Improving the Energy Efficiency of Business with General Motors’ Al Hildreth

September 9, 2015

John Shegerian: Welcome to another edition of Green Is Good, and we are so excited and honored to have with us today Al Hildreth. He is the Global Energy Manager for General Motors. Welcome to Green Is Good, Al. Al Hildreth: Thank you very much. John Shegerian: Hey Al, you know it’s so great to have you on. We’re going to be talking about energy and GM, and we’ve had already GM on the show so many times, and when you guys do things and make a motion in a direction, you really move the needle and you guys have moved the needle in a big way in sustainability in the recent years, and we’re so excited to talk to you about everything you’re doing with regards to energy. But before we do that, talk a little bit about your history, Al. How many years ago did you join GM, and when did you get really involved with regards to sustainability and energy with regards to the evolution of General Motors? Al Hildreth: Certainly. So I’ve been with General Motors over 30 years. John Shegerian: Wow. Al Hildreth: And really since the beginning of my career have been interested in the environment. It kind of matches my personal life. I like to camp, scuba dive and I enjoy swimming in the beaches and oceans, so it really kind of matched my personal beliefs. So I have been involved in recycling projects in the past and, over the past 20 years, have been involved in the energy program here because it really is great for the environment, good for the economy and really I’ve found it to be very rewarding. So I have been working in that for about 20 years. John Shegerian: Wow. Al Hildreth: In various jobs, energy manager and am currently the Global Energy Manager for GM. John Shegerian: And I’m on your amazing website right now, and for our listeners out there that want to learn all about the great green things and sustainability things that GM is doing, and Al is doing with his colleagues at GM, please go to www.GMsustainability.com. It is the coolest website. I am on it right now and it’s just like there is so much information there, and we’re going to get into that in a second. So for 20 years you’ve been involved with energy and sustainability with GM. Can you talk a little bit about the 20-some-year partnership with Energy Star that General Motors has had, Al? Al Hildreth: I certainly can. It’s been very beneficial for us just having a group that we can network with our other OEMs – Toyota, Honda, Ford, Nissan, etc. We get together and we have benchmarking activities. Energy Star has provided some great tools for us. And then their recognition programs, like the Challenge For Industry; we put all of our plants in globally for the Challenge For Industry and have 70 of them so far that have met that and that means that a plant has reduced their energy intensity 10 percent within a five-year period. John Shegerian: Wow. So Energy Star with regards to we all are used to hearing it – it’s a ubiquitous and great name and brand – when we’re dealing with our refrigerators or our freezers or our washers and dryers, but with regards to GM and the collaboration, it’s about the reduction of energy that you’ve created in the manufacturing process. Al Hildreth: Yes. That’s right. So we have two assembly plants that are Energy Star-labeled – very similar to a refrigerator or a laptop. John Shegerian: Right. Al Hildreth: So that’s a very positive recognition for us. John Shegerian: Wow. Al Hildreth: Then, also, Energy Star has a Partner of the Year Award that we’ve applied for and the past four years have won it for energy management and sustained excellence. John Shegerian: That’s awesome. So then talk a little bit about, so what does that mean in terms of how do you – being that you’re the Global Energy Manager – how do you approach it on a macro basis? It’s a fascinating thing that you’re reducing the energy. Energy, to a layman like me, I’m thinking about solar and things like that. How are you reducing the energy in your plants, the use of the energy? Al Hildreth: So the majority of our energy use is in our assembly plants and, specifically, in our paint shops, so we focus mostly on where we get the most benefits out of our efforts in energy efficiency. John Shegerian: In the paint shops. And even though your production is increasing and GM is becoming a bigger and more iconic worldwide brand, how do you continue to reduce the energy every year? How do you keep moving the finish line? Al Hildreth: Yeah, so that becomes a challenge. In the past 20 years, we’ve reduced by about 41 percent our intensity – carbon intensity – and so it gets more difficult each time to reduce once you’re into that law of diminishing return, where it gets harder and harder to get that last piece of efficiency out. So we have integrated energy and the environment into our business plans – so very similar to safety, quality, cost, productivity – and that has really, I think, helped us move the mark and continuously improve and reduce energy. John Shegerian: What are some of the biggest challenges? Is going green as hard as they say it is? The constant pushback 15, 20 years ago we all used to hear, Al, was that “going green is more expensive.” Have you turned it on its head at GM and said, “No, no, no. Not only is going green not more expensive, but we actually make it a money saver here at GM?” How does it work there in terms of the culture and the DNA and the bottom line? Al Hildreth: I mean, that’s one of the things I really like about my job is the fact that this is good for the economy as well as for the environment. For instance, over the past 20 years, we’ve not only reduced energy and carbon, but we’ve also reduced money ,so we‘ve saved about $435 million over the past 20 years and that just goes right to our bottom line. So great for the environment and good for the economy, so it’s really hard to argue against this, so I get a lot of support from top level management, and we have a dedicated fund for energy efficiency and that really helps us year over year continue to plan and do long-term planning for energy reduction in our facilities. John Shegerian: And as you’ve had success, though, of course you know the old adage, Al, “No good deed goes unpunished,” as you say you’re moving the finish line and sustainability is truly a journey – there is no finish line – so how did you get together with your colleagues and make the 2020 goals, and how do you keep balancing goals that you know are achievable so no one looses hope but also create stretch goals so your team continues to strive to break through some barriers that no one ever thought you’d make it through. How do you strike that balance? Al Hildreth: So our goal to reduce energy and carbon from 2010 to 2010 is 20 percent and we really looked at that as kind of a stretch goal for us. We’ve done 40 percent in the previous 10 years. I knew we’d never get that continued performance because then we’d be at zero and we know that’s not possible. John Shegerian: Right. Al Hildreth: Like 2025, it said that that’s not possible. So it’s kind of sealed off, and we put in some realistic business opportunities that we have for energy efficiency and came up with the 20 percent. John Shegerian: I got you. And when you talk about things that are the biggest wins and things that are just nice, just steady wins, if you could share with our listeners – you got that 40 percent. What were the one or two or three biggest savings tools? What tactics got you the most just when you started this? Al Hildreth: So really I think one of the biggest impacts originally was to just not use energy when we’re not producing vehicles but just try to get the best energy shutdown that we could possibly get. Get as close to zero. You can’t get zero again but getting close to that is really good. So putting the measurement tools in place was very effective for us. So we measure energy on an hourly basis and we send information back to the plants to say, “This is how you’re doing on an hourly and a daily basis compared to your monthly targets,” so I think that once you’ve measured it then you can start managing it and that was one of the key success factors for us. John Shegerian: So the big data, this whole booming of big data is actually very helpful to you. Do you actually have a dashboard that you could pull up on your computer or your whatever gadgets you use as a management tool, and do you have a dashboard that actually you could look at the energy and the plants on a real time basis, if you want, or your management team could look at? Al Hildreth: Yes, we do. And we’ve coined the term “Energy OnStar,” because it really kind of acts similar to an OnStar system. It not only looks at our energy use, but it looks at the drivers, what causes energy. So heating, ventilating and air conditioning systems in our plants. We move a lot of air for our paint shops and other uses, so it looks at those HVAC systems and continuously commissions them to make sure that we’re operating at the most efficient point possible. John Shegerian: For our listeners who have just joined us, we’re so honored to have with us today Al Hildreth. He is the Global Energy Manager for the iconic and wonderful brand General Motors. You can learn all about the things that Al and his colleagues are doing in sustainability at General Motors at www.GMsustainability.com. On an industrial scale, energy efficiency isn’t that clean and easy always. You said you’ve saved 435 million dollars. That is a tremendous bottom line case. How about the employees? How excited are they about what you’re doing not only from the top down but from the bottom up? Are they involved and are they encouraged also to bring you ideas on how more can be done in different ways? Al Hildreth: Yes, exactly. I mean, one of the benefits of integrating energy into your business plan is that each team member sees that in front of them every day to say, “This is my target, this is my goal, these are the kinds of things that I can impact, that I can do in the plant to provide better energy efficiency.” Then also we tell them “bring your green to work,” so you’re doing some things at home that are helpful for efficiency – shutting off your lights – bring that attitude and bring that motivation to work as well. John Shegerian: And how are they engaged – or let me just say this in the right way. Are they rewarded to make them energy champions or to make them sustainability champions, or how does that work from the bottom up? Are there meetings? Are there newsletters? From running such a big company and communication, the bigger you get becomes – I would assume – somewhat more difficult, how do you make it such a cultural thing that everyone is excited? Al Hildreth: So we have champions at each level in the organization and those champions really drive the energy efficiency, the awareness. Then, there is a suggestion program where people can put in a suggestion. Many of them are for energy efficiency and energy savings. Then once they’re implemented, they’re compensated with a portion of the savings that we get. So they are incentivized to save. John Shegerian: They’re incentivized. Wow. Now let’s leave your plant and go downstream. How do you get your supply chain excited and motivated to follow suit, to follow all the great work you’re doing at GM? How do you get them on board with energy efficiency and helping you to achieve the goals that you’re trying to achieve, Al? Al Hildreth: So it’s an interesting and emerging topic for us because what we find is through lifecycle analysis of our auto parts that we buy, it turns out that the energy and the carbon use is really magnitude times more in our supply chain than what we have ourselves. So we’re trying to instill those same kinds of business attitudes of save money, help the environment. And we participate with some groups like the Automotive Industry Action group, the Carbon Disclosure Project and Energy Star, and that way we can kind of go across different industries and get as many of our supply chain folks involved as possible. John Shegerian: Is this too simplistic of a way of saying it, though? But you have buying power so do you actually have to just say to them at some point, “Hey listen, we want your parts, you make great stuff that we get to make our great cars out of, but you’ve got to move in this direction of sustainability and get greener?” Do you have to have those kinds of tough discussions also with supply chains so you can achieve the goals that you want to achieve at GM? Al Hildreth: So we have established some guidelines and expectations for the environment. John Shegerian: Right. Al Hildreth: But you’re right, it is a simplistic to think about it as that this first tier is really the total ones responsible, because what really happens is they buy steel from someone else, they purchase electronics from someone else. John Shegerian: Right. Al Hildreth: So it really goes out to about five tiers of suppliers and it becomes a little more complicated to work with but we’re trying to identify major industries that we may be able to impact as well as to see how we can affect change ourselves. John Shegerian: I got you. You know, Al, we have listeners not only in the United States but around the world, and we have, of course, a lot of young high school and college listeners, but we also have a lot of business owners that constantly stay in communication with us and they love listening to the show because they get to hear what’s really happening at the top of the food chain in terms of business. And obviously, being the Global Energy Manager of one of the most iconic brands in the world, you are at the top of the business food chain. If you were to give one tip to businesses to make a significant impact in their energy use – whether the business is a mom-and-pop small business in a wonderful place in America or if it’s a large manufacturing facility in Shanghai – what would be the tip that you give to make the biggest impact on energy use to a business owner today? Al Hildreth: I feel that integrating energy into your business plan is probably the most effective. Doing a one time – we call them “treasure hunts” – where you go out and find opportunities and you get those implemented, those are good, but you really need something to sustain those savings year over year so you can kind of continuously improve. So I think integrating energy into your business plan would be the main tip that I would provide. John Shegerian: That’s so interesting. How much are best practices shared among your group of analogous leaders? So, for instance, I would assume Ford or Toyota or Mercedes all have Global Energy Managers. It’s a small group of you in this world of the leading brands. Are all of you sharing best practices or is it highly competitive or is it more collegial? Al Hildreth: We participate with a number of groups where we get together as fierce competitors but when we look at the energy, the percent of our spend, even though we spend about $1.2 billion a year in energy, that’s a small percent – less than 1 percent – of our total revenue so it’s not really a competitive issue for us from that standpoint. And we all have very similar goals that we want to try and help the environment, so we share quite a bit few best practices amongst the OEMs. John Shegerian: Got you. And you all sort of know each other and you can pick up the phone and send an email and contact each other and try to get answers if you need to share or brainstorm something. Al Hildreth: We meet regularly and we’re actually going to do a boot camp for our supply chain collectively. John Shegerian: Oh. That’s great. Al Hildreth: With a few OEMs, so we can start to train our supply chain to get the same kind of results that we have. John Shegerian: That’s really great. That is great. How about for our listeners out there? We love giving solutions and we love being solution-oriented. What would be the tip to save energy at home? The one best tip from the Global Energy Manger at General Motors. What would you give to save energy at home? Al Hildreth: I’d say, it would be as easy as screwing in a light bulb. If you look at incandescent light bulbs and you do a business case – I just did this recently since we passed them out at an energy conference as kind of a token to get people thinking about energy savings – right now the prices of LED lights – the screw in that fit in an incandescent fixture – are getting so competitive that it’s about a one-year payback. So anybody who wants to save energy year after year – and these are going to last a long time for you – purchase a LED light bulb from your local hardware or store and you’ll get on a one year payback. John Shegerian: Got it. Wow. That’s a good ROI I’ll tell you that. Al Hildreth: Yes. John Shegerian: We’re down to the last minute-and-a-half or so. When you go to bed at night, Al, and you put your head down on the pillow, what do you feel GM’s greatest energy accomplishment has been in the years that you’ve been at its helm? Al Hildreth: So I really like the fact that we look kind of holistically at energy, the environment, water savings, the economy, and we find a way to make all of those kind of work together and that is really the importance – I think – in going green is if you can make it a positive business case. I get support from on top down to the bottom of the organization, and we’re helping the environment as well so I feel good about that. My grandkids, I’m leaving a better world for them in the end. John Shegerian: That is so great, and we are so appreciative of all the great work that you and your colleagues are doing to leave a better world. And for our listeners out there, you’ve been listening to Al Hildreth. He is the Global Energy Manager at General Motors. And to learn more about all the great work and sustainability that General Motors is doing, you can go to www.GMsustainability.com. I was looking at it a little bit before we taped the show today, Al, and also while we were on the air. It’s just an amazing website and a great compendium information. Thank you for joining us today, Al, and sharing GM’s story in energy with our listeners. You are making the world a better place with General Motors and are truly living proof that Green Is Good.