Texan by Nature is excited to recognize Alamo Group, Inc. as a 2021 TxN 20 honoree for their leadership in conservation and sustainability. Alamo Group’s commitment to conservation, their projects, programs, best practices, and lessons learned are an example and inspiration for us all.

Honoree Industry and Size: Agriculture – Mid

Company Overview:

Headquartered in Seguin, Texas, Alamo Group, Inc. is a leader in the design, manufacture, distribution and service of high quality equipment for infrastructure maintenance, agriculture and other applications. Alamo Group offers products for use in most climates and terrains. Our products include truck- and tractor-mounted mowing and other vegetation maintenance equipment, agricultural implements, forestry equipment and related after-market parts and services. The Company, founded in 1969, has approximately 3,990 employees and operates 27 plants in North America, Europe, Australia and Brazil.

What is Alamo Group’s conservation and sustainability mission and why is it important to your company culture?

Alamo Group’s overall mission is based upon developing and maintaining mutually beneficial relationships with our stakeholders: our investors, employees, suppliers, customers, and communities which come together to create our company’s value and purpose.

Alamo Group’s conservation and sustainability mission is:

• a commitment to reducing the environmental impact of our operations and products;
• utilizing natural resources as efficiently and as is practically possible;
• maintaining safe workplaces;
• encouraging workforce diversity at all levels;
• and applying the highest ethical and moral standards in all that we do.

Alamo Group is committed to conservation and sustainability for the long haul, and that requires sustained engagement with our stakeholders and adapting to their changing needs:

• For our investors, this commitment means that we provide sustainable risk-adjusted returns on their investment.
• For our customers, this obligation means that we develop safe, high-quality products that will meet their sustainability goals.
• For our suppliers, this responsibility entails engaging with them to help reduce the environmental impact and improve the resiliency of our supply chains.
• We engage our employees and communities where we work to advance biodiversity, provide inclusive opportunity, and improve quality of life.

“All of us at Alamo Group are committed to reducing the impact of our company’s operations on the environment, and the climate, while making a meaningful, positive social contribution to the communities where we operate. We have implemented a number of projects to reduce our consumption of natural resources, to minimize carbon emissions and other waste streams that we generate, and to make our workspaces safer for our employees. In recent years, we have been accelerating our investments in these areas not only because it’s the right thing to do, but also because it’s good for our employees, our families, our communities, and of course, it’s good for our bottom line as well. While we have much more to accomplish in these areas, we are proud of what we have accomplished to date through the commitment and creativity of our employees. As we look to the future, we will redouble our efforts and investment in the sustainability of our operations to improve corporate performance, enhance the lives of all of our stakeholders and to promote a healthier world for all humanity.”

– Jeff Leonard, Chief Executive Officer, Alamo Group

How is conservation and sustainability a part of Alamo Group’s business strategy?

Any manufacturing company’s business strategy must take into consideration the risks and opportunities created by changing customer requirements, the availability of the resources needed for production, and the evolution of the physical, social, legal, and regulatory constraints under which it operates. What is certain is that our climate is changing, current consumption of natural resources exceeds what the world can produce, and that we must adapt to a rapidly changing environment.

Energy efficiency, conversion to renewable sources, water conservation, waste reduction, and recycling are no longer just good ideas. The evolution to a sustainable business model has become strategic. This not only affects how we achieve our continuous operational improvement objectives, it will also change customer requirements for the products we manufacture, as well as the nature and availability of the materials and human talent we will need to successfully fulfill our mission.

What are Alamo Group’s short and long-term goals as they relate to conservation and sustainability?

In our 2020 Sustainability Report published earlier this year, Alamo Group announced our 2025 targets focused on total energy consumption, renewable energy usage, Scope 1 & 2 GHG emissions, landfill waste generated, percentage of total waste recycled, and water consumption. We are on track to meet our 2025 targets and are proud to report that approximately 20% of our total electric energy comes from renewable energy, nearly 85% of our total waste is recycled, and we are on track to reduce our recordable injury rate to meet OSHA incident rate.

Alamo Group is early in our sustainability journey, and we are exploring what is possible. We are very close to, or are already achieving, some of our 2025 targets. Our 2025 goals are somewhat conservative as it is our culture not to over-promise and under-deliver. That said, we know that three of our largest shareholders have signed on to the Net Zero Asset Managers Initiative, whose signatories now represent nearly half of global assets under management. Moreover, many of our employees have embraced our sustainability initiatives with a high level of enthusiasm, driven by their desire to work for a purpose larger than their next paycheck or our next quarterly profit report. Many of our stakeholders may have sustainability goals in mind that are more aspirational than what is currently reflected in our 2025 target, which we will consider when revisiting our 2025 goals and setting longer-range targets for 2030 and 2050.

Who at Alamo Group is leading your conservation and sustainability efforts and what are some examples of employee engagement in conservation and sustainability at your company?

The integration of sustainability into our strategic planning and risk assessment processes is being driven by Alamo Group’s Board of Directors and Chief Executive Officer. Earlier this year, Alamo Group’s CEO, Jeff Leonard, appointed the company’s former Chief Financial Officer, Dan Malone, a 5th generation native Texan and University of Texas graduate, to the newly created position of Executive Vice President and Chief Sustainability Officer. Mr. Malone now has responsibility for the technical affairs and safety team, including sustainability, strategic supply chain team, information technology group, and investor relations.

“Our conservation and sustainability journey begins with our lean culture. We have always been a company that takes pride in doing more with less. Our sustainability mission starts with eliminating the wasteful consumption of energy, water, packaging, and any other resource that isn’t necessary for obtaining required material inputs, or efficiently producing and delivering the products our customers value. We take it a step further by focusing on reusing or recycling leftover materials to minimize landfill waste, as well as drawing our energy needs from as many renewable sources as pragmatically possible. Perhaps most importantly, we engage our suppliers, customers, employees, and communities to minimize the footprint of the products we produce and to maximize our handprints to advance biodiversity, provide inclusive opportunity, and improve our stakeholders’ quality of life.”

– Dan Malone, Chief Sustainability Officer, Alamo Group

Mr. Malone has also joined with the Alamo Group’s General Counsel and the Vice President of Human Resources to form a Sustainability Executive Steering Committee. Rounding out the Corporate Sustainability Management Team are the Director of Employee Relations and Diversity, the Vice President of Technical Affairs & Safety, and the newly hired Corporate Sustainability & Environmental Compliance Manager.

The leader of each Alamo Group unit company has designated a Sustainability Representative at each facility who is responsible for the monthly tracking and reporting of sustainability metrics, as well as organizing the “Green Teams”. Green Teams are the folks who are planning, innovating, improvising, and implementing the changes that are driving Alamo Group toward achieving our goals. Members of the Corporate Sustainability Team engage regularly with local leadership and Green Teams to share ideas, cross pollinate best practices, and maintain the accountability and visibility of Alamo Group’s progress in achieving our sustainability goals.

For many years, producing more output with less input has been part of our lean manufacturing culture at Alamo Group, and to a large extent, lean practices are also a means to achieving sustainability. Our Green Teams are engaged in a variety of projects to reduce, reuse, and recycle the resources used in the manufacture of our products. We have been particularly focused on energy usage, greenhouse gas emissions, landfill waste, and water consumption reductions.

For example, we have completed the installation of energy efficient LED lighting in most of our facilities and will complete this conversion in the very near future. We have taken steps at several facilities to either shred or bale inbound cardboard boxes to either re-use as packing material for outbound shipments or send out for recycling.

While our Green Team members are usually Alamo Group employees, our Seguin, Texas plant employed a Green Team consisting of three Manufacturing Engineering program students from Texas State University. These interns accomplished several tasks including:

• working with our suppliers to reduce inbound non-recyclable packaging materials
• installing smart plugs to fully automate the running time for fans used on our shop floor during the warmer months
• justifying the purchase of a cardboard shredder to convert corrugated materials received from our suppliers into packing materials we can use to pack parts shipped to our customers
• establishing a plant-wide recycling program

What conservation and sustainability programs and projects does Alamo Group lead and participate in?

Alamo Group’s sustainability efforts are focused on the environmental impact of its manufacturing operations and maintaining a safe and inclusive workplace yet we also lead and participate in many conservation and sustainability projects in the communities where we work and live.

Texas:
In Seguin, Texas, Alamo Group sponsored and participated in the 8th Annual Geronimo and Alligator Creek Cleanup event. Alamo Group employees have been involved in this event since its inception. During this community conservation event, our employees and their families collected nearly a ton of trash and cleared nine miles of roadways and creek banks. Learn more about the results of this event from 2021.

France:
In our manufacturing plant in Daumeray, France, we engaged with a local beekeeping company to install two beehives in the fields surrounding our facility. Honeybees perform a vital service by pollinating over 100 different food crops, yet the number of honeybees is in decline due in part to a phenomenon known as “colony collapse disorder.”

Recognizing the importance of honeybees to biodiversity, our French plant is excited to continue future expansion of their bee program by planting over 100 fruit and flower trees in their fields to provide a steady supply of nectar for the bees.

Other Alamo Group facilities, including Winn, Michigan and São João da Boa Vista, Brazil also plan to plant thousands of trees on their campuses to enhance their surroundings, create a carbon sink and contribute to a high level of biodiversity in their ecosystems.

Washington:
Our manufacturing plant in Kent, Washington is located near the banks of the Green River, which flows 93 miles from the Cascade Mountains to the Puget Sound. It is home to a variety of wildlife, including salmon, black bears, cougars, ospreys, Canadian geese, and bald eagles. Working with the City of Kent, we are committed to mitigating disruptions to the river ecosystems and preserving it as a place where local wildlife can thrive. We use only native, non-invasive plant species in our landscaping and maintain a mixture of deciduous trees, evergreen trees, and local shrubs as a landscaping screen around our facility to prevent river erosion and provide habitat for local wildlife.

In addition, Alamo Group’s Vice President of Technical Affairs and Safety (a University of Texas graduate) serves as the Vice Chair of the Association of Equipment Manufacturers (AEM) Engine Emissions Strategy Task Force. This newly formed task force is looking at several factors related to sustainability, including engine emissions, decarbonization of non-road equipment, and newer technologies (electric, battery, fuel cells, hydrogen, etc.). The task force provides advice to other association committees that are working on new technologies and investigating related safety requirements.

How do you see the future of conservation and sustainability evolving, and what role will Alamo Group play in that progress?

While we can and will make significant changes to our own footprint, the greatest impact Alamo Group will have on the future of conservation and sustainability will be through the design of the products we manufacture and sell. The equipment we make is primarily used by local governments, industries, farmers, ranchers, and contractors to maintain vital infrastructure and produce food. Advances in alternative energy technologies will help us design products with a much smaller environmental footprint, and our customers are constantly finding ways to use our products to produce positive environmental handprints. Many of Alamo Group products are at the forefront of climate change adaptation from our forestry and mower products to our snow removal and waterway equipment.

Reducing our Products’ Footprints – The power source needed to operate the heavy equipment we produce is usually a diesel engine. In recent years, we have redesigned our products to accommodate progressively cleaner diesel engine technology, but advances in electric vehicles and other alternative fuel technologies are opening doors to a variety of power platforms that could be used for many of our future products. Developing these platforms and integrating Life Cycle Analysis into our product development processes will be critical to our future success.

Expanding our Products’ Handprints – Whether it is clearing debris from our streets and sewers, preventing invasive vegetation from interfering with critical infrastructure, or shredding crop stubble to prepare fields for the next seasonal planting, if there is one common theme throughout our product offering, it is that their end use is maintenance. A frequent environmental handprint of our vegetation maintenance products is the promotion of biodiversity. For example, our facility in Giessen, Netherlands developed a mowing boat and raking method to fight invasive, non-native aquatic root plants in European waterways. Unlike normal mowing operations, this new raking technology removes the invasive plants at the root level. Several local governments and a US university are also evaluating this product for use in waterways much closer to home.

How does Alamo Group quantify investment and return on conservation and sustainability?

Many of Alamo Group’s sustainability initiatives line up well with our lean manufacturing culture – reducing the resources consumed per equivalent unit of output. Such initiatives often produce enough operating cost reduction to more than justify the cost of implementation, using a traditional financial return on investment analysis. For these investments, we use the same existing analytical, approval, and reporting processes as we do for any other investment back into our business.

As published in our 2020 Sustainability Report, Alamo Group invested over $1,143,737 in energy conservation initiatives across our facilities worldwide. Some of those investments include installation of solar arrays, replacement of HVAC systems, and implementation of LED system arrays. We will be publishing the benefits realized from that investment in our 2021 Sustainability Report early next year. In addition, we have been conducting assessments to identify waste generated in our facilities, examine current waste reduction practices and their effectiveness, and identify areas and materials in which waste reduction efforts will be most effective.

Where the mindset of evaluating sustainability projects differs from the traditional approach is that greater weight is often assigned to the risks associated with a highly uncertain future. For public companies like Alamo Group, the demand for a much deeper and strategic evaluation of these risks is being driven by several of our larger shareholders and the investment community in general. Companies that pay no attention to environmental, social, or governance issues are increasingly considered to be higher risk investments, which results in deeper discounting of their share prices. Consequently, in addition to traditional return on investment analysis, Alamo Group senior management further evaluates sustainability investments within the context of long-range strategic planning and risk assessment.

What is the one lesson that Alamo Group has learned from your conservation and sustainability efforts that others can take back and think about applying within their own space?

If there is one lesson we have learned, it is to never underestimate the creativity of our Green Team members or overestimate the cost of sustainable solutions.

Case in point: Our Seguin, Texas plant is not air-conditioned. As you might imagine, keeping the air flowing through it during the summer months goes a long way toward keeping the temperature down. While we have a few large centrally controlled fans which create plant-wide airflow, we counted an additional 257 smaller fans located at workstations throughout the facility. The Seguin Green Team decided to count the number of fans because they noticed many were still running after employees left for the day. They walked through the plant to turn off the still running fans before realizing it was an unsustainable, time-consuming chore. They wrote communications to employees, asking them to shut their fans off at the end of their workday, but still found many fans running after hours. They considered replacing the fans with “smart fans” that could be remotely controlled but found that alternative prohibitively expensive. Then, one of the team members ran across an online listing for “smart plugs” which can be turned on or off with a mobile phone or similar device. They purchased and installed the plugs, and now an employee is assigned to remotely shut all fans off after the end of the workday and turn them back on shortly before employees return to work the next day. The plugs only cost us about $6 each and the entire solution was implemented for about $1,500. The reduced energy consumption from this small investment will more than offset its cost in a matter of weeks.

Why is Texas an important home or base of operations for Alamo Group?

As our name suggests, Alamo Group is a homegrown Texas company. While we are now a multinational public company with annual sales over $1.2 billion and are listed on the New York Stock Exchange with a market value of about $1.8 billion, we continue to operate a significant Texas manufacturing facility, and our corporate headquarters is still housed in a modest single-story building on the outskirts of Seguin.

The company was founded in 1969 by native Texan and San Antonio entrepreneur Donald Douglass, who was born in Gonzales and grew up in Corpus Christi. The company began as a Texas-based manufacturer of tractor-mounted mowing equipment serving mainly state and local government and agricultural customers. While we have added a much wider variety of products, we now manufacture and sell our products in many different countries, never losing our focus on our core markets nor our Texas roots.

Learn more about Alamo Group’s conservation and sustainability efforts here.

Definitions:

• Greenhouse Gas Emissions (GHG): a byproduct of manufacturing, power production, transportation, and other sources that causes the Earth’s atmosphere to retain more heat. These gases include carbon dioxide, methane, and fluorinated gases among others
• Scope 1 emissions: emissions produced and controlled directly by the company/organization
• Scope 2 emissions: indirect emissions that are controlled by the company/organization