A business owner initially resented the environmental costs he feared would add to the expense of building a new factory. Now the business is profiting in many ways because he became a Green convert.
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Entrepreneur: Ralph Plarre, CEO production, Co-founder & Co-owner
Company: Ferguson Plarre Bakehouses
Business type: Bakers of specialty pies and cakes
Founded: 1980
Employees: About 120
Turnover: (2007 - 2008) In excess of $14M
Head office: Keilor Park, Victoria, Franchises: 38; Company stores: 2
Contact details: +61 3 9336 3200
The Ferguson Plarre Bakehouses Story
In the car park of the Ferguson Plarre Bakehouses factory in Melbourne there is a white diesel Citroen with the number plate ‘sstain'. It belongs to Ralph Plarre, CEO of production, and symbolises a fundamental green change for the father of three. He says that five years ago he would never have described himself as a greenie. Back then - when Ferguson Plarre needed to build a new $10-million bakery - Plarre was dreading the potential costs of environmental planning requirements. Times and Plarre have changed.
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Key learning points:
- Environmental "costs" - Explore your options to become more environmentally sustainable and how it might improve long-term profitability.
- Staff loyalty - People like working for and supporting companies that not only care for them, but care for the environment.
- Green branding - Think about how your brand might benefit from going greener.
- Long-term vision - Think of your company in a narrative context - how do you see the business in 50 years time?
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Today the 60-plus year old sits in his office above the Ferguson Plarre factory, which is warmed by heat recycled from the bakery ovens. Behind Plarre is a large photo of him shaking hands with the environmental campaigner and former US vice-president Al Gore. The huge new factory hums away below, using 13% less gas than the one it replaced, which was four times smaller.
Plarre runs the company with Ken Ferguson, who is CEO of retail. In 1980, the Plarre and Ferguson families - fourth and fifth generation bakers respectively - merged to create Ferguson Plarre Bakehouses. Since then the business has grown from 10 stores to 38 franchises and two company stores. Turnover has increased by about 30% in the past five years and is projected to increase by 17% in 2008-09. Ferguson Plarre's journey demonstrates how sustainability and profitability can go hand-in-hand.
The Challenge
Four years ago, Ferguson Plarre Bakehouses' Keilor factory was "a pressure cooker" according to Plarre. The factory was built by Plarre's father Ray in 1965 to service five stores, but by 2005 it was servicing 30. Plarre says: "Space was critical. People were crashing into each other and we just couldn't accommodate enough product to have a steady stream going out to the stores." With potential franchisees banging on Ferguson Plarre's doors it was clear that a much larger facility was needed.
The Solution
Although Plarre had initially feared expensive environmental regulations he was soon struck by the lack of them. "At first I was frightened of potential environment issues but as we went through the planning process I discovered there were virtually none." For example, Plarre found it absurd that the council required the business to plant and maintain hundreds of trees around the new factory but had no requirements for rainwater tanks. "Here we have 5,000 square metres of roof area, so it's easy to put in rainwater tanks for irrigation - but there was no requirement for it."
Plarre's worries about having to spend extra on environmental requirements warped into anger about the lack of such standards, creating a desire to differentiate the company by investing for the ecological long-term. The company now harvests its rainwater for irrigation, toilet flushing and truck washing.
During the design phase of Plarre's, image consultant Monica Evers, offered to come out for a chat. Plarre explains: "She went through what she called our ‘marketype'. She asked us, ‘What are you? A market dominator? A market leader? Are you technical leader?' Well, we came out, well and truly as a ‘carer'. We care for our employees, we care for our customers, we care for the environment." The consultation cost Plarre about $13,000 but he says the business has derived "incredible" residual value from it. Plarre came to realise that caring for the environment was a perfect fit for their brand. It became an integral part of their narrative. He says: "It is the greatest marketing opportunity of all time."
Plarre also learnt to keep it simple when designing the new factory. He spent months with consulting engineers and technocrats but often found himself mired in their jargon and conventional ways of thinking. For example, Plarre wanted to recycle the heat coming off the production line; the engineers either drew up complicated plans involving machinery or told Plarre it wouldn't work and was a waste of money. So Plarre drew up his own plans and using his own technical staff created a system that funnels the waste heat from the ovens and warms the entire factory with one simple switch. Plarre says it's been very successful and "smells fantastic".
All staff members are encouraged to be environmentally conscious. Plarre and his technical people designed a computerised system that shows staff how much energy the factory is consuming at any given time. They also share ideas with employees on ways they can be more energy-efficient at home.
Plarre says going green has paid off at many levels: energy costs are lower, it has created goodwill among customers and helped the staff to bond: "Our employees love working with a company that has a vision for the future."
The Result
Despite quadrupling the floor and refrigeration space of the old factory, energy usage has increased by just 50%, with a 60% decline in energy usage per square metre. Gas usage has fallen by 13%; waste water output has fallen by half and overall water usage is the same despite a massive increase in floor size and production output. The cost of investing in hybrid delivery trucks has been prohibitive (the business has one such vehicle) but the company sites its facilities and outlets on efficient distribution link to save diesel consumption.
Plarre says: "Once you start thinking about the environment and how you can better use energy, it then permeates the way you think about a lot of other things." In 2008 Ferguson Plarre was one of four finalists in what is regarded as Australia's most prestigious environmental awards, The Banksia Awards and won the Best Green Business Award at the My Business Awards. Ferguson Plarre plans to add five or more franchises per year.