Canada | Sustainability

Going green is good for the bottom line, industrial company owner says

Metal fabrication company VeriForm reduced its energy use while also increasing staff, doubling its building size and improving profits. Here’s how the firm did it.

A Facebook IconFacebook A Twitter IconTwitter A Linkedin IconLinkedin An Email IconEmail

Paul Rak of VeriForm, a metal fabrication company To see whether he could make a difference in the company’s energy use, VeriForm CEO and founder Paul Rak introduced a number of projects, including turning off the lights at night and reducing the temperature on the water heater. ‘Very quickly we realized these initiatives were extremely beneficial to our bottom line,’ says Rak.

Normally you wouldn’t think of a metal fabrication company as a prime example of sustainability for Earth Day.

But VeriForm, a medium-sized Canadian business based in Cambridge, Ont., could well be held up as a poster company for the sector—and business in general. Since 2006, the company has reduced its carbon footprint by 77 per cent through more than 100 energy-saving initiatives. [See 9 tips for greening your company]

Even more remarkably, the company has performed that feat while increasing its staff by 30 per cent, more than doubling its building size—and tripling its sales per kWh of energy consumed, from $6.12 to $19.55. 

“When you look at the numbers you would say it doesn’t even make sense,” says CEO and founder Paul Rak. “How can you lower your carbon footprint and double your building size and triple your sales per kWh? But that’s what happened.” 

The company’s results are so remarkable that it is drawing the attention of policy makers such as Catherine McKenna, federal minister of environment and climate change. She visited VeriForm in July 2018 and used the company as a Canadian example of how climate action can be profitable. As she explains in a video taken during the visit, “[Rak] has got the business case for taking action on climate change, reducing greenhouse gas emissions, saving money, creating jobs. It’s an awesome story.”   

Gord Beal, vice-president of research, guidance and support at CPA Canada, also visited with Rak recently to see VeriForm and to hear his story. He came away inspired.

“The work that Paul and his team have done is a great example of the kind of leadership that Canadian private business can provide,” he says. “They have demonstrated that GHG emissions can be reduced while also achieving business growth and lower costs. It is a framework for business success and a more sustainable future.” 

AN AHA MOMENT

When Rak founded VeriForm in 1999, energy savings were not necessarily one of his main priorities. But seven years later, he saw An Inconvenient Truth, former U.S. vice-president Al Gore’s Oscar-winning documentary on climate change.

“Nature has always been a big part of my life, so when I saw the movie I said, ‘This is insane,’” says Rak. “Then our daughter was born a few months later. That really changed my mindset. The same month I also bought a Prius and decided we had to do something at work about our greenhouse gases.”   

By definition, the business of metal fabrication is fairly energy intensive: VeriForm’s case, these are destined for use on everything from railcars to Hitachi mining trucks to coast guard ships and helicopter guidance systems. Naturally, the plant is filled with heavy equipment, including large 350- and 900-tonne hydraulic brake presses, welding machines and plate rollers. And at 26,000-plus feet, it is also large, which means it would normally require a lot of energy for lighting, heating and/or cooling. 

To see whether he could make a difference in the company’s energy use, Rak introduced a number of projects (the first 37 are listed on the company’s website). These ranged from turning off the lights at night and reducing the temperature on the water heater, to changing the plant's electricity-use patterns and replacing some of the plant’s machines with newer models that use less energy and require less maintenance. 

“Very quickly we realized these initiatives were extremely beneficial to our bottom line,” says Rak. “This was a surprise, because our initial goal was not to save money—it was to see whether I could improve the world just a little bit for my own daughter.”

VeriForm's yearly carbon consumption

CHANGE IN ACTION 

Rak’s initiatives ended up being very much about data gathering, numbers and calculations—something that speaks directly to CPAs’ skill set. They included:

  • Reducing heating bill with limit switch

One big cost-saver that Rak discovered early on had to do with the plant’s five large bay doors. In winter, the doors were being kept open four hours a day on average while delivery trucks unloaded. 

“We were paying $6,000 a month for natural gas during the winter months,” says Rak.

“So I asked an electrician to install a limit switch on each door that would turn the heat off in the shop when the doors were opened.” That did the trick: “When we got our bill the next month, I couldn’t believe it,” he says. “It was $570.” (The company has now tweaked the door system to set back the heat instead of turning it off outright, but the savings remain.)

  • Including employees in the energy-saving journey

As Rak explains, some of the VeriForm’s energy-saving initiatives involved employee-focused procedures and policies. For example, the company decided to give $250 to employees who buy a new fridge with a certain energy star rating, and it offers a $2,000 subsidy to those who buy a Prius or other hybrid vehicle.

“We started offering those subsidies already in 2006—long before other companies were even talking about those kinds of initiatives,” he says.

  • Using hand dryers over paper towels 

Being ahead of your time sometimes means doing a lot of groundwork. In 2006, for example, the company decided to replace all its paper towel dispensers with hand dryers.

“When we did a Google search of paper towels versus hand dryers, only about four to five links came up. Today, you’ll see tens of thousands of links,” he says. “We also had to go to different websites to find out what a pound of paper was worth in terms of emissions. We ended up with a huge spreadsheet to calculate our carbon footprint and what we would save.” 

The calculations have proven extremely valuable. Installing hand dryers alone (for an initial cost of $2,020) brought annual savings of $2,853 and an annual CO2 reduction of 2,300 kg. 

GOING CARBON NEUTRAL

All in all, VeriForm’s changes have cut the company’s annual GHG emissions from 261 tonnes of carbon dioxide equivalent a year in 2006 to 60 tonnes in 2017. With the help of purchased offsets, the plant now bills itself as carbon neutral.  

“Normally, you would think a steel company needs to be using more energy, not less. You would think if it’s not using much energy it must be going under,” says Rak.  

“But we have found just the opposite. In fact, through all our work over the past 13 years, we’ve been able to determine that a tonne of greenhouse gases costs us just over $900 in waste. In other words, for every tonne we eliminate, we actually add $900 in cost savings to our bottom line. It’s a simple calculation, but I don’t know of any other business in Canada that has done it. But they should. As W. Edwards Deming once said, ‘If you can’t measure it you can’t improve it.’ ”  

WANT TO KNOW MORE ABOUT GHG EMISSIONS?  

See CPA Canada’s Primer for CPAs on greenhouse gas emissions management systems.  

For more on adapting to climate related issues, see CPA Canada’s other resources, including Climate change and Canadian business: The good, the bad and the realistic, Four ways climate change is affecting your organization...and what you can do, and Climate change adaptation and accountants’ roles.