(This piece was originally published in the January 2011 issues of Merchant Magazine and Building Products Digest.)
“In the long run, we’ll all be dead.” That unfortunate utterance from a now dead economist has provided a handy excuse for shortsighted business planners focused only on extracting the maximum profit from the here and now. That kind of thinking is responsible for many business failures, yes, but also many environmental problems more daunting even than the federal deficit. Failure to consider the future implications of decisions made today virtually guarantees a legacy of difficulty and hardship for the next generation.
Taking the long view, on the other hand, is at the heart of green thinking. Therefore, this January, I encourage you to forget about 2011’s top trends for a moment and invest some quality time considering the next decade and the opportunities and threats it will present to your business and community.
The best place to start is at the end – what will your business look like in 2020? Has it been passed down to your children? Acquired, shut down or thriving with you securely at the helm? Is it connected to the same old supply chain? Is the local economy vibrant and strong, or struggling along? Most importantly, what do you want your business to look like and what sort of realistic scenarios will lead you there? To answer these questions one must first consider the long term forces reshaping our industry.
The next decade will see plenty of change and probably as many surprises as the last. Obviously, “green building” is on its way to becoming the new normal, whether it’s LEED or another approach, creating new opportunities for growth. Transport fuel prices are trending higher with the very real possibility that periodic episodes of price volatility will devastate marginal businesses. Households, businesses and governments will continue to shift purchasing to less toxic and more eco-efficient products from socially responsible producers. Competition between “big box” chains and independent dealers will continue, with increasing activism from localization groups. The green DIY and urban agriculture movements will continue to take root across the country. And a host of global and domestic macroeconomic factors will attenuate or amplify these opportunities and threats.
But underlying whatever scenario one wants to envision for the next ten years, there is the inescapable reality that the global climate system is changing, most likely due to human activity. The last decade was the warmest on record, but more important to consider are the local and regional impacts. Damaging and costly extreme weather is becoming more common. NASA has published a slideshow depicting the number of temperature anomalies each decade going back to 1880, (earthobservatory.nasa.gov/Features/WorldOfChange/). The trend is unmistakable, which should be cause for concern, especially in the context of the massively destructive heat wave that hit Russia last summer.
Regional climate patterns are changing in ways that dealers and distributors should understand and anticipate. The US Global Change Research Program, (www.globalchange.gov), provides useful analysis for each region of the country. Depending on your location, expect more drought, more fires, more floods, more heat waves and cold snaps, and more precipitation when it comes. And when these “anomalies” occur, they will probably be at the wrong time, disrupting water supplies, agricultural harvests, supply chain logistics and more.
These broad trends suggest that merchandising and business model innovations will be required to sustain a successful business. Households, businesses and governments will be forced to invest in mitigation and adaptation strategies. Dealers will, too. But those long-term planners among them will be prepared to weather whatever the decade has in store, with solutions that will help their customers and communities, too.
Showing posts with label trends. Show all posts
Showing posts with label trends. Show all posts
Monday, January 17, 2011
Tuesday, August 10, 2010
Oil Dependency and the LBM Supply Chain
(This originally appeared in the August '10 edition of Merchant Magazine and Building Products Digest.)
The oil spill in the Gulf of Mexico is a huge environmental calamity, but it should serve as a wake up call for the LBM supply chain for another reason. Why? The spill will certainly have an impact on local economies and local LBM dealers. But the spill is emblematic of a much bigger issue, the end of cheap oil. And that will shape the future of this industry, bringing tough challenges and green opportunities.
Many analysts are pointing out that most, or all, of the world’s easy oil has been extracted and what’s left is vastly more challenging, energy intensive, and expensive to get – pumping oil from 5,000 feet deep on the floor of the Gulf is but one example. Meanwhile, according to a US Department of Energy report, new oil discoveries are lagging consumption. And some analysts have pointed out that the point of peak oil production may have been reached, or may be reached soon.
Peak oil, as the phenomenon is known, is based on the work of a Shell Oil geologist, M. King Hubbert, who showed that just as an oil well reaches a peak in production long before the oil deposit runs dry, so too, does an oil producing region have a peak in its production curve. Once the peak is reached, production volumes flatten out, then decline. Add the fact that worldwide demand for oil is growing, (car sales in China and India are going through the roof!), and if we are at or near a peak oil situation, then oil prices will surely rise and perhaps very rapidly.
The LBM supply chain is predicated on cheap transportation costs. When fuel prices rose dramatically during the summer of 2008, many distributors and dealers took hits to their already thin margins. While that price spike was due, at least in part, to Wall Street speculators, it provided a taste of what an expensive oil future will bring – higher transport and commodity costs, and marginal businesses going bust.
So, how can you prepare and create resiliency within your organization? First, start shifting your own product mix. Identify those products most vulnerable to rising oil prices and find better alternatives such as local and green products. This will also help you meet the rising demand for such products as the green building movement continues apace. Look especially at those solutions that help your customers, (or their customers,) become more sustainable or self reliant. Also, find opportunities to supply a greater range of need within your community or operating area. If gas prices rise dramatically, your customers will be looking for one-stop shopping.
Dealers and distributors should also be actively seeking ways to reduce gasoline or diesel use within their own operations. Electric vehicles or diesel trucks that run on locally-sourced waste cooking oil might be viable options. Increasing drop ships, from manufacturer to dealer, or from distributor to end-user, will help, too, but only marginally.
Finally, get involved in community efforts to create local resiliency to oil energy shocks. Transition US, (www.transitionus.org,) is a new and growing network of groups throughout the country – 69 at last count – aiming to find ways within their own communities to reduce their dependence on oil. Groups like these are gaining influence with local policy makers, and their efforts naturally support green building and like-minded local businesses. Your involvement will help you identify emerging opportunities, make important connections within your community, and get support for reducing your own oil dependency.
The oil spill in the Gulf of Mexico is a huge environmental calamity, but it should serve as a wake up call for the LBM supply chain for another reason. Why? The spill will certainly have an impact on local economies and local LBM dealers. But the spill is emblematic of a much bigger issue, the end of cheap oil. And that will shape the future of this industry, bringing tough challenges and green opportunities.
Many analysts are pointing out that most, or all, of the world’s easy oil has been extracted and what’s left is vastly more challenging, energy intensive, and expensive to get – pumping oil from 5,000 feet deep on the floor of the Gulf is but one example. Meanwhile, according to a US Department of Energy report, new oil discoveries are lagging consumption. And some analysts have pointed out that the point of peak oil production may have been reached, or may be reached soon.
Peak oil, as the phenomenon is known, is based on the work of a Shell Oil geologist, M. King Hubbert, who showed that just as an oil well reaches a peak in production long before the oil deposit runs dry, so too, does an oil producing region have a peak in its production curve. Once the peak is reached, production volumes flatten out, then decline. Add the fact that worldwide demand for oil is growing, (car sales in China and India are going through the roof!), and if we are at or near a peak oil situation, then oil prices will surely rise and perhaps very rapidly.
The LBM supply chain is predicated on cheap transportation costs. When fuel prices rose dramatically during the summer of 2008, many distributors and dealers took hits to their already thin margins. While that price spike was due, at least in part, to Wall Street speculators, it provided a taste of what an expensive oil future will bring – higher transport and commodity costs, and marginal businesses going bust.
So, how can you prepare and create resiliency within your organization? First, start shifting your own product mix. Identify those products most vulnerable to rising oil prices and find better alternatives such as local and green products. This will also help you meet the rising demand for such products as the green building movement continues apace. Look especially at those solutions that help your customers, (or their customers,) become more sustainable or self reliant. Also, find opportunities to supply a greater range of need within your community or operating area. If gas prices rise dramatically, your customers will be looking for one-stop shopping.
Dealers and distributors should also be actively seeking ways to reduce gasoline or diesel use within their own operations. Electric vehicles or diesel trucks that run on locally-sourced waste cooking oil might be viable options. Increasing drop ships, from manufacturer to dealer, or from distributor to end-user, will help, too, but only marginally.
Finally, get involved in community efforts to create local resiliency to oil energy shocks. Transition US, (www.transitionus.org,) is a new and growing network of groups throughout the country – 69 at last count – aiming to find ways within their own communities to reduce their dependence on oil. Groups like these are gaining influence with local policy makers, and their efforts naturally support green building and like-minded local businesses. Your involvement will help you identify emerging opportunities, make important connections within your community, and get support for reducing your own oil dependency.
Monday, March 1, 2010
Is GIY the New DIY?
(A version of this appeared in March '10, Merchant Magazine and Building Products Digest)
For me, the one phrase that best sums up the ongoing shift in household economic behavior is this: less is more. For anyone who pays attention to the history of this industry, it's a familiar story that comes about with every recession. Folks are doing more projects on their own and the trades are hurting. Mark Twain once said, "history doesn't repeat itself, but it does rhyme," and this time around the return to DIY might be different in some important ways that just might stick.
Most people I know aren't simply doing without, but are discovering new ways to create the lifestyle they want, spending less money and doing more themselves. More households are growing their own food, taking steps to "decarbonize" their homes, and generally looking for simpler, healthier "green it yourself" projects they can take on inexpensively. In fact, the terms "GIY" and "green it yourself" are catching on, appearing frequently in the blogosphere and other media to describe everything from caulking windows with a solvent-free sealant to rigging your own greywater system. In some neighborhoods, if you want to keep up with the Jones, it's not the size and expense of your solar panels, but how little you spent building your own wind generator from an alternator salvaged from Grandpa's old Buick, spare bicycle parts and a plastic milk jug.
On the leading edge of this resurgence of self-reliance and handiness is the rapidly growing permaculture movement. In short, permaculture is a holistic approach to creating household and community-scale sustainability based on modeling and enhancing natural systems. It's deeply green and aimed at creating abundance with fewer inputs - in other words, doing more with less. Typical permaculture projects include intensive food gardens, rainwater harvesting, greywater systems, passive solar, natural building and lots of creative re-use of salvaged resources.
At the community level, this kind of approach, and similar kinds of inexpensive projects, can contribute to greater community resilience, especially in hard times. There are a growing number of non-profit permaculture-based groups, such as City Repair (www.cityrepair.org) in Portland, OR, who are doing just that, rejuvenating the fabric of life in urban neighborhoods. Many of these groups are getting serious funding and are participating in local retrofit programs.
While permaculture is catching on among early adopters, community activists, and even government agencies, it's not mainstream yet. And even though permaculture and GIY projects tend to utilize salvaged, free or otherwise inexpensive resources, there are some good reasons for dealers to pay attention. Becoming knowledgeable about the kinds of permaculture projects happening in your area will likely inspire new thinking around merchandise and promotion. In areas where greywater systems are now legal, for example, stocking non-PVC pipes and fittings might be a good thing. Building close relationships with local permaculture groups and practitioners is even better, and with a little cross promotion can bolster your green reputation. And if permaculture can really help your community become greener and more resilient, you might find that this new kind of DIY is good for you, too.
For me, the one phrase that best sums up the ongoing shift in household economic behavior is this: less is more. For anyone who pays attention to the history of this industry, it's a familiar story that comes about with every recession. Folks are doing more projects on their own and the trades are hurting. Mark Twain once said, "history doesn't repeat itself, but it does rhyme," and this time around the return to DIY might be different in some important ways that just might stick.
Most people I know aren't simply doing without, but are discovering new ways to create the lifestyle they want, spending less money and doing more themselves. More households are growing their own food, taking steps to "decarbonize" their homes, and generally looking for simpler, healthier "green it yourself" projects they can take on inexpensively. In fact, the terms "GIY" and "green it yourself" are catching on, appearing frequently in the blogosphere and other media to describe everything from caulking windows with a solvent-free sealant to rigging your own greywater system. In some neighborhoods, if you want to keep up with the Jones, it's not the size and expense of your solar panels, but how little you spent building your own wind generator from an alternator salvaged from Grandpa's old Buick, spare bicycle parts and a plastic milk jug.
On the leading edge of this resurgence of self-reliance and handiness is the rapidly growing permaculture movement. In short, permaculture is a holistic approach to creating household and community-scale sustainability based on modeling and enhancing natural systems. It's deeply green and aimed at creating abundance with fewer inputs - in other words, doing more with less. Typical permaculture projects include intensive food gardens, rainwater harvesting, greywater systems, passive solar, natural building and lots of creative re-use of salvaged resources.
At the community level, this kind of approach, and similar kinds of inexpensive projects, can contribute to greater community resilience, especially in hard times. There are a growing number of non-profit permaculture-based groups, such as City Repair (www.cityrepair.org) in Portland, OR, who are doing just that, rejuvenating the fabric of life in urban neighborhoods. Many of these groups are getting serious funding and are participating in local retrofit programs.
While permaculture is catching on among early adopters, community activists, and even government agencies, it's not mainstream yet. And even though permaculture and GIY projects tend to utilize salvaged, free or otherwise inexpensive resources, there are some good reasons for dealers to pay attention. Becoming knowledgeable about the kinds of permaculture projects happening in your area will likely inspire new thinking around merchandise and promotion. In areas where greywater systems are now legal, for example, stocking non-PVC pipes and fittings might be a good thing. Building close relationships with local permaculture groups and practitioners is even better, and with a little cross promotion can bolster your green reputation. And if permaculture can really help your community become greener and more resilient, you might find that this new kind of DIY is good for you, too.
Saturday, June 6, 2009
Green Optimism and the Emerging Economics of Trust
(Published in the June '09, Merchant Magazine and Building Products Digest.)
It seems there’s less talk these days about the bad economy and more about things we can do to take action. Action is inherently hopeful which is psychologically empowering, but the real dollar value lies in the fact that that those businesses that take action when economic conditions change create their own opportunities. And over the last several weeks, this is exactly what I see happening. After multiple conferences and talking with hundreds of businesses and entrepreneurs, I’m hearing optimism about green business opportunities and a genuine desire to be more, or even much more, sustainable. And this is leading to an emerging economics of trust that our industry needs to embrace.
The big economic trends all point to “green”, of course, clean energy, energy and water conservation, clean technology, federal spending and regulation, etc. The green building movement is positioned to explode over the next several years. There are more green building programs that require 3rd party verification and the USGBC’s LEED program is pushing 3rd party life cycle analysis (LCA) for products and materials earning LEED credits. And there are more 3rd party certifications that cover a wider variety of product categories. The message to manufacturers is that not only must they produce products that meet green building guidelines, they must do so sustainably, and it must be demonstrated to a trusted, impartial third party. “Trust, but verify,” a former president and product pitch man once said. And manufacturers are doing it, ensuring that this will be one of the most important ways to establish their credibility in the marketplace, with huge implications for brand building, marketing and sales strategies.
Consumer attitude trend lines continue to slant “green,” as well. Energy saving is top of mind for most at the moment, but awareness about the long term issues of climate change, drought, eutrophication, toxic chemicals, food security, etc. hasn’t abated. Consumers are still buying greener products, but more people are suspicious of corporate greenwashing. In fact, one emerging trend shows people moving away from “consumerism” altogether and toward greater personal responsibility. More people want to do more with less: less negative impact on their family’s health, the environment, and energy budget, and more quality of life. As a result, a host of social media websites like GreenGuide.com and GreenMaven.com are popping up, attempting to deliver the real truth about this green product or that greenwasher, creating rapidly growing communities that trust in the “wisdom of crowds.” More importantly, sites like these can establish or obliterate the credibility of a retailer or a product in flash.
I’ve recently spoken with a surprisingly large number of product manufacturers, some in unexpected product categories, who are planning to undergo some sort of third-party certification or documentation to give their claims a credibility boost in the market. Product certifications and other documentation are increasingly important to retail and distributor merchandisers who process loads of product data everyday but don’t have the expertise or the time to independently verify all manufacturer claims. More often these days, the first question a buyer asks when being sold a green product is, “who says?” That’s a good sign, because many retailers and distributors I talk to are attempting the more difficult task of creating trustworthy merchandising programs for their stores and yards. The starting point and the foundation for these programs must be on building collections of quality, verified products that the sales staff understands with confidence. Those who get it right will inspire trust and have good reason to be optimistic about their future.
It seems there’s less talk these days about the bad economy and more about things we can do to take action. Action is inherently hopeful which is psychologically empowering, but the real dollar value lies in the fact that that those businesses that take action when economic conditions change create their own opportunities. And over the last several weeks, this is exactly what I see happening. After multiple conferences and talking with hundreds of businesses and entrepreneurs, I’m hearing optimism about green business opportunities and a genuine desire to be more, or even much more, sustainable. And this is leading to an emerging economics of trust that our industry needs to embrace.
The big economic trends all point to “green”, of course, clean energy, energy and water conservation, clean technology, federal spending and regulation, etc. The green building movement is positioned to explode over the next several years. There are more green building programs that require 3rd party verification and the USGBC’s LEED program is pushing 3rd party life cycle analysis (LCA) for products and materials earning LEED credits. And there are more 3rd party certifications that cover a wider variety of product categories. The message to manufacturers is that not only must they produce products that meet green building guidelines, they must do so sustainably, and it must be demonstrated to a trusted, impartial third party. “Trust, but verify,” a former president and product pitch man once said. And manufacturers are doing it, ensuring that this will be one of the most important ways to establish their credibility in the marketplace, with huge implications for brand building, marketing and sales strategies.
Consumer attitude trend lines continue to slant “green,” as well. Energy saving is top of mind for most at the moment, but awareness about the long term issues of climate change, drought, eutrophication, toxic chemicals, food security, etc. hasn’t abated. Consumers are still buying greener products, but more people are suspicious of corporate greenwashing. In fact, one emerging trend shows people moving away from “consumerism” altogether and toward greater personal responsibility. More people want to do more with less: less negative impact on their family’s health, the environment, and energy budget, and more quality of life. As a result, a host of social media websites like GreenGuide.com and GreenMaven.com are popping up, attempting to deliver the real truth about this green product or that greenwasher, creating rapidly growing communities that trust in the “wisdom of crowds.” More importantly, sites like these can establish or obliterate the credibility of a retailer or a product in flash.
I’ve recently spoken with a surprisingly large number of product manufacturers, some in unexpected product categories, who are planning to undergo some sort of third-party certification or documentation to give their claims a credibility boost in the market. Product certifications and other documentation are increasingly important to retail and distributor merchandisers who process loads of product data everyday but don’t have the expertise or the time to independently verify all manufacturer claims. More often these days, the first question a buyer asks when being sold a green product is, “who says?” That’s a good sign, because many retailers and distributors I talk to are attempting the more difficult task of creating trustworthy merchandising programs for their stores and yards. The starting point and the foundation for these programs must be on building collections of quality, verified products that the sales staff understands with confidence. Those who get it right will inspire trust and have good reason to be optimistic about their future.
Wednesday, March 11, 2009
Get Ready for Green Home Builders
(Published in March '09, Merchant Magazine and Building Products Digest)
This year may be remembered for its gargantuan financial meltdown and economic crisis. It may also be remembered as a foundational year for green home building for two big reasons. First, energy and water conservation are more important issues than ever before. With government incentives, such as rebates and weatherization financing, and water rationing looming in some regions of the country, energy and water efficiency are top of mind concerns for home owners and new home buyers. Second, green homes are selling faster than non-green homes. This has been borne out by research conducted by various local green home building programs, but a recent press release from the US Green Building Council indicates that new homes meeting the LEED for Homes standard built by Pulte in Las Vegas, are selling about twice as fast as their conventional homes. The LEED for Homes program is barely a year old and already there’s a ten-fold increase in new homes slated to be certified this year. With production home builders now taking notice, you can bet that a dramatically larger percentage of new housing starts will be green.
If a rebound in new home construction will be led by green, how can retailers position themselves to benefit? To get a broader perspective on this question, I organized a virtual roundtable discussion with some green building professionals. It seemed everyone wanted to talk about LEED for Homes and rising consumer demand. Why? While it’s not necessarily a good fit for every project, it’s a national standard and a strong brand, which is especially good for production builders. New home buyers are already looking for energy efficiency and healthy indoor air quality, so a credible national green certification for homes will help builders sell their green homes quicker, which is what we’re already seeing. And to meet the growing demand for green homes, the new professional credential, LEED AP + Homes, is rolling out this year, which will dramatically increase the number of professionals working in the area. This is precisely where retailers should take notice.
“Retailers who are serious about serving their pro customers need to get themselves educated about the changes transforming the home building industry,” says Michael Strong, president of GreenHaus Builders (www.greenhausbuilders.com) of Houston, Texas. He was one of the first to build a LEED for Homes project, 2008 NAHB Green Building Advocate of the Year, and has been building green for years. He recommends retailers have at least one staff member go through the LEED AP + Homes training and to bring the rest of the staff up to speed – floor staff and buyers. “Nothing’s more frustrating than to spec a product, educate my supplier, only come back for a second purchase to find they no longer stock the product because they didn’t understand it,” says Strong.
Education and training was also a main theme for Heather Gadonniex, LEED AP, and president of sustainability consultancy Green it Group, (www.greenitgroup.com.) “When I meet with major retailers or distributors looking for help in getting into the green building market, I find there’s enormous confusion about green building guidelines and product certifications,” she says. Part of the blame must go to product manufacturers whose sales and marketing people often add to the confusion. But retailers must ultimately know about the products their pro customers want and develop the expertise to anticipate their needs as technologies, green building guidelines and product certifications evolve. “Retailers should look for products from manufacturers who provide back up documentation to support the validity of their green product claims and, when necessary, obtain third party certification,” says Gadonniex.
While LEED for Homes is a national standard, it includes credit for locally produced materials and innovations appropriate for local conditions. Of course, there are also local and regional green building programs that very often offer a simpler alternative for local builders. According Clarke Snell, author and principal of Think Green Building, (www.thinkgreenbuilding.com), a green and natural builder in North Carolina, thinking local is the right approach. “Building for local climate conditions with locally produced materials is what builders should be focused on, therefore it should be the focus for retailers, too,” says Snell. “Selling FSC certified lumber products from the other side of the planet just doesn’t make sense.” While sourcing locally might be hard for big box chains, it could be a valuable differentiator for knowledgeable independents.
Wednesday, November 12, 2008
Green Collar Jobs
(This article appeared in the November '08 issues of Merchant Magazine and Building Products Digest.)
While the scramble is on to bail out our nation’s banks and financial institutions, most of the rest of us are wondering what’s next. The economy may well be headed for a nasty recession with rising unemployment and sinking consumer confidence. Is this the beginning of a structural economic adjustment analogous to the industrial restructuring of the 1980s that shipped thousands of manufacturing jobs overseas, what we call “Globalization”? Many longer term economic trends point in that direction: rising shipping costs, higher manufacturing costs in China, greater emphasis on green house gas reduction and local sourcing, huge venture capital investments in “green tech,” and government policy promoting green building and clean energy, to name but a few.
But what about the short term? Will the bank bailout keep people in their homes, bring mortgage rates down and provide a small boost for our industry? Will another stimulus package from Congress do the trick? It just may be that the eventual economic recovery will be based, at least in part, on a grass-roots movement that is gaining traction with both local and national policymakers: “green collar” jobs.
From Oakland to Los Angeles, from the South Bronx to Chicago, New Orleans to Newark, local green collar jobs programs are revitalizing neighborhoods and giving people a chance to participate in the still growing green economy. A national organization, Green For All, (www.greenforall.org), founded by Van Jones and Majora Carter serves as a clearinghouse and resource center for local nonprofit-led programs, as well as municipalities seeking to develop their own program. These programs train workers for the clean energy economy and many include weatherization and retrofitting programs for existing homes and commercial buildings.
This is where it gets interesting for home improvement retailers. Getting involved in your local program could provide some immediate tangible benefits – you could be supplying the necessary products for these programs: weather stripping, insulation, lighting, roof coatings, and more. There are also opportunities to provide local leadership and expertise, gain community recognition, free publicity, find trained and motivated new workers, forge links with potential new customers, and more. And with federal green collar jobs programs coming soon, there may even be more opportunity.
On the national stage, it appears that plans to stimulate the growth of green collar jobs are already underway. Thanks in part to the efforts of Green For All and other grass roots organizations, Congress passed the Green Jobs Act as part of the 2007 Energy Bill, calling for $125 million to create the Energy Efficiency and Renewable Energy Worker Training Program. It’s a pilot program that would, (if funded in the next appropriations bill), jumpstart green collar job programs across the country. The House is currently discussing another stimulus package that would include investment in green collar jobs. In addition, both presidential candidates have expressed their support for growing green collar jobs. In any case, it appears that the green collar job issue is here to stay and that should be good news for hardware and home improvement retailers.
While the scramble is on to bail out our nation’s banks and financial institutions, most of the rest of us are wondering what’s next. The economy may well be headed for a nasty recession with rising unemployment and sinking consumer confidence. Is this the beginning of a structural economic adjustment analogous to the industrial restructuring of the 1980s that shipped thousands of manufacturing jobs overseas, what we call “Globalization”? Many longer term economic trends point in that direction: rising shipping costs, higher manufacturing costs in China, greater emphasis on green house gas reduction and local sourcing, huge venture capital investments in “green tech,” and government policy promoting green building and clean energy, to name but a few.
But what about the short term? Will the bank bailout keep people in their homes, bring mortgage rates down and provide a small boost for our industry? Will another stimulus package from Congress do the trick? It just may be that the eventual economic recovery will be based, at least in part, on a grass-roots movement that is gaining traction with both local and national policymakers: “green collar” jobs.
From Oakland to Los Angeles, from the South Bronx to Chicago, New Orleans to Newark, local green collar jobs programs are revitalizing neighborhoods and giving people a chance to participate in the still growing green economy. A national organization, Green For All, (www.greenforall.org), founded by Van Jones and Majora Carter serves as a clearinghouse and resource center for local nonprofit-led programs, as well as municipalities seeking to develop their own program. These programs train workers for the clean energy economy and many include weatherization and retrofitting programs for existing homes and commercial buildings.
This is where it gets interesting for home improvement retailers. Getting involved in your local program could provide some immediate tangible benefits – you could be supplying the necessary products for these programs: weather stripping, insulation, lighting, roof coatings, and more. There are also opportunities to provide local leadership and expertise, gain community recognition, free publicity, find trained and motivated new workers, forge links with potential new customers, and more. And with federal green collar jobs programs coming soon, there may even be more opportunity.
On the national stage, it appears that plans to stimulate the growth of green collar jobs are already underway. Thanks in part to the efforts of Green For All and other grass roots organizations, Congress passed the Green Jobs Act as part of the 2007 Energy Bill, calling for $125 million to create the Energy Efficiency and Renewable Energy Worker Training Program. It’s a pilot program that would, (if funded in the next appropriations bill), jumpstart green collar job programs across the country. The House is currently discussing another stimulus package that would include investment in green collar jobs. In addition, both presidential candidates have expressed their support for growing green collar jobs. In any case, it appears that the green collar job issue is here to stay and that should be good news for hardware and home improvement retailers.
Friday, September 12, 2008
GHG and Retail
(This article appeared in the September '08 issues of Merchant Magazine and Building Products Digest.)
When the topic of green building comes up in our industry, it usually starts up the debate about certified lumber. SFI or FSC? Which is better? Is chain of custody certification worth the trouble? The questions are valid, but the debate is essentially over and has become a distraction from understanding the real issue driving the green building movement. Carbon. It may bring as much change to the hardware and building materials channel as the “big boxes” did decades ago. Let me explain.
The green building movement continues to gain solid support from state and local governments. Solid? San Francisco recently passed mandatory green building guidelines that are the most stringent in the nation, but it’s not another example of West Coast eccentricity. What’s driving the green building movement on the West Coast and the rest of the country isn’t some “tree hugger” ideology, but a science-based approach to curbing green house gas (GHG) emissions, which includes carbon dioxide.
The building industry accounts for nearly half of all green house gas emissions, which includes both embodied energy – the energy required to produce the building materials and move it to where its needed – as well as the energy required for operations, such as lighting, heating and cooling. (See www.architecture2030.com for more information on this, as well as really nice graphics that illustrate the depth of the issue.) Cities and states are focusing on green building related policies as one strategy for limiting GHG emissions because that’s the sweet spot.
A major component of every green building program concerns energy usage. Adding renewable energy, like solar or wind, can earn a building project lots of green points. So too, can adding a host of energy saving features. While federal rebates for solar may end soon, most pundits predict a future that includes more rebates for renewables and energy saving products, coupled with ever stricter building codes. In fact, there is a movement afoot to set the green building standard at carbon neutrality, or zero-energy, well before 2030.
This increasing focus on energy and carbon reduction will create business opportunities and threats. Ikea recently announced their intention to sell solar panels and other home energy products in the next five years. Is this a sign of some big changes headed for this retail channel? Could be. New products in the pipeline will make it easy for do-it-yourselfers to install small-scale solar and wind systems for room additions, out buildings, etc. There’s lots more new energy saving products coming our way, too. Because these products deliver big margins, it’s attracting the attention of retailers like Ikea. And because “alternative energy” is becoming mainstream, established “alternative energy” retailers, such as Northern California’s Real Goods, are seeing tremendous growth opportunities. It’s a sure bet that in the years ahead there will be new retailers focused on meeting the demand for carbon-free energy and challenging traditional home improvement/hardware dealers in that category.
What will all this mean for traditional home centers and building materials retailers? For those that are energy savvy, the new wave of carbon-busting products will add growth to the bottom line. Retailers today that have a solid lineup of Energy Star products and, perhaps, a relationship with a solar installation outfit, have a head start and will be well positioned to take advantage.
When the topic of green building comes up in our industry, it usually starts up the debate about certified lumber. SFI or FSC? Which is better? Is chain of custody certification worth the trouble? The questions are valid, but the debate is essentially over and has become a distraction from understanding the real issue driving the green building movement. Carbon. It may bring as much change to the hardware and building materials channel as the “big boxes” did decades ago. Let me explain.
The green building movement continues to gain solid support from state and local governments. Solid? San Francisco recently passed mandatory green building guidelines that are the most stringent in the nation, but it’s not another example of West Coast eccentricity. What’s driving the green building movement on the West Coast and the rest of the country isn’t some “tree hugger” ideology, but a science-based approach to curbing green house gas (GHG) emissions, which includes carbon dioxide.
The building industry accounts for nearly half of all green house gas emissions, which includes both embodied energy – the energy required to produce the building materials and move it to where its needed – as well as the energy required for operations, such as lighting, heating and cooling. (See www.architecture2030.com for more information on this, as well as really nice graphics that illustrate the depth of the issue.) Cities and states are focusing on green building related policies as one strategy for limiting GHG emissions because that’s the sweet spot.
A major component of every green building program concerns energy usage. Adding renewable energy, like solar or wind, can earn a building project lots of green points. So too, can adding a host of energy saving features. While federal rebates for solar may end soon, most pundits predict a future that includes more rebates for renewables and energy saving products, coupled with ever stricter building codes. In fact, there is a movement afoot to set the green building standard at carbon neutrality, or zero-energy, well before 2030.
This increasing focus on energy and carbon reduction will create business opportunities and threats. Ikea recently announced their intention to sell solar panels and other home energy products in the next five years. Is this a sign of some big changes headed for this retail channel? Could be. New products in the pipeline will make it easy for do-it-yourselfers to install small-scale solar and wind systems for room additions, out buildings, etc. There’s lots more new energy saving products coming our way, too. Because these products deliver big margins, it’s attracting the attention of retailers like Ikea. And because “alternative energy” is becoming mainstream, established “alternative energy” retailers, such as Northern California’s Real Goods, are seeing tremendous growth opportunities. It’s a sure bet that in the years ahead there will be new retailers focused on meeting the demand for carbon-free energy and challenging traditional home improvement/hardware dealers in that category.
What will all this mean for traditional home centers and building materials retailers? For those that are energy savvy, the new wave of carbon-busting products will add growth to the bottom line. Retailers today that have a solid lineup of Energy Star products and, perhaps, a relationship with a solar installation outfit, have a head start and will be well positioned to take advantage.
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