The United States manufacturing sector may be opting for a more diversified way of doing business paired with energy efficiency in preparation for the recently announced emissions reduction target.
The U.S. has recently announced that it will be setting a huge emissions reduction target in the future. Specifically, the country aims to reduce its emissions by a range of between 26 percent and 28 percent by 2025 from its 2005 levels (see related story).
However, with the new emissions reduction comes challenges that need to be addressed, particularly, the manufacturing sector.
“Some may not expect the targets not to pass into law, but the more forward looking (and risk averse) will find a way to diversify their suppliers to lessen the risk of running afoul of future regulations,” said industry expert Paul Noel, senior vice-president of Procurement Solutions at international spend management and procurement solutions provider at Ivalua – one of the leading global vendors in SaaS spend management software.
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But according to Mr. Noel, the U.S. manufacturing industry is ready for the emissions reduction target. “Those in industries containing energy intensive inputs are already thinking of ways to be more efficient in use regardless of source, and this gives them another reason to continue those efforts,” Mr. Noel told Ecoseed.
Mr. Noel explained that the emissions reduction target “should spur some to think of less energy intensive production methods” so as to minimize their exposure to future regulations or energy price inflation. But he noted that there are not a lot of options for manufacturers that are eco-friendly what with the falling price of oil and natural gas.
Meanwhile, amidst U.S.’ emissions reduction target, China has also made plans to reduce its carbon emissions. With the U.S. manufacturing sector facing challenges, it is a common belief that outsourcing work to China should be a natural option, but Mr. Noel explains why this is not so.
“Our opinion is that all who would have outsourced already have and those holding back from doing so weren’t holding back because of emissions regulations,” he said. “The fact that China would have been an alternative for some manufacturers to avoid regulations imposed in the U.S. is removed from the equation here.”
“If anything, U.S. manufacturers who have outsourced to China may either flee China to other less regulatory environments, or the recent trend of near-shoring, or return to the U.S. may see a bump up,” Mr. Noel explained.
With China also having plans to peak their emissions, Mr. Noel told EcoSeed that the country’s plans may incent some to push farther afield to the next country looking to steal China’s low-end manufacturing jobs, as well increase near- and on-shoring back towards the U.S.
Paul Noel, S.V.P. Procurement Solutions at Ivalua, holds a Management Degree from Santa Clara Univeristy in California and studied international business at Sofia University in Tokyo. His entire career has been about improving corporate profitability through efficient operations and management of spend. His specialty has been to harness standard software and services to create specific solutions for companies large and small, local and international. – EcoSeed Staff
