PA 17401

fax 717-854-0087


ph 717-848-6669

PENNTAP website:
           www.penntap.psu.edu