GM Turns Waste Into Millions

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General Motors is finding success in transforming unwanted materials into millions of dollars padding its bottom line. The unwanted materials - waste -- ranges from discarded wood pallets to used oil to leftover scrap metals.

The U.S. automaker recently announced its Baltimore manufacturing plant is the company's eighth facility to achieve landfill-free status. Today we'll speak to Ray Tessier, GM's Global Director of Environmental Services, to find out how GM did this, what the company has learned, and how a change like this in corporate mindset can make companies — especially manufacturers — more competitive.

Tilde Herrera: Ray, can you tell me, what approach did GM take to eliminate all waste from its Baltimore plant that would have, at one point, been sent to landfills?

Ray Tessier: Well, we looked at all the sources of waste at the plant. We've always followed a hierarchy, a waste hierarchy. The first thing we do is look at eliminating the waste and then preventing the waste, then recycling and reusing waste. If we can't do that then we look at energy recovery from the waste, and then the last resort is disposal. Our goal is to not have any disposal.

So, we look at all of the waste streams. Those streams consisted of 510 tons of aluminum, 600 tons of steel, 10 tons of alloy metals, 360 tons of wood pallets, 3 tons of paper, 20 tons of empty totes and drums, 250 tons of used oil, 220 tons of waste water residual and 5,400 tons of returnable packaging. And, all of those waste streams, pretty much, were all recycled.

TH: Were those figures for one year?

RT: Yes, that's an annual figure. And that encompassed 97 percent of the waste from the plant. Three percent is converted to energy at a waste-to-energy facility. And that's more or less plant trash, combustible plant trash.

TH: How did the company deal specifically with each kind of waste?

RT: In terms of the steel, we operate foundries and we recycle the waste into our foundries where it is used to make engine blocks, transmission casings and other parts that we use in the power train of our vehicles.

We sought out various people who have need for the other products and brought in revenue for things like the aluminum and the alloy metals. Other things that we sent to recycling were the wood pallets, which were sent to a person to reuse the wood. We did the same thing with paper; the papers were recycled. It varied in terms of the amount of income that we would get.

In some cases, in terms of used oil, we would send the oil out and the oil recycler would clean it up, put additives in it and then we would buy it back at approximately 25 percent less than buying new product.

TH: What were some of the biggest obstacles and barriers in eliminating this waste?

RT: Well, I think the biggest obstacle was the mindset that it's fairly inexpensive to landfill waste. So we had to look at it from a standpoint of, 'O.K. We have a goal that we don't want to impact the environment at all, in terms of this waste.' That was kind of a change in mindset for us because of the relative inexpensiveness of doing that but we determined that at a very slight additional cost per year, we would send it to a waste-to-energy facility and be totally landfill-free.

TH: Ray, why is this important? What is driving this?

RT: We have a set of environmental principals in General Motors and we put those principals in place back in 1991, and they've really stood the test of time. One of those principles is that we are committed to reducing waste and pollutants, conserving resources and recycling materials at every stage of the product life cycle. These principals have kind of set the benchmark for the way that we do business in General Motors and we continue to make improvements.

Over the last six years, we've reduced the amount of waste that we've generated in our company by 30 percent. But in finding innovative ways to recycle those products, we have reduced the cost 49 percent. So, it's good for business. It's good for the bottom line as well.

TH: Touching on that, how much has this saved the company and how much has it generated in revenue?

RT: When we started the process back in 2000, the cost associated with our waste management efforts in the U.S. was about $32 million. We have since, at the end of 2006, taken that waste management cost down to $8 million. So, you can see a significant cost savings for the company there.

TH: Knowing what you know now, is there anything GM would have done differently?

RT: Well, I think it was a process. About six years ago, we entered into a new system in our company and it's called resource management. We said there is no waste; there are only wasted resources. So we began to look at materials that way and we entered into some contracts with some third party suppliers.

These are well-known suppliers with a lot of expertise in the waste management business. We said, 'Let's look at this in a different manner.' No longer are we generating waste to be disposed of but we want to treat every waste as a wasted resource. Let's find the highest value for that material.

So we really started shifting our paradigm at that time and looking at it in a different manner. So, I think it's just an evolution. You evolve the way you look at (things), the way you do business changes. We have to look at being more competitive. It's now a global marketplace that we're dealing in. So we look at everything in our business differently.

One of the things that I always tell our leadership is that environmental leadership and business leadership are complimentary goals. If we don't make the waste then we reduce our costs. And that's proven true.

TH: What is the low hanging fruit? What are the easiest things that companies can do to reduce waste that yield the largest returns?

RT: Well, the first that we've done and have been doing for a long time is recycling the metals. Those things are very easy and I think most companies do that today.

But look at other things like recycling paper, recycling wood pallets, recycling oil. About ten years ago we were disposing of our oil. Now we recycle almost all of our oil and bring it back after it's cleaned up. A lot of it we do right within our plants on-site. We bring the equipment in that cleans the oil up, recycles it right back into the same piece of equipment and we don't even have to send it off-site.

So, there are just different ways of looking at things.

TH: What advice would you give to other manufacturers, not just automakers but other manufacturers who would like to eliminate the waste they send to landfills?

RT: One of the things we've had is tremendous support on the part of our top leadership within General Motors. Now, as part of every scorecard in every plant, we have added "E" for environment. Every plant has a goal to reduce waste, and that goal is a 15 percent waste reduction from a base year of 2005 by the end of 2010.

So every plant is held to that goal and all of our management supports that goal. From our top leadership of our manufacturing organization in General Motors, I can't tell you how supportive they've been.

Every one of our plants is certified to ISO 14001. That makes environmental protection part of each and every person's job in the plant. And you need to engage the support of the top leadership of the organization in order to make these things work. In General Motors, I'm very happy to say that we have tremendous support on the part of our manufacturing leadership.

TH: Can you elaborate a little bit on the notion that eliminating landfill waste can make a company more competitive?

RT: Looking at the landfill waste, much of the waste that we formerly took to the landfill we found innovative ways to handle it and have been able to even wring some money out of some of it. And by wringing, I say that in a literal sense. We had what we call grinding swarf before. It was very fine particles that came out of our machining operations that were mixed with oil. Well, we've found ways to separate the oil and the chips, and then send the chips out for recycling. In the past we were spending money to send those to a landfill and now we send them out for recycling at no cost.

So those are the types of things that can reduce your cost. And it's, like I say, a different way of looking at every waste stream. And by having these partners, the contracts, the 'resource managers' we call them, coming in and working with us, we have put a specification together. They've come in and they've driven the cost of our waste management efforts down year after year.

TH: Now, what are the company's future goals, in terms of other manufacturing plants eliminating landfill waste?

RT: Well, currently we have 181 General Motors manufacturing facilities around the globe. And we have set a goal by the end of 2010 for 50 percent of these plants to be landfill free. We currently have eight plants that are landfill free and we have seven others that are very, very close that we think in the near future are going to be able to achieve that status. Those plants are not only in the U.S. Two of our plants in Europe that are currently landfill free; two of our plants in Korea are currently landfill free. And we have plants very close in Canada, in Belgium, in Germany, in Indiana, in Mexico, in Michigan, and in Poland. So you can see that this is a global effort for General Motors. That'll be close to 10 percent of the plants that would be landfill free within the next year. So we're working at it.

TH: Can you talk a little bit about other environmentally driven goals the company has?

RT: Well, we're always looking at our environmental performance in terms of compliance initiatives, in terms of our ISO 14001 certifications, in terms of our effect on the environment, in terms of VOC emissions, or volatile organic compound from our painting operations, in waste water emissions, in terms of the energy that we generate and the combustion processes that are associated with that.

We have goals and objectives for energy. We have goals and objectives for water usage, and goals and objectives for VOC emissions as well. So, we have established those goals and objectives and we are working toward achievement of those goals. Again, the goals on the energy side of the business are by the end of 2010 based on a 2005 baseline. And, again, we're talking about a 15 percent reduction.

TH: You sound pretty passionate about what you're doing.

RT: Yes, it's been a journey for us. One of the things that I had set out to do when I took this job several years ago was to make environmental protection a part of each and every person's job in the company so that they wouldn't need me anymore.

And, although my demise, I don't believe, is imminent, we're a long way closer to achieving that goal than we were when I took the job a few years ago. I think that we can look at our company and all of us who work in this area can feel very proud about the achievements that we've had but we can't sit back because there's still a long way to go to achieve our goals and objectives.

One of the things that we've done, especially in terms of the waste, is we have categorized those wastes in terms of, 'Okay, what's the largest amount of waste that we have?' and make a list and go down the list and go after the biggest hitters first.

So, metal scrap obviously would be first. We have foundries and we have foundry sand waste and that's second, plant trash is third, oil is fourth, grinding is fifth. And so on down the line, we've done that and those are the ones that we go after first and are the largest wastes that we generate.

So, we've kind of gone about this in a methodical manner and we've got a very good team. I can't say enough about our people that work in our plants, our manufacturing people and our manufacturing leadership that support us in achieving these goals. So, like I say, we've made a lot of progress but we can't stop. We've got to keep charging because this is a very competitive business and this is a way to make our operations not only more environmentally friendly, but also more competitive as well.

TH: Can you talk a little bit about the industry at large? How commonplace are steps like these in the manufacturing industry? And, are there any leaders that you can point to who, maybe, have served by example?

RT: Well, in some cases, we have benchmarked our competition. In some cases they're better and in some cases, we're better. But there's always a goal out there to achieve and we're always looking at that.

One of the interesting things that we're involved in right now is we are part of what's called the Supplier Partnership for the Environment. And this is co-sponsored by the industry, by the O.E.M.'s (original equipment manufacturers). General Motors and Chrysler are the O.E.M.'s that sit on that committee, as well as about 40 of our key suppliers. And we work with our suppliers, sharing some of these lessons that we've learned to also make them more environmentally friendly and more competitive as well.

The EPA is a co-sponsor of this. We've worked closely with the EPA. The National Institute of Standards and Technology (NIST) has been a co-sponsor with us. And that's been a very successful partnership and has really improved the environmental footprint of many of our key suppliers as well. Dr. Pat Beattie from our group is our main contact on there with many members of her team. And she does a tremendous job working with our suppliers and basically it helps our business because it makes our suppliers more cost competitive, which helps our bottom line as well.

Tilde Herrera is the Associate Editor at GreenBiz. This article originally appeared as a podcast on GreenBiz Radio.

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