Tuesday, August 16, 2005

The clean manufacturing opportunity

8/17 update: Speaking of e-waste, here's another example of the looming pressure on the issue.

Update: Here's another good example of the ways and reasons why many manufacturers are interested in clean technologies.

Over a long weekend off the grid (apologies for the lack of posts), spent some time thinking about how this site tends to reflect what gets reported in the cleantech investing world, and that for whatever reasons such reporting tends to focus on the clean energy segment in particular.

Clean energy is a very interesting area right now, but there are other big investment opportunities in the cleantech universe as well.

For example, manufacturing can be a lucrative area for cleantech innovation. As this article describes, large industrial manufacturers are constantly looking for ways to reduce their costs by reducing waste and materials use. The costs of waste disposal alone can be severe. Thus, large manufacturers are always looking for new innovations that will help them achieve leaner, less wasteful production.

The opportunities for investment can range widely across types of offerings, business models, and investment models. Some examples would include:
  • Software designed to help manufacturers run or improve lean processes. At the broadest level, this could include inventory-tracking software and general factory conditions tracking. More narrowly-defined, software solutions to specifically identify potential waste reductions opportunities clearly fit in the cleantech investing theme.
  • Sensors and factory automation technology. These applications have a strong role to play in waste reduction, as the machine-to-machine (M2M) communications systems they use and enable can recognize wasteful situations quickly, provide more adaptivity and responsiveness, and allow more finely-tuned and accurate manufacturing techniques. This is something we've talked about before. If something goes wrong in a factory, and the manufacturing line is making unusable products, you want to know about it quickly. And if possible, fix it remotely. And even better, avoid it in the first place. This article describes one innovative approach to the problem, using M2M solutions.
  • Materials recovery and recycling technology. With so much wasted material at the factory level, not all of it can be re-used easily. Furthermore, thinking more broadly about the problem, what about being able to close the loop even after a product has been successfully used out in the marketplace? Some innovative companies are looking at ways to collect and re-use wasted materials. They may take waste straight from a particular manufacturing process, and use that extra material for a different type of product (such as DuPont has done for years with its Corian products). Or they may collect a variety of materials from a variety of sources and harvest what value can be found. The e-waste problem is a good illustration: Computer and other electronics contain a large amount of toxic chemicals, which if put into landfills can leach out into water supplies. On the other hand, they also contain a lot of valuable precious metals. Current methods for recovering the valuable material are not very efficient, but some innovative companies are tackling this problem.
  • Building a better mousetrap. Rather than helping existing manufacturers incrementally improve their processes, some companies are aiming to re-design the product, manufacturing it themselves. Such efforts can be found in shipping pallets, in building materials, automobiles... you name it, almost every product-based industry has its examples.
And there are other potential areas besides those above. The point is, the potential markets for clean manufacturing-related technologies are numerous, large and innovative, and should be of interest to cleantech investors, even if they don't get the press attention they deserve...


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