Nordic Roundtable March 910, 2005

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Nordic Roundtable March 9-10, 2005
ITT Flygt - A Nordic company with market
presence in the South and with sustainability
on our agenda Ingrid Brauer Manager
Management Systems Sustainability Coordination
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Why a case presentation from ITT Flygt?

• We are a 100 year old company in the water
  business with
• headquarter and main factory in the North
• 10 of sales in the South
• a sustainability agenda since 1999.
• focusing on sustainable production
• focusing on sustainable consumption
• from a C02 emission perspective
• Our third Sustainability Report will be issued in
  April 05.
• Read more www.flygt.com

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ITT Flygt

• Our task is to help our customers with their
  water needsResolving questions and finding
  solutions

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Products
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ITT Flygt sales by region

• 2004 sales 873 M (SEK 6.630 M)

9,7 sales in low income countries
(countries with a per capita GDP lower than 2975)
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ITT Flygt around the world
44 sales companies Market presence in 130
countries


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• HQ, 300 employees
• Main plant, 1200
• Manufacturing plants
• Argentina 47
• China 129
• Germany 70
• Netherlands 69
• Distributors
• Sales Companies

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About 4000 employees
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Production and Distribution
Manufacturing plants Sweden 1172
employees ( 28 ) Germany 70 (1.6 )
Netherlands 69 (1.6 ) Argentina 47
(1.1 ) China 129 (3)
Two distribtion centres Sweden and France.

Supplier base in Europe. 100 strategic suppliers.
60 certified according to ISO 14001.
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Contribution to business and society

• Wastewater
• Construction
• Mining
• Industry

1/3 of the total electricity consumption in EU is
related to the pumping of water, in all its
different forms ( clean, polluted and excess
water)
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Wastewater
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Construction
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Mining
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Industry
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Our Sustainability Agenda.
Policy We are a responsible company balancing
and continuously improving economic prosperity,
environmental quality, safety, health and social
wellbeing.

• Sustainability Forum and principles for
  integration.
• 10 year Sustainability
  Plan Yearly agenda
• Sustainability Reports

The Sustainability Question Is the decision in
conflict with social, ethical issues or
environmental concerns?
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Comparison production consumption

• Annual Production 80 GWh
• 34 000 ton CO2
• Annual Consumption 3000 GWh
• 120 000 ton CO2
• (European mix)

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Sustainable Production from an CO2 perspective
ITT Flygt Group CO2 budget 34000 ton (
2001) Energy Usage 8300 Service cars,
business travel 9200
Co-workers transportation Transportation of
products 16500 - by air
10230 - by sea
3630 - by road
2640
Decrease C02 activities 2002-2004 Energy 710
ton and transportation efficiency 3800 ton.
Totally 4.500 ton
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Our Energy, Waste, Water trend 1997-2004
Energy consumption
Waste recycling
Water consumption

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Improvements

• WATER
• Water conservation recycling program in the
  main plant.
• Resulted in reduction from 0,33 in 1997 to 0,18
  m3/Sales in 2004.
• WASTE
• Waste recycling program - re use of foundry
  sand.
• We recycle 84 of all generated waste.

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Improvements

• ENERGY
• Green labeled electricity for the main plant
  since 2001.
• Totally 80 green labeled electricity. (40 out
  of 50 Gwh)
• Bio fuel heating accounts for 10 of the total
  energy use. (8 out of 80 Gwh)
• The main plant has implemented a energy program
• the monitoring of the energy status of every
  building, allowing for a quick response to any
  discrepancy,
• the creation of an energy group, gathering
  employees from all departments to continuously
  look for new energy saving solutions
• since 2000 the use of energy has decreased by
  3GWh per year, the energy cost has decreased by
  100.000 USD per year, whereas the production went
  up by 7 and the facility area by 9.

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Improvements

• TRANSPORTATION
• Reduced the air freight deliveries with 30
  2001-2004
• Improved packaging efficiency ( 5) on road
  transportation major plant to Distribution
  Centre in France.
• Reduced business traveling with 50 from HQ
  2004.
• All together about 10 reduction of the CO2
  emissions from transportation 2001 2004.

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Comparison production consumption

• Annual Production 80 GWh
• 34 000 ton CO2
• Annual Consumption 3000 GWh
• 120 000 ton CO2
• (European mix. Corresponds to the annual heating
  and electricity consumption of 200.000
  residential houses.)

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Sustainable Consumption from an C02 perspective

• Our steps towards sustainable consumption of our
  products
• Identify the priorities
• Assess our products environmental impact (LCA and
  EPD)
• Product innovations to improve efficiency and
  reduce the environmental impact (N-impeller, N-
  Technology)
• Life Cycle Cost approach (LCC) to promote energy
  savings
• Communication

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1.identify the priorities

• We are concerned about our products electricity
  consumption.
• Flygts products are run with electricity and
  with a life length of 10-15 years, and the annual
  running time is 2200-8700 hours per year.
• The total annual electricity consumption of all
  products sold during 2004 is estimated to be 2777
  GWh.
• How much is that?
• It corresponds to the annual heating and
  electricity consumption of about 200,000
  residential houses. It is roughly estimated that
  about 1/3 of the total electricity consumption in
  EU is related to the pumping of water, in all its
  different forms (clean, polluted and excess
  water).
• We must focus our environmental strategy towards
  sustainable consumption.

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2.Assess our products environmental impact

• We have identified our products environmental
  impact through life cycle assessments (LCA).
• With the use of Life cycle assessments (LCA) it
  is possible to evaluate the total environmental
  impact of a product, divided in
• production,
• usage phase and
• end of life phase.
• LCA results 95 of the environmental impact
  origins from the usage phase from running the
  product.
• All products are assessed and all new products
  have environmental product declarations as
  standard technical documentation.
• We have certified one Environmental Product
  Declaration according to ISO 140025.

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Energy use is 95 of the products environmental
impact

• Our highest priority.
• Offer products with less energy consumption
• New design concept
• New sales support systems
• Training
• How can we convince our customers to save energy?

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3. Product Innovations

• New design concept
• the N-technology with an
• innovative design of the heart of
• the pump - the impeller to
• decrease electricity consumption,
• to improve working efficiency,
• decrease service needs.

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4. Life cycle cost

• Energy and maintenance costs during the life of a
  pump system are usually more than 10-20 times its
  purchase price
• Life cycle cost thinking is not a new concept,
  but things are changing
• HI/ Europump initiative A Guide To LCC Analysis
  For Pumping Systems
• Government support EU and US
• We have developed new products (N-pumps) and
  sales support tools promoting life cycle
  cost thinking.
• Energy in focus in many countries. Pumped systems
  account for 20 of the worlds electric energy
  demands.

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Our Challenge
How can we convince the customers to sustainable
consumption through buying products using less
energy? 28 of our sold products today are
equipped with the N- technique.
If 50 with N-technique there is an annual saving
of 170 GWh If 75 a saving of 340 GWh
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but is it interesting in the South?

• A few Flygt sales men opinion of the Asian
  markets sustainability awareness
• Brand awareness? European brands Yes
• Products produced in China No
• Is cost of ownership/life cycle cost thinking
  interesting? No
• Energy efficient products? No.
• Green products? Not really with exception
  for Japanese influenced countries
• Low price? No
• High quality Yes
• Short term or long term? Short term
• Note this is not a scientific survey but just a
  few telecalls with salesmen on the field.

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but is it interesting in the South?

• A few Flygt sales men opinion of the Asian
  markets sustainability awareness
• Brand awareness? European brands Yes
• Products produced in China Sometimes a
  disadvantage
• Is cost of ownership/life cycle cost thinking
  interesting? No,but products need to be
  reliable.
• Energy efficient products? No. ( energy is not a
  problem)
• Green products? Not really with exception
  for Japanese influenced countries
• Low price? Not always interesting
• High quality Yes. It is important
• Short term or long term? Short term
• Note this is not a scientific survey but just a
  few telecalls with salesmen on the field.

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but is it interesting in the South?

• A few Flygt sales men opinion of the Asian
  markets sustainability awareness
• Brand awareness? European brands Yes
• Products produced in China Sometimes a
  disadvantage
• Is cost of ownership/life cycle cost thinking
  interesting? No
• Energy efficient products? No. ( energy is not a
  problem)
• Green products? Not really with exception
  for Japanese influenced countries
• Low price? Not always interesting
• High quality Yes. It is important
• Short term or long term? Short term
• Other barriers
• Protectionism, informal local groups set new
  rules for the business
• Corruption Difficult with international
  financing. We are dependent on large projects.
  longtime project bribery sometimes wanted to
  improve the project schedules.
• Language english is not always possible to use.
• Note this is not a scientific survey but just a
  few telecalls with salesmen on the field.

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5 Communication

• Flygt has had a LCC campaign to promote life
  cycle cost thinking to optimize the systems and
  reduce energy consumption.
• E-learning for salesmen web based training
  material
• LCC Coordinators in each sales company.
• The result?
• It is still difficult to communicate the benefits
  of life cycle costs thinking.

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Internally discussed strategies
Reach the customers decision makers that have
the power to change policy. Try to influence end
users to demand efficient solutions. Continue
internal and external training about the benefits
of a system approach and life cycle cost. Work
with governmental organizations to promote the
benefits of LCC and the system approach. The Gov
org carry a lot of credibility and can help us in
our efforts. Develop partnerships on sustainable
consumption with business and NGOs.
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And in the South market

• Try to establish long term relationships rather
  than short term through different partnerships.
• Integrate sustainability into solutions. High
  efficiency, high quality instead of energy saving
  and green products
• Focus on quality rather than environmental
  concern but integrate environmental concerns in
  the quality attributes.
• Focus on reliability instead of energy
  conservation..
• Offer solutions rather than products. Solutions
  and systems with high efficiency and
  reliability.
• Use business partnerships for faster
  implementation of international agreements.
• Need for full-solution business relations to able
  to move, treat and pump water and to be able to
  meet meet growing global demands for clean water
  and to satisfy new regulations governing
  municipal and industrial water treatment.

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Does it matter to us?

• Residents of developing nations pay on average
  12 times more per liter of water than those
  getting their water through municipal systems.
• We want to contribute to more cost effective
  solutions to provide water.