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Jul022015

Asian Factories Starting to go Green

Thursday, July 2, 2015 at 4:09AM

Media headlines have recently highlighted the growing air pollution crisis in Asia’s expanding cities. This is caused by a mix of factors – the growing number of vehicles, coal-powered factories, people burning dirty fuels to heat their homes, and poor enforcement of standards – and has severe consequences for human health. If it’s not tackled, more and more countries will see large rises in respiratory problems, cancers and early deaths from pollution-caused illnesses (http://www.nrdc.org/air/).

The World Health Organization (WHO) says air pollution is the world’s largest environmental health risk, killing 7 million people every year. Asia has the largest number of air pollution deaths in the world, with 3.3 million deaths linked to indoor air pollution and 2.6 million deaths related to outdoor air pollution (Clean Air Asia).

While most of the Asian countries where this is a problem are also aggressively growing their economies in order to get richer and raise living standards, there is a rising awareness of the need to balance a modern, industrial economy with human health and the environment.

One solution is to adopt green and sustainable building standards when constructing new factories. This is more than just a public relations exercise: the energy savings possible from building smart pay off in the long run. And green factories not only pollute less, they save lives and the environment.

Asia plays a critical role in producing the world’s consumer products, from the small and simple to the highly complex components used in 21st-century computing technologies.

Intel (intel.com), the manufacturer of electronic devices and the computer chips that go inside them, is trying to lead the way. It has built a US $1 billion manufacturing plant 16 kilometers outside Ho Chi Minh City, Vietnam, and it is designed to exceed Vietnamese environmental and sustainability guidelines and laws.

Opened in 2010, it boasts the country’s largest solar power system. It is also currently working on a water reclamation system to reduce water consumption at the plant by 68 per cent, according to The New York Times. It is hoping to receive certification from the US Green Building Council (usgbc.org).

It is all part of a wider trend that is starting to reverse the damaging, short-termist approach of the past. More and more Western multinationals and their Asian suppliers are building environmentally sound factories in the developing world.

According to the US Green Building Council, around 300 manufacturing facilities in Asia are either certified or are awaiting Leadership in Energy and Environmental Design (LEED) certification. The LEED certification recognizes the building has met certain standards in becoming a ‘green’ building.

Going green is more and more part of corporate policy for companies that want to avoid the bad publicity of disasters such as the garment factory collapse that killed 1,135 people in Bangladesh in April 2013.

But it is not just driven by a desire to avoid bad publicity: large corporations that build factories in the global South are also realizing there are big financial savings to be made.

Intel has been able to reduce its global energy costs by US $111 million since 2008. It did this by investing US $59 million in 1,500 projects to boost sustainability across its facilities worldwide. The projects have reduced carbon dioxide emissions equivalent to the amount produced by 126,000 American households per year.

Intel’s solar array in Vietnam, which cost US $1.1 million, offsets the equivalent of 500 pollution-belching motorbikes every day.

How effective are LEED-certified buildings? The New York Times reported that a 2011 survey compared a typical shoe factory with a LEED factory run by the American sport shoe maker Nike. It found the LEED factory used 18 per cent less electricity and fuel and 53 per cent less water.
And this trend is creating a new economy unto itself. As an example, a new marketplace for industrial efficiency upgrading is developing in India. Power outages are frequent in India, so finding a way to save electricity and alternatives to dependence on the national power grid is attractive to any economic enterprise.

Prashant Kapoor, principal industry specialist for green buildings at the International Finance Corporation (IFC), believes demand for upgrades is strong enough that various companies can specialize in this field and profit from it.

And things are also happening in the notoriously smog-choked cities of China. By the end of 2012, China had certified eight factories and 742 buildings as LEED, according to the China buildings programme at the Energy Foundation (ef.org) in San Francisco.

Damien Duhamel of Solidiance (solidiance.com), a firm that advises businesses on how to grow in Asia, believes avoiding risk caused by environmental accidents or scandals is heightened by the growing presence of social media, which amplifies negative publicity.

“The next battle will be here” for higher corporate environmental standards, Duhamel believes. “This is why some smart companies – Intel, for example – took the steps of being proactive.”

By David South, Development Challenges, South-South Solutions

Published: April 2014

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=ohM9BQAAQBAJ&dq=development+challenges+april+2014&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challenges-published-april-2014

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

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David South |

African Manufacturing Pioneers Proving it is Possible to Thrive

Wednesday, June 24, 2015 at 2:02PM

Africa’s paradox is that it is home to the greatest share of the world’s unexploited resources, yet has some of the world’s lowest per capita incomes. History has shown that exploiting the continent’s resources alone for export markets does little to improve incomes and living conditions in Africa, which in turn does nothing to improve human development. The key to resolving this paradox is made-in-Africa jobs, in particular high-value jobs that make products.

Africa still mostly makes its income from exporting raw commodities, from minerals to fuel to food. In the 1990s, Asian countries exported five times more manufactured goods, as share of GDP, than sub-Saharan Africa. Things changed in the 2000s. African manufactured output has roughly doubled over the last 10 years. And those goods are going more to the emerging economies than to the traditional powers (African Economic Outlook).

African Economic Outlook points out that by 2009 “trade between African countries and emerging powers equalled that between Africa and its traditional partners.”

“South-based manufacturing enhances the welfare of African consumers via prices and functionality,” the report says.

“For instance, generic Indian pharmaceuticals are cheaper than brands from traditional partners.”

Small and medium enterprises (SMEs) have been identified as a key part of Africa’s future prosperity and key to its ability to reduce poverty and achieve development objectives like the Millennium Development Goals (MDGs) (www.un.org/millenniumgoals).

The sector is large but its economic power is inefficiently used. Telling the Wall Street Journal, Mthuli Ncube, chief economist at the African Development Bank Group, estimated one-quarter of Africa’s gross domestic product — about US $450 billion — comes from 65 million small and medium-sized enterprises.

Manufacturing has been difficult to measure because so many businesses are just tiny cottage industries.

Obstacles to growth include poor infrastructure, unreliable power supplies, unscaleable business models, low quality standards and poor quality branding and design.

Access to funding is often weak and fragmented and many programmes run by international donors and banks targeting SMEs are uncoordinated and duplicate resources. The global economic crisis has not made these factors any easier.

But things are changing in many areas. The booming technology, consumer goods and resource sectors offer hope for a manufacturing renaissance.

There are examples from Africa defying the sceptics and showing it is possible to expand and export manufactured, finished goods that meet international standards.

What they have in common is a sophisticated product offering and an ability to meet international export standards. They also have overcome obstacles that scare away more timid international rivals.

Nigerian shoe and garment maker Fut Conceptus (www.futconceptus.com) has been taking raw Nigerian leather that was once just sent overseas for export, and instead is turning out high-quality shoes and bags made in Nigerian factories. These shoes – made in African, Spanish and Italian styles – meet international standards and are exported aroundAfrica. It has also established operations in Spain and the United Kingdom.

Started in 2008, the company got off to a good start by seeking out the best expertise to train its staff. Shoe-making experts fromSpainwere brought in to do the training. The company also imported top-quality machinery fromItalyandSpainto make sure its operations were modern and efficient.

These first, smart moves have meant the company is able to run an efficient and high-skilled operation inNigeriawhile also making its products to international standards. This is critical for a start-up business: the better the quality of the product in the beginning, the better the chance for accessing lucrative export markets. And the better and more efficient the manufacturing processes, the better chance a company will have meeting increasing demand and tight deadlines. It is one thing to make the best shoe in the world, but if you cannot deliver the quantity required for orders, then your reputation will be damaged.

Fut Conceptus is able to produce 22,000 pairs of sandals and 10,000 pairs of safety boots a day, according to its website.

Fut Conceptus Manufacturing Nigeria Ltd. also found a way to thrive in the country’s difficult and erratic conditions. To deal with the unreliable power supply, they run four electric generators. This costs them US $500 a day in fuel. This power problem scares off multinational companies, leaving the market open for Fut Conceptus. The company has been able to use this first-mover advantage to build its brand acrossWest Africa. It currently makes men’s moccasins, slippers, law enforcement footwear, safety footwear, and ladies’ sandals.

Founder Olumide Wole-Madariola is proud of the achievement. “Nobody was ready for what we were doing… Nobody was ready for ‘Made inNigeria,’” he said.

South African sauce maker Primolitos (www.primolitos.com) has become one of the few African companies able to meet international standards for food exports. It makes a vast range of products (http://www.primolitos.com/index.php?option=com_content&view=article&id=10&Itemid=12), from juices to sauces, spices, pickles, soups and baked goods.

The company has been around for over a decade and sells 2,000 products. It has also set-up a sister division to specialise in liquid and powdered food sachets. The company also has a clear “Quality Policy”, championing collective decision-making between management and staff, delivering “quality and safe consumer products”, and a system to quickly respond to consumer complaints and recall substandard products. All ingredients for building trust in a business.

It also has an ISO 20 0002 (www.iso.org/iso/home.html) accredited factory, complete with three testing labs, a training room, test kitchen, care centre for employees’ children, a wellness centre, laundry, high-tech water filtration and purification systems and the latest in hygiene and manufacturing processes. All of this a clear example of the commitment required to build a quality company that can export.

Over at Good African Coffee, Ugandan entrepreneur Andrew Rugasira is pioneering new ways to process coffee inAfrica. He set upUganda’s first enterprise to make instant coffee two years ago. This is a radical departure from the old practice of exporting the coffee beans to Europe for processing into instant coffee, which would then be exported back toAfrica.

“For decades, Africans have produced what they do not consume and consumed what they do not produce,” Rugasira told the Wall Street Journal.

The company has developed unique distribution arrangements for its instant coffee. A recent deal included providing coffee for an American network of 12,000 churches.

The company’s products are cleverly designed and packaged and are sold in distinct colour-coordinated packets. The company also passionately champions “trade not aid” as the long-term solution toAfrica’s economic growth (http://www.goodafrican.com/index.php/our-story/trade-not-aid.html).

On the African islandof Madagascar, a company is trying to reverse the practice of exporting Africa’s cocoa beans for manufacturing into chocolate products. The Madecasse Chocolate LLC. (http://madecasse.com) is a collaboration between American entrepreneur Tim McCollum and Madagascan chocolatier Shahin Cassam Chenai. The company is making a range of chocolate and vanilla products for US supermarkets.

“IfAfricacould sell the world chocolate…it wouldn’t solve all the continent’s problems, but it could make a big dent,” McCollum told the Wall Street Journal.

Africais believed to produce 60 to 70 percent of the world’s cacao supply. Less than one percent is made inAfricaand most is made into chocolate outside the continent.

Madecasse’s high-quality chocolate bars sell in the USfor US $6 each. Their market niche is to make “a single-origin chocolate, made entirely in Madagascar, which rivals the flavour of the best European chocolates”, according to its website. Flavours (http://store.madecasse.com) include pink pepper and citrus, cinnamon and sakay (a type of Madagascan hot pepper sauce), exotic pepper, sea salt and nibs, Arabica coffee, and baking chocolate. They also sell the world-famous Madagascan vanilla beans and extract. All are sold in colourful and well-designed packaging and sold on their website.

Chenai is a self-taught chocolate maker and works with a local team to refine the Madécasse chocolate.

“Connoisseurs knowMadagascarproduces some of the best cocoa in the world,” maintains Chenai. “My passion is to prove we can produce some of the best chocolate in the world.”