Sustainability, Risk and Rubber
Hello. Automotive IQ has asked me to write a blog about the tire industry. This is my first attempt.
Sustainability means different things to different people. Ecologists think it is about preserving resources and improving the environment.
Few will argue with those sentiments. Industry, however, takes the sustainability question a lot further.
In industry the emphasis is on sustainable business. That includes many of the elements of ecological sustainability such as reducing energy; re-using materials and recycling end of life products. But it also means ensuring that the business can be sustained into the future.
Everyone in the automotive supply chain is seeing increasing pressure to raise their game in this area. BMW is leading that effort. They want to differentiate their brand through its environmental values. Ford is not far behind.
Car makers are rewarding those members of the supply chain who demonstrate a commitment to sustainable supply chains. On the other hand, there is a risk that BMW will cease to do business with suppliers who fail to comply and then don't work to remedy the situation.
BMW has direct influence over its immediate tier-one suppliers. It is using that influence to encourage those tier-ones to influence their tier-two suppliers and so on throughout the supply chain to the original raw materials, mineral ores, trees and plants which contribute to each and every small component used to make a vehicle.
The idea is that through this ladder of responsibility the whole supply chain is monitored, documented and tracked. Any allegations of non-compliance can be refuted with documentary evidence. And if the allegations are well-founded, then the documentation can be used as a management tool in efforts to remedy the situation
Probably every part of the supply chain thinks that this is a challenge. In the tire sector, one of the biggest challenges for sustainable supply chains is the natural rubber sector.
That might, at first glance, seem to be counter-intuitive. Natural rubber trees sequester carbon. They do not consume fossil resources and the the process of harvesting the rubber is labour-intensive, so it keeps many people employed in the developing world.
Paradoxically, the sustainability pendulum is swinging away from natural rubber towards synthetic rubber which is energy-intensive and consumes fossil resources as well as releasing fossil carbon when the end-of-life tire is eventually burned in a power station or cement kiln.
This rather extraordinary result comes about because the synthetic industry can document the entire supply chain. The natural rubber sector cannot – or it thinks it cannot.
Improvements in the performance of the supply chain can only be measured through documentation and metrics.
Without evidence, we cannot respond to allegations of de-forestation or child labour.
Without a full paper trail, the industry will find that its customers in the tire industry start to choose alternatives where possible and minimise exposure to the risks associated with natural rubber.
Like sugar, leather, tobacco and other farmed goods, the natural rubber supply chain depends on millions of small farmers. There is a belief in some quarters that those millions of farmers can't or won't meet the demands of the global supply chain managers.
Nowadays, however, those smallholders routinely use smart phones to check the Singapore rubber price. They use information to improve their commercial situation.
Furthermore, if the rubber industry took the time to look outside of its own borders, they would discover that the tobacco, sugar and other industries have faced and solved this issue for themselves.
The point of this column then, is that BMW and others are determined that their supply chains will change.
For the better.
And if we are to change, then we need to look at different ways of doing things.
The tire industry has always been self-reliant. Not only is rubber visco-elastic, it's also a thermoset and that means it behaves differently from other materials. So the industry has always had to look inwards for new ideas.
Now, as sustainability and ethical values become just as important as technical performance, the tire industry has a reason to look outside itself. Our industry may have different technical demands from others, but where ethics and ecology are concerned, there is much we can learn from those who have already gone down that route.
BMW and other vehicle makers want to drive change. The tire and rubber industry needs to take that as an opportunity and help drive change throughout the industry's supply chain.