By Kay Nolan
For AMF Foundry, a small, family-owned manufacturer in tiny Lannon in Waukesha County, sustainability represents a mountain of savings.
The company, which has been around since 1953 and which makes non-ferrous sand castings for commercial applications, up until recently was trucking some 6,500 tons of sand each year to a landfill. Sand was discarded after processing each mold, forcing the company to not only bear the cost of trucking it away but also to continually purchase more sand.
On its own, AMF Foundry found a way within the past year to reuse 70 percent of the sand, but figured it was stuck with the remaining 30 percent — an estimated 1,920 tons that would still be added to landfills annually — until the company took part in a 2010 pilot program sponsored by the Wisconsin Manufacturing Extension Partnership, which offered sustainability aid to small and midsized manufacturers.
Amy Dvornik, vice president of business development and a granddaughter of the company’s founder, estimates AMF received $30,000 worth of assistance from the program, called the Wisconsin Profitable Sustainable Initiative (PSI). That included $9,900 of lab testing to measure the metal residues and chemicals in the used sand, along with paying for analysis and obtaining permits for the sand to be used in roadbuilding projects.
She says the company is now saving $85,250 annually, thanks to the PSI program. She said the business recouped its costs to implement the suggestions in less than six months. In addition, the PSI consultants identified another five ways the company can increase sustainability in the future, she said.
Wisconsin’s deputy secretary of commerce, Mike Klonsinski, told members of the media Thursday that all 45 small manufacturers that participated in the PSI program achieved positive economic results, and most recovered their investments in about six months. He hopes Gov. Scott Walker and the Republican-majority state Legislature will see fit to continue funding the PSI project because of the potential for sustainability to boost manufacturing revenue in the state.
Klonsinski, a former CEO of WMEP, joined the Department of Commerce in January. The department will soon be reorganized as the Wisconsin Economic Development Corporation. Although the PSI program is not specifically designated in the budget, Klonsinski noted that the budget increases money for overall “business expansion” in the state, and retains previous levels of operating funds for the Commerce Department. In addition, Klonsinski said, “We’re going to look for any unused available federal dollars … the logical place for this to go would be back to the same source that supported it in the first place.”
Proponents say the impressive results of the PSI program merit attention from both sides of the political aisle.
The pilot program, started in April 2010 under the Doyle administration, was largely funded through federal stimulus dollars, along with some state funds. The program started with a $1.75 million grant. Participating companies invested a total of $3.6 million in their projects. Over the next five years, the 45 participating companies are expected to reap $26.9 million in savings and $23.5 million in retained and increased sales, the WMEP reports.
“Currently, we’re projecting $54 million in positive impact over the next five years, and that represents a 31 to 1 return on investment to the state’s initial investment of $1.75 million,” said PSI Program Manager Randy Bertram.
Bertram said those numbers “far exceeded even our wildest expectations” for the project. In the early months, “we had people questioning my sanity that a 20-to-1 return was possible, given what we knew about sustainability,” he said.
Lee Swindall, WMEP’s director of consulting services, said the PSI program “resonates with small businesses because it doesn’t tell manufacturers what they must do, but allows them to take part in figuring it out.”
Bertram said manufacturers are rethinking the concept of sustainability, including that the focus need not be on energy-savings alone. Savings in transportation costs turned out to be a popular goal among participants, he said.
AMF Foundry’s CEO Steve Iggens agreed, noting that customers are pushing back against price increases to cover rising fuel and other costs.
The bottom line, Klonsinski said, is that sustainability is not just “doing something green,” but is a “critical dimension to push manufacturing forward.”
“These results have validated everything we had hoped,” he said. “It demonstrates that you can drive your bottom line — and reduce carbon emissions and water use and have waste reduction. There aren’t too many other things that everybody can get together on. It’s wonderful for society; it’s wonderful for businesses. In the polarized world we’ve been in, it’s a very nice model.”