Fisher Nuts Vertically Integrated Operations Under One Roof
[ By Jeffrey A. Raday ]
Welcoming visitors and clientele representing growers and purchasers from around the world, the Fisher brand is prominently displayed in the lobby of the new headquarters.
Imagine an industrial real estate project full of nuts — 1.2 million square feet of cashews, peanuts, pecans, walnuts, almonds and a wide variety of other nut and snack food ingredients. Vertical integration of all aspects of nut production, processing and delivery for Fisher Nuts, Sunshine Country snacks and other consumer and private label nut products are at the core of the John B. Sanfilippo & Son Inc. business model. Now in the fourth generation of family leadership, the firm was built by bringing all aspects of nut processing and delivery under one corporate roof. In 2005, the Sanfilippo family decided to make “under one roof” the firm’s real estate strategy as well.
In Search of Operational Efficiency
Sanfilippo was operating from six separate locations in the near-northwest suburbs of Chicago. While the firm operates several smaller, temperature-controlled storage locations in nut-growing regions to ensure freshness, the company’s core operations have always been located in the Chicago area. In 2004, the investment climate had never been better to sell the existing locations and start fresh with a new approach – in a single, highly efficient, well-positioned location.
John B. Sanfilippo & Son, Inc.’s main production and distribution facility in Elgin, Illinois serves as a centrally located hub for customers worldwide. Sanfilippo anticipates a production increase of 25-50 percent due to the operational efficiencies provided by the new facility.
Consolidation into a single facility would yield significant operational efficiencies, and the Sanfilippo leadership wanted to provide its employees a welcoming, branded corporate campus environment. After a comprehensive site selection process that considered vacant sites as well as refrigerated or standard warehouse facilities, Sanfilippo decided to pursue a path of adaptive re-use. The firm acquired the former Panasonic business park, a 95-acre office and warehouse campus located at I-90 and Randall Road in Elgin, Illinois. The original corporate campus was comprised of two buildings, a 650,000-square-foot warehouse and a 440,000-square-foot, four-story Class A office building, connected by a fully enclosed pedestrian walkway. Sanfilippo ultimately chose to use the office building as an investment property (adding four new tenants and creating a new revenue stream) and to adapt the existing warehouse facility into a 1.2 million-square-foot corporate headquarters containing a two-story office headquarters; a 1,050,000-square-foot food processing plant with R&D areas; two 65,000-square-foot refrigerated cooler areas; an expanded version of their popular retail outlet store; and more than 50 distinctive operational areas within the processing plant – including a small chocolate factory. The campus is now known as the Fisher Corporate Center, named for the popular Fisher Nuts brand that Sanfilippo processes and distributes for sale.
Helicopter lifts were used to relocate and reuse existing rooftop HVAC equipment to realize all possible cost and scheduling efficiencies to transform the 650,000-square-foot warehouse into a 1.2 million-square-foot corporate headquarters and nut processing facility.
A Strategic Re-Use Solution
The strategic planning process indicated that the location and the shell of the warehouse offered benefits such as direct I-90 access, a 32’ clear height and interior spaces that could be redeveloped into new office and processing areas. The location also offered open land around the facility for future expansion opportunities together with campus features that could be utilized by the firm’s employees. However, without a strategic retrofit and expansion, the existing facility did not support the efficient product flow for incoming, processing and exiting the facility that was critical to long-term profitability.
Financial analysis showed that the cost of adding space onto the facility and reworking the interiors would pay for itself within five years. The project team recommended adding more than 350,000 square feet of warehouse space, and increasing the number of docks and drive-in doors to a final count of 78 truck docks and two drive-in doors. In the final configuration, 68 docks handle the distribution of finished product, while 10 accommodate the delivery of raw materials to the receiving areas. The 10 receiving docks are positioned near the cooler areas and ensure that as raw materials move into the warehouse, they are immediately directed either to mass product holding areas or into the coolers.
Choosing to adapt the Panasonic warehouse offered the Sanfilippo business both an ideal location and a way to address its scheduling challenges. By retaining many portions of the original building, Sanfilippo was able to initiate some operations at the facility while construction of the integrated and essential cooler components was still underway.
Freezer/cooler requirements are not one-size-fits all. A distributor of ice cream requiring frozen storage and zero temperature loss between shelf and truck requires different features in its warehouse than a typical food processing plant requiring refrigeration only. When assessing a need for cold storage, it is necessary to individually address temperature needs, insulation requirements, doors, walls and floors to ensure quality and long-term operational efficiency, without over-investing in unnecessary equipment.
Temperature Needs: Cooler or Freezer?
What type of food or product is being stored? Refrigerated spaces are defined at three levels. Temperature-controlled environments, including refrigerated docks, range from 45° F to 60° F; cooler space between 34° F - 50° F and even as high as 60° F; and freezer storage at 10° F or below.
Insulation
A critical construction component in freezer/cooler space is the amount and type of insulation used on the floors, walls and roof. Walls within refrigerated areas will contain R-values (insulation rating) of 30-33, compared to typical warehouse ranges in the northern climates from 12-15. The space must also include roof insulation with an R-value of 30-50 for refrigerated spaces and 50+ for freezer spaces.
Environmental Standards
Since the mid-1980s, commercial refrigeration systems have transitioned from ozone-depleting refrigerants like chlorofluorocarbons (CFCs) to low-or non-ozone depleting compounds such as hydrochlorofluorocarbons (HCFCs). HCFCs will be phased out in 2030 and subsequently replaced with hydrofluorocarbons (HFCs). Ammonia, hydrocarbons and carbon dioxide systems are also being used as refrigerants, with ammonia systems generally accepted as the more efficient and cost effective industrial refrigerant.
Floor Design
Nearly all freezer areas require an insulated concrete floor slab with a concrete perimeter curb. The floor is also constructed with an interior drain system to dispose of wastewater from cleaning products and normal condensation. Stronger concrete floors (6”-8”) are often required to support increased racking systems loads and to sustain the harsh conditions of operation and maintenance. Floors in cooler spaces are typically not insulated, but freezer areas must always have an under-floor heating system that prevents permafrost.
Ceiling and Wall Construction
In addition to sufficient insulation, the walls, ceiling and roof areas within the freezer/cooler space also require finishes that provide efficient sanitation procedures. Ceiling fans must also be installed to circulate the air thereby preventing frost from forming on the ceiling, floors or products being stored.
Doors
Improperly installed or maintained freezer or cooler doors waste significant energy resulting in higher operating costs and lower efficiencies. The efficiency of freezer doors is measured not only by insulation and seal factors but also on the speed of the door’s operation. Factors also impacting costs and efficiencies on freezer doors include racking/warehouse equipment, open/close requirements and personnel line of sight/safety issues.
Collaboration and the Clock
Even as the project team was still working out plans for the configuration within the processing areas, they began working toward delivering the facility within the nine-month schedule goal. Together, they created a fast-track design and construction schedule that addressed the future delivery of final design drawings; the presence of existing tenants; and adaptations for the necessary parking reconfigurations to accommodate existing campus employees and the legions of construction tradesmen who would soon occupy the site.
“Collaboration was critical to the success of this project,” explains Karl Heitman, president of Heitman Architects, “Jasper Sanfilippo Sr. was involved on a day-to-day basis, and there were meetings where team members from McShane, Heitman and Sanfilippo were in hardhats, poring over laptops projecting animated fly-arounds, as construction work continued around us.”
Construction crews began by demolishing more than 200,000 square feet of dock areas, pouring new foundations and erecting shear column steel to support the expansion. Without disrupting operations for the 250,000-square-foot tenant occupying the warehouse or parking for Panasonic office building employees, an additional 330 exterior parking spaces were constructed by relocating the parking lot from the site of the expanded warehouse. Inside the building, construction crews left existing electrical, plumbing and sewer systems temporarily in place to serve existing tenants while new construction was underway. Sanfilippo also required temporary measures inside the building during demolition to continue to operate an active equipment fabrication shop.
During construction, field adjustments included floor plan changes, cooler design and the equipment placement plan. The “masterminding” of product flow continued throughout the project, often calling for changes on the fly while the construction pushed forward. The construction management team provided daily scheduling and milestones to drive Sanfilippo’s in-house engineering of process areas and associated equipment deliveries.
A Bird in the Hand Costs Less Than Two in the Bush
The accelerated schedule necessitated finding ways to recapture time and integrate cost efficiencies. For example, the existing HVAC rooftop equipment was entirely repositioned to serve both new and existing areas. The original building’s steel design was employed and three walls of the original building’s shell remained in place. The project team also performed an analysis of the cost of new equipment and lighter steel loads versus existing equipment and capacity requiring heavier steel loads. The trade-off was favorable to providing heavier steel, requiring an international search to maintain a continuous steel erection without delaying the start date.
Innovation from the Inside Out
The business of roasting and processing nuts and snack foods uses a large amount of natural gas – 10 times greater than a typical food processing facility. To realize gas usage savings, the project team worked with Nicor Gas, which custom-designed a gas meter, manifold and gas delivery system. A wet fire sprinkler system also branched off from the new ESFR fire protection system that was custom designed to support dry roasting. Each of these systems meets stringent food processing quality requirements for controlling dust and dirt on specialty surfaces.
Twin Coolers – Inside Warehouse Walls
In a business where buying and selling in bulk are essential to success, it follows that large spaces are required to store product – both incoming raw materials and outgoing packaged product ready for sale. In this facility, approximately 132,000 square feet of space is devoted to cold storage, at temperatures between 38–40 degrees Fahrenheit.
The coolers, 100 percent new construction located within the recently-constructed addition to the facility, feature technologically sophisticated insulation, doors and structure, with wall panels offering increased durability against forklift traffic. It was determined that plant-produced pre-cast was less expensive as compared to steel and metal wall panels, offering both cost and time savings thanks to reduced onsite installation time.
While some refrigeration-only cold storage construction projects do not install insulation on the floors, Sanfilippo chose to invest in floor insulation to realize the long-term operational savings derived from sealing all sides of the “box.”
Flexible packaging lines utilize two-level configurations where the nut products are weighed, metal detected, nitrogen flushed and sealed before being dropped down to the lower level where the bags are packaged and placed in cases for shipping.
Under One Roof at Last
Sanfilippo’s new headquarters and processing facility accommodates today’s technology, incorporates operational efficiencies, provides state-of-the-art expanded product R&D areas and allows greater flexibility than the firm’s former facilities. The facility will allow Sanfilippo to ultimately expand production capacity by 25 – 40 percent, reducing changeover time and creating a more nimble operation ready for the forecasted category growth in the nut and snack food sectors. In short, the Sanfilippo business has finally achieved full vertical integration, locating its Chicago area operations quite literally under one roof.
By Jeffrey A. Raday, president, McShane Construction Corporation.
