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Q: Economics ( Answered,   1 Comment )
Question  
Subject: Economics
Category: Business and Money > Economics
Asked by: vergita-ga
List Price: $200.00
Posted: 12 May 2003 09:00 PDT
Expires: 11 Jun 2003 09:00 PDT
Question ID: 202727
Investigate and describe the impact of relevant ligislation
environmental constraints that could be applied to your chosen
engineering company as a whole consider:

* relevant UK & EU legislation and how it may apply to your industry.

* Potential environmental and social constraints that have or may need
to be taken into account in future.

* Also explain:
  The impact of relevant legislations on the operations of the
business e.g production, methods, transportation , communication.

Request for Question Clarification by ragingacademic-ga on 12 May 2003 09:19 PDT
vergita -

Thanks for submitting another interesting question.  While I cannot
promise that I can indeed produce a reply for this, I will do my very
best.

I assume you would like this to refer to the Ford company as well,
correct?
Any other information you can supply that may assist me in replying?

thanks much -
ragingacademic

Request for Question Clarification by ragingacademic-ga on 13 May 2003 00:01 PDT
vergita -

Hello again.

Please confirm that you would like this question answered in regards
to the Ford Motor Company.

I look forward to completing and posting my reply!

thanks,
ragingacademic

Clarification of Question by vergita-ga on 13 May 2003 06:17 PDT
yes that is right ragingacademic-ga 

thanks vergita

Request for Question Clarification by umiat-ga on 13 May 2003 08:07 PDT
For other researchers:

 Although it is not made clear, this question is supposed to be
answered by ragingacademic. I only realized this after looking up a
past question by vergita.
Answer  
Subject: Re: Economics
Answered By: ragingacademic-ga on 13 May 2003 19:45 PDT
 
Dear vergita,

Thanks for your question.  First, let me request that if any of the
following is unclear or if you require any further research – please
don’t hesitate to ask me for a clarification.

You asked what is essentially a multipart question – what we would
like to do is to get a handle on environmental legislation (and other
constraints) in the UK and EU (European Union) as they apply to the
Ford Motor Company.  We are also interested in such constraints that
may have to be taken into account in the future.  Finally, we are
interested in the impact of such legislation and constraints on the
business of the Ford Motor Company from the perspective of operations,
methods, transportation and communication.

I’ll tackle these issues one by one.


Relevant Environmental Legislation and Constraints – UK and EU
---------------------------------------------------------------

Under “Important Links” below you will find a number of URLs that will
link you to what I have found to be the most comprehensive Web sites
on the subject of interest here.

Referring to Croner, a consulting group that deals with environmental
legislation compliance among other things, the field of environmental
legislation is subdivided as follows –

+ Air quality
+ Energy
+ Environmental information (requirements relating to information
companies must disclose to the public)
+ Hazardous substances
+ IPPC – Integrated Pollution Prevention and Control
+ Noise
+ Planning & Conservation
+ Transport
+ Waste management
+ Water pollution & management

The EU has a more comprehensive classification system for
environmental regulation – you can view it if you go to the following
page –

http://europa.eu.int/comm/environment/

Hold your mouse over the “Policies” button and move down and to the
right.

It is interesting to note here that every single one of these is
somehow relevant to the operations of the Ford Motor Company – I will
note how in the last section below.

I will now review recent legislation that may be relevant to the Ford
Motor Company in particular and to the automotive and transportation
industries in general – I will keep to the Croner classification since
I believe that it is comprehensive enough for the purposes of this
specific project.


Air Quality
-----------
For the UK, regulations concerning air quality are enforced locally –
local air quality management (LAQM) regulations were prescribed by the
Environment Act of 1995, and were updated with new policies and
guidelines put in place in early 2003.  Policies and guidance are
available from DEFRA at –

http://www.defra.gov.uk/environment/airquality/laqm/guidance/index.htm

For the EU, “The Sixth Environment Action Programme (EAP),
"Environment 2010: Our future, Our choice", includes Environment and
Health as one of the four main target areas where new effort is
needed. Air pollution is one of the issues included under Environment
and Health.”

http://europa.eu.int/comm/environment/air/index.htm

The EU also relates specifically to the emission of air pollutants –

http://europa.eu.int/comm/environment/air/emissions.htm

Specific information related to “road vehicles:”

“Motor vehicle emissions are regulated by Directive 70/220/EEC (light
vehicles) and 88/77/EC (heavy vehicles) and amendments to those
directives. A whole series of amendments have been issued to stepwise
tighten the limit values.  Emissions are measurably falling because of
this, even though traffic volumes continue to rise. The implementation
of the Auto-Oil Programme will result in a notably improved air
quality in our cities. The programme focused on the emissions of
carbon monoxide (CO), Volatile Organic Compounds (VOC), nitrogen
oxides (NOx) and particles. By the programme stricter limit values
will be implemented for light vehicles 2005 (Directive 98/69/EC) and
for heavy duty vehicles 2005 and 2008 (Directive 1999/96/EC).”

See more at – 

http://europa.eu.int/comm/environment/air/transport.htm

EU Road vehicle specific legislation:

http://europa.eu.int/comm/environment/air/legis.htm#transport


Energy
------

In the UK, legislation relating to energy use is mainly focused on
limiting climate change through constraints on carbon emissions – see
for example –

www.dti.gov.uk/energy/whitepaper/ourenergyfuture.pdf

The EU has similar goals and projects underway – one example is the
community’s emissions trading program –

http://europa.eu.int/comm/environment/climat/emission.htm

The EU is also concerned with ozone layer protection – 

http://europa.eu.int/comm/environment/ozone/index.htm

As well as with greenhouse gas emissions – 

http://europa.eu.int/comm/environment/climat/gge.htm


Environmental Information
-------------------------

In the UK, DEFRA – the Department for the Environment, Food and Rural
Affairs – has published a draft detailing environmental information
regulations –

http://www.defra.gov.uk/environment/consult/envinfo/index.htm

The EU does not seem to have a parallel initiative that is concerned
with the dissemination of information to the public.


Hazardous substances
--------------------

Note that under the UK approach, hazardous substances and waste are
treated separately.  Some substances for which legislation has been
recently introduced include groundwater pollutants, biocidals,
dioxins, creosote and hexaclorethane.  See –

http://wwwa.croner.net/cgi-bin/gen5?access=3a872251505134&midframe=/modules/tracker/index.html&home=ENV&prodtype=TRK&pack=environment&runprog=infodelfs&BV_SessionID=@@@@0958917156.1052846304@@@@&BV_EngineID=ccceadciejgheficefecgfkdffkdfnk.0

The EU reviews hazardous substances in several areas of action – under
biotechnology, the EU is seeking to regulate GMOs – Genetically
Modified Organisms; however, this in no way relates to Ford.

Dangerous substances are dealt with extensively –

http://europa.eu.int/comm/environment/dansub/home_en.htm

The directive on dangerous substances can be found here – 

http://europa.eu.int/comm/environment/dansub/home_en.htm#g

In addition, the EU is working on legislation to curtail and control
the use of the following – pesticides, biocidals, dioxin, endocrine
disrupters, and volatile organic compounds.


IPPC – Integrated Pollution Prevention and Control
---------------------------------------------------

For the UK, pollution prevention and control related legislation can
be accessed from –

http://wwwa.croner.net/cgi-bin/gen5?access=3a872251505134&midframe=/modules/tracker/index.html&home=ENV&prodtype=TRK&pack=environment&runprog=infodelfs&BV_SessionID=@@@@0958917156.1052846304@@@@&BV_EngineID=ccceadciejgheficefecgfkdffkdfnk.0

But see also – 

http://www.environment-centre.net/cgi-bin/croner/jsp/CronerZoneChannel.do?

And – for the EU – separate directives for air, water, and soil. 
Directives for air quality and emissions controls were already
highlighted above.  Soil development policies can be found here –

http://europa.eu.int/comm/environment/soil/index.htm

The Water Framework Directive provides regulations for river basin use
and development –

http://europa.eu.int/comm/environment/water/water-framework/index_en.html

Water pollution by discharge of dangerous substances is treated here –

http://europa.eu.int/comm/environment/water/water-dangersub/76_464.htm

And pollution by nitrates from agricultural sources is regulated by
the “Implementation of Nitrates Directive” –

http://europa.eu.int/comm/environment/water/water-nitrates/index_en.html


Noise
------

The UK seems to be planning to implement regulations based on the EU
directives –

http://www.aviation.dft.gov.uk/consult/noise/index.htm

The EU has a variety of directives on noise, including the “Directive
on Environmental Noise,” the “Directive on Noise from Equipment Used
Outdoors,” and others – see –

http://europa.eu.int/comm/environment/noise/home.htm


Planning & Conservation
------------------------

Links to UK planning and conservation regulations, including town and
country planning –

http://wwwa.croner.net/cgi-bin/gen5?access=3a872251505134&midframe=/modules/tracker/index.html&home=ENV&prodtype=TRK&pack=environment&runprog=infodelfs&BV_SessionID=@@@@0958917156.1052846304@@@@&BV_EngineID=ccceadciejgheficefecgfkdffkdfnk.0

(if any of the Croner links don’t work, refer to the drop-down menu on
the page you are redirected to and select the relevant section)


Transport
---------

Obviously the most intuitively relevant to the operations of the Ford
Motor Company in the UK and the EU.

British motor vehicle regulations also follow the European Commission
directives.  These regulations had been recently updated (2003) and
are available at –

http://www.hmso.gov.uk/si/si2003/20031019.htm

Relevant EU legislation is available at – 

http://europa.eu.int/comm/environment/air/legis.htm#transport

(…there are quite a few directives to look through…)


Waste management
----------------

Waste management licensing regulations for the UK were also updated in
2003; they are available at –

http://www.hmso.gov.uk/si/si2003/20030595.htm

In addition, Croner’s provides comprehensive information on waste
management regulations and legislation in the UK here – from the
Environment Centre at –

http://www.environment-centre.net/cgi-bin/croner/jsp/CronerHomeEnvironmentCentre.do

Select “Waste Management Zone”


Water pollution & management
-----------------------------

UK is in the process of implementing the EU’s Water Framework
Directive –

http://www.defra.gov.uk/environment/water/wfd/

A comprehensive view of water policy in the EU is provided here – 

http://europa.eu.int/comm/environment/water/index.html


Future Constraints
------------------

Clearly, environmental regulations in the UK and the EU are not about
to become more lax.  Legislation may become far more restrictive
especially in the realm of automotive fuel quality, since this is the
easiest way to curtail pollutants.  From the EU site:

“A broad consultation on the appropriate level for the sulphur content
of petrol and diesel has taken place during the years 1999 and 2000
and the contributions have been synthesised and reviewed by a panel of
independent experts. The Commission will bring forward a proposal to
amend current legislation with respect to the remaining fuel
parameters and, if appropriate, the sulphur content of petrol and
diesel.
1.	New Commission proposal to fill in the missing fuel specifications
for year 2005.
2.	"Call for Evidence" on reducing the level of sulphur in petrol and
diesel below 50 ppm. The Commission initiated a public consultation on
this issue and all papers can be found on the internet.
3.	MTBE and the Requirements for Underground Storage Tank Construction
and Operation in Member States: A report prepared by Arthur D. Little
for the European Commission, March 2001. (pdf ~450K)”
The relevant links can be found at –

http://europa.eu.int/comm/environment/air/future_transport.htm

The EU has published several white papers that provide a window into
future plans.  For example, a recent article in Chemical Week reports:

“Chemical industry groups are gearing up to fight the European
Commission's controversial proposals contained in an EU White Paper
that will be used to set future policy on the regulation of chemicals.
The paper's proposals are expected to cost chemical firms producing in
Europe $1.97 billion-$6.92 billion, and US firms that export to Europe
$5.5 billion-$9.6 billion. The cost is largely due to planned
requirements for registering and testing new and existing chemicals.”

Industry sees red on EU white paper; Chemical Week; New York; Jul 17,
2002; Alex Scott;

The EU is also trying to pass legislation that would place
far-reaching environmental liabilities on the shoulders of industry –
“They (the EU) also wanted a "strict liability" regime - where no
fault of the operator is required - to apply to a broader sweep of
activities than outlined in the draft directive, including
contamination by genetically modified organisms, mining, transport,
radiation and oil pollution.”

No common ground on pollution: ENVIRONMENT: Green groups and industry
lobbyists are at loggerheads over a proposed EU directive on
environmental liability, says Vanessa Houlder; Financial Times; London
(UK); Dec 9, 2002; Houlder, Vanessa;

Obviously, such legislation may have far-reaching consequences for a
company such as Ford not only because of possible financial liability
and the additional insurance the company will need to carry, but also
because fundamental changes in operational and manufacturing policies
may be required.

Specific industries are already being taxed for various emissions - 

“The Treasury has imposed a climate change levy on the output from
specific types of power stations but has yet to embrace a broadly
based carbon tax that would help nuclear as well as renewable energy
producers.”

Regulator urges overhaul of climate change policies; Financial Times;
London (UK); Aug 8, 2002; Taylor, Andrew;

…and as the article discusses, additional such taxes are in the not
too distant future.


Impact on the Ford Motor Company
*********************************

I’d like to address this last section in a couple of different ways –
first, I’d like to offer a somewhat theoretical discussion of the kind
of changes Ford will likely have to make in order to meet increasingly
stringent regulations in the environmental arena.  Then, I’ll point
you to a number of articles that discuss what Ford is already doing.

Theoretical Discussion – Environmentally driven Changes
-------------------------------------------------------

I’ll turn to the Croner classification again because I’ve found that
it’s a good framework within which to consider such issues –

+ Air quality – emissions control regulations will require design
changes to Ford’s autos above and beyond what has already been
accomplished to date; depending on the extent of such legislation,
entire production lines may have to be reengineered.  The likely cost
for such changes is in the $US billions.

+ Energy – as above because of emissions control requirements;
however, since such controls are also being levied on manufacturing
plants, additional design and reconstruction may be required at the
factory level.

+ Environmental information – may require a department that would need
to deal exclusively with the creation and dissemination of relevant
content to the public (communications materials, Web site etc.)

+ Hazardous substances – significant operational overhead can be
expected in order to reduce or eliminate the use of such substances;
additional expenses to store and dispose of hazardous substances
according to regulations.

+ IPPC – Integrated Pollution Prevention and Control – similar to air
quality and energy requirements above

+ Noise – complying with regulations pertaining to noise may require
additional auto and plant redesign to reduce noise emissions

+ Planning & Conservation – possibly may have to relocate plants, may
definitely impact planning for future manufacturing facilities; land
already purchased by the company may not be available for planned use

+ Transport – most critical element from Ford’s perspective – but
since majority of relevant legislation relates to pollution of one
sort or another, this has all mostly been dealt with above (air
quality, noise, etc.)

+ Waste management – will need to put in place procedures for the
storage, management and disposal of waste that may far exceed current
budget; again, possibly a major future expense

+ Water pollution & management – since Ford plants use water for
process cooling and dump a variety of fluid waste, will also have an
impact on operations and expenses


Relevant Articles Pertaining to Ford Action in the Environmental Arena
-----------------------------------------------------------------------

Ford’s environmental record has been improving of late, and the
company has been trying to meet future requirements and constraints
stemming from new legislation head-on.  Here are some examples –


*** New Direction at Ford

“A fiercely principled environmentalist and congenial company man,
Ford is fomenting a revolution to transform the family firm-now a
worldwide industrial monster with $170 billion in annual sales-into a
corporation that cares as much for consumers and the air they breathe
as it does for its bottom line.”

The rebel driving Ford; Time; New York; May 14, 2001; Frank Gibney Jr;
John Greenwald

*** Efficiency Bonus From Ford’s Emission-Beating Ovens
When Ford decided it was time to refurbish and upgrade two primer
ovens and systems at its Dagenham plant in Essex, UK, the company
looked to the future. Against a worldwide background of rising concern
over environmental issues and pollution, Ford decided to make use of
the opportunity to reduce VOC emissions.
They aimed for a system that would meet emission regulations for the
foreseeable future, recognizing that better environmental controls
would enhance relations with the local authority and the community.
Source:
http://www.environmental-center.com/articles/article1122/article1122.htm


*** Ford may have to incur significant recycling expenses in Europe

“Controversial measures forcing car manufacturers to take vehicles for
scrapping at no cost to their owners and to recycle parts seem set to
go ahead following approval yesterday by a powerful committee
representing EU member states.  Car manufacturers claim that the plan
will cost them more than {XEU}10bn (6.52bn). European Union ministers
are expected to confirm the measures next week despite opposition from
Germany.”

Makers may have to take back cars for scrap in EU; Financial Times;
London; Jul 23, 1999; Burt, Tim; Simonian, Haig; Smith, Mike;


Ford meeting future environmental regulations early

“Ford Motor Corp. has announced that its 2000 model trucks will meet
EPA regulations mandated for the year 2004. The announcement was
applauded by environmentalists, who warn that America's infatuation
with big trucks poses a dangerous ecological threat because the big
rigs emit more pollutants.”

Green Fords; Time; New York; May 31, 1999; Anonymous


I hope this response adequately addresses your request.  Please let me
know if you are in need of additional information concerning this
query.

Thanks,
ragingacademic-ga


Important Links:

EU and UK
--------------
What’s new in environmental legislation – UK, EU
http://www.shef.ac.uk/~ebn/whatsnew.html


European Union Resources
---------------------------------
EU Environmental Legislation Pages
http://europa.eu.int/comm/environment/

EU links to environmental legislation
http://europa.eu.int/comm/environment/legis_en.htm

European Environmental Law Homepage
http://www.eel.nl/


UK Resources
-----------------
*** UK Environmental Legislation Database ***
http://www.btinternet.com/~cm/l/l.htm

Environmental Protection Act of 1990 (UK)
http://www.btinternet.com/~cm/l/90043.htm

Croner’s - Great source on environmental legislation in UK (free
registration required – but you can use google/google if you do not
want to register yourself)
http://www.environment-centre.net/cgi-bin/croner/jsp/CronerHomeEnvironmentCentre.do

UK Environment Agency – Guiding small businesses through environmental
regulations
http://www.environment-agency.gov.uk/netregs/
Comments  
Subject: Re: Economics
From: ragingacademic-ga on 13 May 2003 08:26 PDT
 
Umiat -

Thanks much for your comment there!

ragingacademic

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