DECEMBER 21, 2006
Asia
By Kenji Hall
Matsushita's Green Strategy
As part of Japan's commitment to the Kyoto Protocol, the consumer-electronics maker aims to cut CO2 emissions in both its factories and products
Chances are, the PC monitor you're reading this on right now is filled with lead, cadmium, and a handful of other toxic substances. The same goes for the cell phones and music players you carry around or the big-screen TV you've got at home. So it may be hard to think of a consumer-electronics maker that deserves to be labeled "green." But Matsushita Electric Industrial (MC) is spending millions trying.
In November, the Japanese consumer-electronics and high-tech manufacturer made headlines when it announced that plasma displays in all Panasonic flat-panel TVs are now lead-free. That works out to about 70 grams (3 oz.) less lead in your average 37-in. plasma TV, and more from larger sets. It's quite an accomplishment, particularly when you consider that more than one in four plasma TVs sold worldwide is a Panasonic. This year, the company expects to sell roughly 4 million sets.
But Matsushita's broader environmental strategy is yielding more mixed results. Like many big manufacturers, it's finding that revving up growth and cutting emissions of the greenhouse gases blamed for global warming can be tricky. By its own reckoning, Matsushita's carbon-dioxide emissions will reach 4.17 million metric tons in the fiscal year through March, 2007. That's almost 14% higher than levels in March, 2002, the oldest data the company has published.
Japan Inc.'s Emissions Struggle Execs blame the surge in sales volumes of flat-screen TVs, DVD recorders, and music players. To produce digital gizmos, Matsushita has to operate huge energy-hungry plants for semiconductors and plasma panels. And tapping into China's coal-fired utilities doesn't help its emissions tally. "Our total CO2 emissions are actually increasing," says Akira Nakamura, general manager of the environmental-planning division. "But we are not giving up."
It won't be easy. Matsushita must lower its emissions as part of Japan's commitment to the Kyoto Protocol. Under the treaty, which went into effect last year, Japan and other wealthy nations pledged to cut greenhouse gases by an average of 6% from 1990 levels by 2012. Japan risks coming up short: Its emissions have gone up 12% between 1990 and 2003.
The fact is, Japan Inc. is way behind on its commitments. Toyota Motor (TM) is one of the exceptions, cutting CO2 output in Japan to 1.78 million tons annually in 2005, from 2.12 million tons 15 years earlier, while globally, CO2 emissions per Toyota car produced are down 15% since 2002. Copier maker Ricoh (RICOY) is another that's ahead of schedule, predicting its CO2 output in 2010 will be 12% below 1990 levels. More typical are companies like Sharp and Sony (SNE), which continue to put out more CO2 than ever. In the past five years, Sony's CO2 levels have gone from 1.88 million tons to 1.94 million, a 3.2% gain.
More Efficient Factories But you're not likely to see Japanese executives throwing up their hands in defeat. Though many companies now avoid setting overall emissions targets, they're focusing on factory-level improvements. Japan's Environment Ministry wants companies in the electronics and electric industries to reduce CO2 output per unit by 25% in 2012, from 1990 levels. In the past 16 years, Matsushita has cut emissions per unit worldwide by 19% and execs say they'll likely beat the ministry's target.
How? It's designed new plants pumping out plasma display panels for TVs to be more efficient than older ones. The company's year-old plasma panel-making plant in Amagasaki, near Osaka, makes bigger sheets of specialized glass that are cut for TVs of different sizes. The result: The plant emits about half the CO2 per display of a plant built several years earlier. At a different factory, in Hangzhou, China, workers replaced 250-watt mercury lamps with 40-watt bulbs and installed new air compressors that use 10% less energy.
Matsushita execs say that while it costs more than $270 million annually to run a green operation, the spending has paid off by making their operations leaner and more profitable. This fiscal year, it expects operating profits to climb 9% to $3.8 billion on a 1% rise in sales to $76.5 billion. Matsushita isn't alone. Others such as copier and camera maker Canon (CAJ) have invested millions to boost the efficiency of plants. Canon also relies on an emissions-to-sales equation, dubbed Factor 2, showing its factories spewing less CO2 for every dollar its products bring in. Sharp has a similar gauge, but is also ramping up production of panels and other gear for solar power, a renewable energy source.
Holistic Approach But executives have more than polluting factories to worry about. Counting emissions isn't just about measuring what's pouring from factory smokestacks and delivery-truck exhaust pipes. Execs also have to factor in the emissions from someone using their products. A TV, washing machine, or refrigerator in your home can generate as much as 11 times the amount of CO2 spewed by the factory that made it. "The biggest impact of an electronics product is in its use phase," says Nakamura.
That's why Matsushita and many others are taking a holistic approach. For them, it's as much about making factories more energy-efficient as it is about creating products that are lighter, last longer, use less energy, contain fewer toxic materials, and can be recycled. At Matsushita, a five-year-old recycling plant helps engineers and designers think of new ways to make products easily recyclable, and those divisions that succeed in making "green" products are rewarded.
Nakamura says executives spent nearly three years meeting with thousands of suppliers to bring them up to speed on new regulations in Europe banning certain toxic materials from this year. An Internet-linked system now lets execs keep tabs on all chemicals and materials used. And yet there's still more to do. While Panasonic has gotten rid of lead in the plasma panels of its TVs, there's about 2 grams (0.07 oz.) in the other components that go into the set. You can be sure that getting rid of every last drop is one of the company's long-term green goals.
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