Sustainability at General Motors is something we've covered repeatedly at GreenBiz.com, from zero-waste factory floors to innovations in alternative fuel sources. But shifting an enormous company like GM is no quick feat, and even the last 3 months have suggested that a sea change is underway in how American car-buyers in particular are choosing their vehicles.
I recently spoke with Terry Cullum, the director of Corporate Responsibility and Environment & Energy at General Motors, about the company's long efforts to improve the environmental performance of their vehicles, as well as how GM is looking ahead to make successful predictions about the long-term market. I began by asking Terry how the near future looks for GM, with its all-electric Chevy Volt scheduled for release in 2010, how a global company addresses regional preferences and its options for alternative fuels.
Matthew Wheeland: Are there solutions that you're tailoring to specific countries, to specific regions within countries? Are you sort of playing all over the field to see what works best at this point?
Terry Cullum: Yeah. I think it's a little of both quite frankly. I think we're looking at the energy infrastructure in the various parts of the world in which we sell vehicles. Probably the best example is looking in Brazil where they have an abundant supply of sugar cane and it's no secret that the Brazilians have moved very aggressively into the biofuel area and I believe somewhere around 95 percent of the fueling that's done in Brazil is with biofuels. So there's one where the natural resource that's available is certainly something that makes economic sense in terms of moving into - for the existing, the car park.
So that's an example of you want to apply the energy source that makes the most sense for that region. But yes, for right now what we're trying to do is we're trying to look at - because we're developing global architectures, we're trying to look at many different options to deploy and it would be dependent on again the regions in which we are going to deploy the technology so there's lots of options that we're looking at. A lot of options on the table in trying to deploy advanced technology where it makes the most sense.
MW: Let's talk a little bit about the broader shift in what consumers are looking for in cars. I think the news recently was that GM is taking a second look at the Hummer line which I think has long been the poster child for the least, you know, fuel efficient, least environmentally friendly vehicle. There was news earlier this week that Ford had an SUV plant that was gonna have to sit idle for nine weeks because of slacking demand.
How does a company as large as General Motors respond to this change in demand quick enough to meet it? I mean obviously this didn't come out of nowhere but it has picked up really rapidly just in the last few months.
TC: Sure. I think obviously it's a direct result of fuel prices escalating at the rate that they have. And hitting points where it now makes a difference with the consumer. So I think we've hit that.
And so a company as large as General Motors, we like to be large and nimble is what we' like to be. And when we saw that the trend was moving in that direction it was clear that we had to make fairly aggressive moves to adjust to that change in consumer demand. And that's why you saw the announcements relative to some of our full-size sport utility and truck plants, and that's where the discussion around the Hummer brand was initiated. So you have to be as nimble as you can be even though you're big. It requires a tremendous amount of manufacturing flexibility and engineering flexibility and management commitment to make these changes. But the management commitment is there and we certainly have the manufacturing expertise and the engineering expertise to take on the task at hand.
So over the next couple years you're going to see changes as a result of $4.00 and above gas prices.
MW: Now I have a question sort of about policy. It's not all that well formed in my mind so forgive me in advance. Barack Obama, the presumptive Democratic nominee, was at a General Motors plant earlier this week I believe talking about manufacturing, talking about how to bring these jobs back to keep those factories open even if people aren't buying Hummers. If there is something else to take that place on the manufacturing lines.
What would be your hope for General Motors in terms of how to grow market share and lower café averages to improve environmental performance and overall impact of the cars? What's sort of your hope for General Motors along those lines?
TC: Well, I think the hope for any major auto manufacturer is that you have the right strategy to meet the consumer demand that arguably changes and to make sure that you don't overcorrect but make sure that you are flexible and nimble enough when you do see consumer demand signals that suggest that, you know, the days of even $3.00 gas might be over with.
You need to be able to adjust and adjust quickly. So that's the challenge to us as we speak. And with the announcements by Rick Wagner just a couple weeks ago, I think it's very clear that that's the direction that General Motors is headed in and will be for the foreseeable future.
So we're confident that again we have the resources, the flexibility and the expertise to be able to pull this off so that we can provide our products that have the utility, the performance and the fuel economy that consumers are really looking for in vehicles that have to be exciting. We're convinced that the design of the vehicle is probably the most compelling feature to get a customer to take a look and draw the customer into the showroom to actually come in and sit in one of those vehicles.
So you have to meld the what I think as leading edge design with all of the attributes that the consumer is looking at in terms of, you know, great fuel economy, great ride comfort, great performance. So all of those things have to be just right in order for you to be successful in this are. It's very complex. This is - we're talking about a durable good that has approximately 20,000 part numbers.
MW: Well, I think that's a really interesting point about how do you make them compelling to consumers. And by “them” I mean more fuel efficient, more environmentally friendly cars. And I think no one is gonna step out on the limb and say that this shift towards smaller cars is because of a widespread awakening of environmental conscientiousness among consumers if they're looking at saving significant money at the gas pump.
If shoppers are not coming to these cars because they're green but are coming because they're smaller and more fuel efficient, are you seeing other elements that they're also appreciating about these cars? If it is something like recycled materials or recyclable materials? Are there other selling points for these cars in addition to fuel efficiency?
TC: I think it's probably too soon to tell. We're committed, though, that the other attributes, the other environmental attributes are important. And we've thought that for quite a while. In fact what we've been doing and have been doing this for years, is as we develop a new model what we do is we take a look at that new model and we compare it to the old model and we say, “Okay, from an environmental standpoint, what have we done to the new model that has improved its environmental performance?” And really it's not just looking at it in the hands of General Motors. It's really a lifecycle kind of approach.
So what have you done to the new product that makes it more - that you've improved the environmental performance? So that's really the challenge that we put out to our engineers when they started looking at developing the new product.
And what we've done as a result of that is for each new model that is introduced, we also publish what we call an environmental features card for that product that basically talks about the things that that new product has that are environmental improvements and it tries to quantify what those environmental improvements are. Now this is not an exhaustive list. What we try to do is keep this fairly high level so that potential consumers can understand that there's more to the vehicle in the environmental space than just fuel economy. There are other things that are important.
In addition to doing that, the environmental feature card on the front side talks about the product and what we've done to change the produce in a positive way for the environment, but if you flip it over we include the plant that that product is built in. In other words, we talk about what are the environmental performance features of that plant where that vehicle was made so that the consumer can understand that GM is not only interested in enhancing the product environmental performance but we're also about enhancing the plant environmental performance as well.
So we have been publishing these for the last several years. They're apparently the best kept secret at General Motors. But we actually have a website where you can have access to all of those environmental feature cards so you can get an idea of what we're talking about.
MW: I think you're right. That may be the best kept secret because I hadn't heard of those either and I really would love to check them out.
That is I think a perfect segue to looking at the larger sustainability topics at GM. I want to just back up briefly -- I'm curious again sort of about this marketing angle. That there are other environmental benefit to the cars.
Are you looking at sort of the chemical makeup of what is inside the passenger part of the vehicles? Is that something GM is taking into account?
TC: Yeah. And let me give you another couple of examples that you'll see in the environmental features brochures. But it gives you some idea of some of the other things that we have considered and because of our environmental principles and what they state in terms of we will always be looking at continuous improvement in terms of our products and their environmental performance.
One of the things that we have implemented on our vehicles is something called an engine oil life monitor. And what it does is it basically measures the engine oil life of that vehicle. So in the old days we were used to the 3,000 mile oil change. Everybody said, okay, well 3,000 miles you gotta take it in and get your oil changed.
Well, with improvements in oil technology, improvements with engine technology, improvements with overall computer technology, we've managed to bring a technology to the consumer that basically says, “No, you don't have to do it every 3,000 miles. It really depends on how you drive the vehicle.”
So if you're driving it mostly on the highway guess what? You're probably gonna be able to extend your oil change intervals probably past 7,500 miles. And so the net result of that is you reduce the amount of used oil that's being generated on an annual basis.
We did some back-of-the-envelope calculations in terms of, you know, how much oil we were actually reducing in terms of waste oil and it's pretty eye opening. So there's another example that we've developed some technology and put it in front of the consumer and gave them the information that they need to know so that they don't change their oil every 3,000 miles. And then the net result of that is over the life of the vehicle a lot less used oil is generated as a result.
So there's an example. Again, it's not about fuel economy but it is an environmental kind of feature that we've added to the vehicle. Again, not very well known.
MW: And again this is not necessarily a strictly green, a strictly environmental benefit. Again, you're saving a significant amount of money if you're cutting the amount of oil changes you have to do in half.
TC: Yeah. We actually call these two-fers. It's a benefit to the environment and oh, by the way, it saves you money as well. And we had our Greener by Design conference last week and one of the issues that we looked at was how you present what may be an environmentally beneficial product in a way that reaches out to non-environmentally minded shoppers.
MW: I was asking about VOCs or, you know, internal rather chemical makeup of the passenger areas of the cars because yes, these are environmental but you can also present them as health and safety issues and you'll get a whole different set of shoppers who are interested in those that might otherwise look away from an environmental benefit.
So this seems like a great time to move away from vehicles to the bigger picture of GM and we have covered some of your initiatives pretty heavily and I think it was towards the end of last year you opened I believe it was your eighth zero waste factory.
How does that fit into GM's larger environmental goals? I guess let's start with tell me a little bit about your zero waste initiative for your manufacturing plants.
TC: Well, quite frankly it's a fairly straightforward initiative in that it's really under our resource management strategy and really we look at waste as a misplaced resource. And you sort of gotta get your mind around the issue differently. And not just say, “That's waste. What do we have to do to get rid of it?”
If you look at it and say, “Geez, that's actually a misplaced resource. We need to identify where we can use this resource.” Is what really made this program successful. It was a different way of looking at waste.
So we were at eight. We're now at ten and I gotta tell you we're growing. We will have many, many more zero waste landfill facilities in the very near future. You'll be hearing more about that. But we're quite pleased with the progress we're making there.
But again it's a difference in mindset. We look at, you know, things that have traditionally been generated as waste. We look at first do you even have to generate the waste. Is there a way to not generate waste? Or is there a way to cut down on the amount of waste by just coming up with a better design so that you don't have to use those materials in the operation?
So there's a lot of things that we look at in this whole area. And at the end of the day what you're trying to do is make sure that everything that comes into the plant the majority of it gets put on the product. The amount of materials that don't get on the product we find another use for those materials.
And in doing so it's another two-fer. You help in terms of not sending materials to landfills. You actually can cut down on your costs associated with waste disposal and in many cases you can find revenue streams from some of these materials. So at the end of the day you're hoping that from a financial standpoint you come out on the plus side.
And then in many cases these very strategies on a resource management level actually have the potential to reduce CO2 emissions. And so it's a very comprehensive, well thought out strategy but it really did start with a very simple idea that waste indeed is just a misplaced resource.
MW: It's a form of inefficiency is something I hear a lot.
TC: Yeah. But the way we look at it is don't create it if you don't have to. The other thing is in order to be successful and transferable, you really have to have a real good network so that you can share best practices. And that's what has been done within the company and that's why we're growing this fairly rapidly because it makes a lot of sense and we've got examples that are transferable from one facility to the next. So I think you're gonna hear a lot more about this in the not-too-distant future.
MW: And what has the response been to this from workers at those plants?
TC: They are very supportive. Because a lot of the ideas that you get quite frankly are from people who are closest to these issues, the people that work in the plants. So a lot of the ideas that we get are from the employees that actually are part of the whole process.
So they are very keen and have some excellent ideas. You've got a lot of folks out there that, you know, they do curbside recycling and so they do this firsthand in their own homes. So without question the people have been the key to the success of this whole initiative. And they're all on board. Again another two-fer.
MW: Great, Terry. Well thanks very much for your time. It was good to talk to you and I look forward to hearing more about more zero waste facilities.
TC: Great, Matt. I appreciate it. Any time.