IRMCO: A Leader in Green Innovation
In his most recent book: Hot, Flat, and Crowded: Why We Need a Green Revolution—and How it Can Renew America, Thomas Friedman argues that the global growth of “American-style” consumption cannot be sustained as it is straining the world-wide resources, the physical environment, and political systems to a point of dangerous instability. Though the book is sounding the alarm on the impact of man’s modern economic activity on the natural world, Friedman argues business people can and should be the architects of the solution to this growing crisis. Specifically, he invites American businesses to take the lead in “creating the tools, systems, energy sources, and ethics that will allow the planet to grow in cleaner, more sustainable ways.”
While taking a leadership position in addressing environmental challenges may be seen by some as a “moral imperative,” the economic opportunity lies in developing products and services that are both environmentally sustainable and profitable. Friedman acknowledges that getting to these economically viable solutions will require innovation, leadership that is able to communicate the green vision, and a long-term perspective on the part of business. It is interesting to notice that these requirements reflect the competitive advantage of many successful family businesses: a proven business model arising from shared values, which have been embraced by all stakeholders in the company, and patient capital.
Perhaps this means family businesses are particularly well poised to take advantage of the economic opportunities that may arise from the green revolution, Friedman and others are advocating. In fact, we know several family businesses with a long track record of green innovation and will profile these occasionally to provide ideas and insights to others who may be wondering how they can capitalize on this important emerging business trend. In this issue we will introduce you to IRMCO, a manufacturer of metal-forming lubricants that started moving away from more polluting oil-based products to water-based lubricants as early as the 1980s and today is a recognized industry leader in green innovation.
IRMCO is a 90 year-old family owned and operated company in the traditionally non-environmentally friendly industry of metal forming chemistry. While their competitors sell primarily oil-based lubricating and coating products to the automotive and other manufacturing sectors—IRMCO sells to these same clients but under the core principle that “the business only manufactures and supplies products and services that support efficient manufacturing principles and contribute to a more environmentally safe world.” As a result of this commitment to excellent business practices and the safeguarding of the environment, the company has been recognized as a “Winning Workplace,” and its products have earned kudos from the EPA for their exceptionally low toxicity. In addition, IRMCO has continued to experience growth and profitability despite working in an industry that is largely retrenching.
While praise and profits are important to the 4th generation business leaders at IRMCO (William “Jeff” Jeffery, CEO and Brad Jeffery, VP and Co-Owner), it makes clear that their commitment to green business practices runs far deeper than the financial benefits. Jeff spoke of the confluence of personal experience and external factors initially pushing the firm in this direction.
“I remember when I was a kid seeing a news story of a river on fire and asking my dad how this could happen. When he explained that the oil in products like ours floated on top and could burn, it kind of bothered me.” While this may have planted a seed of concern, both Jeff and Brad acknowledge that the oil embargo in the 1970s played a pivotal role in teaching the company how vulnerable they were to product shortages and motivated them to look for alternatives. Their father became ill in the 1980s, and he became more reflective of the role of business on the environment and this increased the family’s commitment to working with environmentally sustainable practices as an important focus of the business.
When asked about obstacles to going green, both Jeffery brothers acknowledged the early products were not as good as the oil-based alternative, so finding the right formula and optimal application for a new product was quite a challenge. They put a significant amount of effort into research and development, with excellent results emerging over time. The products have been perfected and many can provide great savings to clients. The challenge comes, however, in convincing clients to make the change. In challenging economic times, it is “a tough sell. Many customers don’t want to do anything they don’t have to do,” Brad says. “While our product would save customers money, it would require some changes to how they currently work their machines, and that resistance to change can be hard to overcome, especially among the old-line industries that are many of our clients,” Jeff explains.
In order to help make the business case for the product to their clients, IRMCO has put the “lean green calculator” directly on their website, enabling potential clients to calculate the nature and extent of savings they would experience with the IRMCO product. “It’s a ‘good news’ story—you don’t have to spend more to be green—green can actually save you money,” Brad said.
The Jeffrey brothers cited some of the many benefits IRMCO has experienced from its green approach to business. Brad stressed that this clear focus “really helps to differentiate us in the marketplace and it gives purpose and meaning to when we go to work every day, a definite morale booster for all.” Jeff points out that because half the product is water, they carry much less inventory. This saves space and money. Moving away from all oil-based products reduced liability “and makes the working environment for our employees safer and more pleasant,” Jeff added.
Brad and Jeff agreed that family businesses are particularly well suited to fostering the innovation that may be necessary to transitioning a business to a more green focus. Brad cited the advantage of control. “You don’t have to please short-term market demands. The enterprise can remain more nimble and decide for itself ‘who’ it wants to be.” Jeff added that the presence of family is another important ingredient, as “the family’s ethics and beliefs permeate the business, which can facilitate going for big goals like this.”
Both Jeff and Brad mentioned client results when asked about their proudest moment around the green practices of their business. Jeff spoke of a client with a very large factory that was facing forced closure by the EPA due to environmental contamination it was causing. “Switching to IRMCO’s product enabled the firm to re-open and continue operations while not harming the fish in the local waters.” Brad describes the pride he feels when walking through a client’s clean and efficient plant after it has converted to the IRMCO product, and comparing it in his mind to the “dark and dirty environment it had been prior.”
Finally, while Brad and Jeff express enthusiasm that others are speaking about the importance of the environment and attempting to minimize their negative impact, they express some concern that many businesses only engage in “green washing,” rather than making the more comprehensive and systemic changes that really make a difference. But the important message to take away from the IRMCO case is that green practices can lead to real green profits.
Jeff points to the important parallels between “green approaches to manufacturing and the ‘lean manufacturing’ ideas that are so prevalent today, you cannot look at this as ‘hippy dippy’ you really can be green and profitable.” He goes on to recommend that every business can look for ways to reduce energy use or reduce packaging by going “for the low-hanging fruit to start.” Brad’s advice to other family business owners is to “study your marketplace and look for opportunities. You need to take this seriously. This is going to happen so figure out how you can capitalize for your business.”