Green Spot: Eaton Corp.: Diversified Green

Feb. 21, 2008
Eaton uses teamwork-oriented "Project Vision" to keep their green programs working together.

With all the diverse industries that Eaton covers, it's no surprise that their Green Spot submission is a joint effort. John White is director of energy management and environmental solutions within Eaton's electrical group, and Joseph Wolfsberger is VP for EHS at Eaton. Between the two of them they bring decades of experience in engineering, marketing and business development, as well as a unified passion for advancing Eaton's global sustainability operations, to bear on the many issues that confront such a global, diversified manufacturier. And they and their teams, working with an impressive array of government and NGO partners, have worked in concert to develop a pretty comprehensive portfolio of best practices and a program, called Project Vision, that seeks to keep these many green programs working in concert.

Editor's note: Because their submission was a team effort, the responses below are generally attributed to "Eaton."

Company Programs

IW: How are you addressing energy efficiency?

Eaton: Eaton has addressed energy efficiency goals by making a public commitment to the Business Roundtable to reduce worldwide greenhouse gas emissions (GHG) by 18% by 2012. We are measuring and reporting on our performance through Eaton's Sustainability Report which, since 2006, is part of Eaton Corporation's Annual Report. Eaton's electrical group is helping to drive the implementation plan at it's own facilities via Project Vision, whose goal is to design the energy efficient prototypical Eaton plant of the future.

Additionally, we have conducted "train-the-trainer" programs on energy efficiency projects throughout the world. As part of this program we have conducted energy audits and helped to develop implementation plans for actual projects -- using what we have learned at our own facilities.

We are also addressing energy efficiency and sustainability in the manufacture of our products. Our Powerware UPS 9395 reduces total energy losses by 50% when compared to traditional units and we have managed to reduce the energy required to manufacture and deliver the product itself by over 80% due to its smaller footprint and size.

IW: Have you evaluated renewable energy production or purchase?

Eaton: We are currently evaluating solar (photovoltaics) at existing facilities (in both the U.S. and Europe) as part of Project Vision. In fact, solar power may elevate our Leadership in Energy and Environmental Design (LEED) rating from Silver to Gold at our electrical group headquarters expansion in Pittsburgh. We are exploring both a PPA and outright ownership. This potential installation is especially interesting since Eaton can provide both electrical and fluid power components for solar and wind energy production facilities. We are pursuing relationships where we can participate in these new business opportunities while serving our broader customer base at the same time.

IW: How are you addressing facilities and equipment management?

Eaton: Internally, Eaton is embracing LEED at our electrical group headquarters expansion in Pittsburgh, PA. Externally, we have developed a comprehensive "LEED Credits Guide to Eaton Products and Services" so our customers can better understand how Eaton can help building owners become more energy efficient and qualify for LEED certification. To further aid our customers' need for energy efficiency services, Eaton has recently signed two strategic alliance agreements -- one with a demand response supplier to help building owners manage their power loads (and receive payment for it) and one with a fuel cell company that provides premium power to the wireless telecom market.

Eaton also addresses sustainability in the design criteria of new product development. We recently acquired Life Cycle Assessment software and are exploring the "green certification" process whereby our products and services will be certified according to a consensus based, transparent and credible standard.

IW: How are you addressing waste reduction?

Eaton: For years, Eaton's Six Sigma discipline and Lean discipline have been part of our supply chain and operational excellence department. An example cited for its energy efficiency is Eaton's Powerware UPS 9395. Improvements to this product eliminated the need for a transformer. Another Eaton product, Integrated Facility Systems has minimized the traditional electrical room installed footprint by 40% and also reduces material waste through streamlined packaging. A final example of waste reduction is in our manufacturing process at Searcy, Arkansas where Eaton's valve manufacturing plant has reduced waste by 70%.

IW: How are you addressing pollution prevention?

Eaton: We essentially completed a new global system for Managing Environment, Safety, Security and Health (or MESH), which consolidated existing programs into one integrated management system. All Eaton facilities worldwide have become part of MESH and are now working toward consistent goals, applying the same metrics, setting targets for improvement and identifying and sharing best practices. Most importantly, MESH has elevated Environment, Health and Safety (EHS) from a series of isolated activities to a responsibility shared by all 63,000 employees.

Eaton sets its waste goals based on pollution prevention. In 2007, we were able to reduce the total waste generated by over 7% on an absolute basis utilizing Eaton's Lean Six Sigma (ELSS). ELSS merges two distinct product and business process improvement programs into one, maximizing the strengths of each with an integrated methodology. Lean and Six Sigma practices were initially developed to reduce waste and eliminate process variation in manufacturing. As part of the waste elimination process engineers now consider energy and water consumption as well as safety considerations. Today, these tools are successfully applied to a variety of settings, including the office environment, product development and product delivery.

Through this process, Eaton is helping to define the standard for socially responsible growth in China. Our new plant in Jining City, Shandong Province includes a world-class industrial wastewater and sewage treatment facility and numerous energy conservation features that minimize our environmental impact on the fast-growing region. Local government officials have singled out the plant as a model for environmentally conscious development.

IW: How are you addressing supply chain management?

Eaton: Supply and value chain management (SCM) are the company's single largest cost-savings initiatives. Eaton recognizes that supply chain and value chain management are the critical means by which we can achieve our financial and growth goals. We have more than 3,500 personnel participating in these efforts related to profitability, quality, efficiency and competitiveness. Eaton is including EHS metrics as part of its supplier qualification process.

One of the programs we are running related to energy supply chain management analyzes how we manage our energy spend, measure consumption and develop consistent metrics to measure GHG emissions. Through a single "clearinghouse" we have a comprehensive look at energy and are able to capture economies of scale in purchasing energy.

Eaton is a Corporate Champion of the EPA's Green Supplier Network where we are working initially with some of Eaton's smaller suppliers in the Midwest to review their operations and evaluate various lean manufacturing process tools that will help them become more competitive and environmentally friendly.

IW: Out of all these, which is your company's priority?

Eaton: Living up to our commitment to reduce GHG by 18% by 2010 is Eaton's main priority. This is an actionable item under Project Vision. It incorporates our principles into the products we design, develop, and manufacture, and ultimately addresses how our products are used by our customers.

IW: What partnerships/programs do you participate in?

Eaton: We participate in the Green Supplier Network, the Business Roundtable, OSHA's Voluntary Protection Program and Performance Track for EPA. We also participate in programs that support our customers such as The Green Grid (Energy Efficient Data Centers) and the US Green Building Council through its Leadership in Energy and Environmental Design (LEED).

Eaton is a partner in the Carbon Disclosure Project (CDP), an independent not for profit organization which holds the largest registry of corporate Greenhouse Gas emissions data in the world. CDP publishes reports that provide a detailed analysis of how the largest companies in the world are responding to climate change. CDP works with its partner corporations to help identify opportunities for emissions reductions.

Eaton has partnered with Environmental Defense and FedEx Corp. to develop low-emission, hybrid electric powered delivery vehicles. The FedEx OptiFleet E700 hybrid electric delivery vehicle decreases particulate emissions by up to 90 percent, reduces smog-causing emissions by about 75 percent and travels 50 percent farther on a gallon of fuel, reducing fuel costs by one-third. These vehicles are currently being tested in several cities in real world situations. Environmental Defense, a national nonprofit organization, partners with businesses, governments and communities to find practical environmental solutions.

Eaton is partnering with the U.S. EPA, U.S. Army, United Parcel Service (UPS), and International Truck and Engine Corporation to launch the first-ever series hydraulic hybrid diesel urban delivery vehicle. In laboratory testing, this patented hybrid technology achieved a 60 to 70 percent improvement in fuel economy and more than a 40 percent reduction in carbon dioxide emissions compared to a conventional UPS delivery truck.

In November 2007, the House of Representatives approved $2 million for Eaton Research to develop advanced digital hydraulic hybrid drive systems in U.S. Army vehicles. The innovative hybrid hydraulic systems will improve mobility and stability. Eaton will conduct the research and development in collaboration with Western Michigan University.

Eaton has worked with the Department of Energy (DOE) and numerous DOE National laboratories on a number of research programs. Currently, Eaton has a program with the DOE Office of Energy Efficiency and Renewable Energy on "Wireless Sensor Networks for Advanced Energy Management." The goal of this program is to demonstrate energy savings in electrical motors, which account for 23% of all electricity sold in the United States and consume 71% of all electrical energy used in industrial process systems. Eaton engineers predict that widespread deployment of the technology in US industry could reduce energy consumption by 11-18% and industrial emissions by 25% by 2020.

Eaton also has DOE programs in "Nanocoatings for High Efficiency Industrial Hydraulic and Tooling Systems" and "Friction and Wear Reduction in Trucks." The goal of the nanocoatings program is to develop and apply advanced materials expertise to enable the production of very highly efficient hydraulic components and cutting tools. The friction and wear program is targeted at reducing energy losses on large (Class 8) truck transmission and axles. Eaton engineers expect that this program will achieve a 4% efficiency improvement, which equates to approximately 1.6 Billion gallons of diesel fuel saved per year for the Truck heavy duty fleet.

Employee Involvement

IW: At what levels are these programs getting buy-in?

Eaton: Our programs are being driven by Sandy Cutler, our Chairman and CEO, and have direct support from our business unit leaders. As Sandy Cutler indicated in our 2006 Annual Report, "Companies that master sustainability -- and leverage it as a competitive advantage -- will emerge as the leaders in the coming decade. At Eaton, we call that opportunity The Power to Make a Difference."

At the electrical group's Sumter, S.C. facility Eaton employees have organized a "Green Team" where more than 600 employees "pledge to support Eaton Corporation's efforts to reduce its environmental impacts and implement plant-wide Green-Sustainability Principles."

Business Value

IW: How do you see sustainability fitting into core business strategy?

Eaton: Sustainability is a major part of our business strategy both in how our products are manufactured and the value our products deliver to our customers. With our participation in The Green Grid, we are demonstrating to our customers how Eaton products, such as our PowerWare UPS 9395, can play a role in the "greening" of data centers. This product was designed to be manufactured in a more sustainable way where the energy required to produce the product is reduced by nearly 80% during the manufacturing process. And the PowerWare UPS 9395 reduces power loss by 50% in its use at a typical data center. The example on the right is yet another illustration of our sustainability strategy. Our trucks are manufactured to be energy efficient -- delivering value to the customer by reducing their emissions along New York City delivery routes.

IW: How, if at all, do you see the regulatory environment changing, and how will it impact your business?

Eaton: We expect that in the U.S. there will be a GHG regulation coming in the next two years and it will impact our business in two distinct ways: (1) Drive us to further reduce GHG -- continuing the goals we have set prior to mandated legislation. (2) Position our products and services to assist customers in measuring and managing their own GHG footprint.

Customer Engagement

IW: How important is corporate branding in this day and age?

Eaton: Building and sustaining a strong corporate brand is very important. Traditionally B2B companies have been less likely to focus on corporate brand building than their consumer-focused counterparts. But, corporate branding has become more important in recent years as companies work to project a unified image to employees and external stakeholders. A highly respected corporate brand enhances the company's reputation and stakeholder trust. These factors can and do create market opportunities -- increased investor interest, customer loyalty, employee engagement and productivity, and media attention -- that can implicitly affect the company's bottom line.

At Eaton, the corporate brand spans the entire company and conveys expectations of what the company will deliver to customers, employees, other key stakeholders and to society. At Eaton we call this "doing business right" and it is the cornerstone of our reputation. The strength of our brand is directly related to our reputation in the marketplace and is rooted in the fundamental belief that: "A brand is a promise kept!"

IW: And how are you publicizing your efforts to reach out to value chain partners and consumers?

Eaton: Our electrical group expanded its public relations operations and is focusing on strategic and tactical awareness including traditional media outreach, success story development, thought leadership positioning, and other traditional and non-traditional outreach efforts. Our electrical group sustainability efforts are featured on a new Web site -- Finally, Eaton has reached out to its customers and participated in customer-sponsored sustainability conferences.

Big Picture

IW: What are you the most proud of that you've accomplished so far, and why?

Eaton: We are most proud that Eaton has been in this for the long haul. Nine years as part of ISO 14001 and decades of developing products that save energy or protect the environment gives further proof to our commitment of "putting our money where our mouth is." Sustainability is simply the right thing to do.

IW: What's the best piece of advice you can give to companies considering "getting with the program"?

Eaton: Corporations must gain buy-in from all key stakeholders and show passionate commitment to sustainability. The best way to do this is to demonstrate the competitive advantages to the organization and the value to your customers. Customers will reward companies who are doing the right thing.

For more features like this, see Green Spot: Best Practices in Sustainable Manufacturing. To participate in IW's Green Spot leadership in manufacturing program, email IW Making Green Editor Brad Kenney to start the application process.

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