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China Sends Mixed Signals on Johnson Controls

You know how it goes. A company plugs away, stays under the radar screen, and doesn't draw a lot of attention. And, then, bam! In one week, you can't seem to escape the news or Twitter feed.

That's how I stumbled on a bunch of mixed reports coming out of Johnson Controls, a diversified technology and industrial company known mostly for its lead-acid batteries.

There was, of course, the “good” news stream.

  • The company last week showcased its ie:3 concept car for the first time in Europe at the Internationale Automobil-Ausstellung (IAA) conference in Frankfurt. The ie:3, meaning “inspired efficiency,” combines the latest seating, electronics, interior, and battery technology, according to the press release.
  • Johnson Controls announced a $100 million plan to build a Start-Stop vehicle battery plant in China. The plant, scheduled to start production in early 2013, will supply global and local automakers in Asia.
  • There were also the typical congratulatory announcements about awards received, contracts won, and recognition garnered.

But there was also one big piece of disturbing news floating around the wires and Internet newspapers: Johnson Controls last week halted production at its Shanghai factory because local authorities are investigating whether several companies in the area are involved in alleged lead pollution cases. According to these press reports, production was suspended based on reports indicating that some two dozen children in Kangqiaotown had excessive lead levels in their blood.

Johnson Controls denied the claim that its production facility was directly associated with these incidents and issued this statement explaining the factory closing and its compliance with Chinese officials. Here's the main takeaway:

    On Sept. 13, the Pudong New Area government requested that Johnson Controls suspend lead-related production in our Shanghai plant as we have achieved our lead quota for the year. As a responsible corporate citizen, we have complied with this request. Johnson Controls is the market leader and global benchmark in health and safety performance in this industry. We operate all of our facilities to the same standards and with the same practices globally… The lead emission average at our Shanghai facility is about 1/7 of Chinese national standard; furthermore, our lead discharge through waste water treatment facility average is about 1/10 of Chinese national standard. Our plant employees are regularly tested to ensure their blood lead levels are sufficiently low, and in fact our blood lead over 200 ug/L rate is world class at 0.7%.

I know from reading that same statement that the company has earned several accolades for its track record in occupational health and safety and environmental sustainability. It even got a nod from US President Barack Obama over the summer.

So how do we categorize this one? Is Johnson Controls generally a good green company caught in a PR snafu? Even if the company is cleared for the lead pollution, if it has exceeded its lead quota for the year, will the factory stay closed for the next quarter? And if it is adding another factory in China, couldn't similar issues arise further down the road? Is China more seriously looking at its environmental and safety standards, or is this just another sort of one-off report? Should other multi-nationals be following this case more closely and ensuring its own plants comply?

17 comments on “China Sends Mixed Signals on Johnson Controls

  1. FLYINGSCOT
    September 23, 2011

    I do not know anything specific about these allegations but I have known of Johnson Controls for a while and generally it is considered a very responsible company.

  2. Houngbo_Hospice
    September 23, 2011

    “local authorities are investigating whether several companies in the area are involved in alleged lead pollution cases.”

    This change in attitude by Chinese authorities with regard to pollution is praise worthy. It is time that companies investing in China and other Asian countries comply with the law on the protection of the environment. 

  3. Kunmi
    September 23, 2011

    This is a good step by China local authority. It will help companies to wake up as to how lead pollution can be can me monitored and reduced.

  4. _hm
    September 23, 2011

    Johnson Control is very reputed organization. However, they may have lax rule implemented in China. As China get more aware of this pollution, all organization has to be more careful. If there is error from Johnson Control, they should immediately rectify the same. China is very big market for them and they should handle it very carefully.

     

  5. Anna Young
    September 24, 2011

    Good on China if its taking a keen interest on its environmental and safety standards. About time too!

  6. Himanshugupta
    September 25, 2011

     …Johnson Controls suspend lead-related production in our Shanghai plant as we have achieved our lead quota for the year..

    Does that mean the company will not start the production until next year? This also suggest that Johnson was not careful in environment and safety norms.

  7. Ms. Daisy
    September 25, 2011

    Jennifer:

    The post describes Johson Controls' IAA car as a high efficiency car with good rated battery specs.  Is it an electric car or a hybrid? 

    Also, was the Johnson Controls plant shut down as a response to self monitored lead emmision levels (“exhausted quota for the year”) or as a response to a violation. If it is the former then the company is still maintaining its reputation as a public health conscious company and should be applauded. If it is the latter, then they need to re-evaluate their procedures at plants outside the US.

  8. SunitaT
    September 26, 2011

    Good on China if its taking a keen interest on its environmental and safety standards. About time too!

    @Anna, I agree with you. Good to see countries like China which is major polluter taking steps to curb the environment pollution. I hope steps like this will help us to realise the dream of green earth.

  9. elctrnx_lyf
    September 26, 2011

    I appreciate the responsibility of the chinese government toward the health and safety of their citizens. These regulations shall be strictly followed by all the companies and Johnson controls is no exception from this. But I wonder what Johnson control would do with factory if the lead quota of this year is already finished?

  10. Jennifer Baljko
    September 26, 2011

    Ms. Daisy: 

    Thanks for the question. Pasted below is what I know, based on the latest statement from Johnson Controls dated Sept 22. It appears that local govt authorities requested a hold on lead-related production. If  their claim is true that they are in compliance with Chinese environmental law, maybe the question for Chinese regulators is: Are China's environmental regulations in line with the other world-class standards Johnson mentions, and is this incident a hint that Chinese authorities will start upping the compliance issue and moving ahead with tougher requirements.

    And here's an argument not just for Johnson Controls, but for the entire industry: Do you have a good environmental track record/reputation because you operate within the legal limits of those green standards, or is it because being a green company is a core part of the company's value statement?

    http://www.johnsoncontrols.com/publish/us/en/news.html

    ” Some local Chinese media are reporting that our Shanghai plant is being held responsible for lead contamination in the local community. Johnson Controls has received no official notification from the government that this is the case. We stand by our own data which shows that the plant is operating in full compliance with Chinese environmental regulations and to the world class standards Johnson Controls applies to all of our battery plants globally. Based on the information we have at this time, we do not believe that emissions from our plant could have caused the level of lead contamination in the surrounding area. We recognize and share the community’s concerns regarding the source of lead contamination in the region. We will continue to fully cooperate with the government and industry experts to understand and help address this issue.

    On Sept. 13, the Pudong New Area government requested that Johnson Controls suspend lead-related production in our Shanghai plant as we have achieved our lead quota for the year, and we have complied with this request. Johnson Controls is taking immediate steps to minimize the impact of this action on our employees. We are also working with our customers and suppliers to minimize the disruptions this will cause to their business.

    Globally and across all of our businesses, Johnson Controls has a strong reputation as a responsible corporate citizen. We take pride and participate fully in the communities in which we work and live to realize our vision of a more safe, comfortable and sustainable world. The company remains committed to being a market leader in the automotive battery industry in China.”

  11. Jennifer Baljko
    September 26, 2011

    Ms Daisy,

    As for the car, press release says this:

    Johnson Controls' ie:3 demonstrates a solution to the challenge of packaging an energy storage system in a fully electric B-segment vehicle  without compromising comfort.”

  12. Daniel
    September 26, 2011

    Jeniffer, as you mentioned Johnson control as a “good green company” , how this happens. Why they had not taken care about the said lead quota? What’s their plan for next quarter and how they can be in production environments are big questions.

  13. Jay_Bond
    September 26, 2011

    I think that China is actually starting to take a look at their environmental impacts due to the large increase in manufacturing plants, and making sure they don't have any long lasting environmental disasters. Though their tolerances for certain pollutants might not be as strict as the U.S. or some European countries, China has realized if they don't start to control some of the pollutants they could have some serious issues in the future.

  14. Mr. Roques
    September 26, 2011

    I hope that's what they are doing. Growth always comes with some issues. China's government is trying to balance growth with inflation, etc. and maybe they added the environment to it now, good for them! 

  15. Houngbo_Hospice
    September 26, 2011

    Environment degradation is so severe in China that pollution has made cancer China’s leading cause of death. There is no magic formula that will stop such issues unless Chinese authorities start taking actions to compel industries to adopt environmental policies.

  16. Taimoor Zubar
    September 27, 2011

    I think the company is looking to improve PR and publicity through this rather than being truly environment friendly. As far as China is concerned, the situation is not so simple. Besides environment, there are lots of other aspects to see before we can assess if the company is truly pursuing ethical policies. Issues such as work timings, working conditions, underage labor are just some of them. The example of Foxconn and the subsequent events that followed should be remembered before Chinese companies are analyzed.

  17. Mr. Roques
    October 31, 2011

    Well, its part of the high price that comes with growth. Normally developing countries leave environmental issues aside when speaking about growth. Even developing countries had that issue and it's now that they are concerned about the impact it causes on the environment.

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