A 'triple win' on energy management
GM's energy reduction effort delivers profits and cuts costs while helping the environment
A two-year effort by General Motors to meet the U.S. EPA’s Energy Star Challenge for Industry has allowed the global automaker to cut its energy intensity by 26% across 54 facilities worldwide. For GM’s energy manager, the results can be measured both inside and outside a GM plant.
“Energy management saves money and reduces the greenhouse gases, and it also improves our maintenance practices. It’s a triple-win,” said Al Hildreth, who leads the U.S. effort on energy for the Detroit automaker. “The beautiful part is that the money I save is pure profit, but I don’t have to do a trade-off. What makes this fun is that I can help the business and help the environment.”
The voluntary Energy Star program has helped focus the GM effort on both energy use reduction and the corresponding drop in costs. GM has saved more than $90 million in energy costs, more than four times the annual budget for energy management within GM’s U.S. operation.
It’s a cooperative, coordinated effort that includes GM’s manufacturing facilities around the world, as well as benchmarking with other global automakers to see what best practices are in place.
The effort to better manage energy costs at GM has been underway over the past 20 years. Now GM manages energy as it does other business units within the organization. “We manage safe, quality, and materials costs. That’s all part of our business plan. Now we include energy in that,” said Hildreth. “It’s not just a one-time event. It’s really a continuous process. We’re now able to measure energy produced per vehicle manufactured.”
For a company that annually spends $1 billion on energy to run its facilities and make cars, a reduction in energy spending that doesn’t impact production is a significant profit generator. The company has attacked many basic areas—improving lighting controls, managing HVAC systems to handle peak loads, and repairing and improving compressed air usage. Now GM wants to attack process energy to continue the cost reduction.
“Our paint shop is a major energy user,” Hildreth said. “Some of our paint systems are newer, some are legacy systems. As we start to do upgrades and retrofits, we’re seeing significant savings in these areas.”
Another area that GM has addressed is the move toward more renewable energy and less dependence on carbon-based fuels. Hildreth said GM is the leading user of solar energy among U.S. automakers, and it will eliminate coal as a fuel to make steam by 2015.
There is a significant change in the way energy is treated in a manufacturing plant. The days of blindly paying invoices for gas, electricity, and steam generation are over. Energy is now seen as a raw material that can be measured, managed— and wasted. While Energy Star recognitions are nice, the realization that wasted energy is wasted money is driving energy improvements in manufacturing today.
And as Hildreth knows, it takes a commitment from management to provide the support to make those changes. “It does take a commitment from management,” he said. “We’re pretty fortunate. I get a $20 million budget to spend on energy efficiency. We run it as a business—we get a budget, we spend the budget, and we get good results.”
“The job is always to always keep on top of things,” Hildreth added. “We’re continuously monitoring the processes. It is a continuous process.”
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Annual Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.