summary:
This article analyzes the measures taken by major international machinery equipment manufacturers to address environmental sustainability issues such as carbon reduction and net-zero emissions. It also investigates the measures taken by small and medium-sized enterprises in the international machinery industry to implement corporate carbon reduction and respond to stakeholder expectations, serving as a reference for the development of carbon reduction strategies and measures in the machinery industry.
Drawing on the experience of both international giants and SMEs, this article suggests that SMEs in Taiwan's machinery industry can promote carbon reduction and address environmental sustainability issues through three major strategies: (1) sustainable product design, (2) process optimization and upgrading, and (3) waste recycling and reuse.
Ⅰ. Overview of my country's machinery product exports:
In 2022, the machinery industry officially became one of Taiwan's key sectors with exports exceeding one trillion NT dollars. In fact, the industry's export performance has shown an upward trend over the past three years, demonstrating the widespread international popularity of Taiwanese machinery products. Statistics show that the total export value of the machinery industry reached US$26.08 billion in 2020, surpassing US$30 billion for the first time in 2021, reaching US$33.138 billion. In 2022, the total export value reached US$34.813 billion, equivalent to approximately NT$1.03 trillion. From January to May 2023, the export value reached US$11.989 billion. Taking 2022 exports as an example, the top three export products of the machinery industry were electronic machinery and equipment (US$5.084 billion, accounting for 14.6%), measurement and testing machinery and equipment (US$4.919 billion, accounting for 14.1%), and machine tools (US$3.023 billion, accounting for 8.7%).
It's worth noting that the export pattern of machinery and equipment appears to be undergoing a structural shift. For example, statistics from 2020 to 2023 show that the top three export destinations for China's machinery and equipment have shifted from mainland China, the United States, and Japan to the United States, mainland China, and Japan, respectively. The United States appears to be gradually replacing mainland China as the largest export destination for China's machinery and equipment industry.
In 2022, China's machinery and equipment exports to the United States amounted to US$8.904 billion, only US$96 million behind mainland China. Statistics from January to May 2023 show that the United States has become China's largest machinery and equipment export destination in 2023, with exports reaching US$2.962 billion, accounting for 24.7% of China's machinery and equipment exports.
Ⅱ. Carbon reduction trends in the machinery industry:
To understand carbon reduction trends in the machinery industry, we examined the carbon reduction measures of global leaders in the machinery industry, including Caterpillar Inc., Deere Co., and Yamazaki Mazak Co. We found that in addition to reducing their own operational (Scope 1 and Scope 2) carbon emissions through measures such as improving internal resource utilization efficiency, wastewater recycling, and waste management, machinery manufacturers are also generally actively reducing Scope 3 carbon emissions generated by customers using their products through strategies such as sustainable product design, improving product energy efficiency, and integrating AI and digital technologies.
1. Caterpillar Inc.
In terms of revenue, Kaituo Heavy Industries is one of the world's largest machinery and equipment brands. Like many leading brands, Kaituo Heavy Industries has responded to the Paris Agreement and is committed to providing customers with lower-carbon products and services by introducing alternative fuels, digitalization, and electrification, among other carbon reduction measures. This helps build infrastructure in areas such as housing, drinking water, transportation, and energy.
With 2030 as its target year (base year 2018), Kaituo Heavy Industries has set carbon reduction goals, including: a 30% reduction in absolute Scope 1 and Scope 2 greenhouse gas emissions (base year 2018), the introduction of water resource management measures at all operating locations, a 50% reduction in waste intensity, a 25% increase in sales of remanufactured products, and, most importantly, the production of a new generation of products that are more sustainable (more energy efficient and less carbon intensive).
Providing customers with more sustainable products is a priority for Kaituo Heavy Industries. Only by achieving this goal can we reduce Scope 3 carbon emissions generated by customers using our products. According to Kaituo Heavy Industries' estimates, Scope 3 carbon emissions generated by customers using our products account for 95% of the company's operational carbon emissions.
2. Deere Co.
John Deere is a global agricultural machinery manufacturer from the United States, with annual sales of US$52.5 billion (equivalent to NT$1.64 trillion). Its main products include tractors, various agricultural harvesters, foragers, seeders, sprayers, and other agricultural machinery and equipment, which are sold worldwide.
In accordance with the Science-Based Targets (SBTi), John Deere has set a target of reducing absolute Scope 1 and Scope 2 carbon emissions by 50% (base year 2021) and Scope 3 carbon emissions by 30% by 2030. It is also promoting corporate carbon reduction through three major strategies: product energy efficiency improvement, sustainable product design, and operational carbon reduction.
First, to improve product energy efficiency, John Deere is integrating various machines with cloud platforms and using AI to analyze data such as machine routes, fertilizer usage, and cropping areas to help users use machines more efficiently and reduce carbon emissions from product use. Second, John Deere is also committed to developing various machines that can use clean energy, such as hybrid, electrified, and even agricultural machinery powered by alternative energy sources such as hydrogen and biofuel, to improve carbon emissions during operation. It is also incorporating concepts of recycled materials and product recycling into product design to reduce carbon emissions from the use of new materials and the disposal of end-of-life products. Third, it is promoting low-carbon procurement and increasing waste recycling rates from 84% to 87%.
3. Yamazaki Mazak Co.
Japan's Megtec is a leading global machine tool brand manufacturer with revenue of approximately US$1.8 billion (equivalent to NT$56.4 billion) last year. Its main products include multi-tasking machines, CNC lathes, laser processing machines, automation systems, etc., and are sold around the world.
After conducting a carbon footprint inventory throughout its product lifecycle and realizing that the primary source of a product's carbon footprint is the customer's usage phase, Mazak is actively promoting "Mazak Go GREEN." Through four major strategies, including energy-saving technologies, AI and digital technologies, process integration, and waste conservation and reduction, the company aims to reduce carbon emissions by 50% by 2030 (base year 2010).
First, Megetic starts with product design, applying innovative technologies to create highly energy-efficient machine tools, thereby reducing carbon emissions during machine operation. Second, Megetic integrates mechanical equipment through AI and digital technology, helping customers monitor and analyze machine operation, providing a basis for adjusting various parameters to reduce energy consumption. Third, Megetic designs new-generation machine tools with sustainability in mind, including improving post-use recyclability and utilizing recycled materials to reduce procurement requirements at the source of product production and the amount of post-use waste.
Ⅲ.Participate in the international carbon reduction case study of small and medium-sized enterprises in the machinery industry
Many small and medium-sized enterprises (SMEs) within the machinery industry supply chain are foundries that supply components to various machinery manufacturers and brand names. Metal casting is known to be highly energy-intensive, leading many SMEs in various sectors to consider how to reduce carbon emissions within their existing production processes to meet the demands of their manufacturing and branding clients. Below, we will explore how a long-established Danish foundry, a family foundry in the United States, and a medium-sized export-focused machine tool manufacturer in Spain are implementing carbon reduction strategies through greenhouse gas audits, equipment replacement, process upgrades, waste recycling, and sustainable product design.
1. TASSO, Denmark
TASSO, a long-established foundry founded in Odense, Denmark in 1865, specializes in the production of various cast iron bars. With an annual production capacity of 19,000 tons, it currently employs 63 people and serves customers worldwide. In recent years, TASSO has actively embraced ESG initiatives, including participating in programs such as "Climate-Ready SME" and "From Philanthropy to Business." TASSO's CEO also serves on the Energy and Utilities Committee of the Confederation of Danish Industry.
TASSO currently embraces the circular economy as its core operating philosophy, striving to increase product recycling rates and use recycled materials to refine new cast iron bars, reducing the need to mine new raw materials. This approach contributes to environmental sustainability from the source. While TASSO has not yet announced a carbon neutrality goal, its latest ESG report indicates that the company has completed Scope 1 and Scope 2 greenhouse gas emissions inventories and is currently working on Scope 3 emissions. The company aims to publicly announce its long-term carbon reduction goals and strategies by 2024.
TASSO's current carbon reduction strategies include optimizing energy efficiency and recycling waste cast iron. First, regarding energy efficiency, TASSO has replaced traditional oil-fired boilers with natural gas boilers, reducing carbon emissions from its production processes while also improving the factory's working environment. Furthermore, TASSO has also replaced its factory lighting with LED fixtures. Since 2012, this replacement has helped TASSO reduce its carbon emissions by over 300 tons.
Secondly, TASSO actively recycles discarded iron castings and remelts them into raw materials for new products. Currently, cast iron can be made from almost 100% recycled raw materials, meaning that one metric ton of discarded cast iron can replace one ton of new steel. Therefore, TASSO collaborates with scrap iron recyclers around the world to acquire discarded cast iron, increasing the source of recycled raw materials, reducing carbon emissions from the extraction of new raw materials and the refining of new steel, and further enhancing the company's contribution to environmental sustainability.
Figure 1. Dissolution process of waste castings in TASSO factory
2. Palmer Foundry, USA
Palmer Foundry, a professional aluminum foundry in Massachusetts, USA, was founded in 1951 by the Jensen family. It is currently run by Robert Logan, the second generation of the Logan family, who acquired the foundry from the Jensen family in 2000. Since its founding, Palmer Foundry has grown into a small, medium-sized enterprise with 95 employees, continuously providing high-quality aluminum castings to clients in industries such as aerospace, semiconductors, defense, industrial, medical, and transportation. In recent years, Palmer Foundry has also actively addressed environmental sustainability through various carbon reduction initiatives.
First, Palmer Foundry is reducing its carbon emissions through process improvements. This project focuses on immersion heating technology. Working with its German partner, Drache, Palmer Foundry has developed an immersion heating boiler. Rather than heating the aluminum from the outside, this new technology heats the metal from within. This not only improves heating speed and uniformity, but also reduces energy consumption by up to 80%.
Secondly, given the high energy consumption of aluminum casting, Palmer Foundry has been installing solar panels around its factory since 2014 to reduce energy consumption during the production process. By generating green electricity, they not only reduce carbon emissions from the production process but also lower energy costs, ultimately achieving their energy conservation and carbon reduction goals. Currently, the solar panels supply 18% of Palmer Foundry's electricity needs.
Third, Palmer Foundry has also installed a sand recovery system to recycle sand generated during the aluminum casting process, reducing the use of raw sand and lowering procurement costs. Since installing the sand recovery system in 2003, Palmer Foundry has recycled over 20 million pounds of sand, improving its processes and operating costs while also making a positive contribution to the environment.
3. Spain ZAYER
ZAYER, located in Vitoria-Gasteiz, a city in north-central Spain, was founded in 1957 and launched its first milling machine. Today, ZAYER employs 150 people and specializes in the production of a wide range of machine tools, helping companies manufacture high-quality products for a variety of sectors, including aviation, wind power, railways, hydraulics, and automotive. In addition to Spain, ZAYER has factories and offices in Italy, Brazil, and mainland China, and its products are sold in over 40 countries worldwide, making it a typical mid-sized machine tool manufacturer and exporter.
ZAYER's primary carbon reduction measures focus on sustainable product design, particularly for its popular mid-sized machines. These include lightweight, energy-efficient machine designs and the integration of machine tools with AIoT devices to develop smart manufacturing lines. These efforts reduce carbon emissions throughout the machine tool lifecycle, particularly by minimizing energy consumption during customer use. ZAYER was awarded the Victorian Most Sustainable Enterprise Award at the end of 2021.
IV. Discovery and Suggestions
(1) Major machinery manufacturers are promoting multiple strategies to reduce product carbon emissions and address environmental sustainability issues.
After carbon inventories, leading machinery manufacturers have recognized that Scope 3 carbon emissions generated by customers' machine use represent a significant and significant source of carbon emissions in their operations. Consequently, leading manufacturers are implementing strategies such as sustainable design, digitalization, energy efficiency improvements, and recycling to reduce their products' lifecycle carbon emissions, addressing environmental sustainability issues such as carbon reduction and net zero emissions.
(2) International experience shows that SMEs can also respond to the trend of carbon reduction through a variety of carbon reduction measures
Small and medium-sized machine tool manufacturers, like large enterprises, are incorporating sustainable design concepts into their products, addressing environmental sustainability issues and client needs by optimizing their energy consumption. High-energy-consuming foundries, in addition to continuously implementing greenhouse gas emissions audits for Scopes 1, 2, and 3, are also reducing carbon emissions from their operations through process upgrades, replacement of high-energy-consuming equipment, renewable energy generation, and waste recycling. These experiences demonstrate that even in energy-intensive industries, effective measures can be implemented to achieve carbon reduction despite significant changes in their operating models.
Sources:
1. Taiwan currently has three trillion-dollar industries: wafer foundry, display manufacturing, and machinery manufacturing. Taiwan's machinery industry export data is sourced from the Taiwan Machinery Industry Association (2023, 2022, and 2021), Taiwan Machinery and Equipment Import and Export Statistics Flash Report (January-May 2023), Taiwan Machinery and Equipment Import and Export Statistics Flash Report (January-December 2022), Taiwan Machinery and Equipment Import and Export Statistics Flash Report (January-December 2021), and Taiwan Machinery and Equipment Import and Export Statistics Flash Report (January-December 2020).
2.https://www.caterpillar.com/en/company/sustainability/sustainability-report/goals-progress.html
3.https://s7d2.scene7.com/is/content/Caterpillar/CM20230428-04e09-9679c
4.https://www.deere.com/en/news/all-news/john-deere-receives-sbti-validation-of-greenhouse-gasemission-reduction-targets/
5.https://www.deere.com/assets/pdfs/common/our-company/sustainability/sustainability-report2022.pdf
6.https://english.mazak.jp/environmental-activities/
7.https://www.tasso-bar.com/sustainability/
8.https://palmerfoundry.com/
9.https://palmerfoundry.com/wp-content/uploads/2021/08/Drache.pdf
10.https://www.zayer.com/actualidad/en/most-sustainable-company-award/
Organizer: Ministry of Economic Affairs, SME Administration
Executing Unit: Plastics Industry Technology Development Center
