Circular Economy Case Study
Steklarna Hrastnik is a 157-year old high-end niche manufacturer of glass products from some of the cleanest glass in the world. It is not only one of the most successful and innovative Slovenian companies, but a leading adopter of the circular economy among the European glassmakers. However, less than 7 years ago, the situation was far less rosy. The company was drowning in losses, work morale was low and, being known as a polluter in the mining town Hrastnik where it is located, its reputation was tarnished. How then, did things turn around so fast for Steklarna Hrastnik? The answer is simple: by deciding to focus on genuine care for their products, their environment, and their employees.
A GLASS HALF FULL
Years of bad results resulted in the arrival of a new management team in 2010, led by Director Andrej Božič. His team started to change the company culture towards one based on sustainability and good relationships with their stakeholders. The new long-term vision for Steklarna Hrastnik was to become the best choice in the world for super premium packaging glass, as well as a front-runner in implementing circular economy technologies. The choice for adopting the circular economy was not coincidental: the new management realized that their customers were starting to put value on their suppliers’ attention to sustainability. As an energy intensive industry, glass manufacturing was put on the spot to prove its commitment to ecological values, but Božič’s motivation ran even deeper than that.
AN ANCIENT MATERIAL FOR A CIRCULAR FUTURE
Glass, as the employees of Steklarna Hrastnik will keenly explain, is a perfect packaging material for the circular economy. Today the world struggles with the enormous amount of plastics that is being produced, used and discarded each day. Recycling it is not easy, nor cheap. Glass on the other hand, can be recycled infinitely, meaning that wasted glass can be used as a secondary material for producing new glass as many times as we want to. Thus, part of Steklarna Hrastnik’s mission became convincing the public that glass can be one of the solutions to the environmental crisis, caused by discarded plastic products.
GETTING TO WORK
The new management wasted no time (or glass) before starting to transform the company’s processes on all operational levels. Acknowledging its bad environmental track record, Steklarna Hrastnik made several large investments over the years that have enabled it to drastically improve its ecological footprint. New technologies were introduced, bringing automation and digitalization into the manufacturing process. Furthermore, to overcome the lack of innovation and effort, the management focused on nurturing a caring, encouraging and safe working environment. A new communication strategy was also designed to rebuild the company’s relationship with the people of Hrastnik. All of this was done with the purpose of achieving operational excellency on all levels of the company. And how did they fare? Before we reveal the outcomes of Steklarna Hrastnik’s circular journey, we would first like to show the reader how they approached their transformation.
BECOMING A CIRCULAR ECONOMY PIONEER
At Steklarna Hrastnik, glass is no longer only the output: it is now also an input material that realizes its full potential as a secondary resource. After their manufacturing plants were modernized, resource recovery became one of Steklarna Hrastnik’s staple activities. Glass cullet (broken shards of glass) that is produced as side material in the production process now represents 30% of the input material of their glass, leading to lower resource use. Furthermore, furnaces now use 2-3% less energy for each 10% of the glass cullet added to the mix. Advanced digitalization and automation enable precise monitoring of the use of resources and energy.
The resource recovery mind-set has since then spread to other areas, including industrial water. Thanks to the innovativeness of their own employees, the industrial wastewater treatment plant was renovated, allowing the loop for industrial water to be closed. New furnaces were built using in-house knowledge. They enable savings of energy, and lower emissions. Steklarna Hrastnik is now proudly claiming to be are on its way to closing energy loops, industrial water loops and by using glass-cullet, making progress on reducing waste materials as well.
EMPLOYEES = INNOVATORS
As part of their strategic transformation, the company introduced a mentorship programme with 75 mentoring couples. New policies were installed to ensure constant engagement of employees in the innovation processes: suggestions for improvement are collected regularly and every year up to 75 % of them are executed. Suggestions for improvement also lead to financial rewards.
This could only be achieved by building a safe and supportive working environment. Steklarna Hrastnik was awarded a “Family friendly company” certificate and after improving their safety measures, work-related accidents fell by 73% in the past 5 years.
LOCAL COMMUNITY = PARTNER
As a major employer, Steklarna Hrastnik plays a key role in the local community. As part of a new communication strategy, they actively and transparently share information on manufacturing activities. They invest in the community by sponsoring cultural and sport events. The best gift that could be given to the people of Hrastnik us, however, a cleaner living environment and higher wages for employees, a direct result of the company’s new circular economy strategy.
AND THE RESULTS? PRETTY GOOD.
Achieving outstanding business results for seven years in a row, Steklarna Hrastnik managed to increase its production and productivity, improve their product mix, significantly lower manufacturing costs, all while dramatically decreasing its environmental impacts. Since 2009, turnover grew by 49%, the added value per employee rose for 108%. And the profits? In 2010 the company operated with a 5 mio EUR loss and at the end of 2016 with a profit of 7,62 mio EUR. New customers and business partners, eager to work with innovative glass manufacturers, were attracted and Steklarna Hrastnik received several awards for the innovation and corporate social responsibility.
The environmental progress was no less significant. After taking every possible measure to decrease their environmental impact from manufacturing, Steklarna Hrastnik decreased the amount of energy used by 16%, amount of waste by 30%, use of water by 55%, NOX emissions by 75%, dust particles by 75% and CO2 emissions by 35%.
Still, the achievement that is most highly regarded within the company is the innovative working environment, where employees and managers alike enjoy coming to work and doing their best to ensure the continuous success of the company.
THE FUTURE IS CLEAR
In 2017, Andrej Božič was succeeded by the new CEO Peter Čas, who is determined to keep steering the company towards a circular future. To compete with larger glass manufacturers, they aim to form strong horizontal partnerships with companies and designers who share their core values. Steklarna Hrastnik is currently investigating options for co-investing in a new production facility abroad to serve as a vehicle for sharing their circular know-how. They invested, together with the Slovenian Government, the EU and 4 other partners, in a research centre RC eNeM that will explore new materials and ways to optimize the conversion of energy to decrease the share of fossil fuels used by industrial melting of glass.
Lowering emissions is a priority for future improvements to the manufacturing processes. In addition, electric vehicles will be bought and used to transport materials between locations and inside the factories. A key future goal is the development of new environmentally friendly methods of glass production that fall under the so-called industry 4.0 or ‘smart factory’ framework.
Author: Niko Korpar