 Good afternoon. Howard Wig, Cold Green, Think Tech, Hawaii. I have a very, very interesting guest today, Trung Lam, who's the CFO of Latour Bakehouse. Now, what is an energy show doing featuring a bakehouse? Well, talk about energy efficiency. But before we get into the program, Trung is a very, very interesting fellow because he's second generation and both of his parents were boat people who had to escape from Vietnam. That's correct. Yep. And had a hard time of it, and they're in America, and this is a success story, a success story. It's been my observation that most of the time immigrants just go above us, head and shoulders us native born because we take America for granted. Immigrants know the alternative to America, and they really appreciate it, and they work like heck, and they make us all look good. So welcome to the program, Trung. Thanks for coming on board here. Thank you, Howard, for having me. So tell us, I'm always interested in immigrant stories. So tell us a bit about your mom and dad and how the bakehouse got started initially. Sure thing. So I want to make one point. You mentioned how you notice a lot of immigrants tend to work harder than a lot of native borns. And I'm native born, I'm second generation, and I see it all the time. And I talk to my dad because at work we'll have our corporate meetings and we'll try to make group decisions together. And he tends to be more on the risk taking side as more to risk adverse like me and I ask him dad, why are you willing to take these risks? And he always says, you know, when I was in Vietnam, so not only is my father in Vietnam, but he was actually homeless for a period of time when he was in Vietnam as a child, he was kicked out and he was on the streets. So he tells me like, no matter how much I lose in America, it still will never be as bad as I had it in Vietnam. Yeah. So definitely they had a really hard difficult life in Vietnam. Yeah, I was in Saigon many, many, many years ago and I would see these street kids begging or trying to shine shoes or something like that. That would be like my dad. Yeah, he was selling lottery tickets. That was his spirit. Wow. So yeah, my parents both came to Vietnam. They came in the late 70s, actually immigrated to California before they came to Hawaii. And my father, you know, he runs a bakery now, but he didn't start that way. When he came to the US, he picked up different jobs here and there. He actually worked for Intel for a period of time. Not as an engineer, just on the plant floor, helping with whatever odds and ends they needed. But he always wanted to have his own business. So he left that and he actually started a tour bus business that drove people from San Jose, which is where they live, to Reno. And that was his own business. He bought a shuttle bus and did that for a while. And during that time of his life, he met someone who owned a sandwich shop and they became good friends. And my father started offering sandwiches on his shuttle bus because there was more competition. So he said, how do I differentiate my business than someone else? I'm going to offer free sandwiches to all my writers. So he started doing that. And after a while, I mean, it was pretty good money. Like we managed to survive. So my father, my mother, and he has two children, two children, I have a younger brother. So we got by. But after a while, it became difficult to make a profit. So, you know, his friend told me, you know what? His name is Tan Tan Lam. So he told me, Tan, I have the sandwich shop. It's doing pretty well in California. I hear there's a lot of Vietnamese in Hawaii. So why don't you partner with me and we'll go to Hawaii and open a shop. Talk about taking a risk. He didn't know Hawaii from Shmai. No, no. So I believe he's going to kill me if I get this wrong. He flew over in October of 1984. And just to check out Hawaii. And by December of 1984, he already had a shop open. High cost of doing business and all the regulations that we have and everything. Yeah, he just took it. He was lucky, found a good landlord. He found good employees really quickly. And he was able to open in that 30, 34 years now. So he had to develop management skills on the fly then? Exactly. And some would say he still is developing management skills. We all are. We all are. But yeah, he was working 18 hour days, seven days a week. He would be there. He would sleep there. He would do it from baking the bread to cleaning up the shop. That is not uncommon for immigrants. 18 hour days, yeah. So you didn't really know him all that well for a period then? Because he just comes staggering after a while. I was a toddler around the time they opened. So I was a little more than two years old when we moved here. I was born in California. So they didn't have daycare. So they couldn't afford daycare. So I was at the shop. So even though he was working a lot, I was there pretty much every day with him and my mom. Wow. Yeah. Okay. So well, let's pull up the first slide here. Just to give you an introducing energy efficiency in food manufacturing. And we'll definitely get into the details. What motivated or what got you interested in energy efficiency? Well, a little bit of back story. So we started 84 with a sandwich shop. And that was actually called Bali sandwiches. Sure. And that grew from one sandwich shop in Chinatown to at its peak, more than 22 locations statewide. Good Lord. This is just you or your dad and mom. And you know, so we had a lot of employees. My father also has six brothers. And my mom has some siblings as well. So a lot of them came to Hawaii to live and they wanted something to do. So my father said, why don't you open Bali sandwich shops? So you know, like the Bali at Ward is family. And a lot of them, maybe not now, our family, but at some point they were family owned previously. And as we were growing, we realized, you know, we can't really make enough bread in our small shop in Chinatown. And we needed a new facility. So in the early 90s, we 94, my father moved our baking facility to Kalihi on Dillingham. It was an old tire factory. He built his first bakery there, which is about 5,000 square feet. And you know, we found a great home there. We expanded beyond just our Vietnamese sandwiches. We started servicing hotels, restaurants, airlines. And while we were there, we also picked up dough production for Papa John's Hawaii, which is really funny, because I always tell people like, you may not have heard of us, but I almost guarantee you you've had some of our products somewhere. Wow. And then we grew, we kept growing until we burst at the seams at that location. And we went from 5,000 square feet there. And we rented another facility, got up to almost 20,000 square feet total space. But we filled that. And in 2000, that's half an acre, 20,000 square feet. Yeah. But you know, bread takes a lot of space. You have a lot of equipment to make it a lot of employees as well. But in 2010, we moved to our current home, which is on Nimitz Highway, still pretty close by an Evalet, where we have 80,000 square feet dedicated to food production. Yeah. Wow. Let's do the next slide here. Sure. So who were these people? So that's my, you can't tell because we all look the same age, but the one in the middle and the one holding the sandwiches in the head, that's my father. You know, he had me when he was pretty young, so he was early 20. So he's not, we keep trying to ask him to retire. But he just turned 60. He's right around 60 right now. So he's not quite ready yet. Spring chicken. And on the other side of him, so I'm on his right. And on the other side is my younger brother, Brandon, who is the current president of the company. So family business, that's a picture taken in our current location with our Furukake Plus, which is something we sell at Costco. And we're hoping to get nationwide as well. Ah, Vietnamese family manufacturing Furukake. Oh yeah, it's Hawaii, right? Yeah, yeah, yeah, yeah. So, you know, we're a Vietnamese family, a lot of French, European inspired bread. We also do like Asian, Japanese products. We do Tower Rolls, Sweet Rose, pretty much A to Z. At one point, I always joke about this because we're trying to change this. We produce over 700 different items. Too much. Food items? Food items ranging from dinner rolls down to salads, to sandwiches, to tapioca, spring rolls. We are, I would say, a pretty decently sized food manufacturer here in Hawaii. And all this is in 80,000 square feet? 80,000 square feet, exactly. So you can see why 20,000 might not have been enough for what we're doing. That's mind-boggling. Let's go to the next slide. We're doing the family story here. Okay, now. So this gives you a story of how our utility usage was back in 84 when we started with the sandwich shop. Obviously, you can't really compare a sandwich shop to a food manufacturing facility, but it gave you kind of like our growth over the years. 96 is when we actually moved into that facility on Dillingham, the first facility. And we saw a modest increase in utilities. By the time we were looking at moving in 2004, we were getting about 13,000 square feet. $13,000 a month utilities. That's just for electrical, by the way. Oh, that doesn't include the gas. No, that is just electrical. And in 2010, when we moved to a new facility, it skyrocketed $28,000. And my background is actually in engineering. So when it comes to logistics, I do have a master's in business as well. So finance and engineering kind of background combined. I'm looking at these costs. I'm like, we have to do something about these utility costs. So we approached a few different vendors and we looked at different ways to try and save energy. Saving energy is good for the environment, but it's great because it saves us money as well. So the biggest project we did was a PV system. And that was about 300 kilowatt-hour system. Pretty sizable system. That's a good size, yeah. And you've got plenty of roof space. That's for sure. Right, right. So we were in the Onimets Highway, the dole boxing facility back in the day. So it's a big square box. And we had about half the roof to fill with PV. And we did. And we were actually one of the first people to do what's called the fit system, the feed-in tariff system. Yeah, yeah. Right, no, it's gone. And replaced by the NEM system, which we also had. But we were one of the first to do it. So we actually had to do an interconnect study, which HECA required, just to make sure the grid could handle the size of the system we were putting in. And your engineering background. Oh, I didn't do it. But we outsourced that. But I was in charge of the project. So it helped that I had an engineering background to see, you know, what are they requiring? Why are they requiring? Because it costs a significant amount of money to do the study, almost $30,000, just for the study. But at this time, there was some really incredible tax incentives. With the, it wasn't even just a tax credit. You could get a cash back option. And it took the, I think the next slide shows it as well. Yeah, let's do the. There you go. Yeah. Ended up saving 50% cash with federal and state incentives combined. So taking something that would have been, you know, almost a 10-year payback to about five years. And, you know, for our size, it was about a $2 million savings over the lifetime of the system. And you're estimating a lifetime to be 20 years, 25 years, or? I think it was, this was a while ago, but I would say between 10 and 15 years, actually. Yeah. Actually, if you maintain the system well, it could be easily be 20 years. That's what we're hoping. I mean, paid a lot. So we do quarterly maintenance on the system, and it's been performing very well. Oh, good, good, good. Yeah. And the 50%, the last time I looked, the state offered 35%, Fed's offered 30%. Right. 30 plus 35, 65. It was 35 for the state. It was a tax credit. Oh, oh, credit, credit, credit. Sure, sure, sure. And I believe when it was cash, it was a little bit less. At that time, we were not generating enough profit to realize that tax credit in a timely manner. So we chose instead of the tax credit, or the cashback. We were also building a new facility and trying to grow that. So we needed the money. Wow. Well, let's take a look at the next slide here. So, yeah, you started off with your PV system. Right. And incidentally, a little side benefit is your shading. The PV systems are set off the roof surface. So you have that shaded area. That shaded area is having zero heat gain. Which is great. And we did put a cool roof technology on the roof just to reduce the amount of energy used for cooling. But that system, which would have cost us about $2 million, ended up costing us about $1 million to install. And after a while, it was great savings, but we were looking, okay, we had our tastes of energy saving. What else can we do? So we looked at other different technologies to help us. So we had replacing all our lights with LEDs. When you're trying to light 80,000 square feet for production level lighting, it needs to be pretty bright. You have areas that are going to need a significant amount of light, aren't you? Exactly. And obviously not everyone's been to the facility, but it's pretty high ceilings. It's about 20 feet high inside as well. So to get enough light. That's a lot of foot candles to get that down. And the surface you're working on is probably four feet high. Exactly. A lot of tables, mixers. So you need a lot of light hitting the ground. So we spent a significant amount of money on lighting. So replacing all that with LEDs was pretty significant. On the slide, we also looked at a few other options as well. We need to take a break and then we can really get into the meat and potatoes here. Sure. So our big Think Tech Hawaii, back in a minute with Trung Lam, CFO Latour Bakehouse. Hello. My name is Stephanie Mock and I'm one of three hosts of Think Tech Hawaii's Hawaii Food and Farmer series. Our other hosts are Matt Johnson and Pamai Weigert. And we talked to those who are in the fields and behind the scenes of our local food system. We talked to farmers, chefs, restaurateurs and more to learn more about what goes into sustainable agriculture here in Hawaii. We are on a Thursdays at 4 p.m. and we hope we'll see you next time. Hello and welcome to Out of the Comfort Zone. I am your villainous host, Arby Kelly. Today we are playing two truths and a lie and I will tell you two truths and you will tell me which one is the lie. Truth number one, this is a real mustache. Truth number two, I want you to watch my show on Tuesdays at 1 p.m. So tune in and let me know which is the truth and which is the lie. I'm Arby Kelly with Out of the Comfort Zone and show up next Tuesday to see my mustache live. Good afternoon again, Howard Weig, Code Green, Think Tech Hawaii, Trung Glam, CFO of Latour Bakehouse and we're just getting in to the Mixed Metaphors Meat and Potatoes of the energy saving measures that you've taken if we could bring that slide back up. Quite thoroughly fascinating. So LED, probably the old lamps were 12 watt fluorescent tubes. Yeah, we had a lot of fluorescent lights so we looked at replacing them with LEDs, putting motion sensors on a lot of them so if someone, you know, people weren't in the room the lights would turn themselves off. And also D-lamping which is like looking at with these LEDs which are brighter and using less energy. Do we need as many lamps? So they were also looking at window film and the list is on there and the reason why those are the things we were looking at is they were actually incentives from Hawaii Energy to implement them. You were very, very wise to hook up with Hawaii Energy. The State Energy Office works really, really closely with them. Yeah, we have a wonderful relationship with them. We love working with them. And you know, as much as we love saving energy for the environment, it has to make sense financially as well. Absolutely, yeah. So on the screen, you can see the different incentives we received from using different technologies. Lighting and cool roof were the two biggest ones and that was around the same time we did the PV system. The other three, the HVAC, the window film and the EC motors were done a little bit later over the years. And what you will see on the next side is the PV system was the most significant source of energy savings. And we saw some saving with these but not as much. So, you know, total cost was $4,000, small rebate. And then with the annual savings, there was a really quick payback on a lot of... That is... This is specifically for the EC motors, which is the motors you use in your walk-in refrigerators, which are constantly running because with people coming in and out, we're storing things. Yeah, you're constantly opening that door. And that's a big cost for a lot of businesses here in Hawaii that do food manufacturing or food distribution because we bring in a lot of frozen or refrigerated ingredients. Oh, you have to keep it frozen. Certain items. So, yeah. Oh, that's really an energy consumer. Yeah. So that instance was just the EC motors. That was just an example of one of the projects that we did with the end of payback period. And then you have window film there. That's where you have... It's probably an older building, didn't you say? It is an older building. When we moved in, we did replace all the external windows with new ones. The putting window film helped with the heat coming in as well. Yeah, because with a normal window, when the sun is directly striking it, 87% of the heat that's striking the exterior is getting into the interior. You put on a good film and 87% goes down to 25%. Great, yeah. Our windows are dual pane, but we thought we'd put the film on just to help them in that much more. Oh, yeah. You're super, super, super efficient. Yeah. Trying to be. Yeah. Oh, that's great. Yeah. And so, yeah. So you're down to total consumption, if I remember, electrical of about 28,000 a month? That was when we started and we were growing. But we wanted to see how low we can get that. And on the next slide, it actually shows our energy usage. And from when that little house is actually when we put the PV on. So from 2011 to 2012, we saw a significant drop continuing to 2013. And between 2013 and 2014, when we did the AC motors and then the LED light upgrades. But what's really funny is if you look at our energy usage, you went up. And you would think, why would it go up if you're adding more things to reduce energies? And on the next slide, it'll show you, explain why. The little snow symbols are actually when we had to install more air conditioning, because we were growing as a business. Between moving to this new facility in 2010 to now, we've actually doubled in revenue, which is we went from about 10 million to about 20 million revenue over that period of time. So we saw a significant electrical usage grow just because business was growing. And when businesses are growing, there's more bodies. We have about 150 employees now. And we have to keep all those spaces nice and cool. So we had to install more air conditioning, which drove usage up, which is great. Because if we didn't have the PV system, our utility bills would be through the roof. And the PV system has helped quite a bit. Wow. And how many KW was the PV system? Yeah, it's 300. It's split into two systems. The feed-in tariff system was limited to about 200 the size. Yeah. So we had to have a secondary NEM system, about 100 kilowatts system. Could we go back to that last slide there? So the, so what is the line there? So on the left, it's two y-axis. On the left is actually the usage. Okay. Okay. Percentage of revenue, right? Which is the, yeah. And on the right is the percentage of revenue. So we use more electricity, but percentage of revenue was kept low because we were growing at the same time. So it's kind of like this, you want to save energy because it's good for environment, but it has to make financial sense. Absolutely. Absolutely. Yeah. As long as your business is growing, it makes sense to invest in these technologies because as a percentage of revenue, which is how most businesses look at their utility costs, if you can keep that down, of course you can, you should invest in technologies to help your business run more efficiently. And I might point out that all of the technologies that you've installed have a, in my opinion, a minimum life of 15 years. Maybe those motors will have a slightly lower life, but once they're in LEDs, last virtually forever. I love LEDs. They have about 60,000, easily 60,000 hours on them. Which is good because we run 24-7. We never shut down. So the lights are used quite a bit. So you have three shifts of people coming in. It's actually more like two and a half. There's like a short shift where there's like a skeleton crew, but we don't shut down because our customers don't. Impressive. Thank you. Wow. Did we need to go through the last slide there? I think there's one or two more. Oh yeah. Okay. So this is just a simple pros and cons list of what we learned doing these different projects. Pros, the smaller energy efficiency projects, they have a lower upfront cost, which is great. But because they're kind of smaller, it's hard to quantify how much you're saving as your business is growing because your usage fluctuates so drastically. You're a moving target, but on the other hand, you know that you're saving something because you're putting in more efficient equipment and you're assuming that it's doing what it's supposed to do. And a lot of these, you can test. You can test using equipment to see how much money you have to save. Yeah, you can submit her. Exactly. Especially in a growing business where you have a lot of cash flow coming in and you'd rather save on some taxes, spending on capital expenditures to, in the long run, help your business really helps a lot. There's a lot of benefit. Yeah. So cap X is what? Capital expense. Equipment, machinery, big, big expenses that usually you don't expense, but you amortize over a period of time in five years. There's also other benefits in addition to how good return investment, it makes you feel good knowing you're saving energy. It gets you on think tech, sharing your story and it helps with employees. Employees, of course, love to save energy. They like to help the environment as well. And when you see the company focusing on that, it makes them feel good about where they work. And because, say, just in the instance of lighting, that's new lighting, good lighting. Oh yeah, it's nice and bright. I love it. Yeah, they're with fluorescence. Some people get headaches under fluorescent because there's many, many, many little fluctuations in the light, but LEDs, that's absolutely not the case. And in terms of maintenance, again, the LEDs, 60,000 hours, even at 24 hours, that's easily six years. And they don't put a whole lot of heat. A little bit of heat, but not very, very, very little. Therefore, your AC load goes down, even with all those warm bodies all over the place. And ovens. Yeah, yeah, yeah. That's incredible. Do we have one less light, I believe? Oh, just to thank you. Yeah, I think that was it. So we're looking forward to new ways on saving energy. Right now, we are trying to review battery storage units, especially with the hurricanes that came through. Most businesses use diesel generators or gas, propane gas generators. But for our size, we would need a sizable generator to cover what we need. And some people probably have been to our building. There's not a lot of parking outside, so we don't want to lose any of that for a large generator. So the battery is much more compact. We can store it above ground. We don't have to exhaust the fumes the way we would if we use a regular generator. So we're exploring the feasibility. You don't need a fuel tank. That, too. Yeah. Well, let me just give you some good news and the audience some good news. Just at the last Hawaii Building Code Council meeting a month ago, we adopted the NEC National Electrical Code 2017 version. And that has a long section on battery storage batteries. And it lists all the safety procedures that you need to go through. And so you comply with that. And you've probably realized that sometimes getting building permits for things takes just a while. Yes. As long as the engineer who signs off on that project says, I am in these, this design is in compliance. 2017 National Electrical Code, the plan checkers will give it just a very cursory review. Yep, yep, yep, yep, yep, yep. And boom, you've got it. Excellent. Yeah. And you know that your design is really, really safe because people are still kind of scared of storage batteries because Kahuku had the old dead acid batteries and there was a fire there. And bad news lasts a long time. So now you've got a safe, efficient system. And Hawaii Energy, no, I don't think they can give a rebate on that because it doesn't save energy, it just shifts the load. Yeah, cross your fingers that the state creates some incentive for businesses to adopt that technology in the future. Yeah, that's our future. Well, on that cheery note, we do need to close for the day. Thank you so much, Tronglam. This has been an inspirational story. If every business in the state did this, boom, we would realize our energy goals very, very, very quickly. Thank you, Howard. It's a lot of fun. So that does it for us. Howard Wigg, Code Green, Sink Tech, Hawaii. See you next time.