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Labcon North America
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Solar-Powered Manufacturer of Laboratory Disposables Sets Sustainable Path Forward
Energy efficient lighting and a new rooftop solar system are just two of the ways that a Northern California company—which has cornered about 5 percent of the world market for laboratory research consumables—is reducing its carbon footprint.
Small companies and large corporations alike often talk about being green and sustainable. But Labcon North America has actually created a green, sustainable companywide system with its innovative products, packaging, and manufacturing methods. The company recently installed a $3.3 million, 800 kW solar panel system—an extensive system that provides an alternative energy source for its machinery and lighting—on the roof of its plant at company headquarters in Petaluma, California.
The system has already brought in dollar savings, reducing the company's energy bill from $40,000 per month to $28,000. The 45,000 square-foot roof system, with 2,500 silicon solar panels, is currently meeting about 29 percent of the company's energy needs, most notably for its 65 energy-draining injection molding machines.
"About 10 years ago, our power bill was getting out of hand," said Jim Happ, president of Labcon. "It was up to $40,000 per month. The business was growing, and we were completely consuming our electricity capacity. So we started cutting our energy use and looking at different technologies, like variable speed drives and new lighting. In 2004, we moved the company to Petaluma from San Rafael. With that move, we put a bunch of things in place to save energy. We installed variable speed drives, new compressors, and modern lighting—anything we could do to streamline our energy use."
After a three-year initiation process, the rooftop solar system was installed on the company's main building in April of 2011 before going live a few months later. Because the solar system was designed to last for 25 years, it was decided that a new roof should first be placed on the building. Happ said it would not have made sense to install a new solar system on an old roof. "It was finally installed in April 2011," he remembers. "First of all, we had to get the buy-in from the parent company, and then we had to figure out who could do a project this size. Then we put it out to bid. After we got the bids back, we started working on them, which took about a year. It was an extra $300,000 or $400,000 for the new roof."
Like many companies operating in and around Silicon Valley, Labcon North America stresses its "Earth Friendly® Commitment." Founded in 1959, Labcon is a major producer of low-carbon laboratory disposables and claims to be the first to market compostable plastics for laboratories. The company's focus on green, sustainable solutions for laboratories dates back to 1994, when it produced its first low-carbon products. And since Labcon installed its rooftop solar system last year, its products carry the Made with Solar PowerTM trademark. The company has also taken significant steps to address the concerns it shares with its end users about packaging, product waste, and product life cycles.
Labcon is a UL-certified, ISO 9001:2008 certified company that uses certified medical-grade resins for its injection molded products. Its extensive product line includes pipet tips and refill systems for pipettes; aerosol filter tips; centrifuge tubes; disposable storage tubes for the microbiology field; organization racks and freezer storage containers; scientific culture tubes; and custom products for unique applications.
"When we developed our patented fiber racks for 15ml and 50ml tubes in 1994, we didn't have the term 'sustainable development' to use, so we came up with Earth Friendly®," the company states on its website. "Now Earth Friendly® is a registered trade mark of Labcon North America and incorporates all we know about sustainability. Our next steps were to continue to innovate products with reduced consumption, like the Pagoda® pipet tip reloading system, the first of its kind.
"We moved on to design a micro centrifuge tube," the company continues, "that uses half the plastic of other tubes, but still can be boiled without opening the SuperClearTM. We've also invested in a solvent-free system to print 15ml and 50ml centrifuge tubes so that there are no volatile organic compounds (VOCs) vented to the atmosphere. This continuous process improvement set the tone for the company and our later commitment to sustainable development."
With 65 injection molding machines working day and night to mold about 4 million parts per day, the company consumes a large volume of energy daily. "We have about 8% of the world market for laboratory research consumables," Happ discloses. "These consumables transfer or store liquids in laboratories, and are mostly one-time use products that are disposable. They are all polypropylenes that are injection molded. We were also the first company to start marketing compostable plastics for labs. We worked with a company out of MIT, Metabolix, that was developing the product, and we went to 30 iterations of biodegradable material before we got it to work for packaging products. So we came out with the first sterilizable, biodegradable packaging material in the United States.
"A lot of companies take a product and make it unrecyclable by adding another product to it," Happ continues. "I'll use pharmacies as an example. They take a plastic bottle for pills and then add a paper label to it, which renders the product unrecyclable because you can't get the paper out of the plastic material. So about ten years ago, we started putting polypropylene labels on all of our polypropylene parts. So the labels don't have to be taken off to recycle the plastic container, and it makes the recycling part of our business more efficient, too."
In 1994, Labcon patented Mr. Friendly, an earth symbol with a smiley face on it. At that time, the company decided to become a green plastics company to promote green, sustainable ideas and activities.
"People say that this is an oxymoron, but I think we do so much better than anyone else," says Happ. "I think we're in a class by ourselves, and we're starting to reap the benefits of this, especially in the universities, where people really care about green technology. With our solar system, we're using less energy. We're being green by using polypropylene labels, making polypropylene parts, nesting products together, and using 70% less packaging to start with. And we're building dispensers, whether they are robotic or hand operated, which gets rid of another piece of packaging. It makes the rack holding the products reusable."
As a manufacturer, Labcon adheres to the "reduce, reuse, recycle" paradigm. Every product that goes through the product development process is evaluated for environmental impact. "One thing we haven't done yet, but we expect to be the first in our industry to do, is put a carbon footprint number on every product that we make," Happ explained. "It might take another year to pull it off because we make about 1,300 products. We have two guys working on it full-time, and it might take two to three years to finish. I think we can carve out a big piece of the market based on our sustainability efforts."
The solar installation was timed perfectly, as Labcon obtained the maximum amount on its rebate from Northern California's largest utility company, Pacific Gas & Electric (PG&E). Labcon eventually secured about $850,000 in incentives from the utility company to install the system. "I think these incentives have now been cut in half," Happ remarks. "Most companies right now would not get more than $300,000 or $400,000. And I've been told that the price of solar panels has dropped considerably during the past year. If we were going to install the same system now, it would probably cost about 10% to 15% less with the price of panels going down."
Happ says that over a six year period, Labcon has cut its energy use by 60%, saving about $8 million. "It made us a whole lot more efficient, and really helped with our power consumption," he pointed out. "In ten years, we've quadrupled our manufacturing production. So if we hadn't cut our power use and added the solar system, our energy bill would be about $1.1 million per year. By cutting our energy use and adding the solar system, our energy bill is about $400,000 per year now. So we're now saving about $700,000 per year in energy. We have the solar system on a seven year lease. At the end of the lease, we will pay somewhere between $400, 000 and $500,000 to buy out the lease. Then we will own the system."
Some banks are now offering long-term leases for solar systems, which enabled Labcon to get started more easily, Happ says. "We had to put down some money upfront for construction costs, but after the system was installed, we recouped all of our down payment money," he explains. "There was no cash out of pocket after one year. We got grants from the state and PG&E. It's about a $3.3 million system, but in the end, it will cost us about $1.6 million."
Rooftop Solar System Already Producing 1.1 million kW of Energy
In terms of functional performance, the solar system is reported to be running at 92% of its projected capacity after one year. Although highly functional, the building site is not perfect because it faces too far north, which precludes perfect alignment with the sun. "The PG&E people and Sun Power, the installer of the system, thought it would generate about 1.18 million kW, and it came in slightly under 1.1 million kW," Happ says. "We also have issues from our climate. It was actually a cool summer recently for Petaluma, so I don't think we had the amount of sun that we usually have. And quite often in the winter time, we get fog or overcast [conditions] in the mornings before it burns off," he added. But it was still 92% of what was projected, and it's already meeting about 27.6% of our power needs."
The new system has already saved a great deal on the company's electric bills, an impact that could allow them to keep production costs for its customers from rising.
"It's cut our electric bill from $40,000 per month to $28,000," Happ discloses. "Our lease payment every month is about $9,000 per month, so we're only saving about $3,000 per month right now. When the lease is paid off, we'll save about $18,000 per month on our electric bill. Passing cost savings on to our customers is not going to happen directly, but it will keep us from having to raise production prices as the cost of electricity goes up. If electricity rates go up, this solar system should freeze our cost for electricity for the next 25 years."
Labcon was able to take full advantage of California's subsidies, as well as solar energy credits from PG&E and the State of California. The rebates from the state are in the form of a check; from PG&E, they're based on the output of the system and are payable over five years in five allotments.
"I don't know the scope of those incentives nowadays, but they're still in place," says Happ. "PG&E's subsidy is still in place, but it was reduced dramatically. The State of California still has subsidies in place, but I'm not sure if they've been reduced or not. I don't know if we would get half of the money back from the state or the utility company if we were doing this project today. Our projected reimbursement, based on the performance of the system, is slightly over $800,000. We received our first check after one year for one fifth of the total amount."
Solar System Installer Worked Closely With Labcon Technicians
Once the decision was made to go ahead with the solar installation, the installer and its engineering team worked closely with Labcon to implement the project and ensure its success. "My maintenance guys worked with the engineering team and installers, with our maintenance guys on the roof the whole time it was going on," says Happ. "The project only took about four months to install. It was very efficiently done, and we had no trouble whatsoever, except when the wind picked up a panel that wasn't installed yet and blew it down. It was replaced at the installer's expense."
The installation company handled the design and engineering of the system. They showed several different designs to Labcon personnel, who then looked at the efficiency of each design and the cost of each system. Labcon opted for a ballasted system that has no penetrations in the building. The final solar system has a five-degree tilt, so it's very low to the roof. It was decided that a tracking system was not economical. With 2,500 panels, it's a very large system, so a tracking system would have been unduly expensive for a system this size.
With a $3.3 million system on the company's roof, a long time frame would be expected for a complete return on investment. "We expect a total return on investment after seven years," Happ surmised. "We already sell energy back to the grid—I think we've sold back about 5% of the power generated to the utility company. How it works in California is they have to pay you the same rate that you are paying them. So, for example, if you have peak rates that you pay in the afternoon, they have to pay you the same rate for energy generated during that peak period."
In the summer, the company generates more energy in the afternoon than it consumes, so for this electricity, they get paid the peak rate. Happ says that it runs the plant 24 hours a day, seven days a week, but it only runs about 70% of the equipment at night. "We tried to do more production at night, but with 230 employees, it was hard to have them all here at night," Happ conceded.
Since the injection molding operation incorporated green sustainability into its facility in 1994, many efforts have been made to conserve energy and use green products. The company's solar system also earned it a PG&E energy award in 2004.
"We replaced all of our sodium lights, but the solar system is what earned the award for us, cutting our energy use by 60%," Happ mentioned proudly. "We created a packaging system for nesting the products together, which cut out about 70% of the packaging, which made our products more exportable to other countries. Since they're nested together, you can get roughly three to four times the amount into a container compared to what you used to get."
Before 1994, the company had almost zero exports. Now, however, Happ says that 35 percent of everything it makes goes overseas. For such a giant leap in exported products, the company won President Obama's "E" Award for exports recently. "Exports are good for the country, they create jobs, and they help balance the trade deficit," Happ explains. "The award was started in 1963 by President Kennedy, and it's been going on every year since then. They pick the top companies and last year, we were one of those companies."
U.S. Commerce Secretary Gary Locke presented Labcon with the "E" Award during a ceremony held at the Commerce Department headquarters in Washington, D.C. on May 16, 2011. The "E" Awards are the highest recognition any U.S. entity may receive for making a significant contribution to the expansion of U.S. exports.
"Exports are a key driver of America's economic recovery," said Secretary Locke. "President Obama's National Export Initiative (NEI) aims to double U.S. exports by 2015 in support of several million American jobs, a robust, forward-looking trade agenda with an emphasis on domestic job growth. Labcon North America is being honored today for making significant contributions toward fulfilling that agenda."
In addition, Labcon was invited to attend a meeting of the White House Business Council held on August 15, 2012, in Washington, D.C. This meeting of the Business Council was focused on manufacturing trends, strategy, and regional manufacturing partnerships and included a macroeconomic overview as related to U.S. competitiveness. Following the event, the National Additive Manufacturing Innovation Institute was announced as a unique new public-private partnership. Representing Labcon at this event was its president, Jim Happ.
The company's long-range, total energy strategy has several phases, including two that have already been accomplished. Happ says that Labcon's constant improvement in this area is a constant mantra. "Cutting our energy use was the first phase, and getting the solar panels in place was the second phase," says Happ. "We envision two or three more major phases. We'll put in more panels in the future, maybe on carports. I think we can get it so the site generates all of the energy that it consumes. So our goal is to be 100% energy neutral over time. I think we can realize our goal in 20 years."
The company's president believes that a system like Labcon's can be attractive to a manufacturing company as long as it has long-term goals. The other issue is that a company contemplating a solar system should own the building. "This is one of the reasons we moved to Petaluma, so we could own the building," Happ remembers. "You wouldn't want to install a $3 million system on someone else's building, because they would inherit it if you ever moved. In a lot of modern businesses, the thought process is that you're better off leasing than owning. I don't believe that, personally. We are a capital-intensive business, so we're here for the long-term."
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