HP: how green was my vendor

Electronic News, June 15, 1992 by Robert Ristelhueber

MOUNTAIN VIEW, CALIF.--If you're trying to sell to Hewlett-Packard these days, be prepared to answer some unusual questions. For example: was your product manufactured in a way which damaged the ozone layer? Can it be recycled? And was it made using any chemicals from the Environmental Protection Agency's 33/50 hit list?

Already under growing pressure from environmental laws and regulations issued by federal, state, local and even foreign governments, components suppliers are now also facing demands in the vendor qualification process to clean up their act and be environmentally friendly. And that is translating into some major expenses for many vendors, particularly semiconductor manufacturers with a heavy investment in wafer fabrication equipment and materials.

For example, in an effort to eliminate ozone-depleting chemicals from its wafter fabs. National Semiconductor wanted to switch one of the gases it uses in the etching process to an ozone-friendly material. The price quoted to National to retrofit each etcher: $50,000. Components suppliers have little choice but to comply. The passage of the Clean Air Act in 1990 was already exerting pressure, but with customers now requiring their vendors to protect the ecology, it becomes a competitive issue.

HP isn't the first computer company to ask detailed questions about its vendors' environmental practices, but it is the most recent to do so. The firm in the past few months has begun surveying all its components suppliers with an eye toward establishing firm guidelines, said Ed Maxie, a procurement director at HP.

"We've always evaluated suppliers based on quality, cost and delivery factors. Now we're looking at environmental issues," he said.

"There are a number of things we're trying to accomplish," he added. "We want to ensure that we're complying with applicable regulations and laws. We want to build up an awareness with suppliers that Hewlett-Packard is concerned with its suppliers' environmental performance. And we want to be sure that we're not at a competitive disadvantage."

On that last point, Mr. Maxie said that under federal law, HP will soon have to label any systems which were made using ozone-depleting materials or contain components which were. "That would put us at a disadvantage with a competitor who doesn't have to label their products," he said.

So far, HP isn't requiring its vendors to conform to certain environmental practices, "But we could eventually," he said. "This is just an information-gathering exercise right now.

"We've surveyed about 20 of the major semiconductor people, and the response so far has been extremely positive," Mr. Maxie said. "A number of companies don't require any encouragement at all. Now we're talking to medium- and small-size companies to get a baseline on those companies."

Some of the questions posed by HP to its vendors relate to their participation in the EPA's 33/50 program. That voluntary program asks companies to commit to reduce their usage of 17 toxic chemicals by 33 percent at the end of this year, and 50 percent by 1995. Included on the list are benzene, carbon tetrachloride, dichloromethane, tetrachloroethylene, xylene, lead and mercury. "We can't say that as an industry we're perfect, but we are very responsive and concerned," Mr. Maxie said. "The typical response of some industries to these laws is to hire 100 lawyers and find out how not to implement them."

The passage of the Clean Air Act has resulted in a tangible increase in pressure being applied by systems makers to their suppliers, said Dan Wilkowski, director of environmental and safety services for National Semiconductor. "This is the first customer-driven environmental activity," he said.

National had been engaged in a five-year phase-out of its use of ozone-depleting materials, which was scheduled for completion by 1994, but pushed that timetable up to the end of 1992 at the behest of customers. "They don't want to label their systems as being manufactured with a substance harmful to the ozone layer. They feel it's bad for business," Mr. Wilkowski said.

While it proved relatively simple to eliminate ozone-depleting chemicals at the early stage of the program, "Now that we're down to the wire, some of the hardware changes that are needed can cost some money," he said.

Substituting new chemicals in the etching and diffusion processes can require the installation of new cabinets and piping around those systems, he said. National is negotiating with its vendor to try to reduce the $50,000 price tag for adapting each etcher, he added.

Another expense is then incurred because National must re-qualify its circuits with customers because of the change in the manufacturing process, Mr. Wilkowski said.

Components suppliers are even being impacted by laws being passed in foreign countries, he said. Germany, for instance, now requires all packaging materials to be recyclable, "a real challenge" for National and its customers given the volume of shrink-wrap materials, electrostatic protection, and bubble-pack materials used in shipping components and systems, he said.