Method’s new soap factory in Chicago’s Pullman neighborhood has resulted in a more profitable, localized supply chain
WHY STOP WITH just building the first LEED Platinum soap factory, when you can also transform your product supply chain and a neighborhood’s food supply? Method, a retail soap company, found a way to achieve even higher profitability by completely rethinking its product supply chain, in part by leasing the roof of its new factory to an urban farm. At the same time, Method cleared a path to a strong triple bottom line (people, planet and profit) for other manufacturers to follow, offering them ideas for future sustainable facilities.
Industrial developments have only lately begun to jump on the sustainability bandwagon. Even in Chicago, a city known for green building, Method’s award-winning factory, dubbed the “South Side Soapbox,” pushes the envelope. Designed to be emulated in part or whole by others, the facility offers multiple sustainability features.
Method is now operating its 150,000-square-foot “factory of the future,” a one-stop shop for bottling, production and shipping of 200 products. The visionary partnerships behind the facility have earned it the 2016 CoreNet Global Sustainable Leadership Award, resulting in a coveted position on the shortlist for global innovators. Situated on 22 newly green acres in Chicago’s historic Pullman neighborhood, the factory boasts an array of eye-catching green building features, from a 23-story wind turbine to the 75,000-square-foot rooftop greenhouse.
Why all these bells and whistles? Method’s “fight against dirty” isn’t just about cleaning up soap — it’s about cleaning up profits, too.
Driving Profit With Supply Chain Innovation
The soap company, whose sales had reached $100 million by the time it was acquired by Denmark-based Ecover in 2012, aims for cradle-to-cradle production — a biomimetic approach that models human industry on natural processes — to support people, planet and profits.
Its philosophy exemplifies a new brand of capitalism. The emerging concept, based on the book “Natural Capitalism” by Paul Hawken, Amory Lovins and L. Hunter Lovins, argues that a healthy economy requires four kinds of capital: human, financial, manufactured and natural — and that, until now, this last piece has been missing from traditional supply chain strategy. According to a 2012 Accenture report on sustainable supply chains, the supply chain for most manufacturing companies accounts for 50 to 70 percent of both total expenses and greenhouse-gas emissions.
Method recognized that by re-engineering and compressing its supply chain, bringing most of its work in-house, it could better use its natural capital and gain cost advantage. Where conventional manufacturing depends on a far-flung supply chain that spans a radius of thousands of miles, this facility reins in the miles (and the dollars) by manufacturing bottles from plastic pellets, producing 90 percent of its 200 soap products, and packaging and shipping those products, all from one place.
Gotham Greens’ rooftop greenhouse doesn’t just grow food. It also produces a new revenue stream for the building while insulating it from cold and heat, providing energy savings to boot.
Photo courtesy of Gotham Greens
Bold advances in industrial development require new thinking, which can create unforeseen roadblocks. A central component of the one-stop-shop strategy was that three tenants would be operating from the same space: Method, its bottle manufacturer Amcor and urban farming organization Gotham Greens.
Amcor, an Australia-based global packaging company, manufactures the bottles, Method, the soap. Then an efficient bottling, labeling, packaging and shipping process unfolds. Meanwhile, on the roof, the urban farm pays rent while also providing locally sourced food to the community, which had been a well-known food desert, an urban area in which it is difficult to buy affordable or high-quality fresh food.
The Road to Pullman Park
Building a next-generation manufacturing facility takes an effective team whose members share a common inspiration. Method brought on sustainability-focused William McDonough + Partners of Charlottesville, Virginia, first for support in formulating soap product chemistry for Cradle to Cradle gold certification by the Cradle to Cradle Products Innovation Institute and then for early initial project conceptualization. Heitman Architects then took over to make the concept a reality.
Location selection was a key focus from the outset. Adam Lowry, who cofounded Method with Eric Ryan, grew up in Detroit. Though the company was based in San Francisco, he believed the Rust Belt would be the best place to find a site that could host all elements of the planned project: product manufacturing and bottle production as well as warehousing and distribution.
Lowry partnered with Adam Miller, owner of Chicago’s Summit Design + Build LLC, as the site development and construction program manager. Cushman & Wakefield led site selection activities for the project, ultimately identifying and vetting multiple sites for Method across five states. These efforts made it possible for Method to meet its aggressive time frame, reach internal consensus on the final site decision and secure the significant incentives needed to make the project economically viable.
Together, they found the right opportunity in Chicago’s historic Pullman neighborhood. The site had some important basics, like good access to transportation. It offers easy access to Interstate 94 as well as several existing bus routes and a rail line. The access to rail was particularly important, as Method had identified rail capability as central to its future supply chain innovation plans.
Yet no new factory had been built in Pullman in almost 30 years. The site team selected a brownfield site occupied by a long-unused steel mill with the express goal of creating more green space in the community. The property had already been remediated through the standard process of installing a barrier and then topping it with significant layers of topsoil. It was certified as environmentally safe for new operations prior to Method’s purchase of the site.
Team member SpaceCo Inc. was charged with further preparing the site, including decommissioning the old steel plant and exploring geotechnical issues like the load-bearing capacity of soils and existing foundations. Ryerson Steel, a one-time subsidiary of Inland Steel that once employed more than 1,600 people, had moved its operations off the site in 2008. Park National Bank purchased the land in 2008; it became the property of U.S. Bank in 2009, when U.S. Bank acquired Park National. A development entity known as Pullman Park Development LLC purchased the land in 2011 and planned to redevelop it as a big-box retail center with tenants such as Wal-Mart and Planet Fitness — as well as the Method factory.
The city of Chicago welcomes green building, which helped the negotiation and permitting processes go quite smoothly. The plan was also extremely popular among community leaders, city officials and financers alike, as it would bring new jobs, energy and vitality to the city’s South Side.
The multistaged permitting process was fast tracked; city officials made sure there were no delays in their review and processing of the permits. Four primary building permits were required, for the base building, manufacturing process, greenhouse and bottling process. It took five months to obtain the building and process permits; the permits for the tenant buildouts took about three months each. In total, the process required just over one and a half years to complete, which was significantly quicker than expected or usual.
The support of aldermen and Chicago Neighborhood Initiatives Inc. (CNI), a community development organization, enabled the project partners to inspire Mayor Rahm Emanuel to commit $8.1 million in tax increment financing (TIF) funds for the project. CNI invested an additional $2 million.
Building for Function And Light
The building was designed to increase operational efficiency, create long-term flexibility and boost workers’ spirits. Precast panels with 12-foot-wide, nine-foot-high openings differ from those found in most industrial buildings; the large windows are stacked two high, which activates the space with far more natural light than is seen on a typical factory floor.
Natural light is expected to cut the factory’s lighting bill in half, thanks to a design that includes a higher-than-usual proportion of windows as well as 40 skylights that dot the factory ceilings.
Copyright 2015 Patsy McEnroe; photo courtesy of Heitman Architects
Increased efficiency was built into the design and the structure from the beginning. On the factory floor, wider-than-typical 60-foot column spacing accommodates flexibility for future production line changes while also supporting the greenhouse above. Multiple skylights harvest natural lighting on the bottle manufacturing and packaging floor areas, which brightens workers’ moods while also saving energy.
Floors are polished concrete, with huge, 22-foot-tall interior glass walls for visibility between the lobby, plant, lunchroom and the outside gardens. This level of transparency fosters trust and builds culture, which in turn can have profound value for employee engagement. Natural light and clean indoor air also drive productivity up, and absenteeism and sickness down, as documented by JLL’s Green + Productive Workplace system. This focus on health and people doesn’t stop with the building; on any given day, workers can be seen taking a break with group exercises and community-building activities.
The complexity and fast-track timing of the project required that the structural design accommodate flexibility during the design process. While the goal from the inception was to put some type of revenue-generating greenhouse on the roof, Brooklyn-based Gotham Greens was not confirmed as the rooftop farm operator until late in the process, after construction of the shell had already commenced.
That ambiguity created yet another challenge: how to design and construct a roof that would be strong enough to support a complex (and heavy) hydroponic growing system with a large-scale greenhouse structure above it, without knowing what specific growing system would be used. The design and construction processes needed to proceed with all options open. The roof also needed to be able to withstand the removal of the greenhouse, so that if the farm operator should ever need to remove its greenhouse, the roof could still function, with proper insulation values and slopes as required by code so it will drain properly.
Community is important to Method, as demonstrated by its fence-free green acreage, now home to native plants and open to the community.
Photo courtesy of Gotham Greens
The system that supports the greenhouse is complex. For starters, the roof needed three stairways to meet life safety requirements, and the two-way girder support system needed long spans that serve as a floor for the farm’s diverse areas, from the hydroponic systems in its growing area to its packaging operations.
With 3-D and 4-D building information modeling (BIM), multiple scenario planning and supportive city partners, the project team successfully designed and built the complex structure, which now produces roughly 500 tons of fresh produce a year. That produce is available, the day after it is harvested, for purchase in Whole Foods stores and restaurants across the city. In addition to the environmental and societal benefits of growing food locally, the rooftop greenhouse represents an important ongoing revenue stream. Gotham Greens made an initial $8 million investment in developing the nearly two-acre rooftop structure. Method will also reap significant revenues in annual rents from this tenant.
“People Against Dirty”
Method’s website and marketing tout the company as “people against dirty.” It’s a sweeping statement that refers to more than soap. The factory’s energy infrastructure is designed for maximum energy productivity. Solar trees over parking lots provide grid-on operations, which means the devices feed energy not needed by the factory back into the utility grid. At the same time, smart lighting controls such as daylight sensors and motion-detecting demand response lighting systems ensure energy efficiency. A solar thermal system provides hot water.
The towering 600-kw wind turbine on-site is a refurbished turbine purchased from Europe at a lower cost than buying a new one locally. It generates wind power 24 hours a day, seven days per week. That power is used in the bottling operation, which is also a 24/7 operation, so more power is used on-site than at a typical on-site wind power generation operation. Installing the wind turbine cost about $2 million, but it should pay for itself in seven to 10 years, after the project’s TIF funding is taken into consideration. Since manufacturing buildings are typically built to last at least 100 years, this alone could mean savings of $70,000 to $100,000 per year for 90 or so years. Altogether, more than 60 percent of the building’s electrical consumption will be provided by wind and solar power.
Increased Asset Value and Profitability
The profitability of this facility doesn’t stop at energy savings. Method is banking on profitability in the longer run with a masterful blend of energy savings, roof tenant rents and averted supply chain costs. There is also real payback coming for its investment in obtaining LEED Platinum certification, which should happen in only three to five years.
Method’s asset value should only increase across the business, too, as a company known for its sustainable product line can demonstrate to customers and investors both an increase in revenue and a deeper commitment to its corporate mission, as well as better employee health. By pursuing its “beyond LEED” ambitions, Method will drive profitability in the long run, while also winning immeasurable corporate social responsibility (CSR) credibility.
It’s no accident that the building provides covered bus areas and regular plant tours. Method’s mission wasn’t just to clean up its own act. It also seeks to show other industrial innovators the power of natural capitalism to add to profits over time.