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Hu Pao Industries, a professional nut manufacturer in Taiwan active in introducing the concepts of ESG sustainability and net-zero transformationand aiming to achieve carbon neutrality and become a low-carbon solution provider, has recently participated in the SBIR program promoted by Tainan City Government to encourage SMEs to carry out research on industrial technology and product innovation and has been awarded one of the Best 10 performers among the 55 grant receivers in 2024. Hu Pao General Manager Bill Wang attended the awarding ceremony on Nov./25/2024 at WinWin Innovation & Incubation Base in Xinying (Tainan) and presented to Tainan City Mayor Wei-Che Huang the award-winning “Carbon Reduction Savior- Waste Oil Recycling Trough”.

Reducing the pressure of new product development, promoting technological innovation, expanding markets, establishing alliances, enhancing corporate image and brand value, and strengthening growth potential are the ultimate goals of Hu Pao's participation in the program. In order to obtain the max. grant of NT$1 million per case, Hu Pao actively attended the briefing sessions and drew up the plan, prepared required documents and integrated internal resources to submit for review, strengthened the external cooperation, and continuously improved and adjusted the plan during the implementation to make it pass the verification in the end.
 

Carbon Reduction Savior- Waste Oil Recycling Trough Realizes Resource Recycling

Waste oil generated from production lines will have a great impact on the environment if it is not properly treated. The Waste Oil Recycling Trough introduced in Hu Pao's production lines converts waste oil into reusable low carbon emission lubricant through innovative technology, effectively reducing the impact of waste oiland carbon emission on the environment, lowering raw material costs, and realizing the purpose of recycling and reusing resources.

“We’ve seamlessly integrated the Waste Oil Recycling Trough into the production lines to streamline operations and improve resource efficiency. We also monitor the equipment data in real time through the Internet, which is then sent to the ERP system for the management to make accurate decisions. In addition, staff training has been strengthened to familiarize them with equipment operation and make them understand the environmental benefits. In this way, not only will our carbon emissions meet int’l standards to enhance competitiveness, but we will also be able to respond to possible policy changes after the implementation of CBAM. This is also an important step for us to continuously attract sustainability partners to create long term economic benefits,” says Hu Pao G.M. Wang.

Taking the Lead and Encouraging the Industry to Lower Carbon Emission Together

Hu Pao winning the award is exemplary for other small and resource-constrained enterprises, and will surely have a positive effect on encouraging carbon reduction in the industry. It is worthwhile for the industry to learn from Hu Pao in terms of how to effectively conduct carbon inventory and data management, improve resource efficiency and reduce operating costs, respond to CBAM reporting and environmental regulations, the exchange of experience and cooperation in cross-sector alliances and platforms, and how to enhance its image and attract customers through carbon reduction measures.

As the only fastener enterprise in Tainan in 2024 to receive the award, G.M.Wang noted, “The establishment of a carbon inventory mechanism and calculation, upgrading to high-efficiency and low-energy-consumption equipment & manufacturing, shortening transportation distances from suppliers, switching to renewable energy, reporting in accordance with CBAM, strengthening technology and material R&D, and reinforcing employee training and carbon awareness are definitely the future directions Taiwan fastener industry should focus on.”

Besides SBIR, Hu Pao has also received grants from the “Low Carbon and Smart Upgrade and Transformation Counseling Program for Large and Small Manufacturers”, the “Low-Carbon Counseling Program for Small and Medium Manufacturers”, the “Industrial Energy Saving Counseling & Efficiency Improvement Program”, and the “Smart Carbon Reduction Subsidy Program”.

ESG Sustainability & Net Zero by 2050

Under the principle of sustainability, Hu Pao has set for itself a carbon reduction target of 60% by 2032, 80% by 2042, and net zero by 2050. It has also introduced the ISO50001 energy management system, purchased low-carbon materials, used reusable resources, developed green energy concepts, emphasized on environmental protection and social responsibility, provided free veggie lunches for employees, and joined “Zero⁺ College”.

It has been responding to CBAM with proactive strategies and forward-thinking. In addition to obtaining the ISO 14064-1:2018, it has continued to monitor carbon emissions data, increase employee participation in carbon reduction, invest in new technologies/equipment, strengthen cooperation among industry, government, and academia, and participate in int’l exhibitions, so as to let customers know its efforts in carbon reduction.

“Taiwanese companies need to be more proactive in responding to geopolitical risks, global economic uncertainties, environmental policy requirements, and the need for technological innovation. Only by adjusting supply chain strategies, strengthening technology R&D, and enhancing the added value of products can they remain competitive in the fierce int’l market,” says G. M. Wang.

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Following the previous certifications of D&B, IATF 16949, ISO 9001:2015, and Taiwan Mittelstand Award, Taiwanese customized automotive, special, and lock nuts manufacturer, Hu Pao Industries Co., Ltd. has again obtained the ISO 14064-1:2018 certification for quantification and reporting of greenhouse gas emissions and removals, which is another step forward for its substantial progress towards ESG compliance and becoming a green sustainable fastener enterprise. Getting this certification is also an indirect way for Hu Pao to announce to its global customers that it’s been ready to move towards low carbon manufacturing.

Taking Almost a Year &

Being the 1st Among Others to Complete GHG Inventory Verification

     Taiwanese fasteners are mostly exported to Europe and the U.S. With the increasing concern of customers on energy saving and carbon reduction as well as the imminent implementation of EU’s Carbon Border Adjustment Mechanism (CBAM) in 2026, the carbon emission control of enterprises has become an important assessment factor for the smooth entry of future products into the local market, and the ISO 14064-1:2018 is the 1st step to help enterprises understand their carbon emission status. Recognizing the importance of net-zero carbon emissions to corporate sustainability, Hu Pao is leading the industry in initiating GHG Inventory verification in 2021, with senior executives directly involved in cross-departmental integration and focusing on direct emissions, indirect energy emissions and other indirect emissions to compile relevant data and certificates under specifications and produce the organization’s final greenhouse gas emission report, emission inventory and inventory procedure documents, clearly quantifying the organization’s carbon footprint from raw materials to shipments. In April 2023, it officially obtained the ISO 14064-1:2018 certification from Ares International, a third-party certification body.

     “We spent a lot of time and manpower collecting the necessary info for certification. During the period, we actively identified the sources of carbon emissions in our factory and strengthened energy saving and carbon reduction in various aspects, such as the introduction of static-electricity waste oil recycling system, installation of smart meters on forming machines, introduction of PM2.5 detection, ERP system integration, improvement of factory energy management according to ISO 50001, data digitalization, free vegetable lunch for employees, etc. I also joined Zero+ College and CJCU Net Zero Transformation Alliance to observe and learn how the 2nd generation of companies are saving energy and reducing carbon emissions. ESG is a confirmed way forward for Hu Pao and reducing carbon emissions is an important part of that. By combining this vision with the company’s goals and allowing employees to fully understand and work together, and at a time when many industry players are clearly lagging behind other industries, Hu Pao takes the lead to set the example, not only enabling us to significantly increase our competitiveness in the market, but also gaining access to the EU market when the carbon tax kicks in,” said Hu Pao General Manager Bill Wang.

“Making Hay While the Sun Shines”

Net Zero Carbon Emission as the Ultimate Goal

     In addition to making a profit, Hu Pao constantly reminds itself of what kind of environment it can leave behind for future generations. Achieving ISO 14064-1:2018 is not only a demonstration of its commitment to customers, but it’ll also be a great help to its future development towards ESG. Even though Hu Pao has already submitted a thick ISO 14064-1:2018 report and obtained the certification, it has not stopped collecting carbon emission data to strengthen its improvement. It continues to record carbon emission data every month and hopes to collect the coefficients for 3 years, and then conduct the audit and certification again next year. “After passing the certification, we’ll continue to improve plant efficiency, increase quality & yield, optimize processes, enhance digitalization, and reduce energy waste. In addition to CBAM, the U.S. may also initiate carbon tax measures in 2024. However, we’re already prepared for that. This year we are planning to participate in many US exhibitions to expand our presence there and to let more overseas customers know about our efforts to save energy and reduce carbon emissions, as well as to contribute to the sustainability of the planet,” said Wang. As a model of energy saving and carbon reduction in Taiwan fastener industry, Hu Pao hopes that more industry players can join the ranks and contribute to the Earth. It suggests that before starting GHG inventory verification, it is necessary to involve senior personnel, form a cross-departmental team, familiarize members with regulations, use digital automation tools (e.g. ERP, carbon emission software), and establish int./ext. auditing mechanisms in order to promote it smoothly. “In the future if one wants to enter the European or U.S. markets, carbon reduction is definitely the way to go. Although the process will add lots of intangible investment costs, if one can achieve it through innovative processes without raising costs, that’s where the advantage exists. Taiwan is the 3rd largest fastener producer in the world, but it is highly export-oriented. As energy saving and carbon reduction has become a global industry phenomenon, Taiwan industry must keep up in this elimination race and make good use of government subsidies. Hu Pao will also work with up/mid/downstream collaborators to make our best efforts to contribute to global climate change, energy conservation, and carbon reduction,” said Wang.

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Taiwanese Pioneer in "Net-Zero" Nuts

Hu Pao is an IATF16949-certified high-end manufacturer specializing in customized automotive nuts. They are also one of the first few fastener manufacturers in Taiwan to push forward ESG and carbon reduction measures. Vice president Bill Wang joined as a student in the founding year of Zero Carbon University in Taiwan. He also joined Zero Carbon Transition Alliance at Chang Jung Christian University in Taiwan, where he shares the tools and resources needed to achieve net zero and carbon inventory with managers and lecturers from various fields who see the same net zero goals.

In December 2022, the European Union announced the carbon border tax target will include fasteners, causing great concern to the fastener industry. Bill said many domestic business owners were still waiting and seeing, but never would they expect that EU would be that fast to reach this decision that will require Taiwanese fastener manufacturers who center on Europe to report carbon emissions. A survey shows there are still nearly 40% of small and medium-sized enterprises in Taiwan which have yet to do anything on net zero transformation, and now, the EU carbon reduction order is right at their doorsteps. "It doesn’t matter if we start early or late, but if we don’t take action, we won’t be able to make it in time," said Bill. Hu Pao has set up a carbon reduction task force and he precedes other industry players by setting "net zero transformation" as his latest business development guideline, aiming to pass ISO14064 (Organization’s Greenhouse Gas Inventory Standard) in the first half of 2023.

Investing In Carbon Reduction Resources for Sustainable Development

Hu Pao adopts an electrostatic oil and gas recycling system on site, using electrostatic plates to filter out oil and pollutants and purify the air. Bill is proud to be the first nut manufacturer in Taiwan to install a particulate matter (PM 2.5) monitoring system in his factory. When the air pollution level exceeds the warning value, the electrostatic plates are replaced immediately. "As an ESG advocate, we not only promote environment protection awareness, but also strive to create a pollution-free manufacturing environment that provides employees with a sense of safety and comfort,” said Bill. To achieve the ultimate goal of ESG, they have invested NTD 15 million to motivate their 3-in-1 (ISO 50001 for energy management, ISO 14064 for greenhouse gas, ISO 14067 for product carbon footprint inventory) strategy and in-plant air purification.

Integrating "IoT-enabled Machines" And "Monitoring" System

The 19 machines in the plant are respectively connected to four IoT systems. Through the local servers installed in the plant and AWS (Amazon cloud computing service), the machines' electricity consumption and output data are captured using digitalized electric meters to monitor electricity usage and utilization rate on the fly. For one thing, it can reduce the manpower required to handwrite the data and go paper-free. For another, it can monitor machine status in real time and understand the energy consumption and efficiency of equipment through software-driven statistics. This will enable the management to make immediate and effective decisions and handle both energy conservation and efficiency, fully utilizing resources to avoid wasting.

Hu Pao’s Net Zero Blueprint

Through a carbon inventory, Hu Pao found that land and sea transportation accounts for as much as 50% of their own carbon emissions, and electricity consumption accounts for 20%. Since the current high steel prices and logistics costs are beyond the control of ordinary enterprises, Bill believes what fastener companies can control is "product yield". "Suppose we purchase 1,000 tons of raw materials, if we can improve the yield rate and produce not only 800 tons but 850 tons of good products from these materials, we will successfully reduce carbon emission and production cost. This is something we can do on our own by optimizing our production line. He believes that if Hu Pao, a small company with only 43 employees, can achieve smart manufacturing, digitization and embark on a "net zero" journey, other fastener manufacturers have the potential to do the same, so don't give up so easily!

After starting carbon inventory, they have projected that they will peak at 20,000 tons of carbon emissions in 2026. They plan to reduce carbon by 60% in 2032, 80% in 2042, and achieve net zero in 2050. Bill plans to build a solar power plant for internal use in about 10 years and sell the generated electricity to Taipower to obtain a green power certificate. With experience, he understands small and medium-sized fastener business owners who want to achieve ESG and carbon reduction are in the bottleneck of having no one to ask and no place to start. Therefore, he suggests reading Challenges and Changes: Pioneers of Net Zero, a book gathering the talks of a group of experienced second-generation successors.

Bill, who led Hu Pao to successfully transform into an ESG-compliant company, was selected as one of the 100 most valuable managers (MVP) in Taiwan in 2022. We can’t wait to see what achievement can his organizational innovation bring to Hu Pao

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Specialized in manufacturing customized automotive, special, and locking nuts, Hu Pao Industries Co., Ltd. is not the largest manufacturer in Taiwanese fastener industry though, but is one of the exemplary companies most active in optimizing its competitiveness on the int’l stage. In 2021 it moved to the 26,445 sqm new plant in Guiren Dist. with the total investment of NT$ 0.6 bn and simultaneously optimized various software/hardware/manufacturing procedures/systems and upgraded forming/tapping/optical sorting equipment. The bright, ventilated, non-sooty, tidy, and well-organized production lines as well as the installation of solar panels not only have completely solved the issue of limited space in the old plant restricting capacity expansion and are expected to increase the capacity by 50%, but also make it easier for Hu Pao to meet global customers’ demands and offer them service from the new plant. 
Upgraded Manufacturing Procedures
Innovative Renovation and Optimized Procedures
     Hu Pao has been implementing digitalization for years. In addition to ERP, MES, the installation of pressure sensors on formers, remote tapping machine monitoring, and new 3D graphics software, many other eye-catching optimization and upgrade have been also completed in 2021. For example, in order to enhance and stabilize the integral manufacturing quality, an intelligent energy control system has been also introduced into the new plant. On the one hand, stable voltage output can prevent equipment from being interfered; on the other hand, around 15% of energy can be saved, thus making early preparations for the upcoming EU’s Carbon Borders Adjustment Mechanism (CBAM).  
 
     Vice President Bill Wang said, “CBAM will come into force soon, so the energy control in manufacturing is quite important. So far, we’ve installed pressure sensors on formers, which are also synchronized with MES to collect electricity consumption data, and have an alert mechanism for parts repair & maintenance. Moreover, we also plan to introduce ISO 14000 and ISO 14067 (the Carbon Footprint of a Product) and expect to submit the application this year or next year.”
 
     Furthermore, for accelerating standardization and digitization, Wang added, “This has been the 3rd version of ERP we adopt, which shows clear info of our quotations, orders, material purchases, machine/die control, as well as product code tracking, delivery, batch inspection, and labeling, keeping customers promptly updated with their order statuses. In addition to regular annual upgrade of the data system, for creating a smart-factory environment, we also expect to introduce online task appointment, measuring systems, and monitoring center that can avoid the risk of manual data management, helping achieve a more efficient operating data standardization and procedures control.”  
 
Complete Development Capabilities
The Ability to Provide “Low-Volume Batch of Diverse Items”
 
     The IATF16949 certified Hu Pao receives around 80% of its orders for high value-added customized automotive nuts, which are required to be of very high quality. With over 3 decades of die development capabilities, it can almost produce every size from M5 to M20. And, different from other large manufacturers requiring min. quantities, Hu Pao even accepts orders for “one bundle of wire rod”. With the advantage of short lead time (one month), it can help customers reduce their inventory. Adopting materials from Taiwan CSC, Hu Pao also utilizes computer inspection, pressure/torque sensors, and power monitoring devices in manufacturing to ensure full compliance of every manufacturing procedure with standards. Sometimes when a few defective items are detected before shipment, the whole batch will be even returned for re-inspection to ensure no defective item is delivered to customers.
 
Active Introduction of External Resources
The Invisible Champion of Taiwanese Nut Manufacturing
Different from other 2nd generation in the fastener industry, Hu Pao, under the leadership of Vice President Wang, has been quite active in recent years in introducing external resources from inside and outside the industry, strengthening interaction with academies and governments, and learning from the experience of many successful companies in northern Taiwan to help Hu Pao improve and optimize in various perspectives. It is also one of the only 5 companies from Taiwanese fastener industry that have received the honor of Taiwan Mittelstand Award. 
 
     Wang noted, “Carbon neutrality, digitalization, and so on have been carried out by companies outside the fastener industry for so long, and the fastener industry has been left far behind. I, with non-technical background, have been active in interaction with companies in northern Taiwan and participated in activities of New Generation College in anticipation of introducing external resources to make Hu Pao grow stronger. I should be a very unconventional new generation! Facing the emerging trend of EV, Hu Pao still achieved an around 30% sales growth in 2021 from 2020. With the support of the new plant, Hu Pao will accelerate steps to create higher capacity and sales. In the future, we may also extend business reach to semiconductor, bike, or solar power and other precision industries. The reserved 4,958 sqm unused space of the new plant also offers possibilities for our future business expansion.”
 

HUPAO Industrial Co., Ltd. cooperates with GoodLinker Co., Ltd. to conduct real-time monitoring of energy and PM2.5 for molding machines, which is the first step in the sustainable development of ESG pursued by Rubao Xingye

https://www.youtube.com/watch?v=rO53Yqd4SWE