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RE: Size of Market for P2 Services-Reply



Warren,

Did you ever consider that this lack of trust may be based on the
organization you are representing ?  In the early days of P2, people
tended to be much more excited and interested in its successful outcome.
Companies were paying good money to engineering firms to have
assessments conducted. The clients staff was very supportive and very
open to new ideas.  We were very willing to put in extra hours and many
of these projects ran into the red when it came to work load versus
available budget.  I spent many hours of my own time making sure we
delivered a high quality product.

Then everything changed.  Mandatory P2 plans here in California pretty
much opened up the flood gates of low price support services.  It didn't
matter that these reports were just photocopied boilerplate, they
satisfied a legal requirement at very low cost.  This put us at a
tremendous disadvantage because we continued to bid these projects at
the level of effort we knew was required to do a good job.

Our general guideline was 60 to 80 hours per major wastestream or
process unit, not 20 per facility !  There is no way you can do a
credible job that is site-specific in less time.  You need to spend some
time with the plant staff developing an understanding if you want to be
taken seriously.  For 20 hours you cannot provide much more than a
cookie cutter approach which is why it is easy for your work to be
dismissed.  When you talk directly to the problem with detailed process
description, listing of alternatives, selection and screening, and
economic assessment, then you "might" be taken seriously.  It also helps
if the facility pays for this service because it creates a vested
interest in its success.

Now before I get flamed, I am not saying that free services are not
beneficial.  There are many industries that can benefit such as auto
shops, paint shops, etc.  You cannot expect a small mom and pop shop to
pay $10,000 or more for a P2 assessment.  The potential savings are just
not there.  But the presence of these free services has impacted the P2
market.

Perhaps there needs to be more of a limit on the type of facilities
served.  Twenty hours for an auto shop is more than enough, especially
if you survey 2 or 3 per week.  The economy of scale helps a lot.  But
if you are looking at a mid to large size facility with lots of
different processes, 20 hours barely scratches the surface.

Just my two cents,

Mike.callahan@jacobs.com

> ----------
> From: 	wjw5@psu.edu[SMTP:wjw5@psu.edu]
> Sent: 	Tuesday, February 10, 1998 4:40PM
> To: 	sjhillenbrand@tva.gov
> Cc: 	p2tech@great-lakes.net
> Subject: 	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
> 
> 
>