Reaching the Hardest Segment: Small- and Medium-Sized Manufacturers

food processing facility in oregon

Big Benefits...

At a recent conference in Milwaukee hosted by M-WERC, the opportunities for reducing energy consumption at small- and medium-sized manufacturing facilities were touted repeatedly: Cost savings, productivity increases, improved worker safety and plant conditions, extended equipment lifetimes, corporate marketing benefits – the list goes on.

But, as the audience contained several manufacturers from across Wisconsin, also on display were the myriad challenges these businesses face in implementing even low- or no-cost efficiency projects. At the same time, utility and implementer reps expressed frustrations about delivering on genuinely good intentions to help these businesses save energy, reduce costs and become more competitive.

...But No Time or Money

The primary reason small- and medium-sized manufacturers have a hard time identifying, scoping, implementing and evaluating energy efficiency projects was made clear by an engineer from a nearby paper mill, when he admitted: Look, I barely have the time and permission to even be here today.”

As the other manufacturer representatives in the room nodded in agreement, he continued, “I’m an energy manager technically, but that’s just one of maybe six roles people like me fill; in a given week, I may have some time or zero time to think about energy use.” This is a familiar line to utility program administrators and outreach staff. Not only do smaller manufacturers have very busy staff, they can also have tight production schedules, complex industrial process needs, short return on investment requirements and limited capital budgets.

A Tale of Two Manufacturers

However, no manufacturer refuted the benefits and importance of energy efficiency improvements. This is somewhat surprising, as depending on the products being produced, energy may or may not make up a large part of monthly business expenditures. A large aluminum extruder from northern Wisconsin reported that they spent anywhere from $65,000 to $90,000 per month just on electricity and natural gas, while a small food processing facility admitted that energy use constituted only a minor portion of their overall operating costs. But both representatives gushed about the benefits they witnessed. Beyond saving on his energy bill, the food processer got better temperature control, improved facility lighting and more detailed process data. The aluminum company “dramatically improved productivity” through reduced process times, reduced scrap and rework, and they created a better work environment and gave their customers a positive narrative on environmental impact.

“I realized that energy efficiency isn’t monolithic,” that representative said, “and that we can increase production and grow in many ways while cutting our products’ energy intensity.”

Getting a Foot in the Door

Nevertheless, program administrators know how hard it can be to stimulate efficiency projects within these companies. For all the reasons mentioned, it can be a herculean task to simply get a meeting with a production manager. Once that happens, and the program administrator convinces them to undertake an assessment (the first step in most utility programs aimed at this segment), the production manager then has the potentially harder task of convincing upper management or company executives to commit to and fund the recommended projects. Program administrators usually have well-developed toolkits for this stage, containing tools like rebates, project financing, trade ally networks, evaluation assistance and recognition programs. But as one project consultant joked, “if I had a dime for every door that’s been closed in my face....”

What Works? Long, Slow Relationship-Building

So what strategies are working? To preface, this is an area in which the energy efficiency community could be a lot more effective. Many typical program outreach strategies are non-transferrable to small- and medium-sized manufacturers, given their unique constraints, diverse process needs and often exceptional energy use characteristics. One strategy seems to be universally – and perhaps begrudgingly – regarded as effective: creating long-term, trusting, personal relationships.

A recent increase in the popularity of utility-supported Strategic Energy Management programs can probably be interpreted as representative of a larger trend away from purely equipment- or widget- incentive programs with deemed energy savings toward more holistic program strategies focused on facility-wide savings, O&M improvements and multiple projects over longer time frames. As many utility program administrators will tell you, it’s the long game that matters. Whether it’s an energy advisor, outreach staff member or account manager, if they can establish a trusting relationship with the right employee at an industrial company, all subsequent barriers start to shrink.

An engineer from a local metal fabricator explained this well: “The biggest milestone in our sustainability journey was when we established a trusted relationship with program representatives and the utility.” Unsurprisingly, this took more than most marketing and outreach programs have to offer. “We had heard of Focus on Energy (Wisconsin’s statewide energy efficiency program) but it wasn’t until they were recommended to us by WMEP (the Wisconsin Manufacturing Extension Partnership) that we decided they were trustworthy.” This of course isn’t a knock on Focus on Energy – one of the most comprehensive and effective energy efficiency program portfolios in the Midwest – but rather a reminder that trust is a critical component of program success and trustworthiness requires strategic partnerships and committed, consistent outreach.

While this old-school approach has been around for some time, program administrators always seem to lament the high-touch, long-term, unpredictable nature of this strategy given that most programs are held to high forecasting standards, operate on annual schedules and are pressed to minimize the amount of money spent on any one customer. This pressure’s off when dealing with the largest energy users since the efficiency projects they embark on typically result in giant savings, equal to whole percentage points of a utility’s annual savings goal. But when the outreach required for a smaller manufacturer takes just as much getting-to-know-you and trust-building efforts as the largest, cost effectiveness becomes a concern.

Focus on Energy's Strategy

Regardless, some of the most effective programs in the Midwest operate this way. Some programs chalk it up to local economic development, since even though the biggest efficiency bang for their buck is in the big plants, most of the manufacturing jobs in some areas reside in the slightly smaller firms. Focus on Energy’s Business Incentive Program (commercial and small industrial) and Large Energy Users (big industrial and institutional) programs operate on these principles and aim to meet customers of all sizes face-to-face. They’ve split the state up into sections where individual energy advisors hit the road to shake hands, conduct energy assessments, offer recommendations and try to get their foot in the door of new facilities. The company then has a dedicated person who serves as their link to all the assistance, incentives and opportunities the statewide program has to offer.

I asked one of these advisors from southern Wisconsin if it was a difficult job, visiting vastly different facilities with their unique processes and needs. His response was telling: “It’s not too hard, because most people and their facilities need help with the same types of things. Mostly they just don’t have the time to devote to energy analysis or sifting through who might be a good contractor. My job is mostly to convince them to let us help, and then nudge them to take action.”

Image credit: Oregon Dept. of Agriculture / Flickr