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Re: How much $ do firms borrow for P2?



Burt, 
When I worked for the City of Palo Alto, we looked into setting up a P2
loan program with the relatively narrow purpose of assisting metal
finishers with implementing P2 projects for copper and nickel.  A
Stanford University graduate student interviewed senior managers at
about a dozen metal finishing and printed circuit board manufacturing
firms (on our behalf) and found, much to our surprise, that there was no
interest in receiving low-interest loans, as the metal finishers only
wanted to pursue loan financing for large projects that they perceived
would have significantly greater financial benefits for their
businesses.  For the most part, they told us that they thought they
could self-finance low-cost P2 improvements (e.g., drag out tanks, spray
rinse, flow controls, drip boards).  They were interested in grants for
demonstrating expensive new technologies costing $100,000 or more to
implement.  We found that even our smallest metal finisher was able to
install an amazing number of P2 measures without loan financing (using
parts purchased primarily at a local hardware store--we were very
impressed at their ingenuity).  Around the same time (mid-1990s), the
City of San Jose set up a low-interest loan program, which (the last
I've heard) did not find any takers.  My conclusion is that loans are
not great motivators or facilitators for P2.
Kelly Moran
TDC Environmental

Burt Hamner wrote:
> 
> Hi P2 techsters and ONE-L folks
> Bill Narotski of the Ohio EPA was kind to send me details of their Pollution
> Prevention Loan Program.  I have analyzed the loans they made to firms for
> various P2 process improvements.  The doc I got reports 27 loans made.  They
> were real process/tech improvements and not pollution control.  The average
> amt was  $175,112, the median amt was  $150,000, min =  $25,050, max =
> $350,000.  The doc does not report the total investment by the firms, just
> the amount they borrowed.  It is reasonable to assume that firms probably
> put in additional funds or in-kind labor to make these work, so I think it
> is reasonable to assume that the average P2 investment is closer to
> $200,000.
> 
> This is a surprise to me.  I thought there would be more firms looking for
> smaller loans.  Question:  Do P2 techsters think there is demand for smaller
> loans and the demand is not being met?  Or, are smaller loans being
> requested by small firms that don't really qualify as good borrowers, so
> they don't get funded? (I think that is often likely).  Or, do firms have to
> be of a certain size and capacity to take advantage of specialized loan
> programs (also likely).  Perhaps the nature of P2 process/technology
> improvements is such that they really do require a significant chunk of
> capital?  Sure, we like to say that there is a lot of low hanging fruit
> etc., but if firms commonly have to spend over a hundred thousand dollars to
> make P2 improvements, well hell, my grandpa would say, no wonder that dog
> won't hunt...
> 
> Honestly, I don't know what these numbers represent, but they sure do raise
> some interesting questions about the financial thresholds firms must face
> when moving towards P2.  I am interested to hear from you in the field about
> what kinds of capital needs your P2 clients face, and what they do when they
> are smaller and the projects are smaller.  I guess I am saying that the P2
> challenge out there does not really seem to be in the firms that are capable
> of handling a $200,000 loan; certainly in many parts of the world you are a
> success already if you can even think about that kind of investment.  Is the
> Ohio lending experience typical of P2 investments, if so what does that mean
> for P2 promotional strategy?
> 
> I am producing a massive paper on P2 financing and will be happy to include
> any feedback you can give in it, with appropriate credits, and share the
> results with you if you are interested.  I hope we can get a little dialog
> about this going on P2TECH.
> **************************************
> Burton Hamner
> Hamner and Assocaties LLC
> 5534 30th Avenue NE
> Seattle WA 98105  USA
> Tel:  206-526-5308
> Fax: 208-279-4991
> Email:  bhamner@cleanerproduction.com
> Web:  www.cleanerproduction.com
> *****************************