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KKR ESG & Citizenship Report

Eco-Efficiency: Lake Region Medical

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Targeting Manufacturing Efficiency Improvements

Key Environmental Performance Area:

  • Greenhouse Gas Emissions (Facilities)

Reviewed existing energy assessments to determine opportunities for higher yield energy conservation initiatives.

Avoided $1 million in electricity costs due to efficiency improvement since 2009.

Avoided 5,600 metric tons of GHG emissions due to efficiency improvement since 2009.

All data and information in this case study are as of December 31, 2015, unless otherwise noted.

Challenge

The industrial sector accounts for a significant portion of the world’s environmental impacts, including approximately half of global energy use.i Manufacturers can help manage their energy consumption, associated costs, and environmental impacts by improving the efficiency of their facilities and production processes.

Lake Region Medical is one of the largest providers of fully integrated outsourced manufacturing and engineering services to the medical device industry. Lake Region Medical is focusing on improving energy efficiency and reducing greenhouse gas emissions from its manufacturing facilities, which represent the company’s largest source of energy use. KKR partially exited its investment in Lake Region Medical when it was acquired by Greatbatch Inc., effective October 27, 2015.

Response

In 2014, Lake Region Medical continued measuring and managing energy consumption in five of its manufacturing facilities against a 2009 baseline as it:

  • Assessed production floor lighting options to establish organizational re-lamping guidelines.
  • Reviewed existing energy assessments to determine opportunities for higher yield energy conservation initiatives.

Resultsii

In absolute terms, greenhouse gas (GHG) emissions from facilities increased by approximately 8 percent between 2009 and 2014, while efficiency improved by approximately 11 percent (GHGs/$ revenue) during the same time period. The efficiency improvement since the baseline year has helped Lake Region Medical to avoid approximately $1 million in electricity costs and 5,600 metric tons of GHG emissionsiii since 2009.

In absolute terms, greenhouse gas (GHG) emissions from facilities increased by approximately 8 percent between 2009 and 2014, while efficiency improved by approximately 11 percent (GHGs/$ revenue) during the same time period. The efficiency improvement since the baseline year has helped Lake Region Medical to avoid approximately $1 million in electricity costs and 5,600 metric tons of GHG emissionsiii since 2009.
ESTIMATED RESULTS 2010 2011 2012 2013 2014 TOTAL
Avoided GHGs (metric tons) 800 1,800 600 -20 2,400 5,600
Avoided costs $146,000 $328,000 $119,000 -$3,000 $449,000 $1,039,000

Lake Region Medical participated in the Green Portfolio Program, joining the effort in 2009. Lake Region Medical’s participation in the program will not continue as it was acquired by Greatbatch Inc. in 2015. KKR sincerely thanks the Lake Region Medical team for their ongoing support of and participation in the program over the past six years.

i “Frequently Asked Questions,” U.S. Energy Information Administration, accessed October 1, 2015, http://www.eia.gov/tools/faqs/faq.cfm?id=447&t=1.

ii Reported numbers are rounded and may not produce the same results when used to analyze percent changes or total impact. See methodology section for description of avoided and efficiency calculations.

iii In 2014, in accordance with new data collection and management processes of the Green Solutions Platform, KKR began using country-level greenhouse gas conversion factors for participating portfolio companies. In order to provide a comparable data set, all prior years were restated using the country-level conversion factors in cases where regional conversion factors were used previously. Total results have been restated to reflect this change.