Legrand's CEO: How we met our energy goal seven years early.
By John Selldorff
In our highly competitive economic environment, it's surprising to learn that U.S. businesses and households waste up to $130 billion each year in excess energy costs — about 70 percent of what businesses pay in corporate income taxes annually — according to a 2009 report from global consulting firm McKinsey & Company. With the commercial and industrial sectors comprising nearly 65 percent of this waste, the opportunities for businesses to save are significant.
Government programs actively challenge businesses and manufacturers to quantify and reduce their energy usage. I encourage every company to seek out and participate in an energy efficiency challenge — whether at the national level, such as Better Buildings, Better Plants or EPA's Energy Star Challenge, or at the state or local level, such as Retrofit Chicago or Minneapolis's Kilowatt Crackdown. If there's not a program that fits your needs, work with community leaders to create one. By participating in a challenge program, companies will discover just how much energy they can save just by being aware of energy use and taking small steps to improve efficiency.
Businesses just shouldn't leave $130 billion on the table.
Winning the challenge with people, process and technology
In 2011, Legrand elected to participate in the Department of Energy's Better Buildings, Better Plants challenge, a voluntary national partnership that required a commitment to reduce energy intensity by 25 percent over 10 years.
That year, Legrand faced many of the same challenges that other businesses face today: an aging building and equipment fleet, energy-intensive manufacturing processes and a lack of specific knowledge about energy usage across the company. But that didn't deter us. Our bottom line was at stake.
To achieve the energy reduction goal through the DOE program, Legrand took a three-pronged approach: a key combination of people, process and technology.
We worked to engage employees across our company, because everybody has a role to play in energy management. As part of that effort, we hosted our first Power Down Day in November 2012 and challenged each of our 2,500 employees to find everyday ways to save energy. We achieved a 24 percent reduction in energy intensity companywide that day, with some of our locations breaking the 30 percent mark, by identifying a multitude of energy savings opportunities that were easy to quickly implement. The experience was effective in raising awareness of the impact of individual actions.
We found ways to change our processes, because we saw the value of incorporating thinking about energy use into the way that we do business.
One example is how we reconfigured an energy-intensive process, a paint line, at one of our facilities. By looking closely into the operation, we determined that we significantly could cut the idle time of the paint ovens by changing the run schedule. As a result, we achieved dramatic energy and cost savings — without spending any money.
We also looked beyond production processes to improve upon our corporate process, including developing a new energy project evaluation tool to ensure that we consider not just ROI, but also actual energy savings, greenhouse gas reductions and social or marketing benefits for every new investment we make.
Finally, we deployed the right technologies for our situation. As an energy saving solutions provider, we thought we already were doing a good job of energy management. But having installed sub-meters across all of our facilities, we are able to analyze our energy use at a more granular level, allowing us to make much more informed observations about when and how energy is used at our facilities. Because of these new insights, we are able to identify additional energy savings opportunities and make the process or equipment changes needed to realize them.
Beating the Better Buildings, Better Plants goal
As a result of these steps, we exceeded our Better Buildings, Better Plants goal within the first four years of joining — seven years ahead of schedule. We achieved a 32 percent reduction in energy intensity across 14 U.S. industrial, commercial and mixed-use sites. At our 100-year-old headquarters building in West Hartford, Conn., we were able to reduce our energy use intensity by 10 percent in just two years, leading to a $233,000 savings in 2013. And those savings will show up in every budget going forward, too.
An important lesson to draw from our experience is that it does not have to cost a lot of money to make substantial reductions in energy use.
Business leaders can be hesitant to undertake energy improvements because they are afraid of the price tag. But in fact, low-tech upgrades and process improvements are available that do not cost a lot of money and have a short payback period. And there is as much to achieve through employee engagement and behavioral change as there is from capital investment.
Our three-pronged approach has worked well for us, and we are happy to share the resources we have used to implement it -—including our Power Down Day toolkit, our new project evaluation tool and our energy management handbook — on our website. If your company seeks a way to begin your efficiency journey, you might find these tools to be a good place to start.
We are thrilled to be doing our part in the Better Buildings, Better Plants challenge; it allows us to reduce our carbon footprint and increase our profits. More than 125 companies are participating in the challenge, representing a broad swath of American industry: automakers such as Ford, GM and Nissan North America; health and beauty product manufacturers such as Johnson and Johnson and Proctor and Gamble; and high-tech companies such as Intel and Raytheon.
Big savings of energy and expense
Together, we already have saved a collective $1 billion in energy costs. That's money we can spend creating and maintaining jobs, making new capital investments and remaining competitive in our industries. We also have reduced greenhouse gas emissions by 11 million metric tons — the same as taking 2.3 million cars off the road.
In 2014, Legrand is excited to recommit to the Better Buildings, Better Plants program. We have set the goal of another 25 percent energy intensity reduction for our North American operations over the next decade.
I hope that sharing my experience at Legrand North America can help point the way for other CEOs to find, and eliminate, the energy waste in their companies and make them more competitive.
About the Author: John Selldorff has nearly 30 years of leadership experience building global brands and guiding top-tier companies. As president and CEO of Legrand in North America, his vision and expertise in the electrical products and mechanical building systems industries has driven notable growth and opportunity.