Circular Economy
Waste management

Materials matchmaking: How GM drives $1 billion in annual revenue

Burgess COMMENTARY

Peter Burgess

Materials matchmaking: How GM drives $1 billion in annual revenue Large-scale reuse of industrial materials is no easy task.

John Bradburn was re-purposing unconventional materials way before it was cool to sell upcycled goods online.

As the 25-year leader of General Motors' waste reduction efforts, Bradburn has evolved the company's efforts to wring more value out of reused and recycled materials — now to the tune of $1 billion in additional revenue each year.

The company tries first and foremost to put used materials back to work within its own operations (turning the cardboard boxes that carry supplier shipments into headliner substrate). Other times, manufacturing byproducts and other leftovers are handed off to outsiders, often through informal channels.

'You got an old guy like me who happens to know a few people,' Bradburn told GreenBiz. 'You say, 'Hey, I got this idea' or 'I got this stuff.'''

Now, however, the rise of the circular economy and the proliferation of corporate and municipal zero-waste goals are spurring calls for companies to pool their resources to accelerate material reuse and remanufacturing.

One possibility to better facilitate the flow of industrial materials: apply the online matchmaking model employed by third-party platforms, such as dating websites, to pair companies with used materials to buy and sell.

'How do you make a good, effective program great?' Bradburn said. 'You systematize it.' Enter the material marketplaces long championed by the U.S. Business Council for Sustainable Development and its global counterpart, the World Business Council for Sustainable Development. More and more people are realizing that reusing materials has a potential value. First in the form of offline spreadsheets and now taking the shape of online software platforms, the group has tried to create centralized inventories of materials up for sale. Financially speaking, the idea is to broker either trades or sales save the buyer money from purchasing new goods and the buyer making more than they would scrapping the material. The idea already has been tested at the local and regional level in markets including Ohio and Austin, Texas, but USBCSD, WBCSD and the Corporate Eco Forum have to try out the marketplace concept on a national scale. 'The increasing pressure on our natural resources sends a clear message: We need to find value in discarded materials,' USBCSD Executive Director Andrew Mangan wrote in a report provided to GreenBiz ahead of its release this week. 'Growing cross-industry collaboration for the efficient use of our resources opens up new business opportunities while creating economic, environmental and societal benefits.' In the report, the groups detail the results of an initial three-month pilot project involving 23 companies — GM, Nike, 3M, Dow, Procter & Gamble, Starbucks, engineering giant CH2M Hill and metals producer Alcoa among them — with a combined $600 million in annual revenues. A total of 2.4 million tons of materials housed in 78 U.S. locations were listed on the platform, with 68 potential matches identified by analysts and the companies involved. No money has yet traded hands as part of the pilot, which Mangan said likely will be extended for three months in early 2016. As much of a logistical enabler as the software might be, he added that the issue also magnifies how companies increasingly view efficiency-focused sustainability measures as a potential financial boon. 'It’s not about the technology as much as the psychology,' Mangan told GreenBiz. 'More and more people are realizing that reusing materials has a potential value.' Coming full circle The material marketplace concept builds on the principles of both old school recycling and newer-school closed loop manufacturing. At its core, the circular economy revolves around the concept of decoupling economic production and consumption of natural resources. Instead of using and then discarding virgin materials, the goal is to keep raw materials, recyclables and even toxic chemicals cycling back through product supply chains. If that sounds like a lofty ideal, that's because it is. 'The circular economy has captured the imagination of a lot of people,' Mangan said. 'Before that, it was called something else. It’s like this wave keeps rising.' While the sentiment may be there with efforts such as the material marketplace, the trick is translating momentum into transactions — a task not entirely unlike converting companies' lofty renewable energy goals into actual clean energy investments, which some are starting to approach with similar tech tools. Amy Costello, environmental sustainability manager at ceiling and flooring manufacturer Amstrong World Industries, said that her company is 'on the cusp' of brokering new materials deals after participating in the marketplace pilot. As a company with 22 U.S. facilities, she said the broad geographic reach is appealing after previously participating in USBCSD's smaller-scale Ohio By-Product Synergy Network. 'As a global manufacturer, it definitely benefits us,' Costello said. 'We have 22 facilities in the United States. It gives us an opportunity to look much broader.' USBCSD/WBCSD/Corporate Eco Forum An overview of facilities that participated in the pilot for a national materials marketplace. Geographic distribution is important for determining the footprint of logistical necessities such as material transportation. Among the most common types of materials put up for sale in the marketplace pilot were packaging types, metals, industrial ash or slag, organic chemicals and various types of stone. Given the eclectic mix, GM's Bradburn, who is also the chair of the USBCSD executive committee, said one key to completing more business-to-business materials transactions is to not 'necessarily see something as it is, but what it can become.' The cover of an electric vehicle battery, for instance, might not seem like it's worth much to non-automakers, but those willing to do some legwork could change that. Bradburn gives an example of components containing isopropyl alcohol, which GM has centrifuged, compounded and transformed into new types of products — an upgrade in utility he refers to as 'giving it intelligence.' Another dimension to consider are the social and environmental implications of transporting used materials that are bought and sold. While long-distance swaps still can be interesting, they aren't the same as self-sustaining local supply chains. There remains a gulf between many companies interested in the circular economy and those prepared to bank on resused materials. 'Community outputs need to be turned into inputs for local industries,' Bradburn said, emphasizing the need for coordination between municipal waste managers, businesses and even local academics. Mangan is encouraged by increased interest in circular economy approaches among regulators, such as the European Commission, the G7 and the Environmental Protection Agency. He said agencies in individual states, such as Ohio, already have shown interest, and more could be encouraged to seek low-carbon waste reduction in the wake of the federal Clean Power Plan. Ultimately, Mangan sees potential for a tiered 'co-op model' of material marketplaces, where local exchanges with low membership rates would feed into bigger state of regional schemes. Larger entities with the volume to participate at the national level then potentially could help subsidize operations throughout the reuse supply chain. Bradburn concedes that there remains a gulf between many companies interested in the circular economy and those prepared to bank on reused materials, but he hopes that the business case for lower material costs and greater operational efficiency will help. 'With the financials, that will get their attention,' Bradburn said. 'Hopefully the learning will happen much faster.'