Environmentalism And The Small Company

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by John Loughmiller

Go to most any large corporation’s website, click on the news tab, and you’ll find a press release detailing one or more “green” programs that the corporation has undertaken. The story will explain that the company is very concerned about the environment and a cost figure will be highlighted to prove that management takes its obligations seriously. But because only cost is stressed, a reader inevitably gets the impression that “going green” comes up a bit short in a profitability analysis.

David Barnes, president and CEO of TV One, intuitively felt there was no reason why embracing a green agenda had to be an endeavor with no upside on the balance sheet. To Barnes, execution was the key to a successful marriage between running a profitable business and overseeing a company that stressed environmentally sound practices.

“Technological innovation has always been one of TV One’s hallmarks,” Barnes said. “But we’ve also integrated environmentally sound practices into the business model as well.

“One of my heroes, Theodore Roosevelt, once said ’The conservation of natural resources is the fundamental problem. Unless we solve that problem it will avail us little to solve all others,’” he continued. “When I first read that quotation, I immediately saw the wisdom in it. I told our management team that we needed to find ways to protect the environment while controlling the impact on the profitability of the company. To me, the best approach for a company such as ours is “Practical Green,” meaning you go green in a way that makes economic as well as environmental sense.”

Small But International

While TV One may meet the generally accepted accounting definition of a small company, it’s actually a significant player in the global video equipment marketplace. Headquartered in the Cincinnati, OH suburb of Erlanger, KY, the company has R&D and manufacturing facilities in Margate, U.K., plus regional and zone offices throughout the U.S. as well as Europe, South America, Taiwan, and mainland China.

Bringing all of these locations under one environmental policy required a detailed investigation and figuring out how to do it without incurring significant added costs required a step-at-a-time approach. One of the company’s first actions was to embrace a set of the manufacturing, storage, sales, and disposal regulations for all of its global operations.

The Acronym Game

TV One manufactures the vast majority of its products at a company-owned factory in the U.K. that is co-located with the R&D operation. This makes the products subject to tough government controls but also provides much needed symmetry between engineering and manufacturing. RoHS (Restriction of Hazardous Substances) is one of these controls and is a required manufacturing and sales practice in Europe.

Since manufacturing to RoHS standards is more costly than using non-RoHS parts and practices, a case could be made to use non-RoHS versions of a product for sales into non-RoHS countries. But TV One standardized on RoHS versions of all products, regardless of where they are manufactured or sold.

There was an incremental cost associated with the decision, however management believes the cost is more than offset by simplified inventory methods. Other initiatives include WEEE and REACH. WEEE stands for Waste, Electrical and Electronic Directive and covers the disposal of surplus electrical devices.

REACH stands for Registration, Evaluation, Authorization and Restriction of Chemical substances. Although both WEEE and REACH are European practices, TV One’s U.S. management investigated and found that the cost to implement these two procedures at the company’s non-European locations was negligible and gave uniformity to the company’s operations.

End users can return equipment for environmentally friendly recycling regardless of where they live, and all company locations use bio-degradable cleaning substances and chemicals to emulate the spirit of the REACH directive.

Low Hanging Fruit

In addition to standardizing on some European practices already being used by TV One’s U.K. operation, some additional ideas were adopted. These “low hanging fruit” environmental items were either revenue neutral or produced cost savings from day one.

• With a few hundred computers in use throughout the world, controlling their energy usage is a definite pro-environment concept. Users were instructed to utilize the power profile feature in the operating systems to turn off monitors and place the PCs in a low energy state anytime activity drops below a predetermined level. In addition, after backup of any critical files, non-critical computers are turned off at the end of the day.

• For those locations that don’t have computer-controlled lighting, employees are expected to turn off their office lights when leaving the facility. Printers and all other non-critical electrical devices are also to be turned off.

• A companywide recycling program is in place for aluminum soft drink cans, and plastic water bottles have been replaced with spring water dispensed from bulk containers into bio-degradable paper cups. Coffee is consumed from reusable containers instead of polystyrene.

• Paper catalogs and specification sheets are available upon specific request but the preferred method of product information distribution is via electronic means.

Local Initiatives

As the two largest facilities in terms of staff and energy usage, the headquarters and U.K. facilities both came up with environmentally friendly procedures. Whenever a local environmental initiative was proposed that had an implementation cost, the goal was to pass the break-even point within 2.5 years. After that, the cash flow was expected to go positive.

• In an attempt to discourage lunchtime travel and use of fossil fuels, both the headquarters facility and the U.K. manufacturing facility have cafeteria areas.

• Cutlery, glasses, and plates are provided and are washed and reused.

• In the U.K., halogen security lights have been replaced with low-energy lights controlled by sensors, and at HQ, a high-efficiency lighting system was installed in the office area and the warehouse.

• Electricity usage at the U.K. facility is monitored to identify wastage.

• The HVAC environmental system is computer-controlled at HQ.

• Low-flow bathroom fixtures were installed at HQ and water is heated at the lavatory via an on-demand system instead of using a central water heater, which would run constantly.

• The 15-year-old boiler used at the U.K. facility was replaced with an energy efficient model.

Additionally, with travel being both a high-energy usage practice as well as an expensive proposition, TV One is using a state-of-the-art videoconference system capable of networking all of its facilities together. More than any other initiative, this system is the best example of being environmentally responsible without negatively impacting the bottom line.

Headquarters management in the U.S. regularly uses the system to meet with R&D engineers in the U.K. as well as factory personnel. An integrated white board allows the engineering team to draw conceptual diagrams for project approval and sales meetings can be held with one, many, or all regional and zone sales managers. Contractors and customers can be part of the network and individual offices can videoconference with one another as required.

Since the conference rooms in all TV One’s facilities already had monitors and webcams, the only cost is a $200/month fee to use the service provider’s network. Conservative estimates put the yearly savings in travel expenses in excess of $50,000.

Finally, within the past year, TV One’s headquarters facility began using a geothermal heating and cooling system for the office and server room. The system cost 2.5 times what a high efficiency natural gas system would have cost, and the payback is approximately eight years at today’s energy prices. 20 shafts, each 100 feet deep, were drilled into the ground adjacent to the headquarters building and five separate systems were implemented using water as the heat transfer medium. One system is dedicated to the server room and the other four are used for the office and technical areas. The system saves the natural gas resource and greatly reduces the cost of heating and cooling a physically large part of the headquarters building.

Summing It All Up

Steven Mattingly, managing director for TV One Limited in the U.K., had this observation: “Although we here in the U.K. are subject to European environmental rules and regulations, we have still managed to find additional ways to improve our green credentials without adding significantly to our cost of doing business. Cutting electricity usage has been a special target for our group because it has both a positive environmental impact and a direct impact on our costs.”

Dan Gibson, TV One VP and CFO was part of the management team that studied the problem of going green without paying a penalty on the bottom line. “We do not have the luxury of developing an environmental policy just to improve our image like many large companies have done,” he said. “Instead of publishing a picture of a polar bear floating around on a block of ice and then throwing a few hundred thousand dollars at its plight, we had to make sure that every dollar invested actually served a purpose both for the environment and for the company.

“It took us a while to get where we are, but we can now legitimately claim that TV One is protecting the environment, providing our customers with value added products, and still showing a profit even in today’s difficult marketplace.”

“For many years, I was CEO of a company that had very close dealings with the Japanese,” said Barnes. “They have a term called ‘Kaizen’ which means ‘continuous improvements,’ and I’ve fully embraced the concept. Normally the term is used in a production environment, and we do search for continuous improvements all across our product line. But it’s really a philosophy for everything we do from employee relations to sales and manufacturing to customer relations to protection of the environment.

“Any business can do what we’ve done,” he concluded. “It simply takes a vision and the right people. And any business can protect the environment without having a negative impact on the bottom line. It’s a duty, really.”

John Loughmiller is the senior writer of the technical support group at TV One.

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