The Circular Economy. A Comparative Analysis on Herman Miller Funiture
The Circular Economy
Cradle to Cradle in practice at Herman Miller
Herman Miller in comparison
About Cradle to Cradle on a larger scale
Facing aggravating problems such as rising demand for a finite supply of resources, surging price volatility and uncertainty of supply in combination with worsening ecological conditions such as the pollution of water, soil and air make alternatives to the economic status quo increasingly attractive for companies (Bardi 2013: 230). One potential answer is the concept of a circular economy that tries to incorporate measures from the natural environment into the industrial world in order to make production and consumption more sustainable by using closed loops of production, consumption and recycling. The concept can be seen as a middle course between the neoclassical approach of the nature as a sole resource and the straight ecological approach that sees industry as a threat in general. By transforming the linear economy into a circular one, the amount of waste is expected to diminish significantly reducing the need to import new raw materials as recycled material can satisfy the demand (World Economic Forum 2014: 3f.). Even more, the transformation of the economy towards a more circular approach has a fiscal potential of €630 billion per year, only through efficiency improvements and might boost the EU's GDP by up to 3.9 per cent by creating new market opportunities. The popularity of the circular approach in the business world can therefore partly be attributed to the promise of improved resilience and competitiveness (European Commission 2014: 2). This essay will introduce the theoretic foundations of the circular economy approach before analysing the practical implementation using the example of the furniture producing company Herman Miller. Thereby, the following analysis will be two-part: Firstly on a micro / meso level by comparing the implementation approach with another company producing office chairs and, secondly, on a macro level by evaluating the circular principle regarding its implementations on making the whole economy more sustainable.
The Circular Economy
Indifferent among the terms circular economy, industrial ecology or cradle to cradle, the underlying concept is almost the same in all cases. Besides, the terms will be used interchangeably throughout this paper. The overall concept can be traced back at least to 1966 when Kenneth Boulding hatched the idea of a “stable, closed-cycle” and five years later R. Buckminster Fuller stated that pollution was “nothing but resources we're not harvesting” (both quoted according: Kiser 2016). Also, practical developments have already been undertaken when Michael Braungart and William McDonough published a book in 2002 that made the circular concept popular in Germany under the term “cradle t cradle”, based on their, 1992 formulated, Hanover Principles (Kiser 2016). The central claim is to suspend the antagonism of industry and nature. The latter is seen as the potential model for the former as it is organised perfectly circularly. The opulence of plants, animals and their environment form an equilibrium where nothing is disposed but everything is recycled naturally. All nutrients, for instance those consumed by trees, go back into the natural cycle in the long-run by composting (Braungart/McDonough 2009: 72). In contrast, the economy nowadays does not incorporate recycling on a larger scale: 40% of the food and 70-80% of construction waste in the United States are disposed in landfills. Even more, up to 50 per cent of industrial energy input becomes waste heat (Kiser 2016). The cradle to cradle concept means to develop an industrial system that is restorative by design. The most important disadvantage against recycling is the phenomenon of “downcycling”, referring to the decreasing quality of material once recycled. Braungart and McDonough claim that this problem can be overcome when products are designed specifically for being recycled after their life cycle has come to an end (Braungart 2011: 20). The vision is of that kind that everything that is waste at the moment should become the resource for a new product (“waste equals food”). Consequently, the term “cradle to cradle” refers to the creation of cycles, whereby biological and technical nutrients have to be separated in the production process. As biological components can be composted naturally and do not mean harm to other organisms, technical parts such as different kinds of metal are more complex, so they have to remain in a closed loop. Apart from thinking in cycles, the use of sun energy as the only durable source of energy, and promotion of variety are the additional principles according to the cradle to cradle principle (Braungart 2011: 36). Thereby, it is not the aim to avoid all traces of human activity in the nature but to reduce them to a sustainable level (Braungart 2009: 22). Instead, rethinking the ingredients of production processes, hazardous waste could be transformed to even have a positive impact. By reintegrating the industrial system into the nature, the problem of resource scarcity and pollution would diminish (Braungart 2011: 27).
To do so, all features of all production inputs have to be assessed so that only harmless ingredients are used for production. The implementation of cradle to cradle into business should then be accomplished in several steps: At first, all harmful materials should be avoided in production. Afterwards, the other materials are to be evaluated by time and eliminated until only material is used that is not only less bad but even has positive implications for humans and / or nature. After completing the process the product would be completely new while still remaining the same in functionality (Braungart 2011: 46). The complexity of this approach arises from the fact that even small products contain a large quantity of small components (for instance, an electric toothbrush is fomed by over 40 components), produced by different suppliers around the globe (World Economic Forum 2014: 29). To close the loop for each component will pose a significant challenge. Since parts are not yet designed to be seperated and recycled, only three dollars of the raw material's worth of sixteen dollars in a mobile phone can be extracted and recycled (World Economic Forum 2014: 34). But the “take-make-consume and dispose” pattern of the linear economy can not only be seen from an economic point of view but also from an ecological perspective. Several waste challenges such as water prevention, marine litter, construction waste, or plastic waste are addressed. Only 24 per cent of plastic waste are recycled while 50 per cent are landfilled (European Commission 2014: 11). It is estimated that 100 million tonnes of material waste could be avoided within five years (World Economic Forum 2014: 5). Moreover, the argument of increasing prices due to costly shifts of the production process only holds for the short term. In the long run, production even tends to become cheaper in the circular economy as industrial safety is easier to ensure with non-harmful materials and production waste can be recycled and therefore does not become dead stock (Braungart 2011: 59).
Cradle to Cradle in practice at Herman Miller
Herman Miller Furniture was founded in 1905 as Michigan Star Furniture Co. and grew into an internationally recognised furniture company. By now, it is one of the top four suppliers in the US office furniture industry and collaborates regularly with notable designers underlining the level of its acknowledgement. With its focus on residential and office furniture in the higher price segment the main customers are S&P 1000 companies. What differentiates Herman Miller from other companies is the fact that it incorporates an extraordinary kind of business culture. Not only is the company seen to serve a moral purpose, its employees are also expected to share a mindset of curiosity, openness, transparency, inclusiveness and similar virtues resulting in high marks in surveys about happiness at the workplace (Lee/Bony 2007: 1-3). This specific attitude is also reflected in business practices: Herman Miller adopted the triple bottom line approach considering profitability, environmental and social measures equally. First environmental actions were taken in 1989 when an Environmental Quality Action Team (EQAT) was founded and the first initiative to reduce waste in the production process was implemented in 1991. As a result, Herman Miller is considered an environmental leader in the industry. Nevertheless, economic considerations still remain the most dominant criteria as the CEO, Herman Schramm, quotes: “We don't make decisions that will put us at a disadvantage in the market“. And „we want to be in business AND be nice guys“ (Lee/Bony 2007: 4).
With the background of environmental sensitivity within Herman Miller, the company was approached by William McDonough in 1997, who was already mentioned above and who ran a consulting firm together with Michael Braungart. This consultancy was looking for companies to practically implement their newly developed cradle to cradle protocol. That one was based on the two premises to implement eco-effectiveness in business culture and to make waste food in the production process. Hence, central elements of the cradle to cradle concept were developed before publication of the same-named book in 2002. Herman Miller, after a while of consideration, agreed on the proposal. Thereby, the implementation strategy followed four key elements: To establish a closed loop system of manufacturing for biological and technical nutrients, a chemical assessment of all materials used and their categorisation according to their impact on the environment, to design products for plain disassembly and to increase recyclability by using recyclable and recycled material. Gradually, it became clear that, although the overall concept was laid down, the details did not exist yet as Herman Miller was to be the first company to implement the cradle to cradle protocol. Therefore, the decision from 2001 to implement the design protocol on a product from beginning to end was the first of its kind (Lee/Bony 2007: 6).
The approach Herman Miller chose was to take an established product and to rethink its design and production to make it consistent with the cradle to cradle protocol. The product chosen was the Mirra Chair, a mid-level office chair, sold at a price of $750. For the upcoming process of redesign, two full-time employees were hired to tackle the most important issues which were to create a database for supplier's materials and to establish disassembly guidelines. Chemical assessments of all materials alone accounted for $300,000 and significant resistance from suppliers to reveal the ingredients of their products emerged. As Herman Miller decided not to fundamentally change its established supply chain, some sort of shifting was inevitable. Most problematic issues could only be encountered with a great effort of convincing and guiding the suppliers, feedback loops, joint work and, finally, the argument of Herman Miller's buying power.
Meanwhile, the chemical assessment was the basis for a Design for Environment (DfE) scoreboard, a new tool used to calculate a score for each component. It is composed by a score on material chemistry, recyclability and recycled / renewable content each accounting for one third of the final score making sure that all areas are considered on the path to cradle to cradle (Lee/Bony 2007: 7). Surprisingly, selected components turned out to become even cheaper after being redesigned. Hereunder the y-spine (the structure supporting the back) which was initially a piece of metal overmolded with plastic and was later produced from Nylon and the tilt mechanism which was later manufactured by recycled material instead of virgin material. At the end, the new Mirra Chair received a bronze certificate from the cradle to cradle institute and received various prices. Moreover, the chair was built to last, underlined by the fact of a twelve year warranty. After all, the spending resulted in a golden PR opportunity both for Herman Miller and McDonough. The recent goal is to gradually redesign all products in the company's portfolio by 2020 to meet the DfE protocol's requirements. That means a recyclability ranking of at least 75 per cent for all products in the long run using bio-based materials built for disassembly and recycling (Bardelline 2009; Rossi et al. 2006: 208).
Naturally, as the implementation process was the first according to the crade to cradle protocol, problems arose that were not foreseen. Among the most controversially discussed issues was the use of PVC, a synthetic material used for the arm chairs of Herman Miller's chairs. While its advantages were durability, scratch resistance and low price, the environmental view was different as PVC cannot be recycled. To find an alternative material at reasonable price level turned out to be complicated and time-consuming, so, under protest of environmentalists in the decision level, the first version of the Mirra Chair was produced still including PVC (Lee/Bony 2007: 9). Actually, the newest version of the chair, which was awarded a silver certificate in 2014, does not include PVC anymore after reengineering several parts (Bardelline 2009). Another, and probably the most controversial, topic was the question how to close the loop, meaning how it was to be ensured that the chairs were actually recycled after their life cycle has terminated. Several options were discussed, from a leasing model to tapping into the network of the market for secondary office furniture to collect used products. At the end, the consensus was to wait for the government to find a solution for the whole industry and not to develop an own approach. The CEO called the situation a “classic chicken and egg problem” and made clear they had “to start somewhere” (Lee/Bony 2007: 8).