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KEKE WP 4 Super Eco-Factories: concepts and success factors Date 27.4.2012

Prepared Kai Salminen, Mikko Tapaninaho

Email [email protected]

Reviewer Seppo Torvinen Mikko Koho

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Copyright © 2012 Department of Production Engineering All rights reserved. No part of this document may be reproduced, distributed, or transmitted in any form or by any means, including printing, photocopying, recording, or other electronic or mechanical methods, without the prior consent, written or spoken, from the creators of the document. For permission request, contact the responsible person at the addresses above.

TEKES – Uudistuva teollisuus -aktivointihanke Competitive and sustainable production systems and networks (KEstävän KEhityksen kilpailukykyinen ekotuotanto KEKE)

1.1.2010-31.12.2011

WP 4: Super Eco-Factories: concepts and success factors





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Table of ContentsIntroduction: Sustainable manufacturing concepts and sustainable manufacturing networks .............................................................................................................................. 3

Sustainable manufacturing concept research ................................................................. 3 Foresight studies and related Scenarios, Visio and Strategies for Eco-Factory concept in EU, US and Japan ......................................................................................... 5 Sustainable industrial area .............................................................................................. 8 Sustainable manufacturing and Eco Factory impact mechanisms, cause-effect studies. ............................................................................................................................ 9 Disruptive innovations ................................................................................................... 10 Manufacturing in society................................................................................................ 13 Drivers impacting future manufacturing ......................................................................... 14 Resource use in production........................................................................................... 19 Skilled workforce, training and education ...................................................................... 24 Standards and regulations............................................................................................. 26

Sustainable Industry area and eco factory planning .......................................................... 29 Aspern Wien, novel innovative eco industrial area concept, Branding the location. ...... 37 Eco Model City (EMC) concept, next generation industrial area, Japan........................ 40 Eco-Model City Initiatives –Toyota City ......................................................................... 44 Eco-Model City Initiatives –Sakai City (Osaka), Low carbon concept ........................... 45 Eco Model City Kamaisha, From devastated tsunami area to world class eco industry area ................................................................................................................. 46 CSM Hotel, A novel innovative eco-factory concept. ..................................................... 49 IMS, Modern view of manufacturing, new concept for next generation manufacturing ............................................................................................................... 51 Problem of aging society and lack of skilled people, ALPS concept for team based learning for inovative manufacturing . ........................................................................... 54 Resource use (Re), 3R (recycle, reduce, reuse) concepts ............................................ 57

Manufacturing foresight ..................................................................................................... 64 NSF National Science Foundation ................................................................................ 64 Advanced Technology and the Future of U.S. Manufacturing, Proceedings of a Georgia Tech research and policy workshop ................................................................. 65 U.S. at 2010, AMP, Production in the Innovation Economy (PIE), ................................. 70 Manufacturing in 21th century (NIST) ........................................................................... 76 Advanced Manufacturing Initiative for America’s Future (AMI). ..................................... 77 Factors Shaping the Future of Manufacturing ............................................................... 78 High level of problems leading to the necessity (for Japanese companies) to move towards sustainable manufacturing ............................................................................... 81 Future manufacturing in Japan, AIST ............................................................................ 83 Foresight of Swedish Production research; ................................................................... 88

6R concept for assessing products sustainability .............................................................. 92 Product value gained through the 6R’s ......................................................................... 93 Assessing the 6R’s ........................................................................................................ 94

References ........................................................................................................................ 94





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Introduction: Sustainable manufacturing concepts and sustainable manufacturing networks This report consists of two parts. The first section of the report is prepared by Kai Salminen and it describes the outcome of study of sustainable manufacturing concepts research, roadmaps and foresights in discrete manufacturing on both research test beds and industrial implementations in comparison of US, Korea, Europe and Japan. The study was decided to be made from industry and research perspective and concentrating on common understanding research strategies, road maps, implementations and results. Basic methodology was field visits and interviews in relevant research institutes, attending relevant seminars and studying foresight reports. As target group were chosen advanced highly competitive research institutes and their research partners driving the development in prominent research programmes. The general motivation of the chosen approach is to study the strategic role of sustainable manufacturing concept research in discrete manufacturing research. Especially the study chose to compare US, Korea, Japan and Europe as they are seen to be in danger of hollowing up their manufacturing excellence core in globalization of production. The purpose of this study is to get overall background, motivation and achieved results. At the same time is discussed the knowledge of the state of the art and who is advancing it, and what principles drive this development. Benchmarking is performed mainly at the System Level, where complete comparable business and factory concepts are evaluated. At Functional Level, the research concentrates on mainly on research management decision making and its implications on manufacturing R&D (research and Development) and links to company R4D (Research for development) for corresponding system innovations. The second part of the report, prepared by Mikko Tapaninaho, presents an overview of the 6R approach that aims for closed loop life cycle manufacturing concept. The approach includes recover, recycle, reduce, redesign, remanufacture and reuse operations. The approach is presented and its use in assessing and improving sustainability of products and processes is described.

Sustainable manufacturing concept research KEKE project researchers studied relevant research and implementations to form an consistent idea of concept approaches and achievements. Principles of the study The study concentrated to interviews of both academic and industrial experts and field visits to ecocities, ecofactories and research projects and studied their industrial implementations. Especially were discussed and studied management decisions of concepts and implementations base equations that define anticipated and achieved performance change in relationships to used metrics. Discussions sought to find insight into underlying mindsets, foresight studies and roadmaps. The research centers and universities chosen to research were selected on basis of their field record, relevant research projects on the issue, location and industrial cluster.





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Europe:

1. Fraunhofer Institute for Manufacturing Engineering and Automation IPA, Institut für Produktionstechnik und Automatisierung ,Stuttgart. Germany. Contact person: Dr.-Ing, MBA Carmen Constantinescu.

Industrial visits: Audi, Daimler, Festo, Siemens and SAP 2. The Institut for Production Engineering (IFT) of Technical University of Vienna,

Austria. Contact person: prof. Friedrich Bleicher. Industrial visits: Opel Wien, Hörbiger, researchTUb, Voith, Steyr, Magna

3. Institute Josef Stefan (IJS), Department for Automation, Biocybernetics and Robotics, Slovenia. Contact person: Dr. Igor Kovacs,

Industrial visits: Gorenje, Kolektor, Cimos, Motoman Yaskawa, TPV, Technology Park Ljubljana.

4. Brunel University, Advanced Manufacturing & Enterprise Engineering (AMEE), London. England. Contact person: prof. Kai Cheng.

Industrial visits: Rolls Royce PLC, Renishaw, Mollart, CRDM. 5. Technical University of Brno and Tomas Bata University of Zlin, Check

Rebublic. Conatct person prof. Lubomir Vasek. Industrial visits: Hella, Tajmac, Tos Hulin

6. Technical University of Delft, Netherland, Contact person: prof. Vincent Nadin. Industrial visits: Hitachi, Airbus

7. University of Bremen, Department of Planning and Control of Production Systems (PSPS). Germany. Contact person: prof. Bernd Scholz-Reiter.

Industry visits: Daimler, Gildemeister 8. University of Chalmers, Production Systems Division, Contact person: prof.

Johan Stahre. Industry visits: SKF, Volvo Trucks, ABB

9. Keio University, Business Engineering Research Laboratory, Tokio, Japan. Contact person: prof. Masaru Nakano.

Industry visits: Hitachi, Simizu, The research used national and EU programmes Universities and Research institutes to find relevant research and people working in area. They provided information of their research projects research partners and relevant cases. During the benchmarking also the following relevant conferences were used.

1. The World Manufacturing Forum, 16-17 May 2011,Villa Erba Cernobbio, Como Lake, Italy

2. Tampere Manufacturing Summit on 23-25 May 2011, Tampere 3. ISAM 2011 on 25-27 May 2011, Tampere 4. ISIE 2011 Conference, June 7-10, 2011,University of California, Berkeley 5. FAIM 2011 on 26-27 june, Feng Chia University, Taiwan 6. IMCRN Industrial Platform Event 2011 on 12 July Brunel University, Uxbridge 7. CSM Forum Seminar 23, September 2011





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The Following research programmes were used 1. EU 7 FoF, Factories of the future, Manufuture 2. EU Joint Research Centre Institute for Prospective Technological Studies,

Facing the future: time for the EU to meet global challenges, EUR 24364 EN 2010

3. IMS (Intelligen Manufacturing Systems) 4. Japanese METI programmes 5. US NSF and NIST programmes 6. Swedish MERA programme

As this research was primarily field research only the material received directly from persons interviewed was intensively analyzed. Thus the material includes primarily company reports, presentation slides and notes, product information and research documents. Collected company material was used also for the study of the metrics and evaluation and analysis systems and standards they use and their compatibility with other business systems. The practical use of international standards from ISO, etc is at special focus. The Competitive Sustainable Manufacturing and related Eco Factory concepts and sustainable manufacturing networks with clean manufacturing solutions for green products represent the present high end in factory design. The main drivers come on increased environmental awareness and resulted institutional actions, conscious customers, availability of resources, need to reduc risks and guarantee sustainable market growth. On the other there is a growing need to manage sustainable way the rapid industrial growth in developing countries and related global change.

Foresight studies and related Scenarios, Visio and Strategies for Eco-Factory concept in EU, US and Japan The most important means for manufacturing industry to adapt global challenges is seen improved global productivity [Yoshikawa 1990]. Global improvements require boosting development of all global manufacturing industry and requires collaborative international political actions. The new sustainability agreements and related norms and standards set by all major industrial countries already give though guidelines for the industrial cities and companies. All major manufacturing companies have developed their own eco-factory concepts to cope with associated increasing demands affecting. Integrated economic, social and environmental approach integrates political decision making of and factory design. Sustainable factory and manufacturing network design is thus a highly strategic issue reflected towards STEEPL (Social Technological Environmental Economical Political and Legal) framework and relevant tools are used to manage the complex web of interdependencies related to systemic nature of sustainability and future eco-industrial area within society.





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EU (European Union) Sustainable Development Strategy (SDS) EU (European Union) Sustainable Development Strategy (SDS). SDS concentrates on management of natural resources, with production and consumption patterns, aims for continuous improvements in human well-being, now and in the future, setting four key objectives: environmental protection – breaking the link between economic growth and environmental damage, social equity and cohesion – building a democratic society with equal opportunities for all and economic prosperity – with full employment and good jobs.It was adopted by the European Council in June 2006. It is an overarching strategy for all EU policies which sets out how we can meet the needs of present generations without compromising the ability of future generations to meet their needs. The aim is an integrated way with economic, environmental and social issues and lists the following seven key challenges: 1. Climate change and clean energy 2. Sustainable transport 3. Sustainable consumption and production 4. Conservation and management of natural resources 5. Public health 6. Social inclusion, demography and migration 7. Global poverty European Union policies for Industry seek to balance and mutually reinforce economic, environmental and social objectives. Regional governments, city authorities and industry within EUs Environmental Action Programme (EAP), concentrate on four priority areas; climate change, nature and biodiversity, environment and health, natural resources and waste. JRCI report states that Based on the criteria of urgency, tractability and impact, the expert workshop identified three challenges with a global scope, but which require action at EU level, to be selected. These are:

1. The need to change current ways in which essential natural resources are used – due to the non-sustainable human over-exploitation of natural resources. The most well-known effects are: climate change; loss of biodiversity; increasing demand for food; deepening poverty and exclusion due to continued exploitation of the natural resources; energy and water scarcity leading to competition and conflict; mass migration and threats in the form of radicalisation and terrorism.

2. The need to anticipate and adapt to societal changes – including political, cultural, demographic and economic transformations in order for the EU to develop into a knowledge society. The main dimensions related to this challenge are: economic growth mainly depending on increases in productivity; ageing societies increasing pressures on pensions, social security and healthcare systems; flows of migrants from developing to developed countries; empowerment of citizens through enhanced education; barriers to the social acceptance of innovations due to lack of understanding of technological possibilities and related consequences; and inability to keep up with the speed and complexity of socio-economic changes.





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3. The need for more effective and transparent governance for the EU and the world –with the creation of more transparent and accountable forms of governance able to anticipate and adapt to the future and thus address common challenges, and to spread democracy and transparency on the global level. Related to this challenge are: the fading of borders between nations with the problems of (especially neighbouring) developing countries increasingly affecting the EU; single policy governance approaches which can no longer cope with global issues; and the lack of balance in representing nations in global fora.

Based on the above challenges, the main policy issues to be considered at EU level are:

1. Policy alignment towards sustainability – including the need to align all relevant policy domains to achieve: a reform in the agrisystem; a reduction in the EU's dependency on resources; an increase in levels of education and social awareness; appropriate and effective management of migration flows resulting from climate change, the aspiration to a better quality of life, and labour market needs of especially ageing societies; and a change in the policy paradigm based on GDP to an updated system which also considers ecological flows and stocks.

2. Social diversity and ICTs towards citizen empowerment – including the need to: build new incentives to facilitate and strengthen relationships between different social systems; develop the necessary means to enhance education on the use of ICTs in conjunction with other technologies; improve the quality of education by, among others, fostering competition within and between EU national education systems; regulate the healthcare system by tapping into new technologies to allow equal access for all; develop radically new and far more efficient forms of social protection; and enhance regional specialisation through the formation of regional RTDI (Research, Technological Development and Innovation) clusters.

3. Anticipation of future challenges to turn these into new opportunities – including the need to: embed forward looking techniques in EU policy making; foster mutual understanding through ongoing and inclusive dialogue both within the EU and worldwide to build shared values, common visions, actions, and smart regulations; enable effective and adaptive international organisations to become a reality; establish partnerships between industry-government-society; clarify at global fora the role and status of the EU and balance its representation in international organisations; and foster (e)participation and (e)democracy through the use of web 2.0 and advanced technologies.

The foresight approach employed in this study contributes to policy making by supporting a continuous and shared approach to understand the present in all its complexity, to look at different future possibilities and to shape a joint direction to follow, considering different stakeholders' points of view. This can be coupled with a periodic evaluation of what has or has not been achieved to enable policy to correct deviations and to continually adapt to and re-shape upcoming new situations. It is believed that such an approach, linked to other forward-looking techniques and





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tapping into evidence-based research and quantitative elements, would be critical to enable EU policy making to become more adaptive and able to anticipate and address change. EU Environmental Technologies Action Plan (ETAP) Environmental Technologies Action Plan (ETAP) is a part of EAP and is directed for eco-innovation and use of environmental technologies. Regional governments and industry are urged to co-invest for the development and demonstration of environmental technologies in line with the EU objectives. The EU and its Member States ratified also the Kyoto Protocol to United Nations Framework Convention on Climate Change (UNFCCC) and commit to reducing their collective emissions of six key greenhouse gases by at least 5%.

Sustainable industrial area Sustainable Industrial area and its eco-factory system can be defined according to EU definitions as an industrial area concept where competitiveness and sustainability are mutually reinforcing. Thus it should manifest co-operative regional and enterprise policy, with its focus on competitiveness, ensure economic growth and provide the essential resources to tackle environmental pressures and reinforce social cohesion. All actors in various life cycle of an eco-industrial area development in various roles must integrate accordingly environmental and social concerns into their design, planning and business practices, and promote framework conditions conducive to sustainable innovation. This calls for innovative new approachess regarding life, living, work, transport, movement, use of resources, wastes, emission and business. Creating sustainable industrial areas is a multidisciplinary collaborative innovative process of all stakeholders based on STEEP-L (Social, Technological, Economic, Environmental, Political and Legislative) system planning framework and concentrating on intelligent resource use (Re) on 6R (Reduce, Reuse, Recycle, Recover, Redesign and Remanufacture) system basis and efficient risks management (Ri ) quided by evolutionary efficieny (E) assesment. Current integrated sustainability design paradigm is dominated by energy and water use footprints and several ways are introduced to asses them. However modern emerging planning paradigm has more comprehensive goals. Various related EU environmental regulations will touch just about every major energy and industrial company. Design of sustainable industrial environment and ecosystems depends also other issues such as demographics, congestion, transportation, waste handling, and nutrient flows.





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Sustainable manufacturing and Eco Factory impact mechanisms, cause-effect studies. Sustainable manufacturing is discussed broadly overall in manufacturing research The basic mechanisms are :

1. Institutional means and their causation. Directives ,norms and policies for sustainable manufacturing

2. Technological advancements, eco innovations, new materials and processes 3. Planning solutions, concepts and principles

The main international forum for sustainable manufacturing development and research has since 1990 been IMS (Intelligent Manufacturing Systems) programme. The global advancements are annually presented in The World Manufacturing forum. The world manufacturing forum 2011 http://www.worldmanufacturingforum.org Manufacturing is one of the engines of global economic growth and sustainable development. However, today's environment bears challenges as well as opportunities: access to international consumer markets has become easier. And whilst OECD countries (EU, US, Japan, Australia, New Zealand, Chile, Israel and Canada) have maintained a high level of spending on science and technology, BRIC economies (Brazil, Russia, India and China) are catching up significantly through increased spending. The World Manufacturing Forum(WMF ) is a direct continuum of IMS (Intelligen Manufacturing System) programme and thus been last 20 years the main collaborative global forum for manufacturing industry. This year WMF concentrated on the consequences of the dramatic change in international business environment has undergone in the last decade. From sustainable manufacturing point of view the main topic was the strategic problems caused by increasingly interlinked value chains. Growing competition for scarce energy sources and raw materials as well as competition of skilled workforce and innovations and global disasters have affected all manufacturing companies. Especially governments in emerging manufacturing areas seem to be keen to put proper policies in place to help their industries seize the new opportunities for innovation and growth. They will be not satisfied solely on the role of cheap labor base. Technology and skills are key innovation differentiators and political and environmental stability as well as natural resources key competitive elements. WMF 2011 addressed the challenges for manufacturing innovation in the context of policy makers' concerns. Speakers presented studies on the management of strategic resources such as water, fossil fuels, and rare earth elements and outlined how governments support global manufacturing companies by innovation environment and increasing the sustainability of business infrastructure by lowering the risk of conflicts through effective dialogue and international S&T cooperation. The forum presented a large variety of cases in advanced global sustainable

http://www.worldmanufacturingforum.org/





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manufacturing solutions of major global companies and their key future strategies. The Future SME Consortium of UK (United Kingdom) and Japanese MITI shared the view on future global manufacturing strategy key areas: In a fast-changing world of work, the ability to adapt and develop new learning and skills is a crucial ingredient in a successful economy.

Developing human (Hitozukuri capabilities); Globalisation and the knowledge-driven economy require to develop a more highly-skilled workforce in order to compete within high-value-added sectors of the world economy.

Knowledgeintensive, high-skilled manufacturing compete more on quality and agility less on price however maintaining profit margins need constant improvement in cost efficiency.

Evolutionary capabilities (Full research and agility): “In the future manufacturing firms needs to be open minded, energetic and empowered organisations, continuously adapting, changing and evolving within their global networks producing rapid and innovative responses to opportunities and threats as they emerge”

The days when everything could be sold are over but on the other hand inverse manufacturing is growing business.

Disruptive innovations The era of sustainable manufacturing has also brought for several disruptive innovations. The logic in eco-innovations was discussed also at WMF. Disruptive innovations can hurt successful, well managed companies that are responsive to their customers and have excellent research and development. These companies tend to ignore the markets most susceptible to disruptive innovations, because the markets have very tight profit margins and are too small to provide a good growth rate to an established (sizable) firm. Thus disruptive technology provides an example of when the common business-world advice to "focus on the customer" ("stay close to the customer", "listen to the customer") can sometimes be strategically counterproductive. How low-end disruption occurs over time. Manufacturing companies at developing economies do not need the full performance valued by the high end manufacturing companies of the market and "new-market disruption" which targets customers who have needs that were previously unserved by existing incumbents is born. Eco-innovations improve at a rate that exceeds the rate at which customers can adopt the new performance. Therefore disruptive innovation may enter the market and provide an innovation which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market. This is happening in large scale in China and India. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will





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not do much to retain its share in a not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market. For instance the case Seiko in watch making and case Foxcon in electronics are good examples of how manufacturing system can be a such determine disruptive innovation. "New market disruption" occurs when a product fits a new or emerging market segment that is not being served by existing incumbents in the industry. This is the case of most new sustainable manufacturing technologies. As the companies themselves are usually weak in noticing the progress there is a vital need to integrate with local and global research. Disruptive innovations can be recognize by evolutionary economic based evaluations instead of current prevailing economic approaches. Disruptive innovations avoid direct competition, seek synergies with current best in class and are usually their sales representatives or subcontractors. Thus they have access to relevant information and personnel. Interdependency, co-operation, symbiosis, and the division of labor instead of competition is the fundamental "organizing principle" in the disruptive evolutionary economy. The touchstone is the problem of earning a living and -- "adaptation" -- and both competition and co-operation are subsidiary phenomena. They are contingent "survival strategies." In fact, many of these companies have practiced in the art of avoiding direct competition. Finally, all those companies exploit the synergy principle in one way or another. Synergy is a way of conjuring economic leverage from an almost endless variety of non-linear co-operative effects. The competition with car manufacturers in developing countries demands according to GM simultaneously addressing the challenge of operational efficiency, new manufacturing technology and mitigating future risks by understanding potential disruptive developments.





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Figure GM plant 2030 strategy, integrated product –process- market approach with constantly improving resource use, risks management and evolution. Pisano, Gary P., and Willy C. Shih. “Restoring American Competitiveness.” Harvard Business Review 87, nos. 7-8 (July - August 2009). :”US has not simply lost low-value jobs, such as assembly, in the high-tech sector, but sophisticated engineering and advanced manufacturing activities. In addition, we are losing the higher value jobs in software and services. The outsourcing of software development to Indian companies illustrates this progression. At first, companies outsourced basic code-writing projects to Indian firms with lower costs. Now, Indian companies and workers are writing sophisticated firmware, having developed software engineering capabilities.” Research and innovation are essential, but alone they do not ensure a successful manufacturing sector. This is a sample26 of technologies and products with both commercial and defense applications invented in the United States and now produced primarily abroad: • Laptop computers • Solar cells • Semiconductor memory devices • Semiconductor production equipment such as steppers • Flat panel displays • Robotics • Interactive electronic games • Lithium-ion batteries ( List from Tassey) The OECD nation’s loss of manufacturing leadership is not limited to factory jobs;





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there are also concerns that we are losing leadership in R&D employment and investment related to manufacturing. R&D activity linked to manufacturing is moving offshore to access emerging global markets, and to respond to global competition for talent and the growing supply of scientists and engineers abroad. This is occurring as other countries are increasing their R&D intensities.

Manufacturing in society One of the prime topics of the WMF 2011 forum was directed to governments. Manufacturing industry and research pointed out that the global manufacturing base is hollowing out fast. Global competition has not only caused outsourcing to fast developing economies like China and India, it has also affected that the manufacturing capability has been deteriorating in developed countries. Especially Europe, US and Japan are seen to loose rapidly all levels manufacturing expertise. Message to governments; Governmental opportunities and challenges For governments solid Manufacturing base means high employment, income tax value stream, multiplier effects and innovation capability. For industry it means vital part of innovation infrastructure. It was generally noted that local production must be supported by local design. Thus the interdepency of design and production was considered especially important in case of high end complex products in several presentations. ABB presented in its presentation their questions to local governments:

Are you growing enough engineers and skilled workers? Are you applying Sustainable Manufacturing rules uniformly? Are you building up, or closing down, Manufacturing?

Similar questions were raised also by Bosch and Festo. These questions are acute in all emerging economies that act in manufacturing supply network. For instance environmental impacts of manufacturing growth in Mexico has caused overall levels of industrial pollution: air pollution, water pollution, and toxics, increase faster than population growth and faster than the GDP of the Corporate Social Responsibility. Standards and Compliance demand in Mexico offered a laxer climate of environmental regulation for all industries. Poor implementation of environmental management systems (EMS) in Mexican firms is causing severe problems in trading with European companies. Thus in recent years the Foreign firms committed to sustainable manufacturing have transferred environmentally friendly technology and management methods to their Mexican suppliers. Mexican government started “Green the supply chain” programme and targeted funds toward the training and certification of SMEs in environmental management systems. Now Mexico has founded Mexico's National Council of Ecological Industrialists (CONIECO), Latin American chapter of the World Business Council for Sustainable Development and Center for Private Sector Studies for Sustainable Development (CESPEDES)





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Also Japan is investing heavily to prevent hollowing up its manufacturing. The efforts concentrate on special zones the international strategic zones and the regional revitalization zones. The strategic zones are aimed at clustering industry and related intellectual and other resources so as to increase growth opportunities in the environment, next-generation energy, bio life science, aircraft, automobile and robotics and other areas. These zones include a "Green Asia International Strategy comprehensive special zone," which groups Fukuoka City and Prefecture with Kitakyushu City in an initiative to position their region in western Japan as the gateway to Asia. There are seven special zones as of February 2012. In total, they comprise budgetary requests of 153.9 billion yen which are expected to lead to 6.97 trillion ($85 billion) in new economic activity and 298,000 new jobs.

Drivers impacting future manufacturing Second big issue discussed in key notes was the key drivers of manufacturing. Global balance is seen changed. China, India, Korea and Taiwan have grown a major manufacturing force not only in volume low technology manufacturing but also in research driven high technology manufacturing. This has caused also a birth of wealthy middle class and major local demand. Due to different requirements and cultures uniform global products are nowadays diminishing. Most advanced global companies have now the strategy of local production. This is also due to logistics and local adaptation needs.





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Claudio Boer discussed in his presentation the enhanced solution space needed for sustainable manufacturing system design. He argued that company internal policies, strategies and product portfolio are no more adequate base for manufacturing system design. A key aspect of this paradigm is the concept of a multi-leveled hierarchy of causation (some prefer Arthur Koestler's less authoritarian-sounding term "holarchy") -- from the physical environment to the most inclusive political entities, including several levels of emergent biological and social "wholes" which are at once partially-independent and interdependent; complex processes of both "upward" and "downward" causation are continuously at work. Indeed, the causal dynamics are usually configural and interactional in nature; they have synergistic properties. Accordingly, in addition to the creative activities the process of evolutionary change also includes such important "variables" as population growth, environmental challenges and opportunities and, not least, resource availabilities. Dr. Martinez from Monterrey Institute of Technology, Mexico noted that Governments instead of having war for energy and materials the global resources have to be addressed to reach the goal of a cleaner, safer and more comfortable world. This is the perquisite for sustainable global economy and balanced growth. Global manufacturing challenges will be addressed with the manufacturing shifts to Emerging Countries, with strong emphasis on international cooperation for development and rise of productivity thus sharing wealth with less environmental effects. Global productivity and sustainability need organizing our resources, our energy supplies and rethinking capital investment on new principles. Through major shifts in (inter)national budgeting governments can achieve new sources of economic strength and sustain a high quality of life. International initiatives to promote innovation will benefit us all with more global manufacturing solutions based on green technologies Lot of discussion was presented by various global companies on the selection criteria for new locations and investment strategy. For instance Bosch and ABB listed main criteria :

1. Political conditions as number one 2. Local industry base and markets as second 3. Adequate developing infrastructure as third 4. Logistics and moving as fourth 5. Sustainability, meaning good and improving environment condition as fifth





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6. Economic sustainability, meaning good government 7. Standard of living, meaning good place for employees and markets 8. Labor market, meaning availability of resources 9. Labor costs, meaning total relational labor costs 10. Know How, meaning local capabilities for adaptation

If we compare the list to basic evolutionary economic theory it has high match to evolutionary “bioeconomic” principles that formed the basis of IMS eco-factory development. These principles included the following, among others:

1. Survival. The survival problem is always context-specific. The precise system-environment relationship.

2. Resources like Energy, and access to relevant information about how to capture and utilize it,

3. The time and energy that any production system has available to meet its needs is always limited and must be utilized relatively efficiently -- or else.

4. Ecological competition and interdependency, co-operation, symbiosis, and the division of labor. The touchstone is the problem of earning a living and -- "adaptation" -- and both competition and co-operation are subsidiary phenomena.

5. Synergy principle Conjuring economic leverage from an almost endless variety of non-linear co-operative effects. Causal dynamics are usually configural and interactional in nature; they have synergistic properties

Figure Selection criteria for global manufacturing by Bosch (WMF 2011)





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ABB presented its strategy under “Global Footprint Strategy” where the central aims were to adapt well locally and seek all possible synergy needs. Profitable growth is seen to be based on global innovations and local effectiveness. The presence of local innovation environment with research and education was seen vital besides local suppliers and markets. Besides Bosch and ABB also Volkswagen, Toyota and BMW stressed availability of local design and development resources. Only Renault was relying solely on own central expertise. Clear synergistic innovations were mainly presented by Japanese companies like Hitachi and Toyota. They both noted also the networking with inverse manufacturing and the role of local partners in adaptation. Toyota, Honda and Nissan had built collaborative IR4TD (Integrated Reserch for Technological Development) institutes with local universities for instance in University of Kentucky in US. Similar initiatives in Europe were with GM in Vienna (aspern IQ with Technical University of Vienna), Chalmers UTC in Gothenburg with ABB, Volvo and SKF. Toyota has a clear “mother factory” system where the Japanese factories support and collaborate their overseas daughter factories in mutual learning thus increasing knowledge exchange.

Figure ABB Global footprint strategy (WMF 2011) A look at the situation of the global market shows that emerging countries have increased their share of the global GDP as a result of population growth and rising income. Emerging countries have also increased their presence as both production bases and markets. Although manufacturing industry has led the Japanese economy





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and has been responsible of 90 % exports Japan has not fully taken advantage of business opportunities in growth markets around the world.

Figure Japan is loosing in asia.

Figure Globalization proceeds, Europe loose significance Moving from global to more regional production. Success factors: Ability to adapt locally, logistics and sales, local research and services, trade rules, environmental pressure ….





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Three main driving forces promoting regionalised supply: 1. Normalising labour rates in the medium to long term, coupled with financial

and environmental impact of transport and logistics 2. Increasing customer demand for short lead times and customized products 3. Global impact of local Sudden Events

Resource use in production Today, more than 95% of the resources lifted from nature are wasted before the finished goods reach the market. And many industrial products - such as production equipment - demand additional natural resources while being used. The key for sustainability is to radically increase the resource productivity of all economic activities, including energy generation. While it may seem obvious, it is nevertheless worth repeating that climate change is the consequence of enormous flows of human-induced carbonaceous material, and of large quantities of other greenhouse emissions. Lovins (2008) has argued that a sixth wave of innovation can be based on Sustainability, radical resource productivity, whole system design, biomimicry, green chemistry, industrial ecology, renewable energy and green nanotechnology. Process innovations A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software (OECD 2005a). In terms of eco-innovation, one of the most significant process innovations is development and application of so-called environmental technologies. The exhibit presents an outline of areas where preventive (integrated) and additive (curative) environmental technologies can be applied. The preventive technologies are integrated in the production process and in the product itself.

Figure: Material, energy and labor resource use management





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The rare earth (RE) substance problem Rare Earth substances are a very strategic question for all advanced manufacturing. Current sources are scares and geographically concentrated. China has been long the primary source with 90 % share but it has recently revised its role in value chain from materials provider towards processor and end user. This development will cause unexpected consequences globally. Recycling of RE Another recently developed source of rare earths is electronic waste and other wastes that have significant rare earth components. New advances in recycling technology have made extraction of rare earths from these materials more feasible, and recycling plants are currently operating in Japan, where there is an estimated 300,000 tons of rare earths stored in unused electronics.In France, the Rhodia group is setting up two factories, in La Rochelle and Saint-Fons, that will produce 200 tons a year of rare earths from used Fluorescent lamps, magnets and batteries. Environmental considerations Mining, refining, and recycling of rare earths have serious environmental consequences if not properly managed. A particular hazard is mildly radioactive slurry tailings resulting from the common occurrence of thorium and uranium in rare earth element ores. Additionally, toxic acids are required during the refining process. Improper handling of these substances can result in extensive environmental damage. In May 2010, China announced a major, five-month crackdown on illegal mining in order to protect the environment and its resources. This campaign is expected to be concentrated in the South, where mines – commonly small, rural, and illegal operations – are particularly prone to releasing toxic wastes into the general water supply. However, even the major operation in Baotou, in Inner Mongolia, where much of the world's rare earth supply is refined, has caused major environmental damage. The Bukit Merah mine in Malaysia has been the focus of a US$100 million cleanup which is proceeding in 2011.





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Figure RE consumption increase calls for actions

Figure: Complementary materials and recycling driwers





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Figure Energy use in advanced manufacturing of new materials New advanced manufacturing methods used for rare earth based advanced materials manufacturing are extremely energy intensive.r Logistics, transport and environmental risks as localization parameters Global transportation & logistics will increasingly come under pressure on cost, reliability, speed and environmental impact. 23% of 2005 global CO2 emissions are due to transport. Severe logistics related problems are also caused by environmental reasons. Risks in manufacturing network and supply chain Sudden events causing disruption in global supply chain; High risk for dependency of single sourced components Environmental risks for global disruption of component supplies causing heavy costs for producers worldwide

Icelandic volcano eruption and ash cloud 2010 Closure of European airspace put African growers out of business Severe disturbances in European supply chain for airfreighted components Japanese tsunami 2011 Sudden changes in political power; Disruption of production in several North

African countries Risks in traditional transport and trade routes – short term alternatives

expensive Currency risks





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A European automobile producer will invest heavily in parts production in Mexico and intends to purchase more goods globally than from traditional local European suppliers. The reason for this decision is to reduce the impact of foreign currency swings on their overall earnings. By buying parts globally, the company has stated that they will reduce their currency risk by $1.23 billion by 2012. (Automotive News, July, 2010). At the same time they are facing the local risks of Mexico.Onthe other hand television components and sub-assemblies are shipped to Mexico for completion in order to contain enough material and labor added in Mexico to qualify for NAFTA trade benefits. Sustainability means the ability to adapt fast. After great earthquake and following tsunami Japan lost considerable amount of their supply network and needed to react fast to get dependent manufacturing going on. This posed also the change to rise the level of the area. There are at present 26 regional revitalization zones. The ambit of this zone program includes disaster prevention and mitigation, environment and next-generation industry, tourism and culture, agriculture, biomass, finance and social business, healthcare and nursing. The total fiscal scale of the zones is 63 billion yen that is expected to lead to 2.15 trillion yen in new business activity and 67,000 new jobs. The tax breaks in the international strategy zone are focused on lowering the corporate tax in order to foster competitiveness in international markets, while those in the regional revitalization zones center on deductions for individual investment in enterprises that are part of the strategy. Hitachi was one of the companies heavily affected and on the other hand important in revitalizing. They presented their actions and adaptation capabilities with few impressive examples. For instance logistic train connections were built up in four months and production assumed. This showed the recovery power of advanced sustainable companies and society.

Figure Hitachi BCP (Business Continuity Plan)





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Research & Development

Skilled workforce, training and education Concerns of availability of skilled workforce in manufacturing were present in all key notes. Retirements of “post-war generation” is not matched with current output levels of industrial engineers in EU, Japan and USA. Speakers pointed out the need for electrical and mechanical manufacturing companies to become more attractive to the “Google generation” or hire from BRIC area:

Around 400,000 Chinese, and 200,000 Indian, engineering graduates (4-year) creates a large talent pool for global engineering

Risk that recent skilled worker lay-offs creates a “drain” to other business sectors

Annual graduates in OECD manufacturing countries are not enough to match the need on long run and thus one key contributors of rapid globalisation of manufacturing.

University of Salford presented a study on Economic Drivers for investing in collaborative next generation workplaces as means to ease the workforce problem. Global competition on skilled workforce Companies are deconstructing and concentrating on core competencies, giving rise to distributed virtual enterprises.

New Opportunities in emerging countries Cheaper and motivated workforce Differentiate the product according to the needs and regulations of the local

market. New economical powers investing on future products (China, India, Russia) Regional Clusters; Regional support for SMEs to work together to offer

value added services (PANAC – Hungary, NW Aerospace Alliance – NW-UK)

Concurrent Engineering – Multi-functional teams need to work together Facts and figures about disability- source: the European disability forum; Disabled people represent 80 million persons in the EU (more than 15% of the population). People with reduced mobility represent more than 40% of the population. This capacity pool can be addressed by re-designing workplaces.





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Figure Collaborative workspace for multidisciplinary systems engineering (Terrnce Fernando, University of Salford) Mexican Government has started intensive programme for creating endogenous productive capacity = knowledge + skills + technology + capability to innovate. The programme aims to move Mexico up in value stream and create capabilities to compete on higher profit markets. With new capabilities firms and workers are able to design, produce and sell products and services in domestic and/or global markets.(Source: Secretary of Economy, National Innovation Plan). Government facilitate the interaction between universities, research centers, government, financial institutions, and industry in order to promote innovation, entrepreneurship, and value generation for the society. For the purpose is founded Intersectorial Innovation Committee and National Technology Award. In US side General Electric, which is creating 4,000 manufacturing jobs domestically to make products including energy-efficient washers and dryers, environmental coatings, fluorescent light bulbs, sodium batteries, and jet engines. G.E. is relying on high-tech machinery, skilled workers, and composite materials to create value-added parts for fuel-efficient jet engines in the United States. It is also taking advantage of state and local tax credits, and automation, to make energy-efficient washers and dryers in Kentucky. Smaller US companies, including Farouk





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Systems, Inc., a $1 billion hand-held appliance maker, and Emerson, an electrical equipment maker based in St. Louis, have also shifted some production from Asia to the United States to improve quality control and to better access their customers, relying on automation and reduced delivery distance to improve their cost competitiveness.40 These companies currently represent exceptions to the broader trend of off-shoring of US manufacturing.

Standards and regulations Sustainability can be addressed basically by tree basic means institutional, planning and technology, Institutional means are standards and regulations. NIST (national Institute of standards and technology) has been an active member of IMS already from beginning. According to NIST Manufacturers need to cope with existing and new environmental regulations that:

Continue to expand across product categories and life cycles Impact innovation and competitiveness Introduce complex product data that need to be collected, secured, verified

and validated Can create compliance issues with suppliers

Figure Development of sustainability standards and norms (NIST)





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One of the key issues is the metrics used for sustainability management. WMF discussed the issue in specific session. Korean steel company POSCO presented a system where the carbon reduction is calculated over the product life cycle. Reduction efforts with both currently available technologies and breakthrough future technologies in manufacturing were evaluated together with effects of lighter and stronger better forming steel sheet for automobiles and the impact of reduced emissions in manufacturing and use, increased safety and decreased recycling costs. POSCO could present 2,100 projects over the ten-year period, lowering energy consumption by 2.91 million TOEs, and saving M$180 in energy expenditures for 2009 alone by using

• Inverter for high-voltage motors • Energy saving in electrical room lighting • Stack heat recovery system • Coke dry quenching facilities • Reuse of waste heat from steelworks

The effort to manage carbon byproducts from steelmaking has become a key success factor in the conduct of business of EUP (Energy Using Products) . GHG reduction effort should be measured in terms of its effect in society as a whole, not just in company viewpoint. The metrics signal the firm’s direct relationship with social and environmental status and direct to achieving productivity and sustainability simultaneously. NIST expressed the strong need to develop and deploy the metrics, standards, and infrastructure required to achieve sustainability in manufacturing in a timely manner

Develop and deploy metrics, standards, and infrastructure required for sustainable manufacturing processes

Develop and deploy metrics, standards, and infrastructure required for sustainability of manufactured products

Develop and deploy metrics, standards, and infrastructure required for manufacturing of clean energy technology products





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Figure NIST framework for metrics and measurement for sustainability performance. Besides design approaches affecting the quality of developed concepts the most influential factor is the set of regulatory constraints given. Although Sustainable Industry within EU is strongly tied into a vast set of common commitments, directives and action plans these are often not communicated clearly planning and related manufacturing. The EU sustainability initiatives seek to standardise the life cycle issues related to energy, waste, emissions, safety etc. For instance energy issues are put into two categories: energy related products (ERP) (the use of which has an impact on energy consumption) and energy-using products (EUPs), which use, generate, transfer or measure energy (electricity, gas, fossil fuel), such as boilers, computers, televisions, transformers, industrial fans, industrial furnaces etc. Other energy related products (ERPs) which do not use energy but have an impact on energy and can therefore contribute to saving energy, such as windows, insulation material, shower heads, taps etc. One important co-operative partner for sustainable norms and directive development is eco-industry. The term “eco-industries” is in this context is defined to mean those industrial sectors acting in the field of, e.g. renewable energy, waste recycling, environmental auditing and consultancy and those capital intensive sectors providing goods and services in specific areas, e.g. waste, wastewater and transport.





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Sustainable Industry area and eco factory planning Main principles and strategies for Sustainable Industrial area and sustainable manufacturing within European cities is here discussed integrating EU`s sustainable development strategy and corporate strategy systems. Within EU strategy the corporate/community approaches consist of Corporate Social Responsibility (CSR), sustainable consumption and production (SCP) and sustainable industrial policy (SIP). Sustainable consumption and production (SCP) is usually related narrowly to energy-using products (EUPs) and energy related products (ERPs). Main principles, concepts and tools for Sustainable Industry and eco factories in regional context within EU:

1. Corporate Social Responsibility (CSR), The European Commission's definition of CSR is: "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis."

2. Sustainable consumption and production (SCP). SCP concentrates on energy and natural resources savings and new opportunities offered by a "green" economy.

3. Sustainable Industry Policy (SIP). SIP concentrates on incentives rewarding eco-friendly products, green public procurement, support to environmental industries, and promotion of sustainable industry internationally and various standards directives and norms.

4. EMS Enterprises are encouraged to implement EMS, either conforming to national/regional certification criteria or complying with international standards (e.g. EN ISO 14001)

5. Community Eco-Management and Audit Scheme (EMAS). (EMAS) is a management tool for companies and other organisations including public and private services, to evaluate report and improve their environmental performance. Regulation (EC) No 1221/2009

6. IPP (Integrated Product Policy). IPP seeks to minimise environmental degradation, whether from their manufacturing, use or disposal caused by the products by looking at all phases of a products' life-cycle and taking action where it is most effective.

EU strategy for Sustainable Industries is thus a concept that on the other hand aims at creation of novel industries better suited to sustainable development and on the other hand on the eco-friendly products and novel eco-technologies for society. However there is no integrative process for the eco-industrial area design over the area life cycle. Current approach seeks only to regulate and audit not actually give guidelines for planning process using these principles, norms, guidelines and standards. Therefore the area and factory planning units are seldom aware of their existence. Planning solutions concepts and principles Sustainable manufacturing and Eco factory planning is a open complex problem. The general process in benchmarked ecofactory cases is a double loop learning process where in the first loop prevailing mind set is challenged with efficient meta synthesis process. In the second loop the new priciples are applied and learning starts.





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Figure General adaptive innovative process of ecofactory planning , (TUT, Kai Salminen) All benchmarked ecofactory cases the sustainable area, factory and systems are results of long evolutionary process that takes place across many scales and is `iterative' or `cyclic' in form. They have emerged rather than consciously planned. This corresponds to general system theoretical three stage process of synthesis- concepting and use phases. The application of the Three Stages system in sustainability design was first applied by Kikutake in Japanese ecocity planning as characterization of design as ka (order), the stage of “image”, which involved the meaning or the “essence of the ecocity” following kata (type) step, the stage of “substance of the ecocity” and finally katachi (form), or “sensory perception” of the ecocity morphology. The question about planning scales is an important issue for ecofactory planning. Traditionally the planning scales in urban industrial systems are different than the scales of sustainability systems and eco factory systems. Thus it was found necessary to introduce functional scales supported by design entity concept. Within IMs it was decided to use autonomous design entity concept. These fractal elements are defined as autonomous role based design units of SOHO (Self Organizing Holonic Order) same way as used in ecological integrity research. This useful notation allows the dynamic modularisation and modelling and thus flexible simulation over different cases and scales of a constantly evolving system.





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The studied collaborative multidisciplinary learning based planning approach of eco factories complex systems can be presented as iterative process based on nobel laureate Batesons learning categories. In Bateson's model, each level is a "holder" for all items at the next level down, thus planning goes beyond (Level 0) designing by rule-based actions and (Level I) learning that selects from options towards (Level II) learning how to learn that is including the process of creating new options if necessary. The basic approach of ecofactory design, planning and implementation processes studied was noted to be based on cyclic three stage collaborative process and be primarily quality driven. They aim at continuous co-evolution with public body- academia and industry for solving companies 21th century problems. Most benchmarked cases started from brown field approach, developing old plant. Especially Japanese overseas ecofactories were however green field approaches; developing a total new factory with new workforce. In both groups the process starts with scenario, vison and value based strategic synthesis work. It was noted that Japanese companies used much more time to this phase than their European and US counterparts. Synthesis process gathers information on three basic categories namely planning solutions and principles, sustainable innovations, clean technology and institutional norms and policies besides normal business and product portfolio based studies. In most cases companies are offered solution concepts by eco technology providers that may also represent their combinations where institutional demands are met by technology and novel planning. As both technological and institutional propositions offered to eco- factory design teams are generic as well as some of planned eco-factory system concepts they have to be adapted and their adaptation requirements must thus also be evaluated. The adaptive innovative assessment methods base thus on comparing the two intentions – the intention of own factory and intention of the offered eco- solution. Aim of planning teams is to make their co-creative discussion possible in order to facilitate learning, adaptation and innovations. As all heuristic approaches are based on experimenting also the eco-factory planning approaches need to support virtual experimenting by simulation against social, technological and economic needs. For that purpose was mainly used standard house of quality (HoQ), Quality Function Deployment (QFD) , Life Cycle Analysis (LCA) and Sustainable Balance Score Carding (SBSC) methods already tested and used within factory planning practices. The continuous reflective planning and assessment follows well-documented planning system logic (for instance Toyota and Denso use GD3 of good design, good discussion and good dissection). The first phase, “Good Design”, emphasizes robust design in early stage and it’s fit for documenting well formulated design intention. The second phase, “Good Discussion”, is a discussion based learning and problem solving process. The third phase “Good Dissection”, is a result analysis process for signs of inconsistent performance or transients that may indicate problems based on disposition analysis. Decision support characterizes every stage of this process while the following process of implementation of the chosen plan or policy involves this sequence once again. One must note that also the assessment is done co-creatively with system providers and partners.





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The selected cases for the benchmarking were pragmatic planning cases of sustainable eco-factories and their simultaneous adaptation to sustainable industrial work+life zones. These cases situated in important central city areas the design of which is a challenging multidisciplinary task attracting interests of many parties with different motivations. The planning and assessment processes used by teams were especially directed for studying synergy and synthesis possibilities and shared solutions. The benchmarking was enhanced by the study of used systemic problem solving methods like TRIZ that were used allowing innovative adaptation of various aspects within sustainable industrial areas hosting eco-factories, residential areas, office buildings and a variety of services. Modern design theories consider design as a filter process within cyclic knowledge flow. The eco- factory design systematics generally seems to recognize three cyclic dynamic filters in form of guiding documentation. First filter is intention document that guides the solution selection, second filter is the implementation document that guides the implementation, third filter is the knowledge filter that guides the design information re-uses, reflection, evaluation and reporting. The process of design and assessment is thus determined by the amount and type of knowledge available to the designer combined with decision guidelines. Therefore special attention was given on structure of knowledge flows and knowledge interaction in selected cases. Used methods were collaborative and ICT based to support simulation based virtual studies for complex cases. The structure, implementation and use of eco factories and used tools and approaches are discussed here against studied cases. Quality based evaluation, assesments and reporting systems Evaluation and search of the common used assessment approaches noted Japanese CASBEE- systematic as only comprehensive approach of aiming global assessment. This Japanese approach allows the fractal scales of global, country, city, area, factory and system. Thus it is the only current feasible approach for eco-factory evaluation in global context. It has good fit to evolutionary planning as it has suitable system theoretical methodological base and its tools and methods are freely available and already applied in various eco-industrial cases and in pragmatic use. It reduces the planning and evaluation to one efficiency factor E=Q/L. Especially the CASBEE for Cities is a evaluating the environmental performance of cities, using similar triple bottom line approach of "environment", "society" and "economy". Thus it allows to discuss city authoritives on eco-factory impacts in city context. It separates at all fractal levels the "negative aspects of environmental impact which go beyond the hypothetical enclosed space to the outside (the public property)" and "improving efficiency of eco-factory system" (Q=quality). With this addition assessment system is now capable of introducing a complete set of complementary tools for different purposes. The assessment can now be reduced to one measure E (solution efficiency) = Q (qualitative factor)/ L (quantitative factor). This can be further developed as E= QFD (Quality Function Deployment) /LCA (Life Cycle Assessment). This notion allows connecting on the other hand to city functions and on the other to factory systems as whole. Moreover it allows connecting functions and strategy system and functions to facts data. In some cases disposition analysis connects the





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system further to resources and risks. LCA was thus connected in Japanese cases with qualitative data from participative tools and interpretation into quantitative data collecting (using QFD and S-SQC (Sustainable Statistical Quality Control)) data to form the base of analysis. Thus evaluation of Re (resource use), Ri (Risks) and E (relative advance) formed solid base for comparison of concepts. The INS developed Q/L approach is thus done neutral to existing systems and allows their complementary use. The further discussion on normative “good, beauty and harmony” are subject to participative methods and included in the evaluation. Basis for modelling, testing and simulation The main aims with concept engineering and modelling processes in ecofactory planning ais to connect it well on the realm of model based virtual testing. Systems approach and the creation of multidisciplinary semantic models are needed when comparing complex seemingly different systems; sosio-technical, sosio-economic and environment. The structure, of system model is in Toyota case done using dynamic modularisation on role based autonomous structuring and the assessment using Batesons logical categories of learning and communication (5 why system) in conjunction of stack of decision levels connecting vision to facts . The properties of coherent decision support system for best practise ecofactory planning are thus:

1. All learning and communication levels of both tool and studied system are holistic and thus autonomous and interactive. The system and the assessment cannot be reduced to its parts without altering its pattern. Similarly behaves the assessment contexts at all levels.

2. The studied system levels are assessed as learning systems. Thus system and assessment "learns" through use against scenarios and as a cyclic reflective process.

3. The system levels are assessed using scenario input and test it against "system internal code". Thus, in the passage of iterations assessment seek to find not only requirement match but the adaptiveness and invention capacity of value offering.

4. Both the assessed system and assessment system are understood as a differentiated sub-whole within a systemic hierarchy. The "environment" in which both systems exist is also a whole system, a meta-system. As a subsystem, both the system's characteristics and operations are co-determinative components of the larger system within which it is an integral component (assessment and assessed system belong to same case).

5. As a whole, assessment faces inward, i.e., each system is assessed towards its internal steady state; as sub-whole, individual assessments of separate systems faces outward, responding to its assessment environment (a meta-system) in a necessary regression of relevant contexts.

As both the tool and studied area are systems the approach needs to base on general three step system design approach (synthesis-solution, development-intelligent, use). More specific the selection was set to evaluate intention towards concepts.





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Case example, ecoprofiling tool for ecoindustrial area design (AIDA project) AIDA (Adaptive Innovative Design process for sustainable Areas) project studied suitable best practices used in Japanese eco-factory planning. AIDA team developed a corresponding ecoprofiling tool for evaluation synergy and synthesis possibilities of city and factory. The same system fits to any factory internal case. Evaluation of the intent of assessed eco-industrial area system against context intention includes questions related to awareness, vision, strategy, identities, values, development, realisation and use level. In evaluation system the area vision is reflected against value offerings possibilities in contributing it as technical systems, source of energy, places and areas, logistics, ecology, already available resources in area, and service and business solutions. The ability of the initiative to support the chosen strategy is evaluated next. Strategy questions consists of various sub strategies of services (health and welfare, solutions of education and culture), management of diversity, competence, safety, economic structure, employment, house building, unifying of urban structure, linking to sustainable forms of traffic and training for readiness for change and competence of personnel. Identity level means structuring to autonomous design entities (artefact) allowing adding or removal of various value offerings to and from the plan for comprehensive analysis of influence in this context. Division of the identity questions is equivalent as in questions concerning about the vision. How well the value offering can take the requested role (identity) is assessed. In this approach, the values of the case city are discussed against the values of value offerings. Development and realisation capability of is analysed from the information and experience point of view. Focus is on available information of the development and realisation, experiences of similar initiatives and test results.





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Figure Tool structure for learning based iterative assessment, improvement and decision support Awareness means how well the initiative is able to deal with 21th century problems. Questions of use include issues within available information from use perspective, risks, maintenance, demolition/disposal and recycling. In case of available models testing is done. It must be noted that the levels are no cascading but rather connecting abstract to real within same base system. The level system allows connection of virtual and real, present and future and directs the collaborative multidisciplinary discussion towards solving possible inconsistencies. Evaluation of the feasibility using integration model Evaluation of feasibility includes questions related to sustainable development, resources and risks. Sustainability in manufacturing has been within EU 7 Manufuture model divided in social, technological, economical, ecological, political and legislation aspects (STEEPL), Sufficiency of the resources and possibilities of the realisation are estimated from the six points of views): conformity to law, availability of process to cover the entire life cycle, technological premises and sufficiency of the network and information to realise the initiative. Evolutionary success factors of a successful ecofactory that need special processes and connection to industrial ecosystem are knowledge, capabilities, collaboration and





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competences affecting directly the adaptability, maintainability and usability over area life cycle in changing context. Finally risks are evaluated towards same system. Concluding remarks Pragmatic existing eco-factory cases used a robust evolutionary planning system for eco-factories planning and consistent set of methods to manage new technology, institutional norms and new planning principles. Especially in early planning stages the collaborative process proved to be a challenging task for all evaluated cases. At first it seemed that the tools for eco-factory planning exist readily in the market, and it is a simple task of collecting a suitable set. This proved not to be the case and the sessions with planning teams pointed out the need of a double loop meta process of first addressing mind set change and then applying new ideas. The demand for addressing class III wicked problems solving guided all the interviewed teams to use learning based approach. Also the need for addressing dynamic interacting systems with analogy to CAS (Complex adaptive Systems) called for use of system approach. It proved that actually only few tools like CASBEE, HoQ (House of Quality), SBCS (Sustainble Balanced Score Carding), LCA(Life Cycle Analysis), TRIZ and S-SQC (Scientifical Statistical Quality control) and TQM (Total Quality Control) are readily available.

Figure Value offering classes , professor Ueda, Japanese ecofactory case. Also it may be noted that the most evaluation cases start as Class III and proceed towards Class I through iterations and learning close to selection. It can thus be noted that this kind of assessment is not analysis but a synthesis and learning problem, For this purpose, the process integrates values such as ecological value, pragmatic value, economic value, psychological value and meta-knowledge value.





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Aspern Wien, novel innovative eco industrial area concept, Branding the location. http://www.aspern-seestadt.at/ Aspern Vienna’s Urban Lakeside is one of the Europe’s biggest next generation work+ life urban development projects. It will combine many things: business location, manufacturing, university research center and recreational area, urban life and nature, modern architecture and alternative energy. Within the area are Opel powertrains eco- factory. Also its suppliers, innovative compamies and service providers are building their new facilities supported by TU-Vienna and research organization rTUB in next generation innovation quartier. Apart industry and 20 000 workplaces the area accommodates 20 000 residents to a prominent eco-industrial zone. This is an city of Viennas investment in the future style of urban living. The focus is on companies and investors that are looking for an urban and vibrant environment. Aspern also seeks industries and participants whose interest is in sustainability services – for example companies that are involved in healthcare and sports or in life sciences. The motto for the Urban Lakeside is “The Full Life”. What does this mean for you? Rainer Holzer: This is all about joining forces and seeking synergies but at the same time giving room to individuality. Industry and supportive companies share certain services, such as ICT, HRM services, logistics, production facilities, workforce, design offices, trade offices, facility services, energy production, property management companies and cooperative child care. Claudia Nutz: “The Full Life” means making everday life worth living. People will not only enjoy living and working in aspern but will also spend their leisure time there. Future urban living entails an “open-minded city”. It fills a whole range of different functions. We know that a building or area designed for only a single specific function can seldom survive in the long term. Dr. Robert Kremlicka,Vice President A.T. Kearney: “ Naturally the geopolitical location plays a leading role in aspern – but it is not the only thing that influences the investment decision. For many international companies the choice of their location depends primarily on the potential to develop, the economic factors involved and security in planning. Then of course there are hard facts like logistics, labour costs, a qualified workforce and taxes. There are still many complaints about the bureaucracy but that has improved in recent years. Finally, everyone loves the much-praised quality of life in Vienna. Keyword “Vienna as a hub for Central and Eastern Europe”: where is the trend heading? For years many companies have relocated their Central European holdings to Vienna. Quality aspects such as strategy, branding, marketing, sales or controlling are key drivers – just like research and development. The trend clearly lies in top quality jobs with the best-trained employees who enjoy working in a multicultural environment. Vienna benefits from





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this because it represents quasi a microcosm of Central Europe. That is also an advantage for recruiting. What are employees looking for in their place of work and living? The environment should cater for all their phases of life and needs. Young university graduates or skilled workers value a dynamic career environment. The offered leisure activities, good international traffic and travel links also play a major role. Young families need security and good access to apartments, schools and health care services, whereas older employees value the ability to be able to plan their retirement. A good business location should take all of these factors into consideration. Renate Brauner Vienna’s Vice Mayor and Deputy Govenor, Executive City Councillor for Finance and Economic Affairs told that aspern is the first of new type of work+life sustainable industrial areas in Vienna. With central location you can take the metro to Vienna and the urban express train into the centre of Bratislava. At the same time you are just 15 minutes away from the Vienna International Airport and 30 minutes away from the Bratislava airport. This means excellent logistic connections. Simultaneously we strengthen the quality of life: in five minutes you are in the Danube Wetlands National Park. How will Vienna continue to develop as a business location? Vienna is a growing business location. The number of international companies and headquarters for Eastern Europe locating and relocating their business in Vienna has virtually boomed in recent years. As quarterly figures confirm, this is an ongoing trend. We are experiencing strong growth in Vienna’s economic development. It is clear that we cannot and do not want to win the competition for a top business location as the lowest bidder with the lowest wages. Instead we must and will be the best! And we will do this with high quality and innovative products and services and a top qualified workforce. Vienna already has more than achieved the Barcelona goal of spending three percent of GDP on research and development. But that is not enough for us. The goal is to make Vienna the research and knowledge capital of Central Europe and we are on the way to realising this goal. The investment into Vienna’s strong economic key drivers is definitely paying off. Research establishments particularly value the qualified workforce. aspern will therefore also be an attractive business location for research and technology.. The industry has been collaborating in planning. “The former Aspern airfield offers the Viennese economy the opportunity of an innovative business location of international standards”, emphasises Brigitte Jank, President of the Vienna Chamber of Commerce. A clearly defined phased development plan will be consistently put into practice. It will be the starting point to attract companies as well as research and development establishments to the campus-like design and to the many advantages of the business location. aspern is a significant key project for Vienna’s economy. The construction of the first building of the Urban Lakeside, aspern IQ, started this spring. The first sod for the geothermal power station that will harness hot water from up to 5,000 m depth for the sustainable, resource-saving energy supply of the Urban Lakeside will also be dug in late autumn 2011.





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A research and development location aspern IQ is a eco-factory/eco-office premise being developed by the Vienna Business Agency as an impulse generator for research- and technology-oriented enterprises in the Urban Lakeside. This innovation quarter offers young companies, office pools and other enterprises concerned with readying a variety of technologies for series production an efficient infrastructure with multi-functional eco-factory, eco-office spaces for applied research as well as attractive office premises. In the first construction stage, approx. 8,000 sq m of useful floorspace will be created by late 2012.

Figure aspern IQ, innovation building for sustainable production technology Technology and know-how transfer are factors that determine the success of R&D companies; thus the first tenant of aspern IQ will be the technology transfer company research TUb. This subsidiary of Vienna’s renowned University of Technology works at the interface between enterprises and universities and is charged with networking these partners for mutual benefit. For the companies settling in the Urban Lakeside, research TUb offers genuine added value, as small and medium-sized enterprises gain access to scientific expertise and can thus innovate their products and services. This entrepreneurial environment is also suitable for university spin-offs. The initial focus will be on two highly future-oriented issues: energy, environment and production technique. Research findings on alternative energy sources and modern production techniques are to be made accessible to enterprises in a targeted and effective manner. Innovative solutions will be equally tapped in the urbanistic project for aspern Vienna’s Urban Lakeside, which renders the location particularly attractive for R&D companies





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Eco Model City (EMC) concept, next generation industrial area, Japan http://ecomodelproject.go.jp/en/ Japan “New Growth” strategy; The key to creating demand is the pursuit of a "problem-solving" national strategy. We will seek to create new demand and jobs by tackling head-on the pile of new problems faced by the economy and society and presenting solutions for them. Based on this idea, the New Growth Strategy has identified such growth areas as "green innovation," "life innovation," "the Asian economy" and "tourism and the regions." We will also implement strategies related to "science and technology and information and communications technology," "employment and human resources" and the “financial sector,” which are areas essential to supporting growth. Green cities initiative Larger environmental "future city" initiative. This latter policy regime carries on from the "eco-model city" program that was put in place in the summer of 2008, and has helped environmental award-winning cities like Kitakyushu in Fukuoka Prefecture deepen their green business and expand their overseas sales. Kitakyushu last year became the first Asian city for the Green City Program of the Organization for Economic Cooperation and Development. It is also exporting its expertise on recycling to such Chinese cities as Dalian and Qingdao. And it is expanding its reach in the global water business that in 2007 was assessed at 36.2 trillion yen (US$440 billion) and is expected to reach 86.5 trillion yen (US$1.05 trillion) in 2025. Kitakyushu's water-management business is finding purchasers in Cambodia's Phnom Penh as well as Vietnam's Hai Phong. The future city policy that Kitakyushu is part of was adopted as one of the 21 national strategic projects of the "new growth strategy" passed on June 18, 2010. This initiative is not simply for green growth; it also includes measures for dealing with rapidly aging societies and disseminating policy lessons learned from within the eco-model cities. The initiative seeks synergies among these categories as well as from among the recipient cities. On December 22, 11 cities were selected as eco-model cities. Five were outside of Tohoku, the area hit by the earthquake. These five include Kitakyushu and Yokohama among those previously designated as eco-model cities. But after March 11, 2011, the national authorities expanded the group to include six from the affected area. These six cities include hard-hit Minamisoma and Kamaishi. The inclusion of these cities in the larger initiative indicates that the government is drawing on outstanding successes of the eco-model city initiative, and expanding it to devastated areas. These successes include the realization of targets for such aspects as recycling, international engagement, and the demonstration of energy management systems. Regeneration of devastated cities to renewable centered smart cities The core devastated areas are being rebuilt as renewable-centered smart cities with funding from the 19 trillion yen fund for reconstruction. Japanese policymakers clearly see including them in the overall green-city project as a way to encourage application





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of lessons learned from both the cities initially involved in the eco-city project as well as those that are trying to rebuild from the tsunami. It is a means of speeding the dissemination of policy learning among local governments in general as well as to overseas markets. Japan is on the way towards low-carbon society. The electricity price increases, resulting from costly purchases in international markets, and uncertainty of supply due to closing down 54 nuclear plants will exacerbate Japan's already grim problem of hollowing out its manufacturing base. Japan's rising yen, shrinking population, huge public-sector debt and other handicaps already pose significant disincentives to manufacturing business investment. Thus rapid revitalizing actions are due. One of those is the Eco Model City project launched 2008. There are three basic reasons first the actions support the birth of eco innovation based new business and help revitalizing Japanese economy, secondly the climate change effects are hard for Japan and nuclear power plants are to be closed, third sustainable consumption is increasing globally demanding “green innovations” in supply chain. Expectations from Low-Carbon Cities for Environment-Driven Growth The 20th Century brought a common understanding to the global community that environmental issues of global scope such as global warming, resource depletion, and biodiversity loss were becoming new constraints on growth. Expectations from governments and businesses towards new markets and businesses means public and private sector drive for:“Green Innovation” Under “environmental constraints” as a new social trend, Expectations as the driver of economic and job growth directed toward: Green Innovation

1. “System Innovation” (F.W. Geels, 2005) In transport, communications, facilities, energy, and other resources is needed in the socio-technical systems,and not only by way of individual technological breakthroughs.

2. ”Green Growth Strategy” (OECD, 2001) states that the market mechanism is insufficient to construct an environmentally efficient production and consumption system. Policies to raise consumer and producer awareness are necessary in addition to appropriate regulation, as wellas price signals.

3. Green Innovation is: a growth area where Japan should play to its strengths as an “environmental power” and needs comprehensive policy packages encompassing system design and regulation

4. Propagation and promotion of environmental technologies, expanded use of renewable energy sources, etc.

5. Smart grid, Japanese-style 6. Thorough recycling of industrial and domestic resources 7. Promotion system for environment-friendly lifestyles 8. Systematic renewal of industrial facilities and building stock 9. The ”FutureCity” (comprehensive innovation in the city) as one of the 21

National Strategic Projects





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Mid to long term goal for Japan (60 -80 % cut nationally by 2050).Draft proposal by Minister of Environment in March 2010: “a cut of 25% in 2020, 80% in 2050”. Strategy:

Development of innovative technology and wide adoption of existing leading technology (Technology development and popularization of renewable energy and energy saving)

Actions to move the whole country toward decarbonization (emissions trading, tax reform, transparency)

The power of regions: Eco-model cities since 2008 (United efforts to decarbonize by cities and communities)

One of the main industrial partisipants cluster in EMC are eco innovation providers like Panasonic, Hitachi, Mitsubishi and major OEM manufacturers like Toyota and its support for SMEs to acquire Eco Action 21 certification for synergies. The tax breaks in the international strategy zone are focused on lowering the corporate tax in order to foster competitiveness in international markets, while those in the regional revitalization zones center on deductions for individual investment in enterprises that are part of the strategy. Conservation: a different answer Greater energy efficiency and conservation as well as creating big incentives for the rapid deployment of renewable power. There were startling advances in conservation and energy efficiency last year, driven by compulsory power reductions as well as subsidies and other encouragement. For example, LED (light-emitting diodes) based lightning had taken a 49.4% share of the market. Falling prices through this mass production also bode well for Japanese electronics makers hard-pressed in international markets by the strong yen. The power-consumption data suggest policy support for efficiency had significant effects. The figures of the Federation of Electric Power Companies in Japan for the summer months of 2011 show total nationwide electricity sales, relative to the previous year, down 5% in July, 11.3% in August and 11.4% in September. Data for January 2012 indicate that power generation was down 3.7% compared to January of 2011. Conservation and efficiency were already a growth industry before the nuclear crisis. But the new, unforeseeable spurs to innovation and diffusion may see Japan overshoot "New Growth Strategy" targets for 2020. These were established in June 2010, and aim at a "green innovation" market totaling 50 trillion yen (US$625 billion, or 10% of 2011 GDP) and 1.4 million new workers. One example of the growing scale of the conservation incentives is that 80% of 104 major Japanese firms planned to reduce power purchases from TEPCO. More than half (54) of the firms declared that they would invest in conservation, and 14 of the 104 replied that they would deploy some form of in-house sustainable power-generation capacity. To respond to this increasing demand for conservation, firms are rushing energy-management systems to market. Toray Engineering was opening sales on its "Eco-Plant EMS", an energy management system for use in factories. The system in on-site tests achieved a 30% power reduction of air conditioning and a 10-20% reduction in factory power use overall.





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Moving to renewables Moreover, Japan has increasingly robust policies in place for diffusing renewable alternatives. In particular, its feed-in tariff - a long-term subsidy guaranteeing producers a certain rate on the supply of electricity - has been expanded from solar to include wind, biomass, small hydro and geothermal. Price setting and periods of guarantee are being determined by a five-member consultative committee that held its first meeting on March 6. The pro-renewable majority on the committee suggests these crucial elements of the policy will be robust, perhaps driving rapid diffusion and concomitant price declines in this market as well. Marubeni, NTT, Mitsui, and a host of local governments and other organizations are already committed to large-scale mega-solar, wind and related projects. The most recent data indicate that the total of mega-solar projects announced over the past year is twice what the utilities were planning to install up to 2020. This is strong evidence of how much low-hanging fruit there was in Japan, on renewables. Decentralization Local governments have been particularly aggressive in responding to the crises driven and exacerbated by the Fukushima shock. The effective collapse of national energy policy has seen many rethink their growth strategies and revamp their intergovernmental organizations, both among themselves as well as between them and the central government. The Fukushima shock was profound for most local governments due to the existential threat to power supplies as well as the central government's abysmal crisis management in the weeks following the disaster. One of responses to this threat from centralized, overly complex energy institutions dominated by vested interests has been to increase local resilience and autonomy via decentralized power generation. Besides companies also cities like Tokyo, for example, determined that it needed its own generation capacity in order to maintain subway transport and other critical functions in the event of an emergency. So it is installing gas-fired power and a small-scale smart grid separate from the TEPCO utility. Also, Osaka City and Osaka Prefecture have banded together to launch an energy commission. They are explicitly committed to ramping up conservation and renewables in the face of the central government's immobilism. Kobe and Kyoto have joined Osaka as partners in the effort. Other prefectures, including Kanagawa and Saitama, are also explicitly aiming their policymaking at efficiency and fostering an energy shift to renewable power so as to enhance self-reliance, employment and business opportunities, as well as international competitiveness. As of late February, local governments' fiscal 2012 initial budget compilations have a combined 52 billion yen (US$650 million) investment aimed at fostering renewable power projects. While not tallied and energy efficiency are many multiples of the budget for renewables. The central government's feed-in-tariff adds to these kinds of generalized incentives to enhance local resilience.





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Eco-Model City Initiatives –Toyota City Being the home of the world's leading automakers, Toyota city has developed as an industrial city. It also has the aspect of forest city whose seventy percent area covered with the forest. The city will realize the “Hybrid-city Toyota,” in which human, environment and technology grow together, by demonstrating new lifestyle in future through the activities including the development of “Low-carbon Model District” as the showcase and the place to experiment of advanced environmental technology, the utilization of the next-generation eco-car, and so on. “The City of Toyota, a city of radiant people, environmental consciousness, and dynamic growth”

Population: 423,940 (as of August 1, 2009), Area: 918.47 km2 Value of shipped manufactures, etc.: No. 1 in Japan Consolidation of surrounding communities has resulted in 70% of the city’s

area being forested. Industrial roof top gardens and green spaces. The industrial city coexists with depopulated areas in intermediate and mountainous areas

Low-carbon Urban Development Initiative: Popularizing Nextgeneration “Eco-cars” and robot vehicles that use natural energy. Zero-carbon driving + Low-carbon driving, Solar recharging station, plug-in hybrid vehicle (PHV) Urban area Mountainous area

Subsidies for solar installations Establish Toyota City Environmental Administration Network and promote measures in medium and small factories through an integrated implementation of technical advices by large companies including Toyota, city subsidy, and administrative guidance by Chamber of Commerce and Industry. Mandate medium and small factories to disclose their emissions and ensure thorough goal management.





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Figure Toyota City action plan

Eco-Model City Initiatives –Sakai City (Osaka), Low carbon concept Being so-called the city of industry with coastal industrial area, the city has accumulated various innovative environmental industries recently including solar panel factories or the power generation with recycling material. Making the most use of the enterprising spirit which is shown up in the phrase “Everything are derived from Sakai”, the city aims to achieve the “Cool-City Sakai” in which “comfortable life” and “city of bustle” go together by the cooperation among the businesses, academic sector, citizens and public administration. • Outline: Population of approx. 835,000; total area of 150 km2 • Some 60% of GHG emissions originate in industrial sector (2005). • Aiming for a 15% reduction of greenhouse gases by 2030, and 60% by 2050

(compared with 2005). • Striving to become “Cool City Sakai,” a low-carbon city, by transitioning to low-

carbon industry, • developing sustainable public transportation, and creating environmentally

friendly lifestyles.





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Transition to Low-Carbon Industry Implement pioneering initiatives (installing some of the world’s largest fuel cells, using LED lighting, etc. at all plants) at a new industrial complex to be built in the Rinkai coastal area. Provide information to surrounding communities and other regions in Japan and overseas, the initiatives underway in the Rinkai coastal area taking the role of showcase.

• Conclude a Cool City Sakai Support Agreement (tentative name) with businesses.

• Additionally, build the Sakai Low-carbon Technology Strategic Center (tentative name) to encourage the development of technologies that contribute to energy and resource conservation as well as the use of existing state-of-the art technologies.

• Power generation at a residential waste processing facility • Bioethanol plant (wood waste) • Hydrogen plant (using LNG-powered heating and cooling) • LNG station • Power generation at a waste wood chip incineration plant • High-efficiency LNG thermal power station • Developing a low-carbon industrial complex • Enhancing partnerships between businesses • Transportation network friendly to bicycle, • Community bicycle system • Toward Sustainable Public Transportation • Creation of Eco-Culture • Preserving and creating “cool spots”

Facilitate independent action by industry, government, academia, and residents to bring the natural beauty of trees and water to the city by forming the Sakai Green Project to preserve and create nature, for example in the form of burial mounds, reservoirs, and the Kyoseino-Mori plan. Create a system whereby the city recognizes residents and local businessmen who have rendered distinguished service, for example through their efforts to achieve a low-carbon society.

• Put the flexible ideas generated from local youth to use through “Sakai student idea bank for urban development (tentative name)”

• Drawing on the wisdom of residents and local companies • Developing urban solar power plants:Popularizing solar power generation • Bring solar power to 100,000 households (one-third of all households in the

city) by the year 2030.

Eco Model City Kamaisha, From devastated tsunami area to world class eco industry area http://futurecity.rro.go.jp/english/forum/kamaishi.pdf Kamaisha was one of the cities suffered severely on earthquake and tsunami. Being industrial city and base of Nippon Steel and several manufacturing sites it demonstrated astonishing capability not only to assume production quickly but also revitalize at the same time.

http://futurecity.rro.go.jp/english/forum/kamaishi.pdf





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Figure Kamaisha Industrial recovery after tsunami, Sustainable capability. Kamaishi City is situated in the south-eastern section of Iwate prefecture, in the center of the Rikuchu Coastline National Park. Making use of the good natural harbors found in this ria coastline, the fishing industry has played a central part, and coupled with its history as the birthplace of Japan's modern iron industry, Kamaishi City has developed as a "City of Steel, Fish, and Tourism." Nippon Steel’s Kamaishi works is modern eco-factory that improves the supply ability of high grade products for automobile. The works increases high end products including wire rod for steel cord and cold heading wire. The works improves the advanced technology to offer high valued products in order to reduce the users’ processes while the works improves the supply chain including ocean shipping logistics. The works also reduces variable and fixed cost through various efforts including better yield for high valued products and 50% target for jointed billet endless rolling for international competitive wire rod production base Ministry of Economy, Trade and Industry held meeting on automobile industry strategy for Japanese economy growth. The members including president of Toyota Motor sought common materials and parts to improve the supply chain along with the cost saving. The members include Toyota’s president Akio Toyoda and officials from automakers and automotive parts makers and archers from universities. The members try to improve the competitiveness of the suppliers with Japanese base by standardizing the parts, materials and processes for lower supply risk in emergency period and for lower cost structure. METI expects the effort could avoid offshore shift of the suppliers. The standardization would benefit Special steel makers when they have to make products with many specifications depending on the parts and users.





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Figure Kamaisha Eco Model City plan





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Figure Eco City Kamaisha

CSM Hotel, A novel innovative eco-factory concept. The target for the CSM-Hotel project is to develop a functioning production concept in the new industrial reality and to investigate new business opportunities brought by that concept. The CSM Hotel is a sustainable and quickly adaptable production unit of a new generation for small and medium-sized industries as a respond to the swift changes in the markets. The solution combines the idea of ecological manufacturing as well as agile production by offering the ecological infrastructure, ICT and automation solutions, which require specialization, as services of the hotel. Thus, the integrated solution gives the users of the network a chance to focus on their own core competences, but also an opportunity for efficient cooperation and innovative operations. CSM Hotel concept basis on Eco Industrial symbiosis (IS) engaging “traditionally separate industries in a collective approach to competitive advantage involving both physical exchange of materials, energy, water, capabilities, competences and by-products and sharing knowledge, risks and systems. The keys to industrial symbiosis are collaboration and the synergistic possibilities offered by geographic proximity and shared ICT and global network. There are two approaches to creating industrial





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symbiosis (Chertow 2007). Planned ‘eco-industrial park’ model includes a conscious effort to identify companies from different industries and locate them together so that they can share resources across and among them. Self-organising symbiosis model emerges from decisions by private actors motivated to exchange resources to meet goals such as cost reduction, revenue enhancement, or business expansion. The CSM Hotel can be located in the proximity of a main supplier, integrated into the supplier’s systems or in the center of a city gathering several small and medium-sized entrepreneurs into shared facilities. It can also operate as a network of regionally scattered hotels. The goal is to create an all-around efficient production concept with a supportive technological solution and a business model, and thus combine both sustainability and agile production. At the same time, the project promotes talent to create and maintain similar environments globally. In the end, the solution is in itself firmly based on the strong Finnish talent and knowledge on flexible manufacturing, automation and ICT. The participants of the project:

• Tampere University of Technology, Department of Production Engineering • Tekes • Fastems • Sandvik Mining and Construction • Finn-Power • Tieto • The Federation of Finnish Technology Industries • Visual Components • Ylä-Savon Kehitys

The mind set behind CSM-Hotel is the integrated view of manufacturing and evolutionay economic model.

Figure CSM-Hotel concept basic. Total integrated view of manufacturing System oriented partner companies that represent different manufacturing strategies operate on bioeconomic principles that included the following, among others:





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Survival. The survival problem is context-specific => creating solid business environment on win-win base, Resources, and access to relevant information about how to capture and utilize it. Shared and complementary resources form competitive manufacturing base. The time and energy that any production system has available is always limited and must be utilized relatively efficiently -- or else. Multiple business concept reduce the risk of resource inefficiencies. Ecosystem competition and interdependency, co-operation, symbiosis, and the division of labor. Efficient mutually benefiting collaboration models Adaptation -- and both competition and co-operation are subsidiary phenomena. They are contingent "survival strategies." In fact, many companies have practiced in the art of avoiding direct competition. Efficient support system and resource pool bring necessary agility. Synergy principle a way of conjuring economic leverage from an almost endless variety of non-linear co-operative effects. Innovation environment through complementary resources. If none of these principles sound like conventional economics, it is because our economists have erected a science that does not bear much relationship to the ecosystem fundamentals.

IMS, Modern view of manufacturing, new concept for next generation manufacturing Modern view of manufacturing as base for ecofactories was grounded in 1990 international IMS (Intelligent Manufacturing Systems) – project. It defined manufacturing as "product realization," which encompasses all of the processes, intellectual and physical, that are undertaken as an idea for a product is hatched, refined, turned into design data, analyzed and simulated, cost-analyzed, turned into process plans and instructions, the parts made, assembled, tested, and shipped, the factory designed and operated, products made and delivered, used and maintained, recycled and reused customer responses factored into the next design, and so on.





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Figure 1 Modern view of manufacturing; integrated closed loop system IMS sustainable manufacturing paradigm IMS seeked to replace the prevailing manufacturing paradigm, with its heavy emphasis on competition and use of mediocrate or even unskilled workers, with a new paradigm that strikes a sustainable balance between competition and cooperation, demanding processes and excellent skills thus it addressed economic growth into the 21st by “renaissance in manufacturing”. Sustainability issues as part of 21th century manufacturing paradigm of IMS Sustainability concept, the so called triple bottom line was introduced by Bruntland committee with aim to get balanced view of economic, ecologic and societal issues to be solved as interlinked systemic problems. Those seemingly incompatible systems were so far addressed by separate disciplines suggesting solutions that were seen causing each other severe problems not solvable within themselves. In order to find consistent approach to fit sustainability demands to manufacturing Japanese research (Yoshikawa , AIST) initiated IMS. Yoshikawa introduced the concept of systemic sustainable evolution indicator, which takes as its denominator the disturbance imparted to the global environment and its numerator as the degree of benefit imparted to the inhabitants of the globe. ( E= Qualitative benefits/ Loads as disturbance). This basic approach sets the base requirement of addressing simultaneously qualitative improvements in terms of sustainability aspects and the burden or load on the environment, economy and social systems. Sustainability efficiency in manufacturing can thus be reduced to one figure given by the ratio: (functional quantity of a product and service) / (disturbance imparted to system) E = Q/L= QFD/LCA. This ratio is also an evolutionary factor that can be used when evaluating new innovations against previous generation. This approach has been developed further to norms like Japanese CASBEE and Industry internal. For example Toshiba and Toyota. Toyota used the “factor 4 “-thinking first time within G21 new car model for 21th century leading to Prius and its factory design leading to new Takaoka and Tsusumi eco factories. G21 idea was to develop two times better value offering for customer with half the load to environment. Same idea is used in all





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Toyota companies for instance Toyota Houses. Q/L forms also the basis of development at Toshiba, Panasonic, Sharp etc.. The term "Q = functional quantity" can be approximated by the amount of product activites system described in holonic way. Also "disturbance" can be defined as the system effects of the product over its total life cycle, beginning from design and extending through manufacture, use, inverse use and disposal. Basic tools are customer QFD (Quality Function Deployment) and LCA(Life Cycle Analysis).

Figure Eco- efficiency indicator, Toshiba, Evolutionary system of relative advancement. Systematic Study of Manufacturing and constant learning concept for manufacturing in eco factories (Yoshikawa) Manufacturing technology is traditionally divided into the categories of physical processing, information processing, and human organization. The related manufacturing knowledge is created in research and in companies. Knowledge was within IMS put in four interlinked categories; emergent, precompetitive, competitive and post-competitive knowledge. Re-synthesis of manufacturing technologies for digital manufacturing was taken as a subject for post-competitive research by an international business/academia partnership. IMS utilizes virtual manufacturing that synthesize the actions of manufacturing (process/knowledge)-including all elemental technologies (facts/media knowledge) required to produce a single product. This new "process theory," approach which applies fact theories to create a realistic process as system. In the sense that a process theory explicitly includes a consideration of time, it is of a fundamentally different form a fact theory and essential in considering environmental spatial and time related impacts of manufacturing. The tackled problem was that the knowledge used to produce such a process is usually only expressed in the form of a manual or "how to" book and thereby lacks generality and





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thus adaptability. Thus modeling and simulation based dynamic expert systems allowing constant learning were considered vital. Similarly all automated islands-type solutions were considered causing problems that are not solvable within these isolated sub optimizing closed systems.

Problem of aging society and lack of skilled people, ALPS concept for team based learning for inovative manufacturing . All developed countries are facing fast democrafic changes regarding their human resources. For instance Japan is calculated to lose its population from present 128 milj to 87 milj until 2060. Sustainable manufacturing paradigm solving 21th century problems requires the participation in the manufacturing industry of talented personnel having innovative ideas regarding not only technology, but also social and economic structures as well.

Figure System designer and project leader, future engineering challenge of sustainable manufacturing, Keio University





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Figure Balanced “T” concept of developing future based engineering skills, University of Kentucky, To bring back intelligent and ambitious young men and women into these areas, IMS seeks work out a concept to enhance the attractiveness of the profession and provide an environment in which hard work is justly rewarded. Also the capture of the manufacturing skills and corresponding education are addressed.

Figure Teaching Factory Pilot Initiative, Manufuture (adapted, Minna Lanz) Active Learning Project Sequence (ALPS) is a novel approach of Keio University for





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sustainable manufacturing of innovative products, services and other systems using system design and management approaches developed in collaboration among Keio University, Massachusetts Institute of Technology (MIT), Stanford University, and Delft Unicersity of Technology (TU Delft). ALPS teams examine products and services related to a project, define the problems, learn the requirements of the interested parties, set system requirements, design concepts, propose architecture, repeatedly test and prototype, and then verify recommendations. ALPS participants gain real-life experience in the design of totally new business models and innovative systems. ALPS Symbiosis and Synergy learning. Students of ALPS will use the latest design thinking and systems engineering approaches to propose novel concepts for symbiosis and synergy needed for eco inovations. In systems engineering, symbiosis and synergy can mean a construct of different elements working together to produce results not obtainable by any individual elements. The elements can include products, services, people, facilities and policies required to produce system-level results. The value created by the system as a whole, beyond individual and independent contributions, is primarily from the relationship and interaction among the elements (Blanchard, B., 2004)

Figure Education of next generation engineers, Keio SDM





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Resource use (Re), 3R (recycle, reduce, reuse) concepts Within IMS sustainable manufacturing concept is a closed system. Thus resource use Re was divided to 3R (recycle, reduce, reuse) concepts as consideration base. The ultimate in sustainable manufacturing can be called the satisfaction of new functional demands through the recycling of current resources without replenishment with any new natural resources. Especially in resource poor countries like Japan this consideration is of growing importance. IMS established "venous-type" production systems that take in artificially produced items as raw materials. Such "reverse factories" are on the same general scale as conventional factories and, technologically speaking, require "high-tech" solutions. While the reverse factories (inverse manufacturing) are most common in Japan Toyota introduced the first overseas reverse factory CTIS Manufacturing, for the remanufacture of compressors in US in 2002. Hitachi launched in Netherlands new reverse factory for hydraulic components for crawler excavators - such as main pumps, and travel and swing motors - as well as axles and transmissions for wheeled excavators and wheel loaders, that are now available to order on half price to original spare parts. Offerings will extend to include a wider range of components on an ongoing basis. Similar plants are also within Fuji-Xerox. Design for environment (DFE) concept Sustainability is the second mission of IMS. It started with discussions on concurrent engineering based Design for environment (DFE) system concept. The concept has permeated many functions that were once quite removed from the design process itself. DFE is the systematic consideration of design performance with respect to environmental, health, and safety objectives over the full product and process life-cycle [J. Fiksel, Design for Environment, New York: McGraw-Hill, 1996]. DFE takes place early in a product's design or upgrade phase to ensure that the environmental consequences of a product's life cycle are understood before manufacturing decisions are committed. It is a combination of several design-related topics, including disassembly, recovery, recyclability, regulatory compliance, disposition, health and safety impact, and hazardous material minimization. The DFE concept fails to introduce synergies of production innovations and design innovations. It unfortunately fosters the idea “design anywhere- manufacture anywhere”. As a complex, multi-disciplinary, multi-functional activity, the successful implementation of DFE calls for commitment from upper and mid-level management as well as cross-functional interaction (e.g., between design, manufacturing, marketing, sales, accounting, etc.). DFE requires the coordination of several design- and data-based activities, such as environmental impact metrics; data and data management; design optimization, including cost assessments; and others. Metrics for measuring environmental performance and/or impact must be determined, information flow between departments needs to be supported, and an infrastructure to carry out DFE-based decisions must be established. Failure to address any of the aspects will likely limit the effectiveness and usefulness of DFE efforts. It was first introduced as part of a several roadmap process, like 1996 Electronics Industry Environmental Roadmap





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DFE tools and standards Firms that are currently matured enough for using environmental management standards generally refere to using ISO 14000 as base. It should guide fulfilling customer expectations with products that use less energy and require less maintenance, and comply with regulatory efforts, especially in Europe, with improved use of recycled materials and improved recyclability. To date, most efforts have focused on developing Design for Environment (DFE) tools and software for specific products and sectors for all stages of design. Linking DFE with DFX system and product life cycle During conceptual design, material check lists or justification schemes for high impact materials and matrix assessments that consider multiple impacts for each life cycle stage are common DFE tools. As materials and processes are selected during product embodiment and detailed design, software such as IDEMAT for materials selection, CAD-based product disassembly tools such as Boothroyd and Dewhurst’s DFE tool, and Life Cycle Assessment (LCA) software are used to analyze the environmental impact of product designs. In fact, the current trend is to develop tools and software for specific products and sectors for all stages of design. Because of the need to balance environmental concerns with other DFX requirements, DFE’s life cycle view has made explicit linkages to supply chain management, pollution prevention and environmental management standards (ISO14000). As such, many companies have integrated related DFE efforts into their business models. Examples include Supplier Screening at AT&T, Supplier Training at General Motors, Supplier ISO14000 Registration at Ford, 3M’s Pollution Prevention Pays Program, and Xerox’s Asset Recycle Management Program. Interestingly, as Rounds and Cooper (2002) investigate the development and use of DFM(Design for Manufacturing) and DFE design requirements in product design. They find that most of the DFM requirements also apply to DFE and vice versa. Similarly, improvements in material and energy efficiency reduce raw material and energy costs as well as materials and waste management costs. Lifecycle Analysis - Life-cycle analysis (LCA) concept As DFE was studied further its linkage to LCA came clear. LCA (Life Cycle Analysis) is a family of methods for systematically assessing material use, energy use, waste emissions, services, processes, and technologies associated with a product over its entire life. ISO 14040:2006 describes the principles and framework for life cycle assessment (LCA) including: definition of the goal and scope of the LCA, the life cycle inventory analysis (LCI) phase, the life cycle impact assessment (LCIA) phase, the life cycle interpretation phase, reporting and critical review of the LCA, limitations of the LCA, the relationship between the LCA phases, and conditions for use of value choices and optional elements. It covers life cycle assessment (LCA) studies and life cycle inventory (LCI) studies. It does not describe the LCA technique in detail, nor does it specify methodologies for the individual phases of the LCA. The intended application of LCA or LCI results is considered during definition of the goal and scope, but the application itself is outside the scope of this International Standard.





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Most former product oriented life-cycle tools focus solely on inventory analysis. Life-cycle inventory analysis uses quantitative data to establish the levels and types of energy and material inputs to a system and the releases that result. It is significant to note that many current LCA tools do not treat cost. Often when inventory-oriented lifecycle analysis tools claim to accommodate cost analysis, it is ad hoc at best, i.e., the user can add cost properties to unit operations but the analyses do not necessarily understand the concepts of yield or the detailed feedback mechanisms associated with test and rework activities nor do they include reverse manufacturing. Only a few of benchmarked LCA tools include impact analysis. In these cases, the impact analysis generally takes the form of user controlled normalization and weighting of the inventory results to formulate an overall metric for comparing dissimilar environmental results. From system point of view each business portfolio decision brings forth the need to build and maintain necessary related lifecycle processes consisting of information system, organization and physical system for order management, product design and production. These decisions are linked through company layers in collaboration of marketing, design and production domains. Success of portfolio strategy is strongly based on building competitive solutions and efficient use of synergies. One form of impact analysis within benchmarked companies is risk ranking. Risk ranking tools have the objective of assessing the material content of a product against regulatory compliance, environmental safety, and health criteria (toxicity, cancer potency, bioavailability). The broadness of scope and depth of evaluation associated with LCA methods represent both their greatest strength and most significant weakness While the effects of design changes can be assessed in many areas, over the life of a product, extensive data on every aspect of the product’s fabrication, use, and disposal is required.





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Figure NIST approach to LCA LCA tools range from spreadsheet applications to sophisticated database managers. The largest differentiating characteristic between software based life-cycle inventory analysis tools is the variety and volume of data supported by the tool vendor. There are several existing tools that treat cost-oriented life-cycle analysis with limited material and energy inventory information. Risks management (Ri), the second sustainability concept IMS project defined evolutionary measure environmental efficiency E=Q/L that evaluates manufacturing decisions dynamically towards its general impacts taking on account of sustainability (economic, social and environmental) effects. Central impact measures are thus besides traditional CQDF (Cost Quality Delivery and Flexibility) also Re (Resource use) and Ri (Risks). ISO 31000:2009 provides principles and generic guidelines on risk management and can be used by any public, private or community enterprise, association, group or individual. Therefore, it is not specific to any industry or sector. It can be applied throughout the life of an organization, and to a wide range of activities, including strategies and decisions, operations, processes, functions, projects, products, services and assets applied to any type of risk, whatever its nature, whether having positive or negative consequences. Although ISO 31000:2009 provides generic guidelines, it is not intended to promote





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uniformity of risk management across organizations. The design and implementation of risk management plans and frameworks will need to take into account the varying needs of a specific organization, its particular objectives, context, structure, operations, processes, functions, projects, products, services, or assets and specific practices employed. It is intended that ISO 31000:2009 be utilized to harmonize risk management processes in existing and future standards. It provides a common approach in support of standards dealing with specific risks and/or sectors, and does not replace those standards. LCA and inverse manufacturing concept Inverse manufacturing systems like for instance at Toyota, Fuji-Xerox and Hitachi, dismantle old machines and, melting down some parts and reassemble usable ones to new machines. Disassembly/Recyclability Process Analysis - is used to modify a system’s content (materials, components) or manufacturing process to facilitate disassembly and recyclability of the product at the end of its life. It may measure success in terms of associated costs or various efficiencies. Most disassembly process analyses are based on decision trees: the designer enters information on the product structure into a table and an algorithm then computes the most profitable disassembly scenario using a database that includes disposal costs, revenue from recycled or reused parts, and disassembly times and costs. Table-based methods are well suited for assessing and optimizing the recovery process, but not well suited for assessing the effects of specific design changes. Very few tools were identified in this segment of the landscape (although several methodologies have appeared in recent literature). The key characteristic of software tools generating disassembly and recyclability plans is that they tend to be library-based. In a library-based analysis the tool creates a solution to a user’s problem using pre-defined solutions or subsets of solutions from libraries. Sometimes the tool can interpolate between known pre-defined solutions. Unfortunately, if the library does not contain problems similar to the one the user poses, then a solution may not be generated or the user may find that the same solution is generated for every problem. DFM and DFE new concept of “design for manufacturing” DFM (design For Manufacturing) tools were primarily used in serial manufacturing. Manufacturability Analysis - Manufacturability addresses the ease with which a product can be manufactured. None of the manufacturability tools identified in companies consider environmental effects explicitly. In modern view DFE (Design for Environment) in context of DFX can be done using QFD/LCA system approach. QFD (Quality Function Deployment) Perhaps the most commonly used DFM tool throughout all stages of product development is Quality Function Deployment (QFD). QFD was first put forth in 1966 in quality assurance work by Akao and Oshiumi (see, for instance, Akao, 1990). Subsequent research used the matrix to address technical trade-offs in the quality characteristics by adding a “roof” to the top of the matrix, which became the “House of Quality.” QFD converts customer demands (WHATs) into quality characteristics (HOWs) and systematically develops a quality plan thru a multidiscipline discussion





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for the deployment of the finished product. In practice today, QFD is used to translate the voice of the customers into a set of design elements that can be deployed vertically top-down through a four-phase process: Product Planning, Part Deployment, Process Planning, and Process Control. From an green product, clean technology and sustainable manufacturing development standpoint, DFM in conceptual design seeks close the QFD ‘loop’ to propagate standard downstream concerns back into conceptual design. Integrating DFM into QFD Integrating DFM into QFD and further to LCA is an approach selected by mainly Japanese companies. They use system approach of E = Q/L = QFD/LCA. This is achieved through an iterative collaborate process that brings the results of process planning and control matrices into the part deployment matrix. For example, once a process plan has been conceived, features that make components easier to fabricate or easier to assemble into the final product can be added to the list of technical and part characteristics. Such iterations ease the transition to embodiment design and allow manufacturing to be considered at the earliest stage of design. Again, experience in this process not only provides early estimates of downstream metrics but also helps link performance metrics directly to function (Dong and Wood, 2003). Sustainable production and design for sustainability( DFS) As the continuous improvement of eco performance of production lines, factories, and supply chains depends upon consistent product portfolio design and management. Green products and clean production as well as Toyota uses factor 4 thinking where E = two times better for customer/ two times less negative impacts. The rapid introduction of new products means that existing facilities outlive new products. Thus the natural process builds on developed expertise and synergies. Instead of designing the product to fit the facility as is by DFX rules the product and designing collaborate to adapt both facility and product to upgrade to next efficiency level. Often, manufacturing system adaptation to higher level performance is disregarded during product design because it requires collaborative iterative process that takes time and complicated modeling. As Japanese interviews pointed out they use two thirds of the time to collaborative design and one third to fast implementation. These figures outside Japan tend to be other way around. Herrmann and Chincholkar (2001/2002) give a detailed review of DFP approaches, and Chincholkar et al. (2003) survey a range of DFP studies in detail.





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Figure NIST approach to LCE Toyota in IMS, G21 , the Prius project Toyota launched a major project for s first Environmental Action Plan launched 1993 Toyotas Environmental Committee set up 1992 Toyotas Introduction of Center system for 21th century needs 1992- 1993 Development Center I-III for R4D, Development Center IV for R&D, building up simultaneous engineering system Development of new plant Process flow analysis integrated to LCE Process Flow Analysis - This analysis is used to optimize the process for fabricating (assembling) a system by allowing the selection of the best process flow for a product. Process-flow analysis results traditionally only in overall system cost, quality (yield), and time estimates. Within sustainable manufacturing Quality, Cost, Delivery and Flexibility are estimated towards resource use and risks. The base is in LCE and QFD/LCA integration. Several types of process flow analyses exist. Activity-based methods are more accurate if sufficient data exists to use them. Japan ecofactory developments after IMS After failing to get global consensus on the need to support sustainable growth. Japanese left IMS ansd continued with 21th century COE (Center of Excellence)





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programmes. (Japan continues to put more than 4% of GPD to R&D). Thus besides prominent efforts in industry also the public sector changed their strategy and introduced new collaborative approach. The first EMC (Eco Model City) programme was launched. It is directed to jointly understand “synergy and synthesis” possibilities with cities and industry. All the prominent Japanese cities joined to prepare for the challenge of rapid changing global and domestic situation. Against the backdrop of one of the world's fastest aging populations, one of the lowest birth rates on the planet, a renewed reliance on overseas energy, and a yen that is so expensive that Japanese corporations are offshoring production the need to actions is immediate. The “Full Research for sustainable society” approach is constructed by Type-I basic research that is an endeavor to elucidate the nature of sustainable manufacturing by analyzing the subject from a certain perspective, yielding new knowledge. Principles and theories are constructed based on this knowledge. Whereas type-II basic research pursues universality of a process to create a new entity or product through applying those principles and theories in multiple fields (for instance AIST within University od Tokio and , Keio SDM within Keio University). The latter is seen essential to achieve the sustainable manufacturing goal. Hence, type-II basic research involves the process of “synthesizing” multiple scientific fields that represents the difficulty inherent to this research. In order to serve the purpose of industrial development, 21th century COEs were established to make a great leap forward in to reality and bring gained scientific discovery and innovative technological ideas bear the fruit of social wealth and bring the ultimate goal “realization of sustainable society within fast changing reality.

Manufacturing foresight

NSF National Science Foundation Louis Martin-Vega, NSF's acting assistant director for Engineering http://www.nsf.gov/ Manufacturing companies are the source of 70 percent of the research and development performed by industry in the United States, accounting for a total of $147 billion in R&D funding in 2004. Manufacturing is also responsible for 90 percent of all patents. In 2008 manufacturing produced $1.4 trillion in national income, making it one of the largest sectors in the American economy. The National Association of Manufacturers has estimated that, “every $1.00 in manufactured goods generates an additional $1.37 worth of additional economic activity - more than any other economic sector.” This also helps create jobs – one study found that each job in manufacturing supported three jobs in the rest of the economy. American manufacturing has been among the most successful in the world. Over the last 30 years, the United States has had the largest increase in manufacturing output among major developed countries. Figure 2 demonstrates that U.S. manufacturing output began to increase most rapidly after 1994, propelled by rapidly increasing productivity. This improvement is unmatched by any other G7 country.





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The Myth of Manufacturing's Demise Here at the close of the twentieth century, manufacturing accounts for one-fifth of the nation's gross domestic product and employs 17 percent of the U.S. workforce, according to the National Science and Technology Council. More significantly to the nation's economic well-being throughout the 1990s, productivity in manufacturing—the ability to produce more goods using less labor—far outstripped productivity in all other sectors of society, including the service sector. As the nation's productivity leader, manufacturing has helped the nation to achieve low unemployment with only modest inflation. This record of success seems remarkable when compared to the state of manufacturing just twenty-five years ago. Division of Design, Manufacture, and Industrial Innovation (DMII), mission is to develop a science base for design and manufacturing, help make the country's manufacturing base more competitive, and facilitate research and education with systems relevance. NSF helped to move manufacturing from the obituaries to the headlines, which now are more likely to celebrate the "new manufacturing," with its reliance on information technologies and more malleable, quick-response organizational structures. As the following highlights demonstrate, with some critical assistance from NSF, U.S. manufacturing isn't dying after all—it's just changing.

Advanced Technology and the Future of U.S. Manufacturing, Proceedings of a Georgia Tech research and policy workshop Prior to IMS U.S. launched MIT Commission on Industrial Productivity.: The commission was appointed by MIT President Paul E. Gray '54 in November 1986 "to identify what happened to US industrial performance and what we and others might do to help improve the situation." The commission visited more than 200 companies and 150 plant sites, and





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conducted more than 550 interviews in the United States, Japan, and Europe to complete a "bottom-up" a two-year, eight-industry study survey of industries for “Made in America” report. In its study of particular industries, the commission formed eight teams from members of the MIT community to study eight particular industries: automobiles; chemicals; commercial aircraft; consumer electronics; machine tools; semiconductors, computers and copiers; steel; and textiles. Each team was headed by a commissioner. The results were published in “Made in America: Regaining the Productive Edge”. The main message was coined in new term “productive performance” leading to productivity. The road from innovation in R&D through R4D to companies is heavily addressed. The published book states that : "Relative to other nations and relative to its own history, America does indeed have a serious productivity problem," and "the causes of this problem go well beyond macroeconomic explanations of high capital costs and inadequate savings to the attitudinal and organizational weaknesses that pervade America's production system," concluded the Made in America examines the causes of the slowdown in US productivity growth and makes recommendations for improved economic performance. It cites six problems relating to productivity performance: outdated strategies, short time horizons, technological weakness in development and production, neglect of human resources, failures of cooperation, and government and industry at cross-purposes. However in comparison with Japanese study it fails to note the role of uncertainty and relative unbalance in global growth. Recommendations for improvement include specific proposals for industry reform and larger macroeconomic imperatives. Focusing upon international markets and the importance of technology and education, the macroeconomic recommendations call for a focus on "the new fundamentals of manufacturing," the cultivation of a new "economic citizenship," a blend of cooperation and individualism, adaptation to an emerging world economy, and provision for the future through investment and education. Thus the U.S. idea bears resemblance to Yoshikawas idea of 21th century manufacturing leading to IMS. However ideas of global productivity, global technology and sustainability issues are not present. Five imperatives for productivity The commission cites six key similarities among those firms which have best adapted to the modern economic climate, which is characterized by growing internationalization, increasing consumer sophistication/specialization, and rapid technological progress: 1) a focus on simultaneous improvements in cost, quality and delivery ; 2) closer links to customers; 3) closer relationships with suppliers; 4) the effective use of technology for strategic advantage; 5) less hierarchical and compartmentalized organizations (for greater flexibility); and 6) human resource policies that promote continuous learning, teamwork, participation and flexibility.





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On a larger scale, the commission proposes five imperatives for improving the rate of productivity (and hence income) growth:

1. Focus on the new fundamentals of manufacturing. "Too much attention is being paid to indicators of short-term financial performance, such as quarterly earnings," the commission asserts. An emphasis on technical and organizational excellence in manufacture is necessary for any competitive firm in today's economy. ("The primary ingredient for success in the next decade," said IBM's Toole,"is speed—speed in development and speed in delivering derivative products of very high quality to the marketplace. To win, one needs to be competitive in all areas—competitive designs; well-trained employees; a strong infrastructure of tools, materials, and components; and much-improved manufacturing prowess.")

2. Cultivating a new "economic citizenship." Increased technological competence

will be required for the labor force. In addition, workers should have more job security and receive ongoing vocational training

3. A blend of cooperation and individualism. Schools and companies should

reward both individual and cooperative achievement to promote a combination of competitive aggressiveness and responsible coordination. Partnerships among various social institutions help to overcome "some of the defects of the market," the commission asserts.

4. Adapting to an emerging world economy. Americans should be more aware of

the diversity of world cultures, and shop internationally for technology, materials, and innovative industrial practices.

5. Provision for the future through investment and education. Educational reform

must create a more technically literate, culturally tolerant population. In addition, domestic investment must be promoted through savings incentives and consumption taxes so that future capital development is financed by Americans instead of overseasers.

Agile manufacturing, novel concept for adaptation One of the new themes of IMS was agility. Also U.S. was quick to note that supply chain management may make for leaner manufacturing, but there is also a premium on agility. The question of agility in manufacturing rises from the fact that information technology and globalization have dramatically quickened the rate at which new products must be innovated and brought to market. In such a rapidly shifting marketplace, it's best to operate not as a vertically integrated giant but rather as part of a loose confederation of affiliates that form and reform relationships depending on changing customer needs. In the 1990s, NSF set up three institutes—at the University of Illinois, Rensselaer Polytechnic Institute (RPI), and the University of Texas at Arlington—to study issues raised by this new IMS theme agile manufacturing. "Agile manufacturing takes on a slightly different definition depending on whom you talk to," says Robert Graves, who is a professor in the Decision Sciences and





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Engineering Systems department at RPI as well as director of the Electronics Agile Manufacturing Research Institute, which studies issues of agile manufacturing as they apply to the electronics industry. "Here in electronics we look at the idea of distributed manufacturing." Manufacturing 2020 identified as Major Forces for Change as following: The nature of manufacturing enterprises will evolve in response to changes in the technological, political, and economic climate. The committee believes that the following factors will be the most important to the development of manufacturing:

1. The competitive climate, enhanced by communication and knowledge sharing, will require rapid responses to market forces.

2. Sophisticated customers, many in newly developed countries, will demand products customized to meet their needs.

3. The basis of competition will be creativity and innovation in all aspects of the manufacturing enterprise.

4. The development of innovative process technologies will change both the scope and scale of manufacturing.

5. Environmental protection will be essential as the global ecosystem is strained by growing populations and the emergence of new high-technology economies.

6. Information and knowledge on all aspects of manufacturing enterprises and the marketplace will be instantly available in a form that can be used for decision making.

7. The global distribution of highly competitive production resources, including skilled workforces, will be a critical factor in the organization of manufacturing enterprises.

These trends suggest that flexibility and responsiveness will be critical for manufacturing in 2020. The concept of future “manufacturing in 2020” Manufacturing 2020 will be broader than it is today. It will include software (the conversion of information, as well as materials, into useful products), biotechnology, some aspects of agribusiness, and many other production enterprises. The basis for competition will be creativity and innovation because (1) the manufacturing context will be broader and (2) social and organizational structures will be much more knowledge-based, dynamic, fluid, and globally distributed. Manufacturing enterprises will plan, create, and manage new products, processes, supply chain systems, and other business aspects of the enterprise (e.g., finance and marketing) concurrently. The structure and identity of companies will radically change to encompass virtual structures that will coalesce and vanish in response to a dynamic marketplace. All activities that are not essential to implementing new ideas in marketable products will be eliminated. A readily available generic transaction and alliance infrastructure (e.g., equitable profit sharing and business processes for protecting intellectual property) will enable individuals and entrepreneurial teams to compete solely on the basis of skills and knowledge.





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These developments were seen to require new corporate architectures for manufacturing enterprises:

• materials enterprises that can convert raw and recycled feedstocks into an array of finished and semifinished materials to meet the changing demands of product suppliers in a cost-effective way

• product enterprises that can convert the new materials into configured products

Recommendation. Establish priorities for long-term research with an emphasis on crosscutting technologies, i.e., technologies that address more than one grand challenge. Adaptable and reconfigurable manufacturing systems, information and communication technologies, and modeling and simulation are three research areas that address several grand challenges. Breakthrough Research The committee believes that technological breakthroughs in two areas—innovative submicron manufacturing processes and enterprise modeling and simulation—would have a profound impact on manufacturing of the future. Parallel to this was done Next Generation Manufacturing study (NGM, 1997). NGM was funded by NSF and other federal agencies but headed by a coordinating council drawn from the manufacturing industries. In 1995, more than 500 industry experts worked together to produce a final 1997 report offering a detailed vision for the future of manufacturing. Today the NGM report forms the basis of a follow-up effort called the Integrated Manufacturing Technology Roadmap (IMTR) project, also funded by NSF and other federal agencies. According to the NGM report, a "next generation" manufacturer will need to transform itself from a twentieth-century-style company—one that functions as a sovereign, profit-making entity—into a twenty-first century company that is more of an extended enterprise with multiple and ever-shifting business partners. Or as Stephen R. Rosenthal, director of the Center for Enterprise Leadership, describes it, next-generation manufacturers should be companies that stretch from "the supplier's supplier to the customer's customer." Successful next-generation manufacturers, the NGM report concludes, will have to possess an integrated set of attributes. The company will need to respond quickly to customer needs by rapidly producing customized, inexpensive, and high-quality products. This will require factories that can be quickly reconfigured to adapt to changing production and that can be operated by highly-motivated and skilled knowledge workers. Workers organized into teams—both within and outside a company—will become a vital aspect of manufacturing. As participants in extended enterprises, next-generation companies will only undertake that part of the manufacturing process that they can do better than others, something industry calls "adding value." Inherent in these requirements are what the NGM project report calls "dilemmas." These arise from the conflict between the individual company's needs and those of the extended enterprise. How can knowledge be shared if knowledge is itself a basis for competition? What security can companies offer their skilled employees when the rapidly changing nature of new manufacturing means that the firms can't guarantee





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lifetime employment? How can the gaining of new knowledge be rewarded in a reward-for-doing environment? U.S. 2000, How we compete Political scientist Suzanne Berger the manager of MIT Industrial Performance Center conducte a five-year study and released 2005 book How We Compete: What Companies Around the World Are Doing to Make it in Today’s Global Economy. (MIT study of 500 international companies;five years of international research by 13 social scientists and engineers at the MIT Industrial Performance Center. Berger and the MIT team examined businesses where technology changes rapidly, such as electronics, and more traditional sectors, such as automobiles and textiles. Their global sample of company strategies came from Apple, Cisco, Dell, Liz Claiborne, the Gap, Benetton, Sony and many others; the team visited countries throughout the world. "We wanted to understand how globalization is changing our society and economy and what we can do about it," Berger writes in a preview of the five-year MIT Globalization Study -- a study that took the 13-member team on a journey through the United States, Mexico, France, Germany, Romania, China, Taiwan, Japan and elsewhere to conduct 700 interviews. The research states: "The activities that succeed over time are those that build on continuous learning and innovation."

U.S. at 2010, AMP, Production in the Innovation Economy (PIE), President Barack Obama’s President’s Council of Advisors on Science and Technology (PCAST), released a report entitled “Ensuring Leadership in Advanced Manufacturing.” The PCAST report calls for a partnership between government, industry, and academia to identify the most pressing challenges and transformative opportunities to improve the technologies, processes and products across multiple manufacturing industries. Advanced Manufacturing Partnership (AMP) AMP is being developed based on the recommendation of the The AMP will be led by Andrew Liveris, Chairman, President, and CEO of Dow Chemical, and Susan Hockfield, President of the Massachusetts Institute of Technology. Working closely White House’s National Economic Council, Office of Science and Technology Policy and the PCAST, AMP will bring together a broad cross-section of major U.S. manufacturers and top U.S. engineering universities. The universities initially involved in the AMP will be the Massachusetts Institute of Technology, Carnegie Mellon University, Georgia Institute of Technology, Stanford University, University of California-Berkeley, and University of Michigan. The manufacturers initially involved in the AMP will be Allegheny Technologies, Caterpillar, Corning, Dow Chemical, Ford, Honeywell, Intel, Johnson and Johnson, Northrop Grumman, Procter and Gamble, and Stryker. (AMP), a national effort bringing together industry, universities, and the federal government to invest in the emerging technologies that will create high quality manufacturing jobs and enhance our global competitiveness. Investing in technologies, such as information technology, biotechnology, and nanotechnology,





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will support the creation of good jobs by helping U.S. manufacturers reduce costs, improve quality, and accelerate product development. The President’s plan, which leverages existing programs and proposals, will invest more than $500 million to jumpstart this effort. The President believes that even as we live within our means, we must invest to win the future. Investments will be made in the following key areas:

1. building domestic manufacturing capabilities in critical national security industries;

2. reducing the time needed to make advanced materials used in manufacturing products;

3. establishing U.S. leadership in next-generation robotics; 4. increasing the energy efficiency of manufacturing processes; and 5. developing new technologies that will dramatically reduce the time required to

design, build, and test manufactured goods. Leading universities and companies will compliment these federal efforts helping to invent, deploy and scale these cutting-edge technologies. “Today, I’m calling for all of us to come together- private sector industry, universities, and the government- to spark a renaissance in American manufacturing and help our manufacturers develop the cutting-edge tools they need to compete with anyone in the world,” said President Obama. “With these key investments, we can ensure that the United States remains a nation that ‘invents it here and manufactures it here’ and creates high-quality, good paying jobs for American workers.” Production in the Innovation Economy (PIE) programme “Made in America in the 21st century” With the loss of U.S. manufacturing jobs an ever-present political and economic issue, MIT is additionally kicking off a new global manufacturing study. The effort follows up on the school’s famous Made in America report. Nobel Laureate Phil Sharp, a co-founder of Biogen and other biotech companies, and political scientist Suzanne Berger are co-chairing the effort. MIT’s Institute President Susan Hockfield is serving as a co-chair of the steering committee of PIE that is not a subset of AMP, but arises from similar concerns about applying technology in the national interest. Berger directs the MIT International Science and Technology Initiative Program, and she was one of 13 contributors and co-authors on the original 1989 Made in America study. While the decline of American manufacturing— manufacturing jobs in the United States have dropped from 20 million in 1979 to about 12 million today — conglomerates such as Procter & Gamble and high-tech firms such as Dow Corning have kept significant amounts of manufacturing in the country. Moreover, 3,500 manufacturing companies across the United States — not just the jug-making firm in Massachusetts — doubled their revenues between 2004 and 2008. With that in mind, Berger asks, “How can we imagine enabling these firms to branch out into more innovative activities as well?” That is the kind of problem Berger and 19





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of her faculty colleagues at MIT are now studying as part of a two-year Institute-wide research project called Production in the Innovation Economy (PIE), which is focused on renewing American manufacturing. The guiding premise of PIE is that the United States still produces a great deal of promising basic research and technological innovation; what is needed is a better sense of how to translate those advances into economic growth and new jobs. The single most important question in the study is: What kind of manufacturing is needed in order to get full value out of innovation strengths? In the course of conducting its research, PIE will issue an interim report later this spring; publish a final report in 2013; create a film on manufacturing; host a lecture series; and issue a working-paper series of research findings from the professors on the team. The co-chairs of the PIE Commission are Berger, the Raphael Dorman-Helen Starbuck Professor of Political Science, and biologist and Institute Professor Phillip Sharp. Olivier de Weck, who has served as the associate head of the Engineering Systems Division and also holds a dual appointment with the Department of Aeronautics and Astronautics, is serving as PIE’s executive director. To a significant extent, PIE is modeled on the MIT Commission on Industrial Productivity. However, PIE’s research interests differ from those of the Made in America group in substantial ways. The 1980s research project was organized around the performance of U.S. firms in several major industries then experiencing intensified competition, from automakers to consumer electronics companies. PIE focuses on specific questions that may cut across a multitude of industrial sectors, and has organized its work into eight distinct “modules” that cover a diverse set of issues, ranging from the challenges of scaling up small startups to the problems of training workers. In so doing, PIE is also broadly scrutinizing a common assumption of the last quarter-century: that the information technology industry is the basic paradigm for innovation-based manufacturing in the United States. “Some people think we can just do the innovation, and then license and sell and outsource it,” Berger notes. By contrast, she says, “those of us in the PIE study think it’s an open question whether a similar model works elsewhere, particularly in the new emerging-technology areas.” Information technology companies often have low startup costs covered by venture capital, and their production tasks lend themselves to being handled overseas. But in other areas with advanced-manufacturing potential, such as energy, advanced materials or biotechnology, “you’re going to need far heavier capital investment,” Berger says. It’s not obvious how such companies can best finance the development and commercialization of their products. One of the PIE modules will also examine the effects of manufacturing — and the loss of manufacturing jobs — on other industries. Manufacturing is widely viewed as an industry that creates additional jobs besides those on the production lines; factories create a need for additional service-industry workers. Additionally, the income earned by manufacturing workers creates demand for still more goods and





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services. What PIE is pointing out is that this connection between manufacturing and services is an integral one. A set of capabilities is gained in making products that then get redeployed in the service part of a business. Ultimately, the PIE researchers chart the possible paths for new success in manufacturing PIE programme seeks to analyze the state of production in the United States and to propose new routes from innovation through manufacturing to jobs and growth in the United States. To transform technologies into strong flows of new products, services, and processes, US need to stimulate innovation in systems of production different from old-style manufacturing. Those countries that can build powerful links between research in the laboratory and new manufacturing will emerge as the ones that benefit the most from their innovative capabilities. The recent bankruptcy of Eastman Kodak founded in 1892, Kodak shows that very few of 19th century giants in US just don't have the staying power they used to. Even the largest companies in US these days have difficulties to outlast a 40-year. According to John Hagel III, Co-Chairman of Deloitte LLP Center for the Edge and , the lifespan of such companies is now reduced to about 15 years. That's a stunning change from 1937 when the average life expectancy of the companies in the Standard and Poor's 500 Index was 75 years. A similar 1983 study of the 1970 Fortune 500 found the life expectancy of its companies to be around 40 years, with a third of them vanishing in the intervening 13 years. Thus the progression from 75-year corporate lifespans to 40 and now to 15 since 1937 in US has been clear and more or less smooth. Bankruptcy is one of many but not all these corporate deaths are due to bankruptcies - some of them are takeovers, which are much more common since the 1970s. Other companies disappear because they cannot cope with technological change. That is Kodak's problem, even though 120 years is a pretty good run. Other countries are more family business-oriented, and are less attracted by get-rich-quick schemes. In Germany or Japan, corporate lifespans have not shortened to the extent they have in the United States. In general, emerging markets are more long-term oriented than the U.S., although their political and economic risks may kill companies before their time. As for Kodak, they did not die because they did not keep up with the technological advances of the day. In fact, they were decades ahead of the curve. Kodak was actually the first to create the digital camera in 1975, but shelved the model fearing it would derail its profitable film business and made management decision that, instead of being out front of the curve, cost them the entire business. Entrepreneurs' motivations in US are seen different today. Today, they seem to go for repeated entrepreneurship rather than old-style empire-building. The corporate lifespan is thus getting much shorter than it was, and not likely to lengthen again. In a short-lived corporate world speed innovation, but they make being an employee or an investor much more difficult and dangerous and the investments in skills and green production are less likely. Now this trend is affecting on US interest in its





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manufacturing base and its renewal. Obviously for them it is tempting to manufacture in emerging economies. AMP On November 28, 2011, from 10 a.m. to 6 p.m., the AMP Northeast Regional Meeting was held at MIT. This was the second of four regional workshops taking place in the U.S. focusing on identifying collaborative approaches needed to realize advanced manufacturing opportunities. Topics included:

• Technology development; • Education and workforce development; • Facility and infrastructure sharing; • Policies that could create a fertile innovation environment.

Beginning with key facts and assumptions, this report analyzes the cost drivers in each step of the manufacturing process and suggests a framework for designing appropriate government support in each of these areas. Key Facts and Assumptions There are five key facts and assumptions that form the basis of a sound and comprehensive manufacturing policy:

1. The manufacturing sector generates significant benefits for society. Manufacturing creates substantial additional economic activity, is responsible for 70 percent of all research and development spending performed by industry in the United States, and with consistently improving productivity creates wealth that can be utilized elsewhere in the economy. Manufacturing jobs have higher pay and benefits than similar jobs in other sectors. Manufactured goods represent 69 percent of exports, which is particularly important as increasing exports is critical to reducing our trade deficit and supporting economic growth. Our national security requires that we maintain the ability to manufacture certain goods needed to defend ourselves militarily. Finally, production jobs in manufacturing can provide a career path to the middle class for people for whom a four-year college degree is not the best fit.

2. Overall costs drive manufacturers’ location choices. In today's increasingly competitive global marketplace, manufacturing activities will be undertaken by private actors who will locate their factories where total all-in cost is lowest.

3. The environmental impact of manufacturing activities creates both responsibilities and opportunities. Clean air and water and lower greenhouse gas emissions are important to the American public, and appropriately, companies operating on our soil must do their part to mitigate or avoid adverse impacts. At the same time, companies that adopt sustainable manufacturing strategies can both benefit the environment and gain competitive advantage.

4. Productivity growth is essential for maintaining high wages. America’s





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high labor standards can make an hour of labor more costly than it is in other parts of the world. In general, American society aspires to increase hourly wages and benefits, which is fundamental to allowing our citizens to enjoy a rising standard of living. An important way to keep the total cost of labor competitive is to maximize the productivity of each hour of labor. The importance of productivity growth applies equally to blue collar, white collar and managerial labor.

5. U.S. total manufacturing costs are internationally competitive in certain sectors. Due to dramatic increases in the productivity of manufacturing labor, combined with the very real advantages that operating in America provides, there are certain activities where U.S manufacturing is highly competitive.

At AMP meeting MIT President Susan Hockfield declared that similar period of economic malaise than today was in US experiemced in the mid-19th century — when, as it turns out, the country was on the cusp of the Industrial Revolution. At the time, MIT founder William Barton Rogers lamented” the citizenry’s lack of scientific expertise, founding MIT, in part, to cultivate a new generation of scientists and engineers who would develop innovative materials and manufacturing processes. “Once again, as a nation, we find ourselves at a moment of difficult transition,” Hockfield said. “After more than a century of industrial success, America needs to revise its economic assumptions once again — in fact, the United States manufactures about as much as China, and its GDP far eclipses that of China — there is no doubt that China is a major manufacturing force, a fact that has become synonymous with economic power in the minds. Edward Steinfeld, professor of political science points that many firms were unable in scaling up new technologies in US. Instead, Steinfeld said, these firms found financial support and manufacturing capacity in China, where “there’s a ready and willing audience.” Steinfeld says the United States can learn from China’s economic policy, which fosters innovation, “ensuring that innovation will happen on their soil.” “There is scares of advanced manufacturing capability in the United States, although the right product, but where to manufacture?” However there is also a noted flow of knowledge back with significant support in the United States— using the knowledge US companies gained from China. However, there needs to be much more investment in advanced manufacturing to make any appreciable dent in markets. Other MIT scientists echoe call for advanced-manufacturing support; “Technology-focused manufacturing would open up jobs in the United States,” “It would require expertise not in operating forklifts, but in understanding technology.” Productivity at all levels Robert Solow, Institute Professor emeritus and Nobel laureate in economics, offered a counterpoint to the supporters of advanced manufacturing, saying that while manufacturing matters, “other things matter too”: specifically, a high and fairly distributed per-capita income. To attain a relatively high income across the country, Solow says it’s not necessarily manufacturing, but productivity in general that matters, particularly in non-manufacturing sectors such as the services industry. “Manufacturing will provide employment, [although] we will never go back to having a third of employment from manufacturing,”





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Innovation MIT says that regardless of which sector packs the most punch in terms of productivity, innovation is what arguably sets the United States apart from the rest of the world. In order to rebuild the economy, it’s necessary to examine the relationship between manufacturing and innovation, and to consider the view of analysts who warn that “if manufacturing goes, innovation follows.” “If this is true, US kind of left with nothing to bring to the party. Given the consequences if that is true, US ought to be erring on the side of caution.”

Manufacturing in 21th century (NIST) Within US the follow up of IMS is done within Manufacturing Technology Platform (MTP) program. The established manufacturing technology platforms are:

• Sustainability, • Energy Efficiency, • Key Technologies, • Standards and. • Education.

The manufacturing industry in US, indeed the manufacturing enterprise, has faced significant challenges over the past thirty years. In the form in which it came to economic ascendancy as part of the industrialisation revolution, through its mass-production of standardised products for mass markets, the threat appears to be terminal. The new information and communications technologies, and the processes of globalisation which have been associated with them, have already changed the face of manufacturing. Much of manufacturing is now globalised, in the sense that a wide range of functions from R&D and marketing to production and distribution are now undertaken on an integrated global basis; networked, in that the co-ordination of these functions make intensive use of electronic networks and of virtual and geographical clusters of expertise; customised, in that methods of production must allow for detailed customisation of products to meet the needs of individual markets and individual consumers; and digitised, in the sense that many of these processes, and particularly final production, are controlled by advanced computers systems which limit the need for human intervention. A diverse combination of factors - from greater productivity arising from technological change in the goods industries, a shift of demand in high income countries from goods to services in spite of declining relative prices for goods, intense global competition, including from newly industrialising economies - is leading to a decline in the share of GDP arising from goods production in all developed countries. In the emerging knowledge economy, there is a shift from goods industries to knowledge and person-based industries in terms of the composition of GDP and employment. Discussion papers, "Visionary manufacturing challenges for 2020", by Professor John Bollinger, "Manufacturing and Growth in the Longer Term: An Economic Perspective", by Professor Peter Sheehan, "Manufacturing education in global context", by Professor Hans Danielmeyer, "The vision of IMS", by Professor Hiroyuki Yoshikawa, The ManuFuture Road: Towards Competitive and Sustainable





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High-Adding-Value Manufacturing by professor Francesco Jovane and professor Engelbert Westkämper, UK Foresight Manufacturing Panel, etc are many. Big initaitives are launced : IMS ( Intelligent Manufacturing Systems), 21th century COE programme in Japan, 21th century manufacturing in US and ManuFuture in EU. Bottom line is: While there is some increased demand for services as final products, activities related to the creation, production and distribution of goods still lie at the heart of advanced economies. But those activities are becoming increasingly knowledge and service intensive, so that there is growing convergence between what are traditionally regarded as goods industries (such as agriculture, manufacturing and mining) and service industries The next generation manufacturing builds on synergy and synthesis.. For example, firms engaged in manufacturing rely heavily on services, both from within the firm and outside it, and sell both goods and services. Many service sector firms are totally focused on providing services to manufacturing firms, or to firms producing other types of goods.

Advanced Manufacturing Initiative for America’s Future (AMI). http://www1.eere.energy.gov/industry/amp/index.html Overcoming Market Failures: Advanced Manufacturing Initiative for America’s Future There are systematic market failures that

1 block or slow the development of important new technologies and methodologies and

2 limit access by firms to technology infrastructure. The Federal Government has historically made visionary investments that have facilitated the birth of new technology-based industries and strengthened the development of existing industries. These investments have paid enormous financial and social returns to the Nation. It is essential that we renew this wise policy. PCAST (The President’s Council of Advisors on Science and Technology (PCAST), Office of Science and Technology Policy (OSTP)). believes there are a number of Federal investments that could have large returns in propelling advanced manufacturing. These include:

co-investing in the advancement of new technologies that face market failure, support of shared infrastructure, and rethinking the manufacturing process through targeted support for new

methods and approaches. Currently, key technological investments in this vein are being made by the Defense Advanced Research Projects Agency (DARPA), the National Institute of Standards and Technology (NIST) and the Department of Energy. It is crucial that this whole-of-government effort be complemented by parallel initiatives in the industry and academia. AMI should develop mechanisms to involve these sectors and to draw on their expertise in identifying technological opportunities. An external advisory board that has access to advanced manufacturing expertise should help guide this work.





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Federal investments to propel advanced manufacturing in the U.S., including Coordinated Federal support to academia and industry for applied research on

new technologies and design methodologies, Public-private partnerships (PPPs) to advance such technologies through pre-

competitive consortia that tackle major-cross-cutting challenges, Development and dissemination of design methodologies that dramatically

decrease the time and lower the barrier for entrepreneurs to make products, Shared facilities and infra-structure to help small and medium-sized firms

improve their products to compete globally. The report should also identify the most pressing technological challenges that merit focused attention for these activities.

Factors Shaping the Future of Manufacturing The Impact of Sustainability. The pattern of economic activity built up in the advanced economies since the Industrial Revolution is clearly not sustainable for the world as a whole in the 21st century. In many advanced countries environmental systems are severely damaged, and global warming appears to be well advanced already. But as countries such as China, India, Indonesia and Brazil move up the development ladder a new global pattern of economic activity, environmentally sustainable over the long term, becomes an undeniable imperative. This will mean not only substantive changes to present processes for the creation, production and distribution of goods, but fundamentally new approaches to many aspects of human life In 1987, the Brundtland report presented at the U.N. World Commission on Environment and Development,known as “Our Common Future2)” suggested that two contradicting needs, i.e. rapid improvement of living standards in the developing countries and preservation of the global environment can be met simultaneously in spite of considerable difficulties. The report confirms with conviction that the progress in science and technology will pave the way to achieve this aim. It is clear that the era of the global manufacturing has just begun, and that the forces driving this new economy will generate further fundamental change in the decades ahead. Growth for firms, regions and nations will depend heavily on the extent to which they can access and apply new knowledge and new ideas, necessity is the new culture of collaboration and competition. The information and communications technologies have been revolutionary in large part because they are so pervasive. It is arguable that technologies which can create and structure materials and products at the atomic level – nanotechnologies, – may be almost equally pervasive and revolutionary. These technologies enable us, to introduce knowledge into the structure of matter itself, and hence to design and create products to meet the needs of firms and consumers in ways not yet conceived. In areas as diverse as genetically customised drugs, energy storage, new materials (ceramics, polymers or structural materials), production processes, electronics and bioelectronics, technologies at or near the atomic level will provide a fundamental element of the context of advanced manufacturing in 2020.





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The crucial role of the manufacturing industry in achieving the goals of sustainable development are widely recognised: "As we enter the next century, industry will be the most important engine for change in the drive for sustainable solutions to the world's environmental problems " Maurice Strong, Chairman, Earth Council. Challenges that include the expansion of global trade leads to new environmental concerns, quickly followed by new legislation e.g. environmental taxes, eco-labelling requirements, laws on packaging; the pressure of environmental concerns in trade liberalisation and access to overseas markets; and the tension between trade law and environmental law. The unifying concept in the analyses and proposals emerging from the business community is 'eco-efficiency'. This concept/label is intended to combine both ecological and economic efficiency in business considerations. According to the World Business Council for Sustainable Development, a company seeking to become eco-efficient should strive to:

• reduce the material intensity of its goods and services; • reduce the energy intensity of its goods and services; • reduce the dispersion of any toxic materials; • enhance the recyclability of its materials; • maximise the sustainable use of renewable resources; • extend the durability of its products; and • increase the service intensity of its goods and services.

There are a wide variety of sustainable development-related issues and mechanisms which will impinge in the future on economic development. They include the following:

Regulation of process and production methods (PPMs) product-related PPMs deal directly with the permitted characteristics of the product e.g. toxicity, hazard, etc. process-related PPMs could include issues such as how raw materials are grown and harvested (e.g. using rainforest timbers), production processes, air, water and waste emissions, transport to market, etc.

Life-cycle regulation this might range from raw materials used, proportion of recycled material, to conditions of use, lifetime, etc. through to provisions for disposal/recovery (an interesting example is an international carpet company which leases rather than sells its product, and takes responsibility for life-time maintenance, and eventual repurchase and recycle)

Eco-labelling which will signify that products and services meet an agreed independent sustainable development standard. This may prove very influential over consumer choice.

The establishment of the ISO 14001 standard in environmental management experience of the impact of the ISO 9000 series of standards addressing quality management on business practice in the 1990s would give an indication of possible impact.





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There is evidence, from various UN and US Congress debates, and positions at the most recent WTO meeting in Seattle, that such considerations might be further broadened to include labour standards on matters such as child and prison labour, and minimum pay-rates. The broader movement to corporate responsibility is reflected also in arguments emerging about the importance, necessity and value of 'triple-bottom-line' accounting whereby companies are required, or see value in, reporting not only financial performance, but also environmental and social performance.. Together, these forces suggest that companies will find it wise, or be forced, to develop business strategies, practices, products/services and markets, that can be shown to met adequate standards of sustainable development. Development and the Control of Knowledge. There are growing signs that the emerging knowledge economy may be producing increasing rather than decreasing inequality, both within and between nations. The creation and application of knowledge tends to concentrate in particular social groups, regions and nations. For example, the process of knowledge creation is a cumulative one, which builds on past successes; it involves a substantial transfer of tacit knowledge, through personal interaction, and it is very expensive. The Industrial Revolution, based on the application of the new scientific knowledge, led to massive inequality between countries. In 1800 per capita incomes were roughly equal in what were to become the developed countries and the Third World; by 1970 average incomes were about seven times higher in the developed countries, which had been able to access and apply the new sciences. There is a danger of a new surge in inequality in coming decades, with further increases in relative incomes in those advanced countries that control the next generation of knowledge. Political dynamics, political engineering, Research group in KEIO SDM When studying manufacturing management one has also to address political dimension. Delving into complex social questions quickly leads to a tangle of claims about politics, power, and interests. Within its complex system studies KEIO SDM investigate how to effectively break down political phenomena into its constituent parts, identify key actors and their particular incentives, and how such actors interact in a complex system shaped by various institutions. Through comparisons of various politicalsystems and approaches the research seeks to uncover unique and common features of Japan’ s politics and potential remedies through political engineering. The Comparative Political Systems Laboratory (CPSL) focuses on such diverging requirements between stakeholders in social systems. Its frame of reference is “politics”, the process of arriving at agreement among actors with varying interests and influence. Without understanding these political dynamics, we believe realistic solutions or re-designs of social systems cannot be achieved. To analyse these political dynamics, the laboratory adopts the empirical approach and conceptual tools of comparative institutionalism in political science. This approach focuses on how various political institutions (such as companies and its environments political systems as electoral, executive, local government, and companies own bureaucratic systems) shape and constrain the behaviour of political





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actors and influence the outcome of political contestation. By understanding how these “rules of the game” affect collective decision-making, the comparative institutionalist hopes to generate predictive theories to be able to better engineer political systems. CPSL covers political institutions and processes in general, but focuses particularly on the domain of local government and autonomy questions in industrial systems development.

High level of problems leading to the necessity (for Japanese companies) to move towards sustainable manufacturing The “New Japanese paradigm of Eco-Factories” is a result of Japanese actions from 1990 to these days representing a substantial change and effort leading to current novel approach seen in their eco-factories and eco-cities. It was initiated by a group of Japanese scholars, universities and companies. The leading person was the president of Tokyo University 1989: Intelligent Manufacturing Systems grows out of an initiative from Japan proposed that year by Professor Hiroyuki Yoshikawa, then President of the University of Tokyo. The vision was for a global system of industrial cooperation and technology sharing H Yoshikawa that sheds light on the Japanese motive for the IMS initiative (Intelligent Manufacturing Systems) - that now initiated the CSM (Competitive Sustainable Manufacturing) in Europe and the MTP program (Manufacturing Technology Platform) in USA. The main reason IMS failed was that EU and USA accepted a competitiveness motive but not the collaboration for global growth and thus failed to look out of the box to address global productivity and the creation of balanced global growth in manufacturing which was the main initial target. In Japan collaborative trans-disciplinary structures like KEIO SDM and Toyota IR4TD (Institutes for Research for Technological Development) network and so on has been structured and global productivity is still in agenda. They are rather frustrated with the western inability to see the needs for collaboration. It is worth noting that they see their manufacturing theory base as weak and undeveloped and therefore have put lots of effort to create an explicit the “Japanese way”. Unfortunately these efforts are mostly unknown in west and we trust too much on American “lean” gurus. (70 % of the lean projects fail ), (http://www.asb.dk/en/aboutus/newsfromasb/newsarchive/article/artikel/successful_lean_depends_on_managements_trust_in_its_employees-2/) Objectives of IMS Program 1990 reflecting Japanese view of future manufacturing

1. Sophistication in manufacturing operation (systems view) 2. Improvement of global environment (sustainability and global productivity) 3. Resources saving and recycling (Re ; planning towards resources) 4. Creation of new products (extended product view) 5. Improvement of the manufacturing environment (eco factories) 6. Transfer of knowledge to future generations ( skills made explicit, skills

process, monozukuri / hitozukuri) 7. Effective globalization (global productivity, sustainable growth) 8. Enlargement and openness of markets (shared wealth) 9. Advancement of manufacturing professionalism (manufacturing as a

discipline, process and system view)





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Transition to systems theory is clear in new Japanese thinking. “New Lean” for instance in Toyota integrates their TMS (Toyota Marketing System), TDS(Toyota Design System) and TPS (Toyota Production System) using new approach Efficiency = Quality /Loads , where the efficiency is an evolutionary index . Toyota uses “factor 4” thinking where the next evolutionary steps have to contribute 2 times better quality with 2 times less loads. Another systems view induced principle is the use of synthesis and synergy for enhanced productivity. For instance all Japanese automanufacturers use efficiently collaboration with each other and other industries. You can find today collaborative efforts on components and even shared models ( Toyota AYGO) . Shared technology and R&D is not a novel idea but transdicplinary and transindustrial examples are still scares in Europe and US. The main important issues: 1. Basic research in manufacturing. (R&D)

a. 1990 H Yoshikawa stated that Japanese manufacturing research is “dying” old fashioned, irrelevant and not a genuine discipline.

b. IMS was set to correct the matter and produce “manufacturing Renaissance”,

c. Japan coined the term “monozukuri” , manufacturing as dicipline and correlated it with “hitozukuri” educating skilled experts and launced a corresponding programme (21th century COE)

d. After the failure of IMS Japan continued on own and has reached steady improvement of the manufacturing capability and productivity

e. As Japanese idea of manufacturing is developing they have introduced transdiciplinary research structures like KEIO SDM.

2. Research for Development (R4D) a. 1990 H Yoshikawa noted that creation of wealth and global productivity are

the only possibility to needed growth. Therefore Japan introduced the network of IR4TD (Institute for Technical Development) and linked them to Centers of Excellence for joint Industry- academia projects. Companies like Toyota and Hitachi have them gobally.

b. EU and US have lately introduced similar concepts either as extended Science Parks or novel concepts like CSM-Hotel (Tampere), IQ-building (Wien), RMD building ( Rotterdam), Aachen, Göteborg etc. In Us Stanford and MIT have similar projects.

c. Action Learning. Action learning was originally developed in Cambridge and is a methodology to connect research directly to problem solving. KEIO SDM uses ALPS as the link with both companies and public sector.

d. Synthesis and synergy principle. Japanese research in manufacturing is addressing eco-city- eco-industry-eco factory and eco- manufacturing as symbiotic synergy system. Thus they achieve multiple productivity gains.

3. Eco –manufacturing a. Eco- efficient manufacturing means for Japanese increasing customer

value achieved with diminishing environmental effects. E= Q/L =Qualitative improvements/ Quantitative loads = QFD (Quality function deplaoyment) / LCA (life Cycle Analysis).





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There are theories derived from this leading to solutions. These solutions go well beyond technology. The manufacturing theories related to new paradigm are made explicit basically within and after IMS in the 21th century COE (Centre of Excellence) program (http://www.jsps.go.jp/english/e-21coe/04.html)in the JSPS (Japanese Society for Promoting Science) created various new COEs covering many disciplines (one of these is MMRC (Manufacturing Management Research Centre) within University of Tokyo that was established to reform the current situation based on the two principles of university-industry collaboration and international cooperation with four basic research themes:

1) Explicit and generic studies on the “Integrated Manufacturing Systems” using an inter-industry framework

2) Architectural studies on product-process design philosophies for enhancing competence analysis by re-scheming industrial categories

3) International comparative studies on firm competence, in collaboration with MIT, Harvard Business School, and several other universities

4) Studies on brand power and sales force management for directing competence to profit.

Consequent implementation of these solutions required effort, but it has reached day to day operation in Japanese factories successfully

1 The main companies in Japan with novel next generation approaches created in this program are; Toyota, Denso, Panasonic, Hitatchi, Toshiba, Simizu , Fuji Xerox Co., Ltd., Sony Corporation, Railway Technical Research Institute, Nissan Motor Co., Ltd., Onosokki, Japan Society for Safety Engineering, Japan Manned Space System Corporation, Jyukankyo Research Institute Inc., NHK Computer Service Co., Ltd., etc. (these and 52 others are within KEIO SDM network)

2 In Finland we have done related work within Metso, Fastems, Ponsse etc. with noted success - but not as thorough as in Japan.

3 Details can be provided; further contacts and proof of these statements are available

4 We have the chance to connect to these solutions and we also need to shape our European answer accordingly as we are in a different cultural setting

We have already some experience in Finland and most of theory has already made explicit and is thus free from cultural setting.

Future manufacturing in Japan, AIST Background In recent years, public expectations for science and technology development in Japan are rapidly growing. Since the enactment of the Basic Law on Science and Technology in 1994, the Japanese government has been injecting enormous amounts of funds into research on science and technology in the framework of the





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first and second Basic Programs for Science and Technology, regardless of the severe economic depression. The amount of the invested money indicates high degree of public expectations. Japan's new Science and Technology Basic Plan, which will take effect 2011. In the report of the Council for Science and Technology Policy, what forms the basis of the plan is the view that science and technology policies and innovation policies should be formulated in an integrated manner so as to transform the results of science and technology into innovation, as well as to improve their level thereby contributing toward strengthening Japan's competitiveness. The target for related investment in research and development was set to at least 4 % of GDP for the private and public sectors combined, with at least 1 % of this to be funded by the government. This figure compares favorably with the level of investment during the term of the previous plans, and is an indication of the determination of the government. Intensive discussions concerning competing in the race for global innovation, the necessity of nurturing and utilizing human resources, including engineers and scientists, that can meet the needs of the time, as well as the necessity of making a global contribution with a focus on software rather than hardware, in addition to the importance of industry-academia-government collaboration to promote science and technology innovation policies and revitalize local economies are in center of new Japanese manufacturing paradigm.. Japanese National goals The new plan is the following five "national goals" that were discussed. The Cabinet Office document, "Basic Science and Technology Policy":

(1) a nation that can achieve sustainable growth into the future (2) a nation that can realize a prosperous and high-quality life for its people (3) a nation that can sustain science and technology, which provides the

basis for its existence (4) a nation that takes leadership on global issues (5) a nation that continues to create intellectual properties and nurture

science and technology as culture In recent years, concerns have often been expressed over the pessimism pervading Japan due to its decline in the global competitiveness rankings of the International Institute for Management Development (IMD), its sluggish economic growth, and the rapid pace at which other countries are drawing level with it. Needless to say, Japan has worked hard to catch up with and surpass the developed countries on its road to modernization since the Meiji Era and, as a result, has become globally recognized in the cultural, economic, and industrial spheres. There are many issues on which Japan can contribute to the world with its high level of science and technology achieved over the years, including environmental issues. Japan is in a position where it can take the initiative to solve the issues specific to this century that the world is facing.. A rise in Japan's global competitiveness ranking will inevitably follow the achievement of these goals.





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Science and Technology Innovation Policy The world economy has become globalized with the rapid emergence of countries such as China and India as economic powers. In addition, strong competition has arisen in the arena of global innovation and a phenomenon called the marketization of research and development is appearing in various countries and regions. The global movement of talented people has intensified and the competition for top researchers has become fierce. The purpose of the integrated implementation of the "Science and Technology Innovation Policy" is to respond to the changes in and escalation of global competition and to transform scientific and technological achievements into the creation of new value. Emphasis is being placed on the development of a strategic structure to promote innovation, enhancement of the industry-academia-government "knowledge" network, and creation of opportunities for industry-academic-government collaboration. With the qualitative changes in competition, addressing the international standardization of technology is becoming increasingly important. This calls for stepped-up nationwide efforts. Support for international activities in science and technology diplomacy in Asia and other regions will be enhanced. This will make a significant contribution to the promotion of "green innovation" and "life innovation" as pillars of economic growth and the international dissemination of the achievements of these programs. Reform of research and development organizations is also a matter to be discussed. In the environment of severe global competition, there are an increasing number of issues that are difficult for the private sector or universities to tackle, and that need to be addressed by public research and development organizations. These issues include long-term research and development, research and development for the benefit of the public, and research and development with a high current level of risk. It has been 10 years since Independent administrative institutions were established. In promoting science and technology innovation policies in an integrated manner, enhancing the functions of research and development organizations by improving their governance and management of organization and operations is of great importance. Japanese Universities and Research Institutes mission for manufacturing renewal, AIST AIST's current missions are "solution for the 21st century issues" and "reinforcing functions of open innovation hub". In "solution for the 21st century issues", the challenge is on developing fundamental and advanced technologies to promote green innovation and life innovation and to enhance sustainable competitiveness, as set forth in the government's economic growth strategy and the Science and Technology Basic Plan. While having significantly benefited from scientific, technological, and industrial development, human beings are inevitably faced with new issues related to the environment, natural resources, and ethics. We must seek well-balanced development, with consideration given not only to contributing to market growth and improved convenience but also to the issues mentioned above. In "reinforcing functions of open innovation hub", research and development, assessment, and standardization of technologies through industry-academia-





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government collaboration utilizing the human resources and organization of AIST , universities, public research institutions, and companies on a one-to-one basis or on a consortium basis, setting up collaborative research organizations, and integrating databases together. Open and active large-scale collaboration, including participation in technology research associations. The government will revise the Fourth Science and Technology Basic Plan for a five-year period starting in FY 2011. Revisions to our strategy will probably be made to proactively and quickly incorporate the changes to the plan. A number of global issues need to be addressed to ensure the sustainability of human society is growing. Global collaboration and competition in innovation are rapidly expanding. This trend is reflected in the increase in the number of research collaboration agreements with overseas research institutions. Benchmarking 21st century COE programme MMRC,(Manufacturing Management Research Center) professor Takahiro Fujimoto 21 th Century Architecture based competition The US financial crisis hit Toyota and other Japanese firms that depended heavily on the US economic-bubble-driven exports, and yen was appreciated during the same period. Many Japanese factories continued to move to low cost countries like China. Some of large firms in lower cost countries such as Korea started to outperform Japanese counterparts. – These facts and concerns lead to spread of various types of industrial pessimism: Many observers in and out of Japan started to argue that this is the beginning of “the end of Japanese manufacturing.” On the other hand, however, Japanese export activities remained fairly high after the crisis – 50 trillion yen or over 10% of its stagnant GDP, with over 6 trillion yen of trade surplus in fiscal year 2009. There are still many Japanese firms with record high profits and continued growth. Note that, while media tend to focus on the hardship of bad performers, better performers (smaller ones in particular) are generally silent, as they do not want to become targets for price-cutting pressures. This indicate that the reality of Japanese economy is a more mixed one than an “all-dark” view that the media tend to advocate. In fact, if we can still predict the global expansion of free trade as a long-term trend in the 21st century, and if we also believe in David Ricardo’s theory of international division of labor based on comparative advantage as an economic wisdom from the 19th century, it should be common sense that industrialized countries have, after all, something to export and other things to import. Where to design , produce and sell It is neither meaningful nor constructive to ask whether European, U.S. or Japanese manufacturing sector is totally hollowed out or in danger to do so. The realistic question should be (i) in what areas manufacturing sites maintain comparative advantage, (ii) and what levels of relative wage, living standards, and exchange rate are compatible with its trade balance. Since today’s major firms extend their activities across borders, these questions are translated into where to design, produce, and sell their products on a global scale.





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Dynamic fit between products and capabilities, design based view Fujimotos MMRC group answers to these two questions are as follows (see also Figure): (i) a dynamic fit between products’ architecture and sites’ capability affect the comparative advantage of the goods and sites in question; (ii) capability-building competition among the competing manufacturing sites affects relative wage levels that are compatible with balanced trade. This framework is called design-based view of comparative advantage, which may provide us with additional explanation to today’s trade phenomenon (e.g., intra-industrial trade), alternative classification of industries, and a calmer approach to the problem of industrial hollowing out. Where to design ie. coordination of architechture and capability The evolutionary framework of architecture-based comparative advantage leads to a hypothesis that dynamic fit between organizational capability and product-process architecture tends to result in complicated patterns of international division of labor. While most existing trade theories focus on the question of “where to produce,” this approach starts from a simple fact that a design process precedes a production process, and thus emphasize another important question – where to design. Because design of an artifact is nothing but coordination of its functional and structural elements prior to production, we should pay attention to coordinative aspects of capability and architecture. Capability , the cumulative strength A manufacturing site’s capability reflects the historical system evolution of a nation or region in question. In post-war Japan, for example, “economy of scarcity,” that is, chronic shortage of labor, material, and financial input caused by Japan’s rapid and continuous economic growth in the 1960s to 80s, through long-term employment and transactions for preserving such inputs, resulted in disproportionate accumulation of coordinative (integrative) capabilities in the country. And this coordination-rich capability of manufacturing sites, once established, became a source of competitive advantage in coordination-intensive products with complex and integral architecture.





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Build on strength Thus, a prediction derived from this design-information-architecture view of industry is that Japanese firms and industries should base their strategies on its traditional strength; that is, coordinative-integrative organizational capability and coordination-intensive (i.e., complex-integral) products for the time being. More generally, each country should exploit its existing capability and architecture in the shorter run, while exploring its potentials in alternative types of capability and design in the longer run. Different countries and regions have different histories. And history matters as a basis of their competitive advantage. Industrial hollowing out may happen more often in the area where the capability and architecture do not fit, but compensating industrial development may be observed in the area where the dynamic fit is present – this is an insight derived from our design-based, or “monozukuri-based,” theory of trade and industries.

Foresight of Swedish Production research; Chalmers University of Technology, Department of Product and Production Development, SE- 412 96 Göteborg Sweden Svensk Produktionsforskning 2020, Strategisk forskningsagenda. Teknikföretagen, Svenska Produktionsakademien and Swerea IVF ,Jan Sjögren, IVF, Johan Stahre, Chalmers. World-class production is crucial for the global competitiveness of the Swedish manufacturing industry. Sweden has strong and long-standing traditions in the manufacturing industry but also in research institutes and universities. However, we have found that industrial knowledge and know-how has been hollowed out and that interest in production technology education and research in the field has diminished. Swedish manufacturing industry generates 50% of Sweden’s export of goods. The industry is facing big changes. The main driving forces behind the changes are





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increasing globalization and requirements on ecological sustainability. Great opportunities exist for Sweden to strengthen its global competitiveness by quickly adjusting to the new conditions A continous development of production knowledge and skills is a key factor for renewing Swedish industry, in part to stimulate and develop domestic production and also to increase Sweden’s attraction as a platform for development for global companies. Advanced production engineering research carried out in close cooperation with manufacturing companies is a key factor in industrial development. The presented agenda is a joint vision of industry and academia towards the year 2020. Important challenges for future production

1) Sustainable Production Only minimal environmental impact and minimal consumption of resources is acceptable. Manufacturing industries must achieve production sustainability from ecological, social, and economical perspectives. The competitive advantages are to be found in methods and technologies for resource efficiency and global perspectives on environmental impact in all stages of the product realisation process, from idea to recycled product.

2) Flexible production Manufacturing companies must be able to adapt quickly to be able to seize opportunities. Production processes, production systems, competencies, and organisations in knowledge-based companies must be able to take advantage of changes in conditions, customer preferences, innovation and social requirements quickly.

3) The role of humans in production systems Employment in future production means advanced, professional, knowledge-based work where communication and co-operation between people and production systems are crucial. Innovation, problem-solving, and ability to quickly adjust to new situations require efficient and user-friendly communication tools. Knowledge-based work enables maximal synergy between people and technology.

4) Digital and knowledge-based production New technology must enable efficient transformation of data into useable knowledge. A constant access to enormous amounts of information demands new methods to process and transform information. Information technology, information standards, sensors, automated information processing and the interface towards humans must be developed radically.

5) Production of innovative products New product concepts that cannot be predicted today will require completely new production processes and materials for production to take advantage of the potential in new materials, compounds, mechatronics, and micro- and nano-technology.

6) Parallel product realization Concurrency throughout the product realisation process. Minimize the time from idea to delivered product. The whole life cycle of the product must be taken into account.Customer needs and demands should be identified during product development and preparation for production and distribution. The challenge promotes fast innovation in all stages of product realisation.

7) From a Swedish perspective, the ongoing globalisation poses a huge challenge, which brings both possibilities and threats for Sweden. A seventh challenge is therefore added to the six previous challenges: Global Swedish production





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a. Strategies for taking advantage of the strong increase in globalisation. b. Method for efficiently chosing production strategies. c. Development of production strategies for optimized distribution of

domestic and outsourced production. It is a challenge to strengthen Sweden as an attractive production country. The challenges outline key and long-term areas of research and development. All challenges place demands on interdisciplinary or multidisciplinary approaches. Today’s technology and methods are not sufficient enough to take advantage of possibilities or solve problems created by these challenges. Long-term co-operation between the industry, academia and research institutes is necessary to increase the competitive edge of Swedish manufacturing companies. These challenges are long-term goals for industrial and academic development. A time limit is set to 2020, but many of these challenges will still be important for a long time after that. The areas of research identified by systematic matching of the industry’s and academia’s visions paints a justified picture of prioritised Swedish research needs. FACTS: Identified areas of research The following 16 areas of research have been identified and prioritised to lead research towards the seven challenges in a long-term strategy. Prioritised areas of research, summary Production systems:

• Robust and reliable production systems • Flexible and module-based automation • Adaptive production systems • Virtual factory and flow development • The role of humans in production systems • Competence, learning, and organisation in production • Production logistics and enterprise networks • Integrated production and product development: • Production requirements in early stages of product development • Methods for virtual production and product development • Methods for analysis and optimisation of production and product development • Manufacturing processes: • Processing of new materials and compounds • Virtual development methods for material processing and forming • Processes for surface and heat treatment • Manufacturing technology for micro- and nano-structures • Measuring and management of measured data • Characterisation of materials from a process perspective

Humans often participate in manufacturing as flexible and efficient resources and their working conditions must always be based on needs for safety and motivation. The staff must be in command of the systems and, if necessary, be able to solve complicated situations. A good working environment is therefore important and the systems must be designed to make human-human and human-technology interaction efficient. The distribution of tasks between humans and automated resources is not





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permanent but will change over time. Each production system should meet the requirements for ecological, social and economic sustainability. A big challenge is therefore to develop production towards life-cycle considerations, for example by minimizing environmentally hazardous emissions and energy consumption. The Projects in sustainable manufacturing in CalmersChalmers:

1. EcoProIT ProViking project 2010-2013, The main objective in EcoProIT is to enable measurement and evaluation of environmental footprint during the lifecycle of a product.

2. SYMBIZ is a research project that aims to test the hypothesis that an integrated co-operation between manufacturing and recycling industry, employing symbiotic business models, will increase the profitability and reduce the environmental impact for both parties. The project runs for six months and is funded by VINNOVA, the Swedish Agency for Innovation Systems.

3. reCORE , Remanufacturing – a key industrial discipline at the end of a product’s life cycle. This project supports remanufacturers in handling variety induced complexity by developing sector and company specific manufacturing configuration options.

4. Managing the Resource DMU, This project focus on improved visualization methods of the factory and the process of maintaining this evolving information over time. The project is financed by the Swedish Knowledge Foundation

5. Lean or Mean - Consequences of existing production concepts in Swedish working life, The creation of effective organizations and good working conditions. The aim is to identify the hallmarks of a good Lean Production implementation in terms of stress levels and working conditions.

6. ProAct - Proactive assembly systems.The research project was formed in 2006 and is a national cooperation between academia, institution and industry . “Ability of preparation for changes and disturbance during operation and planned, long-term, and sustainable evolution of an assembly system” planned combination of automation and manual knowledge work where the level of automation (LoA), the level of competence (LoC) and the level of information (LoI) are decisive factors. These three parameters will contribute to a cost efficient proactivity





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6R concept for assessing products sustainability The 6R concept is an extension of the environmentally benign manufacturing concept ‘3R’ [1]. The 3R concept considers only Reduce, Reuse and Recycle operations. The shortcoming of this concept is that it cannot be applied for a closed loop life cycle hence it does not take a proactive stance towards enabling innovations and operations in the product’s end of life management [2]. Therefore, the ‘3R’ concept cannot be viewed as a sustainable paradigm. However, the 6R takes a far more holistic approach in the product’s life cycle, enabling further actions towards managing the products end of life decisions and possible subsequent life cycles. The 6R concept is presented in figure 1. A brief description of the 6R’s is given below [2].

Figure 1 Illustration of a closed loop product life cycle showing the 6R's

Reduce Reduce seeks to simplify the product to enable better end of life management for the product and give the product more opportunities to live a subsequent life cycle. Reduce mostly occurs in the first three stages of the products life cycle, pre-manufacturing, manufacturing and use. In pre-manufacturing it means to reduce the raw material required for the product, in manufacturing it refers to the reduction of resources such as energy to produce the product. Finally in use, reduce means to reduce the environmental burden the product has in its environment, such as energy consumption and waste generation. Reuse Reuse has the lowest environmental impact in the 6R’s as the product can be directly reused without embedding further resources in the product [3]. Additionally reuse also refers to reusing the product or parts which still has usable aspects left [4]. Reuse is only present in the subsequent life cycles of the product. Recycle Recycle refers to activities such as shredding, smelting and separating. Recycling also includes a number of activities such as sorting and processing recycled products into raw materials [5]. Recycling minimizes the emissions of a number of greenhouse gasses and pollutants which are hazardous to the environment. Recycling also saves energy and serves as a supply of raw materials for the industry.





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Recover Recover represents the activities in collecting end-of-life products to enable the subsequent post-use activities. Recover can also refer to the disassembly and dismantling of specific components from a product at the end of its life. Recovered products can be sorted, cleaned and processed to reduce the virgin material use. Recovery is an important aspect of the post-use stage since recovering the products enables other stages in the 6R concept such as redesign and remanufacturing. Redesign Redesign is an operation closely linked with Reduce as it involves redesigning the product to be more simplified for future post-use processes. Design for Environment is a central part of the redesign process since it takes environmental issues into account. This ensures the ease of disassembly, reduction of hazardous materials used and a number of other benefits which would otherwise make the product less sustainable. Remanufacture Remanufacturing is similar in many ways to normal manufacturing, the difference however is that the manufacturing is not conducted for the first time. Remanufacturing is considered as a subsequent operation conducted after other post-use activities. Remanufacturing can be applied to restore used products to like new condition of the original product [6]. Remanufacturing costs are lower compared to the costs of first time manufacturing.

Product value gained through the 6R’s As products are produced the value of the product increases through the supply chain up to the customer. At the end of life the product has the choice to either be reused or disposed. Should the product be disposed the monetary value invested in the product can be hard to recover. Applying the 6R approach to the end of life it can enable a subsequent life cycle for the product. Subsequent life cycle enables savings for the manufacturer as the need for raw materials is greatly decreased in refurbishing the product to a like new condition [2]. The gains through the products first life cycle and subsequent life cycles are illustrated in figure 2.

Figure 2 The increase in products value through the initial and subsequent life cycles

[2]





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Assessing the 6R’s A generic methodology for assessing the product in terms of the triple bottom line, Economy, Environment and Society with the 6R concept is presented in figure 3. Additionally the figure shows the interactions between the 6R’s with different stages in the products life cycle. The initial life cycle only considers Reduce from the 6R’s as the other R’s of the 6R concept are heavily linked with the post use activities of both the product and process. In each element of the matrix each R‘s presence is considered and weighed on the scale of 1-10. The average for these influencing factors is calculated to percentages and presented in a visual representation of the obtained results [2].

Figure 3 A generic matrix for scoring the 6R's in terms of Economy, Environment and Society in the different stages of the products life cycle [2]

References [1] Reduce, Reuse, and Recycle Concept (the “3Rs”) and Life-cycle Economy, UNEP/GC.23/INF/11, Twenty-third Session of the Governing Council / Global Ministerial Environment Forum, Governing Council of the United Nations Environment Programme (2005). [2] K. Joshi, A. Venkatachalam, I.H. Jaafar and I.S. Jawahir, A New Methodology for Transforming 3R Concept into 6R Concept for Improved Product Sustainability, 2006, Global Conference on Sustainable Manufacturing, Sao Paolo, Brazil. [3] The University of Bolton, Online Postgraduate Courses for the Electronics Industry, Life-cycle Thinking, http://www.ami.ac.uk/ [4] http://www.env.go.jp/recycle/3r/en/outline.html [5] http://www.epa.gov/epaoswer/nonhw/muncpl/recycle.htm [6] Remanufacturing:The Ultimate Form of Recycling, Rolf Steinhilper, Fraunhofer IRB Verlag

http://www.ami.ac.uk/

http://www.env.go.jp/recycle/3r/en/outline.html

http://www.epa.gov/epaoswer/nonhw/muncpl/recycle.htm

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