featureOperations

OPERATIONS

Company objectives included in Operations are: energy, emissions/climate change, waste, paper, water, and commuting/travel. We report here on the Operations activities of our two manufacturing facilities and a warehouse, all in Iowa.

Facilities Overview

Our headquarters in Norway, Iowa, is home to our corporate offices, our Customer Service and Sales Departments, and to Manufacturing for our Frontier and Simply Organic products. In addition, Frontier Direct, our wholesale distribution unit, operates from this location. The original building in this complex was remodeled in 2010 to provide a new entryway and to house our Co-op Café, Human Resources Department and Research and Development Lab. The remodel was awarded Silver Leed status in 2011.

Frontier CEO, Tony BedardThe sustainably managed 56-acre Norway site includes 14 acres of connected building space and parking lot, a restored wetland, a small wildlife pond, a restored barn (our green barn is a rural landmark), and several stands of trees. Our restored tallgrass prairie will be 20 years old in 2012. All of the landscape is managed organically, and the buildings and parking lot are greenscaped — that is, they are planted with hardy native trees and shrubs that need minimal care and no watering. The parking lot is designed to handle most rainwater run-off through bioswales that flow into the wetland.

We purchased a warehouse building in 2011 in North Liberty, Iowa, to repurpose as a raw material storage facility for our herbs and spices. We will be expanding the building uses in 2012, when we will be moving our herb and spice manufacturing (processing and blending) from Norway. The move will free up space in Norway to handle our growth in Operations without having to build a new facility.

Our Aura Cacia plant, located in Urbana, Iowa, is a remodeled coffee facility and sits on 4.9 acres. The facility is home to Aura Cacia Headquarters and Operations, including Bottling, Blending, Research and Development, Quality Assurance, and Order Fulfillment.

Energy

Our energy objective is to efficiently use only directly or indirectly sourced green energy.

To offset our increasing power demands over the last five years, we have undertaken a number of energy efficiency projects – relighting, installation of a cool roof, upgrades to air conditioner units, and building envelope improvement. Despite these efforts, our energy continues to grow.

We report our total energy used in BTU’s in the table below. We convert kilowatt-hours of electricity and therms of natural gas to BTU’s in order to have a common unit of measure for the total energy we use. Total energy used was the highest we’ve seen in the last five years. While disappointing, it was not a surprise that energy use grew 40% over last year because of the significant expansion we made in Operations space and processes. We added new packaging and processing equipment, expanded the operation on second- and third-shifts, added a steam sterilizer, and purchased a 102,000 square-foot building.

Energy Consumer 2007 2008  2009  2010 2011
Total BTU’s (000’s) 10,226,806 12,698,810 12,437,650 13,818,942 19,318,693
% Electricity 65% 66% 65% 67% 61%
% Natural Gas  35% 34% 35% 33% 39%
BTU’s/Unit Produced 568 585 578 546 672
BTU’s/Square Foot 58,439 72,565 71,072 76,032 67,732

Natural gas usage as a percentage of overall consumption rose due to a full year’s use of steam sterilization equipment. A second unit, to be added in 2012, will cause another spike in natural gas usage. Both units will be located in the North Liberty facility, where we plan to create a heat-recovery system to help offset some of the energy used. Last year was only a partial year of use for the North Liberty facility, so the full impact of heating and cooling the building will be realized in 2012.

In 2011, we had an infrared thermography audit done for all of our buildings. This technology takes thermal images of the surfaces of a building to identify areas of heat transfer. Using these images, we were able to identify areas needing repairs, such as replacing dock seals, caulking seams, eliminating unused vents, and sealing air returns. Along with improvements to energy efficiency, we also look at energy intensity and energy productivity metrics. BTU’s per product unit produced shows whether we are making more productive use of the energy we consume. This year, energy use far outpaced production despite improvements in the last two years. BTU’s per square foot went down, lowering our overall energy intensity. However, this was due to the increase in square feet of space rather than a true reduction in intensity.

In 2012, we are taking a close look at managing power use of our office equipment – printers, computers, copiers, and fax machines – to see if we can gain some energy reduction there. Most of the equipment is already Energy Star. We believe we can make reductions by creating power-down plans for this equipment to reduce offline usage. We are also looking at heating and cooling and are planning to add winter heat recovery to our boiler and compressor rooms.

At our Aura Cacia plant, a strong storm in the summer of 2011 damaged the roof, making it necessary to replace. We are taking the opportunity to increase the amount of insulation in the roof — raising the insulating value from R19 to R38 — and install a reflective white roof.

Emission/Climate Change

Frontier’s climate change objective is to reduce greenhouse gas emissions and offset 100% of remaining direct and indirect emissions.

Translating our goal to the GHG Protocol (Greenhouse Gas) language, our intention is to offset Scope 1 and Scope 2 emissions.

Emissions grow in tandem with energy use, so with our increased energy demand usually comes increased emissions. Company growth (see Energy above) led to increases in overall energy consumption and, therefore, in total emissions in 2010. But, even as we had a very busy year, we were able to increase our carbon emission efficiency so that pounds of CO2 per unit of production went down.

Tons Scope 1 & 2 Greenhouse Gas Emissions 2007 2008 2009 2010 2010 % Offset Net Emissions

Direct (Primarily Natural gas)

 177 216 212 229 449 100% 0
Indirect (Electricity)  1,403 1,764 1,699 1,961 2,361 100% 0
Total Emissions (CO2e)

1,580

 1,980 1,911 2,190 2,811 100% 0
Pounds CO2e/Unit

0.175

 0.182 0.178 0.173 0.196 -- --
Pounds CO2e/Square Foot 18.1 22.6 21.8 23.9 19.7    

We continue to offset all of our direct or Scope 1 (fuels burned on site) and indirect or Scope 2 (electricity) emissions by purchasing Green-e certified, renewable energy certificates from Bonneville Environmental Foundation (BEF). Bonneville is a non-profit, established in 1998 to create innovative, value-added ways to support the development of renewable energy. Our offsets primarily support wind-generated power.

We also measure some of our Scope 3 emissions. Scope 3 emissions are those resulting from indirect business activities, such as farm emissions from growing crops and the drying, processing and transport of those crops, shipping orders, employee emissions from commuting, production of supplies and equipment, and other contracted or offsite activities that indirectly benefit a business. The Scope 3 activities we measure at this time are business travel, commuting, and Frontier Direct shipping. The emission from travel and commuting are reported below in the commuting/travel section. Emissions from Frontier Direct shipping are offset through BEF, to make the shipping of our wholesale orders carbon neutral.

Here is an example of scope 3 emissions reduction. We switched from using recycled polystyrene peanuts to a 100% biodegradable starch based packing material in 2010. Then, in 2011, we changed how we purchased the starch peanuts and eliminated 31 tons of carbon emissions a year. We did it by purchasing the equipment to make the peanuts at our facility. We now buy a condensed starch pellet that we puff up into peanuts. This change reduced our cost for the packing material — and keeps 56 semi-trucks a year off the road, saving fuel and emissions. For next year, we are working on finding sources that are closer to home for some of our packaging materials.

Waste

Our resource use and waste objective is to achieve zero waste sent to landfill and to maximize the efficient use of materials.

We have been recycling much of our waste for many years, but it was just five years ago that we started to really measure and track what we recycled. A quick look back tells us that in the last five years we have recycled a total of 1,630 tons of waste – equal to 163 full garbage trucks.

In 2011, though, we sent 181 tons to the landfill, a 13% increase over the previous year. But, at the same time, we increased the tons of waste recycled by 13%. We also recycled a large amount of material that we are not able to weigh and count in our totals. For example:

• two trucks of construction waste to ReStore, a Habitat for Humanity Store
• pallets that we reuse in warehousing and shipping
• drums that we reuse in blending and processing
• cardboard boxes that we use in shipping

Waste 2007 2008 2009 2010 2011
Tons Land Filled 144 156 163 160 181
Tons Recycled 289 387 314 334 379
Tons Composted - 82 26 2.1 1
Total Tons Waste 433 625 503 487 560

In order to achieve our long-term goal of zero waste to landfill, we realized we needed a more systematic approach to waste. A thorough audit of our waste-handling practices in 2011 led to changes we are making in 2012. Our goal is to reduce waste to landfill from 32% this year to 25% in 2012.

Composting. A real blow to our landfill-waste-reduction efforts was the loss of our composting partner in 2010 and our inability to find another outlet for botanical waste. In late 2011, we found a new partner who is taking most of our botanical waste. For smaller amounts we’ve set-up an experimental sheet-composting project in Norway. We are also composting the contents of our manufacturing dust-collection system, a totally new addition to our composting efforts. We will continue to bin compost food scraps from our Co-op Café. We expect these efforts to help us meet most or all of our goal for next year.

We also found some new outlets for several waste commodities that were previously being landfilled. This should have a small, but measurable, impact on our totals.

Two other initiatives in progress are that: 1) we are providing better information and better training for employees on recycling and trash and 2) we are establishing a strong recycling program and waste management program in our North Liberty facility.

The chart below represents our major categories of recycled waste over the last five years. The number one and two categories are pallets and cardboard. Cardboard also provides the highest level of recycling revenue for us. Excess pallets also provide income. Other items we recycle provide no income, or, in the case of glass and poly-lined bags, actually cost us to recycle.

Recycled Waste (tons) 2007 2008 2009 2010 2011 Total
Pallets 115 54 121 132 108 530
Cardboard 86 113 119 125 174 617
Glass 33 14 26 30 17 120
Paper 8 11 11 3 10 43
Clear Film 4 4 6 13 16 43
Plastics - 6 7 2 2 17
Kraft Bags - 11 18 16 22 67
Compost - 82 26 2 1 111
Other 23 11 6 13 30 84

Paper

We track paper because it is one of the most recycled and recyclable supplies we use, one that everyone can impact. Our goals are to reduce our paper use wherever we can and to use 100% recycled content in our paper. Ninety-nine percent of our copy paper in 2011 was 100% recycled content. Our annual wholesale catalog and all the monthly sale catalogs use 100% recycled content. Ninety-three percent of printed materials used 100% recycled content, giving us a total of 98% recycled across all publications and copy paper used. (More complete tracking rather than lower usage of 100% recycled-content paper is the reason for the 98% reported this year over the 99% reported last year.)

Copy Paper & Printed Materials 2007 2008 2009 2010 2011
Copy Paper Used (tons) 7 6 6.8 7 8.1
Printed Material Paper Used (tons) -- -- -- -- 130
% Recycled Content All Paper 28.5% 68% 99% 99% 98%

Water

Employee bathroom and hand-washing account for the largest amount of the water we consume, so we added an efficiency metric of water consumed per employee. Of the 500,000 additional gallons of water used in 2011, a little under 200,000 can be explained by two changes at Aura Cacia. First, a new water meter was installed, as it was found that the old one was recording water use at one-tenth of actual; Aura Cacia’s water use was previously underreported. The second was the installation of a reverse osmosis system to produce water for use in Aura Cacia mists to replace distilled water that was previously purchased.

Water 2007 2008 2009 2010 2011
Gallons Used 2,000,596 1,476,100 1,671,700 1,587,500 2,165,000
Gallons Per Employee 8,698 5,839 6,405 5,121

6,787
Gallons Wastewater NA NA 1,631,700 1,596,500 2,100,100

The remainder of the increase comes from adding a boiler system in Norway for the steam sterilizer and removing low-flow hand-washing faucets on the Production floor. The low-flow faucets were not allowing for hot water to travel fast enough to the sinks, so they had to be removed until we can find a remedy.

Water initiatives for next year are: 1) to find a workable solution so we can use the low-flow faucets in Production and 2) install water recovery to the reverse osmosis system at Aura Cacia, as the process currently loses a significant amount of usable water.

Commuting/Travel

With two of our facilities located in rural settings and the third along an interstate, it's a challenge to reduce commuter miles through encouraging public transportation and bicycling. As we grow, we employ more people and potentially draw them from further away. Carpool incentives, including preferred parking for carpool participants, have so far proven to be the best way to reduce commuter miles. Due to the increase of carpool miles by 24%, total commuting miles decreased 2% (despite adding employees) and CO2 emissions dropped by 5%.

Employee Commuting & Company Air Travel 2009 2010 2011
Commuting Miles 2,138,141 2,345,140 2,460,005
Carpool Miles   68,702 89,995
Tons CO2e from Commuting 1,203 1,381 1,304
Tons CO2e per Employee 4.3 4.3 3.9
Air Travel Miles 906,689 1,267,707 1,239,208
Tons CO2e from Travel 440 615 601

Air travel miles decreased slightly in 2011, decreasing emissions from air travel. We do not have a method for tracking business car travel, so this is a missing piece in our overall business travel picture that we will be addressing next year.

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Over the last five years, we have undertaken a
number of energy efficiency projects – relighting, installation of a cool roof, upgrades to air conditioner units, and building envelope
improvement.

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Frontier Co-op LEED Silver Certification

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