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PepsiCo’s Factory of the Future

Editor’s Note: The following is a non-sponsored guest op-ed by Al Halvorsen Sr. Director of Environmental Sustainability for PepsiCo.  By Al Halvorsen As we recognize Earth Day 2012, I can’t help but think back to my first job after graduating from college and the impact it has had on my role at PepsiCo today. The job was at a Frito-Lay snack plant in Casa Grande, Arizona, and 23 years later this plant has helped shape my career as a “conservative environmentalist.” Environmental sustainability gives us the ability, ingenuity and discipline to use the world’s precious resources in the most responsible way possible, and it articulates our hope that we can create a healthier planet for future generations. My three boys and their future children deserve a planet every bit as incredible as we have it today. These are noble sentiments, and as a self-proclaimed “environmentalist,” I’m a true believer. As a “conservative environmentalist,” I am also driven by finding great ways to positively impact PepsiCo’s bottom line. The question that every company confronts is, “How do you simultaneously pursue these aspirational sustainability goals while meeting the ongoing necessity of driving business performance?” Is this an inherent conflict of aspirations or can they ultimately be aligned? At Frito-Lay, and throughout all of PepsiCo’s divisions, we have asked and answered these questions during the last 20+ years of our environmental sustainability journey. In the late 1990s we created Green Teams at all of our manufacturing plants responsible for maintaining the environmental compliance positions at each plant. In 1999, Frito-Lay created our own Department of Energy and established aggressive goals to cut our use of water by 50%, natural gas use by 30% and the use of electricity by 25% per pound of production. As a result of setting these goals, the company installed individual energy or water-saving technologies in factories around the U.S. These initiatives, along with our fleet upgrades, saved the company more than $80 million in 2010, as compared to our 1999 run rates. But we decided that there was much more we could do to achieve our sustainability aspirations. Basically, we looked at a map of our best practice U.S. energy projects and asked, “If we combine all the best technologies, how advanced could we make a manufacturing plant?” We began by looking for the best site for a state-of-the-art facility that could showcase sustainable technologies to PepsiCo plants around the world. After an extensive review of our facilities, we decided that our environmental prototype would be Casa Grande, a medium-size 28-year-old plant in the desert of the Southwest – a region with plentiful sunshine and potential water scarcity problems. To give a sense of scale, this 350-employee, 283-acre facility produces about 100 million pounds of potato and tortilla chips a year, packaged onsite and delivered across seven states. Our objective was to do all that we could to ensure that this plant met our “near net zero” standard – where we dramatically reduce the plant’s environmental sustainability footprint by maximizing the use of recycled water and renewable energy and eliminating the waste going to local landfills. Achieving this goal required that we recycle water, use renewable energy sources and dramatically reduce waste. The challenges were many, and there are two in particular to highlight: First, creating a “near net zero” plant requires a precise understanding of how various technologies interact. For example, installing filtering equipment to recycle water will require us to use even more energy – a counterproductive result. Second, we were combining technologies in ways that had not been done before, creating zoning, permitting and engineering challenges for us and for local authorities. These issues were addressed by creating a team of engineers, environmental compliance experts and economic development advisers, and asking them to develop a “near net zero” blueprint using complementary, rather than competing, technologies. They, in turn, fostered strong partnerships with the City of Casa Grande, recycling vendors, equipment providers and contractors with whom Frito-Lay made renewable power purchasing agreements. To conserve water, the engineers combined two technologies – membrane bio reactor and low pressure reverse osmosis – to produce recycled water that meets the U.S. Environmental Protection Agency (EPA) drinking water standards. They replaced fossil fuel energy sources by turning to wood and sunlight. A biomass boiler uses wood waste from tree trimmings and pallet companies to generate steam power. Five new solar photovoltaic (PV) fields on the property’s farmland produce nearly 10 million kilowatts of electrical power – half the plant’s needs. Commitment and innovation were two parts of the puzzle; another ingredient was utilizing considerable outside technical assistance. We asked the National Renewable Energy Laboratory (NREL) in Colorado, part of the U.S. Department of Energy, to map the availability of renewable energy technologies, such as solar and wind power, against conditions at our Frito-Lay facilities. Also, with the strong support of the Casa Grande employees, the site recycles waste wherever possible – including leftover food, which is then fed to cattle. The retrofitted factory is the first U.S. food snacks plant to achieve LEED’s Gold standard for existing buildings. Case Grande now recycles 75% of its water, gets half its electricity from solar power, powers production lines with steam from wood waste and does not send any waste to landfill. The plant is now not only one of the most energy and water efficient in the U.S., but also could be one of the most efficient in the world. Case Grande provides a comprehensive demonstration of PepsiCo’s approach to sustainability. We were able to find ways to drive down business costs while reducing our global environmental impact, supporting our company’s guiding principle – “Performance with Purpose.” This facility is an investment in our future and has now become a learning laboratory and a model of best practices for all PepsiCo manufacturing plants – specifically helping to inspire 23 other Frito-Lay plants to achieve 100% waste to landfill. Fundamentally, this project provided us with an excellent opportunity to integrate our environment and business objectives and execute against our most cherished values. Our results have provided us with even more confidence that sustainability and “near net zero” will become the mantra and the long-term strategy for companies and organizations through the world. PepsiCo’s sustainability journey and our Near Net Zero project has re-enforced my firm belief that “conservative environmentalism” is critical to the sustainability journey at PepsiCo and businesses worldwide. We can never lose sight of our mission and responsibility to the environment and to the bottom line of our business. *** As the Sr. Director of Environmental Sustainability for PepsiCo, Al Halvorsen is responsible for coordinating and reporting corporate-wide Sustainability initiatives across all PepsiCo Divisions with specific focus on energy, water and packaging sustainability. Al has over twenty-three years of Operations experience with Frito Lay.  He has held various Technology and Financial Planning Leadership Positions at the Casa Grande Arizona, Honolulu Hawaii and Denver Colorado manufacturing plants.  In 2004, he transferred to Frito-Lay Corporate Headquarters in Dallas Texas to help lead the environmental sustainability and compliance programs for Frito-Lay North America. PepsiCo’s Energy Management Program has been recognized as an EPA ENERGY STAR Partner of the Year in 2007 and as a Sustained Excellence Winner in 2008, 2009, 2010, 2011 and 2012.  Also in 2010, Frito-Lay reached its US EPA Climate Leaders GHG Reduction Goal and recently obtained its 13th LEED Gold Certification for its headquarters, manufacturing and distribution buildings. Al holds degrees in Electrical Engineering and a Master Business Administration from Arizona State University.
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