Chemical leasing
Encyclopedia
In the chemical industry
, chemical leasing is a business model in which the chemical company supplies a substance for a specific service, but retains ownership of the chemical. It is intended to shift the focus from increasing sales volume of chemicals towards a value added approach. It may lead to more efficient use of chemicals, and to quality, environmental, and economic benefits.
s are often charged on the basis of the number of kilometers to be covered, rather than on the litres of paint consumed. This concept is referred to by several different names, such as "eco-efficient services", "product-service systems", "chemical servicizing", "chemical management services", and the "product service system
".
Chemical leasing promotes the sustainable management of chemicals. By shifting the focus from increasing the sales volume of chemicals towards a more value added approach, it is an illustration of extended product responsibility. The chemical company supplies a substance for a specific service, such as powder coating, dyeing or painting, but retains ownership over the chemical, and also advises the user on its best use. The producer owns the machinery, and maintains responsibility over the manufacturing process. As a result, it is in the interest of all parties to use the substances as efficiently as possible.
on sustainable development, the international community agreed on the goal of ensuring that, by the year 2020, chemicals will be produced and used in ways that minimize significant adverse impacts on human health and the environment. As a consequence the United Nations Environmental Programme (UNEP) decided to develop of the Strategic Approach to International Chemicals Management (SAICM) in 2003. In 2006 at the International Conference on Chemicals Management (ICCM) in Dubai, the signing countries committed themselves to promote the sound management of chemicals and hazardous wastes at all levels.
The Austrian government has played an important role in promoting chemicals management based on resource efficiency and precaution. When Austria held the Presidency of the European Union during the first half of 2006, chemicals policy was on top of the environmental agenda. Austria continues to promote chemical leasing.
The Federal Environment Agency (UBA) of Germany
proposed to promote chemical leasing in its "Sustainable Chemicals" paper. http://www.umweltdaten.de/publikationen/fpdf-l/3734.pdfhttp://www.chemikalienleasing.de/
, Castrol
, Quaker, PPG, and BASF
that were able to broaden their market share or become the sole providers of CMS by extending the range of their chemicals and adding information management and technical services to their chemicals business.
CMS customers in Europe and America are primarily large, multinational Fortune 500
companies in the automotive, metalworking, aerospace, and electronics sectors. Automotive companies such as Volkswagen
, Daimler Chrysler, Volvo
, Ford, Toyota, and General Motors
have been outsourcing the management of their paint shops in Europe and some of these facilities are now also moving toward total outsourcing of chemical management. Prominent companies in the semiconductor industry, such as STMicroelectronics
, Micron Technologies, and Motorola
, have also been using chemical management services for many years. New areas of CMS growth in Europe include the pulp and paper industry and the life sciences industry.
(UNIDO) and the Austrian Ministry of Environment decided to jointly support chemical leasing through a number of global projects. In partnership with National Cleaner Production Centers, UNIDO has implemented chemical leasing Projects in Austria, Egypt, Mexico and Russia. PERO Innovative Services GnbH (a joint venture of SAFECHEM GmbH, a subsidiary of Dow and PERO AG) has supported Automobiltechnik Blau in metal cleaning to use cost efficient machines, lower the energy consumption and chemical usage.
Akzo Nobel Powder Coatings S.A.E has supported the chemical leasing of powder coating
in Egypt to ABB ARAB. Environmental benefits are said to include recycling of powder waste, compliance with environmental regulations, and enhancement of supply chain management. General Motors Egypt has tied up with the Dr. Badawi Chemical Work to lease hydrocarbon solvents used in metal finishing. Elsewedy Electric
, the Egyptian market leader in hot dip galvanization, has partnered with Zinc Misr to manage the use of flux chemicals and reduce waste discharges.{[cn|date=July 2011}}
Mepla–Alfit and Tiefenbacher GmbH in Austria are cooperating in the chemical leasing of de-lacquering agents and paint strippers. IKEA
and the Huntsman Corporation are cooperating in India to secure the colouring process in textiles.
The sugar mill Fideicomiso Ingenio San Cristobal in Mexico has implemented chemical leasing for the machine lubrication with the help of Shutz Oil and SUMAT
. Henkel-ERA in Russia is using the services of ERG
for industrial waste water treatment.
, Chairman of the European Chemical Agency (ECHA), chemical leasing fulfils the REACH obligations.
Chemical leasing and REACH share the same philosophy of ensuring compliance with a duty of care
(REACH recital 16), as a tool to demonstrate adequate control (REACH para 60). They are mutually supportive in developing rules for sharing costs, and ensuring that chemicals are handled properly. Both are involve several different stages of the supply chain. There is a strong effort by the Austrian and German Governments to bring chemical leasing within the purview of EU Chemicals policy and regulations.
(KPIs). The resources needed to fulfil improvements are also defined.
The implementation stage starts with the signing of a chemical leasing agreement that defines the scope and conditions, unit of payment, KPIs, roles, and responsibilities. The chemical company supervises the chemical process, transporting and managing the inventory, laboratory management, improving process controls, record keeping, and training workers. Periodic checks and inspections are carried out independently to verify that the implementation is proceeding on expected lines. At the end of the implementation phase, progress is evaluated, often by an external party to secure objectivity. Finally, any project benefits are quantified and learning is documented, to provide input for future projects.
Chemical industry
The chemical industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials into more than 70,000 different products.-Products:...
, chemical leasing is a business model in which the chemical company supplies a substance for a specific service, but retains ownership of the chemical. It is intended to shift the focus from increasing sales volume of chemicals towards a value added approach. It may lead to more efficient use of chemicals, and to quality, environmental, and economic benefits.
Definitions
Chemical leasing is a service-oriented business model that shifts the focus from increasing sales volume of chemicals towards a value–added approach. The producer mainly sells the functions performed by the chemical and the functional units, such as the number of pieces painted, are the main basis for payment. It is a business model in which a customer engages with a service provider in a strategic, long-term contract to supply and manage the customer’s chemical and related services. This model has been practiced by the paint industry for decades. For example, the painting of roads or sidewalkSidewalk
A sidewalk, or pavement, footpath, footway, and sometimes platform, is a path along the side of a road. A sidewalk may accommodate moderate changes in grade and is normally separated from the vehicular section by a curb...
s are often charged on the basis of the number of kilometers to be covered, rather than on the litres of paint consumed. This concept is referred to by several different names, such as "eco-efficient services", "product-service systems", "chemical servicizing", "chemical management services", and the "product service system
Product service system
A product-service system , also known as a function-oriented business model, is a business model, developed in academia, that is aimed at providing sustainability of both consumption and production.- What is PSS? :...
".
Chemical leasing promotes the sustainable management of chemicals. By shifting the focus from increasing the sales volume of chemicals towards a more value added approach, it is an illustration of extended product responsibility. The chemical company supplies a substance for a specific service, such as powder coating, dyeing or painting, but retains ownership over the chemical, and also advises the user on its best use. The producer owns the machinery, and maintains responsibility over the manufacturing process. As a result, it is in the interest of all parties to use the substances as efficiently as possible.
Globalization
At the Earth Summit 2002Earth Summit 2002
The World Summit on Sustainable Development, WSSD or Earth Summit 2002 took place in Johannesburg, South Africa, from 26 August to 4 September 2002. It was convened to discuss sustainable development by the United Nations. WSSD gathered a number of leaders from business and non-governmental...
on sustainable development, the international community agreed on the goal of ensuring that, by the year 2020, chemicals will be produced and used in ways that minimize significant adverse impacts on human health and the environment. As a consequence the United Nations Environmental Programme (UNEP) decided to develop of the Strategic Approach to International Chemicals Management (SAICM) in 2003. In 2006 at the International Conference on Chemicals Management (ICCM) in Dubai, the signing countries committed themselves to promote the sound management of chemicals and hazardous wastes at all levels.
The Austrian government has played an important role in promoting chemicals management based on resource efficiency and precaution. When Austria held the Presidency of the European Union during the first half of 2006, chemicals policy was on top of the environmental agenda. Austria continues to promote chemical leasing.
The Federal Environment Agency (UBA) of Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
proposed to promote chemical leasing in its "Sustainable Chemicals" paper. http://www.umweltdaten.de/publikationen/fpdf-l/3734.pdfhttp://www.chemikalienleasing.de/
Chemical management services
Integrated chemical services, also called total chemical management or CMS, include the development of chemicals according to customer requirements, the provision of logistics solutions, administration, process development, chemical application, and waste management. The majority of chemical management services in Europe are large international chemical companies such as DowDow
-People:*Herbert Henry Dow , founder of Dow Chemical Company*Charles Dow , founder of Dow Jones & Co*James R. Dow, professor of German language*Paula Dow , 58th Attorney General of New Jersey*Neal S...
, Castrol
Castrol
Castrol is a brand of industrial and automotive lubricants which is applied to a large range of oils, greases and similar products for most lubrication applications...
, Quaker, PPG, and BASF
BASF
BASF SE is the largest chemical company in the world and is headquartered in Germany. BASF originally stood for Badische Anilin- und Soda-Fabrik . Today, the four letters are a registered trademark and the company is listed on the Frankfurt Stock Exchange, London Stock Exchange, and Zurich Stock...
that were able to broaden their market share or become the sole providers of CMS by extending the range of their chemicals and adding information management and technical services to their chemicals business.
CMS customers in Europe and America are primarily large, multinational Fortune 500
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...
companies in the automotive, metalworking, aerospace, and electronics sectors. Automotive companies such as Volkswagen
Volkswagen
Volkswagen is a German automobile manufacturer and is the original and biggest-selling marque of the Volkswagen Group, which now also owns the Audi, Bentley, Bugatti, Lamborghini, SEAT, and Škoda marques and the truck manufacturer Scania.Volkswagen means "people's car" in German, where it is...
, Daimler Chrysler, Volvo
Volvo
AB Volvo is a Swedish builder of commercial vehicles, including trucks, buses and construction equipment. Volvo also supplies marine and industrial drive systems, aerospace components and financial services...
, Ford, Toyota, and General Motors
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
have been outsourcing the management of their paint shops in Europe and some of these facilities are now also moving toward total outsourcing of chemical management. Prominent companies in the semiconductor industry, such as STMicroelectronics
STMicroelectronics
STMicroelectronics is an Italian-French electronics and semiconductor manufacturer headquartered in Geneva, Switzerland.While STMicroelectronics corporate headquarters and the headquarters for EMEA region are based in Geneva, the holding company, STMicroelectronics N.V. is registered in Amsterdam,...
, Micron Technologies, and Motorola
Motorola
Motorola, Inc. was an American multinational telecommunications company based in Schaumburg, Illinois, which was eventually divided into two independent public companies, Motorola Mobility and Motorola Solutions on January 4, 2011, after losing $4.3 billion from 2007 to 2009...
, have also been using chemical management services for many years. New areas of CMS growth in Europe include the pulp and paper industry and the life sciences industry.
UNIDO
In 2004, the United Nations Industrial Development OrganizationUnited Nations Industrial Development Organization
The United Nations Industrial Development Organization , French/Spanish acronym ONUDI, is a specialized agency in the United Nations system, headquartered in Vienna, Austria...
(UNIDO) and the Austrian Ministry of Environment decided to jointly support chemical leasing through a number of global projects. In partnership with National Cleaner Production Centers, UNIDO has implemented chemical leasing Projects in Austria, Egypt, Mexico and Russia. PERO Innovative Services GnbH (a joint venture of SAFECHEM GmbH, a subsidiary of Dow and PERO AG) has supported Automobiltechnik Blau in metal cleaning to use cost efficient machines, lower the energy consumption and chemical usage.
Akzo Nobel Powder Coatings S.A.E has supported the chemical leasing of powder coating
Powder coating
thumb|right|Aluminium extrusions being powder coatedPowder coating is a type of coating that is applied as a free-flowing, dry powder. The main difference between a conventional liquid paint and a powder coating is that the powder coating does not require a solvent to keep the binder and filler...
in Egypt to ABB ARAB. Environmental benefits are said to include recycling of powder waste, compliance with environmental regulations, and enhancement of supply chain management. General Motors Egypt has tied up with the Dr. Badawi Chemical Work to lease hydrocarbon solvents used in metal finishing. Elsewedy Electric
Elsewedy Electric
'Elsewedy Electric is an Egyptian manufacturing company. It was founded in 1938 by the Elsewedy family.The company manufactures and sells integrated energy products and services in seven energy segments: Cables and accessories, electrical products, telecommunications, transformers, wind energy...
, the Egyptian market leader in hot dip galvanization, has partnered with Zinc Misr to manage the use of flux chemicals and reduce waste discharges.{[cn|date=July 2011}}
Mepla–Alfit and Tiefenbacher GmbH in Austria are cooperating in the chemical leasing of de-lacquering agents and paint strippers. IKEA
IKEA
IKEA is a privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories. The company is the world's largest furniture retailer...
and the Huntsman Corporation are cooperating in India to secure the colouring process in textiles.
The sugar mill Fideicomiso Ingenio San Cristobal in Mexico has implemented chemical leasing for the machine lubrication with the help of Shutz Oil and SUMAT
Sumat
Sumat is a settlement in Kenya's North Eastern Province....
. Henkel-ERA in Russia is using the services of ERG
Erg
An erg is the unit of energy and mechanical work in the centimetre-gram-second system of units, symbol "erg". Its name is derived from the Greek ergon, meaning "work"....
for industrial waste water treatment.
REACH
The reversal of the burden of proof is a key component of the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) system leading to a "no data – no market" concept, obliging producers or importers of substances to deliver documentation regarding properties of chemicals and possible risks during their application as a pre-condition for market access. The OECD Conference in Vienna in 2003 Nov. reiterated that, "... The new EU chemicals policy (REACH) will require a new relationship between provider and user ...." According to Thomas JaklThomas Jakl
Thomas Jakl is the Chairman of European Chemicals Agency and the Director of Austrian Ministry responsible for Environmental protection relating to Chemicals Policy...
, Chairman of the European Chemical Agency (ECHA), chemical leasing fulfils the REACH obligations.
Chemical leasing and REACH share the same philosophy of ensuring compliance with a duty of care
Duty of care
In tort law, a duty of care is a legal obligation imposed on an individual requiring that they adhere to a standard of reasonable care while performing any acts that could foreseeably harm others. It is the first element that must be established to proceed with an action in negligence. The claimant...
(REACH recital 16), as a tool to demonstrate adequate control (REACH para 60). They are mutually supportive in developing rules for sharing costs, and ensuring that chemicals are handled properly. Both are involve several different stages of the supply chain. There is a strong effort by the Austrian and German Governments to bring chemical leasing within the purview of EU Chemicals policy and regulations.
Project phases
Chemical leasing projects are divided into planning, implementation, evaluation and dissemination stages, based on a Deming Cycle. The planning stage consists of a preparatory phase, a process optimisation phase and a design phase. In this stage, discussions around the leasing model, its cost implications versus quality and environmental benefits, commercial terms, and conditions begin. A baseline audit is performed, and a report presented to the factory management. This audit outlines the potential for improvements and forms the basis of defining the key performance indicatorsKey performance indicators
A performance indicator or key performance indicator is an industry jargon for a type of performance measurement.. KPIs are commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged...
(KPIs). The resources needed to fulfil improvements are also defined.
The implementation stage starts with the signing of a chemical leasing agreement that defines the scope and conditions, unit of payment, KPIs, roles, and responsibilities. The chemical company supervises the chemical process, transporting and managing the inventory, laboratory management, improving process controls, record keeping, and training workers. Periodic checks and inspections are carried out independently to verify that the implementation is proceeding on expected lines. At the end of the implementation phase, progress is evaluated, often by an external party to secure objectivity. Finally, any project benefits are quantified and learning is documented, to provide input for future projects.
Global Award for Chemical Leasing
The Austrian government and UNIDO have instituted the Global Chemical Leasing Award to recognize successful chemical leasing implementation, publication and promotional activities. The winners of the First Global Chemical Leasing Award were announced at Prague in March 2010.Further reading
- Jakl T, Joas R, Schott R, Windsperger A (2004), Chemical Leasing: an intelligent and integrated business model with a view to sustainable development in materials management, Springer, Vienna
- Jakl T, Schwager P (2008) "Chemical Leasing goes global - selling services instead of barrels: A Win-Win model for Environment and Industry." Springer Wien New York
- Jakl T, and Schwager P (2011) "Global Chemical Leasing Award 2010", Technology and Investment, 2011, 2, 20-26; Scientific Research