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Volvo’s Sustainable Ambition

Marc Gombeer, Volvo’s VP of Manufacturing Americas, believes sustainability will become a critical factor for success in the global auto industry.

“Volvo strongly believes that sustainability will be a requirement to be in business within the next decade.”

Marc Gombeer, Vice President Manufacturing Americas, Volvo Car USA.

In October this year, Volvo Cars launched one of the most ambitious sustainability strategies in the global automotive industry.

By 2025 Volvo aims to make its entire global manufacturing network fully carbon neutral, reduce its lifecycle carbon footprint per car by 40%, reduce CO2 emission across its global supply chain by 25%, and generate 50% of its global car sales from fully electric cars, a third of which will be autonomous. These ambitious goals are all part of its corporate strategy to become a fully carbon neutral company by 2040.
Founded in 1927 in Gothenberg, Sweden, Volvo Cars was acquired from Ford by the Chinese holding company Zhejiang Geely in 2010. Now with a network of 11 production plants worldwide, the company sold over 642,000 cars across 100 countries around the world last year, the highest annual car sales volume in its 90-year history.
In our latest Dialogue with a manufacturing industry thought-leader, Marc Gombeer, Vice President of Manufacturing Americas for Volvo Car USA, and head of its recently opened U.S. production plant in Charleston, South Carolina, talks to Manufacturing Leadership Council Executive Editor Paul Tate about the importance of agility in a world of changing attitudes and customer demands, the need to create more sustainable manufacturing approaches and products for the future, and how leaders must explore new ways to succeed in a circular industrial economy that will impact everyone across the manufacturing value chain.
Q: What excites you most about your role at Volvo Cars?
A: In the automotive sector, starting up a new plant is a really unique and exciting experience. I originally joined Volvo to start up a new plant in China. Now, as head of manufacturing operations in the Americas, I am reliving that experience here at our new plant in Charleston. It’s really exciting to take a plant from start-up volumes to higher operational volumes and constantly increase performance as people get used to having the production up and running.
I personally enjoy teaching and coaching people to develop themselves. You can see people grow. And you can see the results improving to get us to a world-class level. The new plant has a lot of world-class equipment and we’re now working with the whole team to get the world-class results that we expect from this investment. That’s also exciting.

“The companies that will be successful in the future companies that have the ability to change fast.”

Q: How does the new Charleston plant fit into Volvo Cars’ global production network?
To succeed in today’s very fast global automotive market we need to establish a global production footprint. We have always had European facilities and since the acquisition in 2010 there has been step-by-step expansion in China and Asia. We’ve now expanded into the U.S. with the new Charleston plant which is really the last step in completing that global footprint.

We began production in Charleston around a year ago, primarily to serve the large U.S. market but also to export across the Americas to Canada, Mexico, Brazil and other countries, and to export some models back into Europe too. For example, the S60 model is part of our portfolio and we’ve exported around 50% of our production out of the U.S. since we began last year. Our ambition is to add the next generation XC90 SUV in 2022 and to ramp up to full volume production of around 150,000 units a year by 2024.

Q: What would you highlight as the primary driving forces now transforming the automotive sector?
A lot is changing across the industry and the pace of change is increasing. There are many trends involved. One is the development of autonomous driving which is a very hot topic for us. We already have a close cooperation with Uber which will cover up to 24,000 autonomous vehicles over the next few years. And we’ve also setup a joint venture called Zenuity with autonomous driving software company Autoliv because we strongly believe this will be one of the key changing factors in the future of the industry.

Then, if you look at the whole sustainability debate, electrification has become a very, hot topic too. Volvo has made a clear stance that we are committed to electrification and we want to be in the lead. We are the first major auto company to commit to a hybrid or fully electric powertrain for all our models in the future and we aim to have half of our sales from fully electric vehicles by 2025.

There is also the impact of connectivity. People are having a discussion about what the primary digital mobility platform for the future will be; is it your phone or is it your car? We still believe it’s the car and that the car should have much higher connectivity so that the user can do all the things that they’re used to doing on their phone while also using the car.

So, there are so many changes underway and Volvo is determined to be one of the high-tech leaders in the industry. We are a little smaller than many of the other OEMs which gives us an opportunity to be more flexible in following these trends, and even leading several of them.

Q: What’s the main motivation behind Volvo’s ambitious sustainability strategy?
We believe sustainability will be a determining factor in how people will look at mobility in the future, and we are taking a very brave and bold stance on this. We believe that customer behavior will change and we want to be part of that change and stay ahead of it. You can see from all the activities and ideas of today’s youth that they are demanding more sustainable thinking about the future. So, we need to ask ourselves, are we just going to continue manufacturing cars in the years ahead, or are we going to offer a more sustainable mobility solution where the physical part of the car may change but will still be an important part of it? If that solution is more sustainable, then we believe that as a car company we can make a strong contribution to making that change happen, from reducing tailpipe emissions, to full electrification, to making all our manufacturing footprint carbon neutral by 2025. It’s not just a marketing story. Volvo strongly believes that sustainability will be a requirement to be in business within the next decade.

Q: How are you going to make that happen? What has to change?
Let me give you some examples. Our engine plant in Sweden is already carbon neutral and has been since last year, which is a great achievement. Here in Charleston, we are now installing a big solar farm that will help to bring our carbon neutral level up from 25% to 50%, so we’re already halfway there. We’re also looking into ways to reduce our current usage of utilities like carbon electricity, and exploring other forms of green energy, like the windmills we already have in our Ghent plant in Belgium, so we can hit that target by 2025. So, this is not just some theory. We are looking at the best solutions for each individual plant around the world and taking very concrete actions to hit the target.

Q: Apart from energy usage, are you also addressing other aspects like materials reuse and waste reduction?
From a plant perspective, water usage and waste are certainly high on our agenda for further reduction. And if you talk about materials, Volvo has already set a goal for the company and its suppliers to use at least 25% recycled plastics in all its cars and packaging by 2025. It’s really about understanding each of our processes and trying to do things differently. Innovative technologies can help us do that. In the Charleston paint shop, for example, we have installed a new technology called eCube. Instead of using normal water curtains to extract particles from the air, we are using an air flow system and then capturing the particles with eCubes, so our water consumption is reduced and our emissions are better. This is what Volvo wants to do. By really understanding our processes better and trying out new ideas we are aiming to make sure that we implement more sustainable processes across all our plants.

Q: How will the transition to a fully electric product line impact manufacturing?
Electrification has a major impact. People who are familiar with car plants know that the process normally starts with various production lines for the engines themselves. But an electrified car has a different body structure where almost the whole floor is designed around the batteries. So, it actually starts in the body shop, which is a very different production approach. As Volvo is renowned for making the safest cars in the world, we need to make sure that when we build an electrified car, we can offer that same safety. Then, when you move into assembly, very different operations are needed compared to the normal internal combustion engine. For the XC90 project, for example, we aim to build a battery assembly plant so the battery modules are built close to the line and can be easily transported into the assembly process.

“Investing in developing our people is what we all need to do as manufacturing leaders.”

The other big impact on the manufacturing process is increasing connectivity. The current electrical architecture of most cars is not sufficient to really fulfil future needs. Future models will need a totally different architecture that will be able to cope with all the new requirements of increased connectivity and autonomous systems. This will also have a big impact on our manufacturing, so we will have to scale up some of our knowledge. But as part of a global production network at Volvo, we can learn from each other about the best practice approaches for dealing with these new electronic or electric architectures.

Q: So, the future looks like a continual journey of learning and experimentation to achieve more sustainable results at all levels.
Yes. We may not have all the answers to all the questions about how we can make everything work yet, but we strongly believe that a more sustainable, circular economy is coming closer.

I’m proud to be part of a global group of people that is now coming together to brainstorm what the circular economy means for a car manufacturing company, how it needs to operate, and how the overall business will work. It’s inspiring to look at new ideas about developing more sustainable mobility solutions instead of thinking just in terms of units; about the importance of understanding the full lifespan of the vehicles we produce; and to look ahead at how we may be able to recycle, if possible, the full product in the future so we have less impact in the environment.

Our journey at Volvo is to understand what a circular economy business model will look like, what the impact will be on the product, what the impact will be on manufacturing, and what the impact will be on the dealer network. We can see that everybody involved will be impacted if we are going to make a circular economy a reality.

Q: From a broader perspective, what’s your view on the deployment of other advanced new technologies, often called Manufacturing 4.0, to create a more agile, digital future for manufacturing?
I think the industry needs to be more agile and flexible to respond to customer needs. Customers today expect products faster and to have products that better meet their needs. So, we need to reform some of the ways we produce things. But we also believe that we need to be masters in the basics, and we don’t want to make the way we build world-class cars too complex.

When you look at advanced automation, we don’t want to go to a level that actually hinders us from being flexible and delivering cars on time. So, we choose carefully. 3D printing, for example, is a specific tool that can help make us less dependent on, say, a spare part that might have a long lead-time, so it actually helps us become more flexible and make sure that we deliver our products on time. Another important technology is virtual reality. It may sound easy to start dreaming about making a virtual car online but in the end, we need to make a physical product. So, in our development process, we create a virtual car design and then we have people from all over the world who participate online in that design to make sure that the car we develop is best suited for physical manufacturing.

So, we have some very concrete applications for advanced new technologies, but we want to make sure we are masters in the basics and then we can apply those new technologies in the correct way.

Q: Are you also harnessing new analytical tools and artificial intelligence to support any of your production operations.
Yes, in specific projects. In the paint shop we have a Big Data project to help us understand all the potential parameters in the processes, environment, or whatever, that may influence the quality that comes out of the paint process. We’re doing a similar thing for spot-welding quality. We already know how to manage these processes, but we want to see if Big Data can help identify certain correlations that we are not aware of from our past experience. So, we’re exploring the possible application of these kinds of analytical tools by applying them to specific projects at this stage.

“The companies that will be successful in the future will be the companies that have the ability to change fast.”

Q: Are you exploring these advanced technologies corporate-wide, or just at a plant level?
We have a global manufacturing engineering organization that leads these projects. They assign a specific plant to do initial testing and put a pilot into place and then if it is successful, we expand it to other plants so that we gain speed rather than everybody going through the same learning process. At the moment we have people from all the body shops around the world here in Charleston to talk about what they are doing at their sites and the results they have seen. Then they decide if we understand it, and if we are now comfortable expanding it and applying it across multiple plants. They meet twice a year for this kind of best practice sharing, so we have regular insights into how we can improve and learn from each other to increase the learning cycle.

Q: What challenges still keep you awake at night?
I do have a good night’s sleep. It’s important. If you lose your sleep, you probably won’t function that well anymore. My main focus is really on the development of our people as we go through all these changes and I put a lot of my personal time into this. That’s what excites me but it’s also what keeps me awake. If you look at our organization, for example, not everyone is raised and trained in car manufacturing, so we have a lot of education to do about the future. How can we do better? How can we really make sure that people are fully mastering their jobs within each plant? I strongly believe that investing in developing our people is what we all need to do as manufacturing leaders.

Q: What would you highlight as the greatest business challenges and opportunities for the manufacturing industry over the next 5 years?
The main challenge, especially for a lot of large organizations, is to have the flexibility to move with the right speed to keep up with all the changes that are happening in today’s industry. I am convinced that the companies that will be successful in the future will be the companies that have the ability to change fast. And that means creating new kinds of structures across the organization that are more agile and that can adapt to whatever change is happening in the market. In the end, if customer behavior changes, it’s a matter of how fast you can react to that change that will drive success.

Q: What kind of leadership skills do you think the next generation of manufacturing leaders will need in the digital era?
I think we’re moving away from a world where experience alone leads your career. Today’s leaders must have an ability to learn, and an ability to change, and are able to make that change happen. In the past, career progression was focused on who knows most about the existing processes and the best way to manage them. It was more a technically driven kind of leadership. Now we need people who really understand and capture the things going on in the market and can learn new approaches in a very fast way. They also need to be able to make change happen and can really inspire their people to accept change so that the company stays on the right track. I think these are two of the main characteristics we should be looking for in our next generation leaders. We’re moving more into a world where flexibility and a capability to learn defines a new kind of leadership in manufacturing.

Q: Finally, if you had to focus on one thing as a watchword for the future of manufacturing, what would that be?
Be agile, but never forget the basics. That’s what drives my approach at Volvo.   M

FACT FILE: Volvo cars
Gothenburg, Sweden (U.S. HQ: Rockleigh, NJ)
Business Sector:
$26.25 bn (SEK 252.7 bn, 2018)
$1.48 bn (SEK 14.2 bn, 2018)
43,000 (2018)
Cars Sold 2018:
100+ Countries
Production: 11 Production Sites Worldwide

Marc Gombeer
Vice President Manufacturing Americas, Charleston Plant, Volvo Car USA
B.S. degree in industrial engineering and electromechanics, Groep T – Internationale Hogeschool, Leuven, Belgium; M.B.A, University of Antwerp Management School (UAMS), Belgium
Dutch, English, French, German, Portuguese, Slovak
Previous Roles Include:
-Vice President, Chengdu Plant, Volvo Cars, China
-Vice President, Daqing Plant, Volvo Cars, China
-Business Director, Automotive & Petroleum, Belgo Bekaert Arames, Brazil
-General Manager, RR&R, Bekaert, Slovakia
-Plant Manager, Bekaert, Belgium
-Area Manager, General Motors, Belgium


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