JACOBSEN: The real home run is when we are able to, as an industry, start tying the processes together, work across the trades, and streamline the process for everybody.
Helge Jacobsen. My title is Vice President of Operational Excellence and Innovation within United Rentals.
MANDY HENRY: Hey guys, thanks for tuning in to the LITES Podcast. It’s Leadership in Industrial Technology, Education, and Safety. My name is Mandy Henry. In this episode, Pinky Gonzales sat down with Helge Jacobsen of United Rentals to discuss the challenges of the construction industry, and how the employees of United Rentals are working together to solve them.
PINKY GONZALES: Perfect. Now, how did you end up there?
JACOBSEN: It’s been a long journey, professionally. I spent the beginning of my career was in general electric, got trained in finance and later in operations, and ended up running a manufacturing and supply chain for a business unit out in Europe. From there, I spent time in private equity, in operations. Did a lot of turnaround work and the private equity version of turnaround work is to spend a lot of time there. Part of that I was exposed to United Rentals. I then spent a few years in a high tech where I was running the operation side of global sales, and as I said, I got exposed to United Rentals. Michael Neillen called and it was just a matter of finding the right time for me to join United Rentals.
HENRY: Pinky met with Helge back in February at the LITES event hosted by Bechtel Corporation at the Bechtel Welding and Applied Technology Center in Houston.
JACOBSEN: I joined United Rentals five years ago. I started out running our internal audit group, which gave me a lot of exposure and a lot of learning about how the rental industry works, how construction works, because I had to be out with my auditors from the very beginning that turned into the opportunity.
We saw the opportunity for improving our internal processes and operations. So, that turned into setting up an operations excellence group within United Rentals and really get a lean program running, identifying waste and, getting the entire company exposed to, but really engaged in and excited about how can we identify waste, how can we take the waste out of the work and make it more productive and safer?
So, five years later we have gained about $170M of productivity, but more importantly we have 15,000 employees that are excited about every day on identifying waste and finding creative ways, to take it out. We build it into our culture within our people. We build an entire leadership culture within United Rentals. That is kind of how we operate.
GONZALES: Can you give me some examples of how people are exposed to this? I am a new employee for United Rentals. I've been told that this is an important thing. How, how does it come into my frame of reference?
JACOBSEN: It comes in on a couple different levels. The most basic and a very nonnegotiable level is we have a 5S program. So, we do expect that every part of operations is making sure that they have standards in place, that they're keeping it organized, that they are running their operations safely. It doesn't matter if you're a driver, tech, or an internal sales rep on the counter, we expect you to follow certain standards in making your workplace organized and safe. So that's the very basic level. We’ll train you in that, and that's just a basic level of expectations.
Throughout the operations, we have every Tuesday morning everybody, not everybody, but eventually it cycles through. So, in a month, everybody's been involved in a huddle on Tuesday morning, where it is really about how do we identify where, where the employees are encouraged to and now are taking the lead on identifying new ways of operating new issues that came up. Together, answer the “5 Whys” and together come up with new solutions and implement them for that week. So, every Tuesday there will be huddle every one of our operations with that that scheme. The employees will rotate through, so every month everybody has been engaged in that process.
So, when you're a new employee, you will be part of that every Tuesday. I'm sure you'll be observing a little bit the first Tuesdays, but everybody very quickly finds it exciting, engaging, because you get a chance to make your day to day life at work better, safer, and you get a chance to problem solve with your colleagues and finding cross-functional solutions. So that's exciting.
GONZALES: That's great. So just by chance, I had the opportunity to see a brief presentation you gave just a short while ago. Tell us about the apples and Google and I'd love to hear how, how you came upon that story and, and integrated into your thinking.
JACOBSEN: Absolutely. So, it's a story that really frustrates me a lot because I see it as an example and that's why I use it when I give presentations. It is an example of, in my mind of where innovation has gone wrong. Where innovation has become about the cool solution and innovation becomes about asking smart questions.
So, the story is, it's a couple years old, there was an article that was a small group of Google engineers, they got funded by Venture Capital and they created an autonomous apple picker. From a technology standpoint, it's actually incredibly advanced. So, they're using artificial intelligence to identify the color and the shape or the apple, they have a sensor on the arm that picks the apple, that can feel the firmness. They use all that data together with deep learning. They identify the right apple to pick and they picked that apple.
From a technology and solution standpoint it is incredibly advanced and totally cool. But I spent time picking apples when I was young and the picking of the apple takes about a half a second. So, when you look at the overall value stream of picking apples to actual picking of the apple is really the least important part of it. It takes us a half a second to pick that apple and humans are incredibly well set up for our censoring apparatus, and we are incredibly well set up for picking apples. We identify colors, firmness, and shape very, very well. No AI is quite at our level yet. But when you're picking apples, after you pick the apple, you now have to walk down the hill with 50 apples on your back. You're walking down 10 minutes offloading the apples, you'll walk in 10 minutes up the hill again and you do it again.
So, when you look at the overall value stream, the real waste is in the walking up and down the hill with apples on your back. And so, the real question is going to be, how can we identify the waste of the transportation of the apples and how can we eliminate the waste? That is a true question. That question is actually really simple to solve.
Creating an autonomous vehicle that drives in a set pattern up and down with apples, that is a piece of cake. So, that provides an immense amount of value because you take out calling is 15 to 20 minutes of that person's time every time they pick. So, you increase the capacity with 30 or 40 percent with a solution that's really, really simple.
When I talk about innovation and when we talk about innovation within United Rentals, our starting point is always to look at the value chain, where in the value chains are the waste and how can we find ways to use technology to eliminate that waste? When we do that, we make the work more interesting. We typically make the work safer and we for sure drive a lot of productivity in the process.
So, that's the apple story and why it's so important for us wanting to get a chance to knock the Google engineers, but more importantly, it really illustrates that focus on the overall value chain and eliminating the waste.
GONZALES: I love it. So, in this case, it seems like so much of the recognition of where that waste is and therefore where the innovation should be placed is coming from the inside out. People that are doing this job every day, they know what they know and so they can make these informed decisions. At what point do you guys look to outside resources, vendors or third parties or some kid in a dorm room with a new mobile app? How do you infuse outside ideas with internal knowledge?
JAOBSEN: Absolutely. So, we set up a group, within United Rentals, called the Advanced Solutions Group, and a lot of companies have that now. We have innovation groups. All our major customers have them. Part of our responsibility in that group is to be on the forefront of what are the technologies. So, we spent a lot of time meeting with everybody, large, small, startup, VCs, and just really stay on top of what are the latest technologies out there. But, when we're trying to solve or create solutions, that is not where we start. That is a background, that is part of our toolbox.
We start every one of our projects, as you said, on the operator level. We start out in the field. Because the best ideas really come up when we talk to the guys that are doing the work and they will very clearly tell you what are the issues. What is it that could make a big difference? At that point in time you start introducing new technologies and you start having in those working sessions you can ask, “Would it be helpful if I could identify those pieces? If I could identify the different types of rebar on the job site and I could do that from the image and I could give that back to you.” Right? The answers, yes. They don't necessarily need to know that that is a deep learning algorithm that is done on a cloud server that is creating, that can identify the different kinds of rebar on an image. They don't necessarily need to be involved. That image that is captured by a drone. That's our job to kind of create those technology solutions. But you can have those discussions about: What if you could do this? What if you could do that and you engage the operator? That is where we get the best ideas.
Then the innovation processes really a long series of trial and errors. We’ll put prototypes together, we will be back out with the operator, we’ll test it out and again, when they start seeing and feeling some of the solutions, we get very precise, very quick feedback. This is working, this is not, this is giving value, this is not. Now can iterate and find the right solution. So that's kind of how we're doing it. A little bit of a two-pronged approach, if you will. On one hand, we're spending a lot of time being very knowledgeable about technology, but our ideas and the problems we are trying to solve is all rooted at the operator level, either within United Rentals or with our customers.
GONZALES: Does a particular problem, or maybe even suggestion by an operator, have to reach a certain number of other facilities or a certain scale? How do you decide which things are good idea versus a great idea?
JACOBSEN: We try not to put too many filters on an idea up front. We have a couple of key areas that we have focused on where we will focus and have our working sessions with the operators. We don't have a filter on how many others have that problem, but the way we test that is that we will think, if we had a solution, how would we commercialize it? We never go down a path until we have a decision maker to say, “Yep. If you can create this solution, I will buy it at this cost point,” and that is our test going back that we have something that the customer is seeing that go on. “Yep, I understand the problem you're trying to solve. I see the value. If you can create that, I'll pay x,” and that is how to test for if the market is there or not. And then we'll create it. We’ll go through the iterations we talked about as we create the solutions. We will then go back and go now, “All right, now we have the solution.”
One example in point was, we created an autonomous track loader for a customer that was moving material from a lay-down yard down in Florida, out on the job site. The idea came from the operators. They would go on, “We really need to have a solution to have material on time when the crews need it.” We then created that autonomous solution. We went and it presented to the customer saying, “Yep, if you can do that, we will buy it.” We did it in November. We had track loaders running autonomously on work sites in Florida. Then we go back to the customer going, “All right, here's the solution.” And they immediately signed up for the next 25, which is basically everything we could produce at that point in time. And that is how me evolve the business case. Now we get smarter about exactly where the value is because we saw it, the customer has seen it and they are signing on the dotted line proving that there is value to them and to us.
GONZALES: That's fantastic. And that's the lean process you're describing earlier? My observation of ITI’s growth with the simulator over time has been exactly this. United Rentals and Bechtel have both been a part of what it is because it was validated in the first place.
GONZALES: You know, we would make it if he would buy it, but we're not going to make it if nobody's going to buy it.
JACOBSEN: Exactly. That's how we engage with our customers. Earning customers respect and enjoy that process because it becomes real, right? Because if you go on, I could create a drone that can carry people up and now you don't need a drone. Would you like that? And they go one, “Yeah, that sounds about right.” “Would you pay for it?” “No, don't. Because I don't like the liability. It’s not going to work. The cost point doesn't save me anything.” Then that's where it becomes real. So that's how we do it.
GONZALES: That's excellent. So, the big question, what are the big challenges of industry from your perspective today?
JAOBSEN: I'm biased because I come from manufacturing. The big challenges for the industry, if you just step back, the big challenge is that we continue to be one of the most dangerous job categories in North America. I think we are the third most dangerous job category – construction. That is an issue on many different fronts. One, there's a lot of people that are going home being hurt and in some cases ending up with fatalities. So, that is a major focus. The other part of it is that is very difficult to attract new labor and new employees into the field.
So, when you look at the aging of the workforce in construction, it fundamentally ages one year every year. What that tells you is that as there's very little new workforce coming in and it's the same group of people that just tends to get older one year every year and we are not able to attract new people, new talent into the industry. In the interviews we had done, it was very clear that it's not because they don't want to be in construction, because culturally as fewer and fewer people that grow up building stuff. So that's part of it.
In our interviews, it is very clear that the kids that are coming out of high school or graduating from colleges today to look at it and go on like, “Why would I take a job where I put myself at risk? Makes no sense to me.” So, I think that is a big thing we need to solve. Again, stepping back on the industry, we have now 4 or 5 decades with negative productivity. So, you take the problem of us not being able to renew the workforce and you overlay that with lack of productivity and we have a real shortage of capacity. There's significantly more work for everybody out there then there is capacity of people to get it done.
GONZALES: Do you attribute the loss of productivity to not enough people being out there? Are there other factors?
JACOBSEN: No. So that's a whole series of pieces. One is that there are some regulatory constraints, right? We keep having to comply with more and more regulation. So, that has taken some of the productivity out. I think more importantly, it is because we still work very isolated. Every trade is treated separately. We tend to solve problems in silos and we are not good as an industry to really take a look at the overall value chain again and tying all the pieces together.
So, when you look at what is the big opportunity for us as an industry, the big opportunity is that every time you create capacity there's more work to be done and all of us get a chance to make another buck. So that is a big opportunity. In terms of the solution, it's really around how can we tie the value chain together and how can we streamline that entire chain of events instead of optimizing each piece individually.
JACOBSEN: So, when you look at what are some of the technologies that are going to help, of course, the Internet of things, being able to have centering and data around pieces, being able to share that information is incredibly important. Some of the innovations on BIM, or some of the other innovations I think over time at least has the potential to be part of that solution. The real home run is when we are able to, as an industry, start tying the processes together, work across the trades, and streamline the process for everybody. That is when we're going to be cooking with grease.
GONZALES: So, a bit of a curve ball question for you, there's a lot of talk about AR these days and there's great expectations that it will change everything. And the one-use case that you seem to see in construction again and again is the technician who opens up the engine, there's the engine, here's the part and twist this knob and that's what AR is going to do for us. Aside from that example, have you seen or are you, are you hopeful that AR, whether it's through a phone, a tablet or a head mounted device, is there something that AR can do for us beyond the user manual?
JACOBSEN: It’s a relatively new technology. It's not a new technology, but I think getting to a cost point where it's available for us as a reasonable solution is relatively new and I think we're going to learn a lot about where the value is. Some of the places where we are working right now, the easy one is training. So, we're doing a lot of training within United Academy, leveraging VR and AR and the reason being is that you don't really understand how to operate a boom, or operate an excavator until you have sensed what it feels like to be on a boom and virtual reality or augmented reality are really strong tools that can help you create that sensation of what it feels like to be on a boom. Uh, so I think the training is a great first use case for those technologies.
Again, coming back to some of the problems we have with attracting new people into the industry. Well, if we can train them ahead of time and we can make people feel more confident being in the environment, being more confident, working safer in that environment, I think we can leverage AR and VR to attract a different set of employees and broaden the pool of resources that they have available. So that is the first one.
The second one we're working on is really on creating remote capabilities. And I'm not talking about just standing right next to it with an X-Box control. I'm talking about if we can move some of our jobs into cubicle type settings. Now you could sit in a cubicle. One project that we are working on is if you can sit in a cubicle and you could remote manage a welder in a job site in a different place, again, the virtual reality gives you all the precision and the sensing you need for you to create a good scene for the welder, and really be in that environment, and being able to deal with the variants of that job site.
So, I think VR and AR can help us move some of the jobs away from where it's dangerous. Today, we often require our employees to travel. They will be gone for weeks at a time. It makes it very hard for huge parts of the population that either doesn’t want to make that sacrifice or can't make that sacrifice to participate in the construction industry.
Well, if we can move those jobs into a more fixed setting, now it becomes very attractive for somebody who doesn’t want to make the travel commitment. We're working actively, and I think over the next couple of years I've gotten to see more and more examples where we are going to be experimenting with and seeing proof cases of us being able to move work from where it's dangerous to safe areas such as cubicles and being able to do remote work.
GONZALES: Awesome. That's going to be not only great for the industry, that was a great description of where it's going. Last question I have, I would love for you to describe what United Rentals does in the training space. What you guys offer, and how that plays into how you guys rent stuff out.
JACOBSEN: Absolutely. Again, when you look at the problems be phased as an industry, we used to be able to assume that the people that are entering the industry had worked with machinery growing up. We can no longer make that assumption. The other part is that we as an industry have a really grown up and put a significant emphasis on making sure that our job sites are safe. You put those two together and we need to create safe training environments for our employees in the industry and making sure that they feel comfortable and operating machinery safely.
When we saw that we also saw the opportunity to create those trainings. So, we have a series of offers being at either a very passive online training where you can take the training, make sure you understand the theory, and have the theoretical knowledge of operating equipment. We have trainings available where you are actually operating a piece of equipment. So, we have trainings where we will give you the hands-on opportunity to operate the piece of equipment and being trained and doing it efficiently and safely.
We have what we call Blended, which is really where we allow you to do certain things online. We allow you to do certain things with virtual reality in simulators and we allow you to do certain parts of the training on the actual piece of equipment. We are finding more and more of our customers are appreciating the Blended experience because it allows for a more effective use of the employee's time. They can do parts of it very effectively online, and they can get the theory. We can do a lot of the virtual reality in a safe environment where we're not hurting anybody, but we get a really good sense of how the machine works. We can do that de-centralized, we don't have to move people together. We don't have to get gear that can get that done decentralized, but the final certification is on an actual piece of equipment.
Now you can do that within an hour or an hour and a half and in one of our branch locations and get that done in a much more efficient way. So, we are finding more and more that our customers are really more and more bias towards doing Blended learning and leveraging the technologies and the efficiency of the offer.
GONZALES: Is there anything I didn't ask?
JACOBSEN: You know, I think that's good.
GONZALES: Thank you so much.
JACOBSEN: Did we do okay?
GONZALES: Yes, it's beautiful.
HENRY: Thanks for tuning into LITES. It's leadership and industrial technology education and safety. See more at LITES.org. If you enjoyed the show, please remember to rate, review and subscribe.
LITES is a production of Industrial Training International. Our guests today were Helge Jacobsen – Vice President of Operational Excellence and Innovation at United Rentals, and Pinky Gonzales. Our producer is Michael Montaine. I’m your host, Mandy Henry and we'll see you next time.