The opportunity of the green supply chain

This morning’s Wall Street Journal includes a call literal to energy for the new Congress. The writer describes the $33 billion in stimulus money awarded to 5,137 entities, from General Electric to state energy initiatives to “no-name start-ups” as “Soviet central planning under the guise of ‘investing’ in America’s future.” The next Energy chairman, who will be a Republican, needs to reign in “a federal energy apparatus that is flushing taxpayer dollars down ethanol, wind and battery projects while crowding out cheaper fuels and killing jobs.”

At the same time, she points out that politicians of all stripes love the idea of being green because it sounds so good. “The conservative energy position is a study in confusion. The field’s wide open for some clarity and direction.”

I’m not convinced that research into wind and battery projects is throwing money down a rat’s hole - hey, I know manufacturers in our industry that have received government funding to do research into alternative fuels for lift trucks. None of those companies are managed by wild-eyed socialists and who believe there are viable alternatives to the batteries we currently use. Next time someone scoffs at the green economy, ask yourself this: aside from the potential quick buck for venture capitalists, which do you think would deliver more long-term value to the economy? The next Twitter or a new energy-saving technology that saves us all money at home and makes our manufacturers more competitive? 

Still, I understand that we are schizophrenic on this issue. In my own personal life, my wife convinced me in 2008 to spend $1,200 to replace our window air conditioners and incandescent light bulbs with flourescent bulbs and energy savings cooling units. The result, I spent $2,672 on electricity in 2007, the last full year with the old stuff; I spent $1,868 in 2009 and will spend $1,960 in 2010 - that’s more or less an 18 month payback. I think I could get that project funded at most companies.

At the same time, I’m the treasurer of the local Episcopal Church. We occupy and pay about $3,000 a year in electricity for one floor of a three-story office building; our tenants pay their own electricity, which means that any money we invest in alternative energy benefits our tenants but doesn’t put money back into our pockets. We recently received a proposal to put solar panels on the roof at a cost of $53,000 - not counting the cost of replacing the roof first. Call me crazy, but I can’t justify a $53,000 investment to save about $120 a month on a $3,000 bill. Still, I have some fellow parishioners, including some clear-eyed corporate executives, who believe we need to lead by example. Likewise, I’ve done the math on the Ford Fusion hybrid my wife has fallen in love with a dozen different ways and explained why we will lose money getting better gas mileage with a hybrid, given our driving habits - she still wants that lovely Ford Fusion hybrid on our dealer’s lot.

Having sat in on presentations about several LEED-certified distribution centers, I think our industry is equally schizophrenic about green. When I look at the bullets on the PowerPoint slides, I see bike racks in the parking lot, water-saving faucets, solar panels on the roof and recycled building materials. Rarely do I hear about energy-efficient motors or power-saving features on the conveyors and sortation systems or regenerative brakes on the lift trucks or AS/RS cranes.

While I’m not convinced that things like solar panels, wind turbines and more efficient batteries are the answers to today’s problems in their present form - I don’t think the research is a waste of money or killing jobs. There’s a reason Warren Buffett has invested billions in a Chinese battery company. If not us, someone will develop these technologies and create great new companies and value. And given that corporate America is going green, there’s an opportunity for us in the materials handling industry to lead the way in our industrial niche.

After all, wouldn’t you like to see bullets on the PowerPoint slide about how your conveyor, AGV or lift truck helped your customer get LEED certification instead of a bike rack in the parking lot?