Climate Change is Heating Up Foundries
The foundry industry is very much affected by the advances of climate change regulations because it is considered a “dirty” industry. This essay will describe why foundries are bad for the environment and provide examples of how Waupaca Foundry is combating climate change despite the nature of the industry.
Climate Change Challenge – Waupaca Foundry
Waupaca Foundry is a metal casting company that has 4,400 employees, nine foundries and machine shops, and is headquartered in Waupaca, WI.[1] Waupaca is one of the largest foundries in the United States and has a diversified customer base that includes automotive, industrial, and agricultural equipment. They are known in the industry for their lean manufacturing methods, operating efficiency, and technology advancement. The foundry industry is very affected by the advances of climate change regulations because it is considered a “dirty” industry. This essay will describe why foundries are bad for the environment and provide examples of how Waupaca Foundry is combating climate change despite the nature of the industry.
A foundry is a factory that melts and pours metal into a mold to form a part. Many types of metals can be melted down but the most common are ferrous. Foundries negatively impact the environment in two ways: they consume copious amounts of energy and release hazardous air pollutants. Foundries typically melt metal via two methods: an electric induction furnace or a cupola (coke fired) furnace. Coke is a type of fuel made from coal.
Waupaca Foundry uses both cupolas and electric furnaces for their operations. They are the largest electricity consumer in the state of Wisconsin. Here is a summary of their energy use in 2014: “It takes a large amount of energy to melt metals and run our operations, including natural gas, electricity, and coke. We used 854,000 megawatts (MW) of electricity in 2014. Our combined energy consumption from coke, natural gas, and electricity was over 15,800,000 million British thermal units (mmBtu). We also track our energy consumption per ton of product shipped so we can capture gains in energy efficiency that may occur even as our overall energy increases due to higher production rates. Our consolidated energy intensity was 10.82 mmBtu/ton of product shipped for 2014.”[2] For the cupola melt Waupaca uses 10% natural gas, 50% electricity, and 40% coke. The electric furnaces use 5% natural gas and 95% electricity.[3]
As you can see, they use a large amount of energy and an alarming amount of coke. Waupaca has been making great strides to reduce their energy consumption and has committed to reducing their energy intensity by 25% by 2020. They participate in an energy efficiency and long-term sustainability program call Better Plants that is run by the U.S. Department of Energy. They have begun to implement energy reduction projects such as using excess foundry heat for building/hot water heating. They have Installed energy efficient lighting and have begun using high efficiency motors.
Foundries are also notorious for harmful emissions such as dust, sand, and harmful particles. Greenhouse gas emissions are divided into three categories:
- Scope 1 emissions are emissions that result directly from an organization’s operations, such as burning fossil fuels.
- Scope 2 emissions are indirect emissions from a utility provider resulting from energy used by the organization, such as electricity, steam, or chilled water.
- Scope 3 emissions are the result of other sources, indirectly related to an organization[4]
Waupaca has scope 1and 2 greenhouse gases due to their use of coke, natural gas, and electricity. In 2014 Waupaca’s total GHG emissions were 1,472,000 tons of CO2e.[5] Waupaca has state of the art filtration and monitoring systems to prevent air pollution but do not have a solution to eliminate the harmful impacts of the coke.
Waupaca is leading the charge in environmental improvements in the foundry industry in the US. Despite this, the use of coal as an energy source is still a large part of their operations. It would be best for the environment for Waupaca to switch from coke fired cupolas to electric induction furnaces. This would require a large amount of capital investment that is not realistic in such a tight margin industry. This is the biggest struggle that I have with the push for environmental sustainability. How do companies like Waupaca make the right environmental decisions/updates if it has a large negative effect on the profitability or even the sustainability of the company? Where do they get the capital for this type of large improvement?
Final Word Count: 740
[1] WaupacaFoundry.com. (2016, October 30). Retrieved from http://www.waupacafoundry.com/en/our-company/locations
[2] Waupaca Foundry. (2016, October 30). 2014 Sustainability Report. Retrieved from http://www.waupacafoundry.com/SiteCollectionDocuments/2014%20Waupaca%20Foundry%20Sustainability%20Report.pdf
[3] IBID
[4] IBID
[5] IBID
I really liked the questions posed in this blog. After reading, it seems that Waupaca is not incentivized to change their methods due to low margins and the competitiveness of the business. My key question though is if Waupaca might be incentivized to change if end-consumers become more aware of the effects of foundries and instigate the change. For example, if Deere’s end consumers want only environmentally-conscious products, might they push Deere to not work with Waupaca?
Interesting industry to consider from a climate change perspective – especially since it as you mentioned a “dirty industry” with no easy solutions. I wanted to follow up on Kelly’s comment to say given their somewhat large scale in the US – and the specific region if Waupaca could try to create an Industry standard program for end users to know that their metal was cast in the most environmentally sustainable way possible. Something like a rainforest alliance certified product[1] – which has now become a common stamp to see from a consumer perspective. I do understand the challenge around this would be the fact that several of the competing foundries are located in emerging markets like China and India – where apart from the lower costs there is arguably less attention paid to the issue of climate change. However,
I think if Waupaca could come across out front on this initiative they could build brand equity and be seen as a pioneer in this field.
[1] – http://www.rainforest-alliance.org
I thought this was a really cool topic. Not many people think about foundries or metal casting as it seems like such an antiquated industry, particularly in the United States. Not only is it a form of manufacturing (which is increasingly rarely found in the US) but it is often seen as a form of commoditized manufacturing. In reality, however, these foundries are still very much at the heart of our economy. Indeed, one of the largest M&A deals of 2015 was Berkshire Hathaway’s acquisition of Precision Castparts for $38 billion. If Warren Buffett is willing to spend $38 billion on a company, I think it is pretty safe to assume that that company is going to be around for the next few years…
I had no idea that foundries consumed so much energy. It is shocking to hear that a foundry is the single largest energy consumer in the state of Wisconsin. Making even small improvements to their energy consumption can mean a big impact on our environment.
Great topic and post! I find these traditional “dirty” industries to be some of the most interesting test cases. While often pejoratively labeled as “polluters”, the reality is that these businesses make important contributions to the economy and manufacture products that are highly valued by consumers. In terms of the greenhouse gas (“GHG”) pollution, this example also underscores the benefits of a cap and trade type scheme versus a flat carbon tax. As Maria expertly points out, this process is by its nature energy intensive, and it doesn’t seem that this is easily changeable without costly investments in new technologies / equipment. In this context it makes sense for businesses that have a lower marginal cost of reducing GHG emissions to do so in order to minimize the overall cost to society and avoid putting businesses like this into bankruptcy!
Great post! It was really interesting to learn about the foundry industry in the US.
I wonder, are foundries necessary anymore with the advances we’ve seen in modern technology? Is it possible that 3D printing could create some of these products? Maybe the major industries could consider shifting towards composite/plastic parts instead of foundry parts. I wonder what effects a potential switch would have on costs…