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Northern Exposure

Raising and harvesting chickens in Minnesota and northern Wisconsin isn't easy. Survival requires innovation, and innovation requires a company dedicated to investing in it.

By Tom Johnston, managing editor

Quickly, so much so that the creature all but escapes view, a bass — or was it a turtle? — plops back into the calm, fresh water. The only evidence left is the rings rippling around the point of plunge.

Here on the Sauk River, in Cold Spring, Minn., effluent enters from a new wastewater treatment facility, whose technology is just one step shy of reverse osmosis, a process that can turn contaminated discharge into drinking water. And so the runoff, though not quite perfect, is nonetheless cleaner than its tributary.

The GNP Company, the chicken processor formerly known only as Gold'n Plump, turned the crank on the multi-million-dollar treatment facility at its Cold Spring complex in July. Among a list of other milestones this year, GNP also blazed a trail to identify and label the actual carbon footprint of one of its fresh chicken products. But as "green" as those initiatives are, they exemplify only one aspect of the company's broader definition of "sustainability": making profits while treating people and animals right, too — a philosophy formed over decades of running a business dependent on the health of live chickens in an environment better known for ice fishing.

Simply put, it's a game of survival up here — even in a good economy.

"It goes back to the need for innovation to operate a chicken business in Minnesota," says GNP Company CEO Michael Helgeson, whose grandfather founded the business in 1926. "Unfortunately, my grandfather liked St. Cloud, which is a tougher place to be in the poultry business. To be competitive, you have to be innovative."

WARM AND FUZZY

Some 85 years back, E.M. Helgeson, it could be said, was turned on to poultry growing. He'd heard about a new invention called an incubator, and he set out to use the technology to sustain his family. It wasn't long before he began to sell day-old chicks everywhere he could, including through the Sears & Roebuck catalog. He later called his company Jack Frost Hatchery, a title inspired by the hardiness and quality of his animals.

In the 1950s E.M.'s sons Don and Jerry Helgeson bought the business and integrated vertically, eventually gaining farm-to-fork control over product quality. The next big step was 1978, when they created the original Gold'n Plump brand to differentiate their products.

Today the $300 million GNP Company calls it continuous improvement, which refers to both a set of business analysis tools that help the company turn data into fact-based decisions and a belief system that permeates the entire enterprise.

"The constant has been the need to continue to evolve and innovate," says Michael Helgeson, whose father, Don, remains GNP's board chairman.

PLANTS, PROCESSES, PEOPLE

Over in Arcadia, Wis., the local GNP processing plant backs up to a steep rock cliff. The formation helps tell the story of how the glaciers that left 10,000 reminders in Minnesota spared this beautifully bumpy swath of Wisconsin. The cliff also meant the only way to expand was by, well, going forward.

GNP has invested some $110 million in expansions to the Arcadia complex since it acquired the assets in 1993. Within the past year the completion of a 22,000-square-foot addition upped slaughter capacity by 13 percent with two automated evisceration lines, each running 105 birds per minute — all while the facility also achieved SQF 2000 Level II status. Overall, the plant has tripled production, primarily of parts for foodservice and whole birds for retail delis.

Plant manager Mandy Korpal says automation and use of LEAN tools in first processing have removed non-value-added steps and 50 jobs since 2007. The latest expansion eliminated 10 positions, but the increase in production required as many in second processing. "It's more ergonomically friendly, and the environment is better," she says, noting that employees were part of the design process. "We had three people who were going to retire, but they have ... stayed to enjoy it."

Arcadia's expansion exemplifies GNP's ability to balance people and profit; GNP's employee suggestion program elicited 945 ideas, of which 351 were adopted for company-wide savings of $267,884 in 2010. More than $34,000 in bonuses was paid to employees for their ideas in that year.

Bill Petz, director of Arcadia Operations, says the complex benefits from its location in an agricultural area, but "our labor costs are much higher (compared with those of the industry overall). Where we can automate, we can be competitive."

GNP's hatcheries, for example, are among the most automated in the industry. Also unique are renewable 10-year contracts with family-farm growers to whom the company pays rent for the life of the contract and offers profit bonuses. "We believe that if [our growers are] happy in what they do, they're going to produce higher-quality birds," Petz says.

BRAND(S) NEW

No coincidence, then, that Gold'n Plump the single-brand company this year has morphed into GNP the multi-brand company. Its newest brand, Just BARE, requires its growers to produce birds with a vegetarian diet and without antibiotics and arsenicals. The brand caters to "mindful eaters," a growing segment of consumers the company identified as keen on information about the origins of their food. A nearly 360-degree view of the product in its clear packaging is part of that goal, as is the ability for consumers to enter a product code on the brand's website and determine which of the 100 or so family farms made their dinner. New individually pouched, freezer-ready product means they want convenience, too.

"Our business strategy is centered around customer service excellence," says Tim Wensman, executive vice president of customer processes at GNP. "We spend a lot of time trying to get the voice of our customers [and] the consumer. We try to gather what they are looking for within their chicken program, then we try to fill the gaps with products ... that most companies don't provide."

Most companies don't provide, for example, a label that shows the carbon footprint of one of its products. Spearheaded by its sustainability manager, Paul Helgeson — the CEO's son — GNP was the first U.S. chicken company to do a life-cycle assessment, as part of the World Research Institute's efforts to establish worldwide standards, and to achieve Carbon Trust Certification. The company evaluated greenhouse gas emissions — from feed production to the disposal of packaging and leftovers — to understand the environmental impacts of Just BARE chicken breasts and establish goals for improvement.

Steve Jurek, executive vice president of operations and administration, says the heaviest thud comes from inputs such as corn and soybeans, and general land preparation and treatment in farming. The company's relationships with local farms, then, not only ensures feed supplies but also limits the transportation required for delivery. The experience has honed GNP's focus on consolidating routes and minimizing packaging.

Eco-friendly attributes notwithstanding, Jurek points out that such initiatives also amount to "good business. We're able to save money."

SAVE, SPEND

What the company saves the company can reinvest, and the family-owned GNP isn't thrifty. They would rather lose a customer over price than quality. Customers who do leave for a cheaper deal often ultimately return anyway. "Being a private company allows us to take a long-term view," Michael Helgeson says. "We're not worried about quarter-to-quarter earnings."

The company is more concerned with operational excellence. For example, GNP claims to be the industry's first company to implement fixed-weight scannable products. Introduced some 10 years ago, the practice is still rare in the industry, says Deke Fischer, manager of the Cold Spring plant, which specializes in processing 5.75-pound liveweight broilers primarily in tray packs for retailers, and also recently received SQF 2000 Level II status. (Arcadia packs 4.25-pounders for foodservice.) Fixed-weight scannable products allow GNP's customers to better monitor inventory and profitability.

"Luckily all our chickens are the same size and the pieces are the same weight," Jurek jokes. "No, the key is to optimize the right number of pieces that a consumer wants in the tray and to minimize overpack."

Achieving this consistency in the plant relies on costly, sophisticated weighing and batching systems that prioritize processes and ensure customer orders are filled. Cold Spring's mastery of such systems has prompted manufacturers to visit frequently to study its processes.

"All the technology we have is available to anyone," Fischer says. "We can just run the equipment better than anyone else can, including the manufacturers."

SUNNY SKIES

In early September, the long row of solar panels parallel to Sauk River Road at the Cold Spring complex still are waiting for the last 16 panels, which will not only help further GNP's cause in generating green energy but also advertise to motorists its sustainable manufacturing practices.

A stone's throw separates the solar panels from the new wastewater facility, which is capable of recycling about a fourth of the 1.2-to-1.5 million gallons of water the Cold Spring plant uses daily. Operators hope to soon triple the amount of recycled water.

Secondary biosolids from the sanitation process are composted, bagged and sold as fertilizer. Composting also is rare in the industry, which typically-land-applies such waste. GNP has done it for nearly 10 years.

The next decade promises more improvements, including — possibly — reverse osmosis, a method of filtration through holes so small only water molecules can pass. Then GNP could turn plant waste into drinking water.

Raise a glass.

AT A GLANCE

Company: GNP Company
Founded: 1926, by E.M. Helgeson
Leadership: Michael Helgeson (CEO); Don Helgeson (board chairman); Steve Jurek (executive vice president, operations and administration); Tim Wenseman, executive vice president, customer processes)
Employees: 1,600
Plants: Cold Spring, Minn.; Arcadia, Wis.; Luverne, Minn.
Products: All-natural fresh and prepared chicken for foodservice, retail and deli in 40 states

UP AND DOWN

UP: GNP's leadership is motivated to not only survive but thrive in an industry that's tough in any climate, let alone Minnesota and northern Wisconsin. They are willing to invest in the technologies and the people to help them do so.

UP&DOWN: In the game of chicken, skyrocketing feed prices expose all players to potential financial pitfalls, though GNP's tight relationships with local farmers ensure supply and limit transportation costs.

UP&DOWN: GNP's business strategy is difficult, given it only owns three processing facilities. That the company is doing business in more than 40 states, however, suggests the strategy is working.

To read the article from the MeatingPlace website, visit: http://www.meatingplace.com/MembersOnly/archives/details.aspx?item=4082