Greening the grounds finding economic and sustainable returns - murphy - nov 29- 2012 prof pesch guest - st cloud state university

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November 29, 2012

Richard Murphy Jr. ASLA

President & CEO, Murphy Companies

Past President, American Society of Landscape Architects – MN Chapter (ASLA-MN)

Past Chair, Center for Transportation Studies (CTS), U of MN

Past Chair, Council of Supply Chain Management Professionals (CSCMP)

E-mail: [email protected]

Murphy Warehouse Company Case Owner’s Perspectives

Greening The Grounds:

Finding Economic and Sustainable Returns In Supply Chain Logistics

Resource Allocation Decisions Green Sustainability Returns vs. Economic Returns Is a Balance Possible? What Can Drive this Balance Analysis

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Perspective

Presentation Flow

• Where Do I Come From

Intro to Murphy

Intro to Logistics World

• Site Level - Green / Sustainable

Practices with ROIs

Native Prairie Planting – why plant & maintain,

economic ROI (return-on-investment) results.

Trees + Prairies Carbon Sequestration

Stormwater Management – how to be green and

economic at the same time.

Urban Heat Island – mitigation strategies

Solar Power Generation – using state of art

technology, designed and manufactured in Bloomington, MN.

LED Lighting Technology – ROI Analysis

Carbon Neutrality – Murphy’s practices getting very

close at 12.83%

• Why We Went LEED & Energy Star

Certification

5 Strategies

Sustainability Certification LEED Gold & Silver and Energy Star

2 LEED GOLD & 1 LEED Silver Certified

“Existing” Facilities (GOLD: July 2010 - built in 1994 and 1996; SILVER: Nov 2012 – built 1999)

Minneapolis Campus Spring 2013

Eagan Campus Spring 2013; Target level

Gold/Platinum

Energy Star Certification

Scored 99 & 98 on 100 point scale (Aug 2010).

Central Ave scored 87 (Jan 2012).

Minneapolis & Eagan review Winter 2012/3.

GOLD Top 1%

Perspective

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Sustainability Certification ISO 14001 and SLI Certification

ISO 14001 Certification

Environmental Performance & Management Certification; Nov. 2012.

Sustainable Logistics Initiative

International Warehouse Logistics Association sustainability certification for the 3PL Logistics Industry.

Perspective

Where Do I Come From Supply Chain Logistics / Transportation

Why Care About: Touches Everything We Do

8.3% of Economy!

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Where Do I Come From Supply Chain Logistics / Transportation

Why Care About: Touches Everything We Do

% of Economy

8.3% Logistics $3.78 per person in U.S.

vs.

17.3% Healthcare $7.89 per person in U.S.

Why Care About: Supply Chain Logistics / Transportation

Strategic Advantage - Supply Chain Execution Apple iPod Global Supply Chain – leading edge tech would be wasted if time to market was too long!!!

Steve Jobs said the supply chain was the key to Apple’s success…!!!

Apple has been the #1 Supply Chain in the world for 6 straight years..!!

Perspective

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Strategic Advantage - Supply Chain Execution P&G’s success relies on this and so do many others

Yes, the great ads, packaging, shelf designs, marketing, sales, etc. help….

But if the product isn’t on the shelf when you want to buy - it doesn’t matter anymore

Perspective


UPS’s new branding campaign has pulled back the curtain and introduced the consuming public to the importance of supply chain logistics in their lives and the economy

Perspective

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Where Do I Come From Warehousing in Logistics

5 Billion Sq. Ft of warehousing in U.S. (ProLogis)

Perspective

Warehousing in Logistics 5 Billion Sq. Ft of warehousing in U.S.

Floor area equals a 4 foot walkway from here to the Moon…!!!

The 5B only includes what’s under roof. Add another 40-50% to add outdoor dock & staging areas.

Industry has a massive impact on the Nation’s landscape

Perspective

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Warehousing in Logistics 5 Billion Sq. Ft of warehousing in U.S.

Equates to a 4 foot by 4 foot square of space in a warehouse for every man, women and child in the U.S….all 330,000,000 of us…!!!

….a big footprint on the landscape!

4 Feet

4 Feet

Perspective

Where Do I Come From In the Beginning…1904 4th Generation Family Business “Feeding the horse-power was key”

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3PL – “3rd Party Logistics Services Provider”

Companies Served: Fortune 100 to Small Entrepreneurs Domestic and Global

Industries Served: Retail / Catalogue / Consumer Medical / Health Care Grocery / Food Processing Beverage Plastics Recreational / Camping Industrial Forest Products (Paper/Packaging) International

Perspective

Who is Murphy Logistics Services Company / 3PL

We are a Service Company Warehousing, distribution, transportation, value-

added, fulfillment, international, etc.

We handle products throughout their life-cycle

From raw materials to in-process goods to finished products to returns for numerous industry segments.

Square Feet Operated: 2,800,000 ; Employees: 185

ISO 9001 & 14000 / OSHA SHARP / Organic Food Certified LEED “Gold” Certified / Energy Star Certified Facilities US Customs – CES, CFS, GO; FTZ (Foreign Trade Zone)

SKU’s Controlled: 29,000+ ; Orders / Month: 30,000+ Truck Loads Handled / Year: 120,450

Rail Cars Handled / Year: 9,000 (equivalent to 31,500 TL’s)

How do firms use Murphy 13 Examples

1. Big Box / Mass Merchant / Retail

2. Global Sourcing – Domestic Distribution

3. Domestic Sourcing – Domestic Distribution

4. Vendor Consolidation Park

5. Seasonal Space Offsets

6. Domestic Manufacturing Support / JIT Plant Support

7. Distribution / Transportation Services • Regional Distribution

• U. S. Distribution

• Consolidation / Cross Docking

• Rail Transload / Truck-Rail-Ocean Integration

8. Contract Logistics

9. Medical Support Logistics

10. Value Added Services • Parts Assembly

• Pick and Pack operations

• Packaging

11. Customer Returns Processing

12. Core Competency Strategies Solutions

13. Build to Suit Operations and Warehouses

Perspective

0%

20%

40%

60%

80%

100%

Jan

Feb

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April

May

June July

Aug

Sept Oc

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Nov De

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Seasonal Spec

Sugar

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Medical Support Logistics JIT Replenishment

Surgical Kits

Custom kits for various surgery operations Customized for teams of Doctors at every hospital.

Kit contains all the items needed for a surgery.

JIT delivery to hospital.

Hospital Supplies IV Solutions, Needles, Dressings, etc.

Mass Merchant Retail Support Store Backroom Logistics

Supply of 1500+ Stores with items to run stores

Supplies, training manuals, uniforms. Sales/promo

materials, bags, etc.

Full “pick-pack” operation..

Perspective

Customer Returns Management “Reverse Logistics”

What happens to your clothes once they reach the final end of retail

Clothing – garments shipped overseas for fibers to be separated and reused. A local fashion designer has a clothing line made from re-

cycled threads.

Shoes – rubber soles recycled; fabric used as compost.

Leather Goods – reprocessed into other leather items.

Perspective

Regional Distribution Contract Logistics - 5 State Distribution

Beer: Domestic + imports + end-of-isle displays. Operate at 40-55º; keg room at 36º

Strict lot control & rotation: “Born-on Date”

Facility handles 18 rail cars indoors at one time

Reduces Distributors’ Cash Flow Requirements

Typical Beer activity: 52 turns per year DC Designed for “Flow-through”

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Global Sourcing – Domestic Production Multiple Concepts in Operation

Food Products – Raw, In-Process & Finished • Import From Middle East & elsewhere

Vendor Park (Global Consolidation Point) • North America Distribution

Inbound Flow - Raw Materials

Outbound Flow – Finished Goods

U.S. Distribution Recreation Industry

Canadian Companies Covering Entire U.S. from One Central DC Operations Include:

Item Pick / “Pick-Pack” Case Pick Pallet pick Small-to-Large Order Custom Labeling Carrier Selection and Management

Value Added Services “Postponement”

Important Concept in Marketing • Allows manufacturers to “postpone” final

format of products

• Reduces total number of SKUs and inventory size

• Allows customization to customer specs at last minute

• Typical services include: Brand labeling / Packaging (private label)

Order entry and customer service

Kit assembly / Make-to-order

Multi-pak creation

Shelf / end-of-isle display ready

Reverse logistics for store returns

Product repair

Inventory control

Halloween Candy

Mix packs

Multi-paks

Tray Pack

End-of-Isle Displays

Product Assembly & Packaging

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Value Added Services Postponement Concept

Retail Supply Chain – Big User

Increasing Important for Retail Sectors: Club Stores

Mass Merchandisers

Box Retail / Department Stores

Auto Stores & Repair Channels

Grocery Wholesalers & Retail Chains

Super-sized Stores

Murphy Project Example Multi-vendor 4th of July promotion

End-of-Aisle Displays

Multi Vendor Sales Promotions

Master invoicing & coordination

Murphy Rigging & Erecting, Inc. A Rigging / Millwright Contractor

Clients: Manufacturers to Printers

Medical to High Tech.

Artists to Classified Military.

From Very Precarious Handling….to Very Heavy Lifts

….to Fragile Works of Art….to Delicate and Expensive

Medical Devices

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Richard Murphy, Jr. ASLA Where Else Do I Come From…???

Perspective

Landscape Architect MLA Harvard Grad School of Design

MBA University of Minnesota

BLA University of Minnesota

Adjunct Professor College of Design, U of MN

25 years so far…

Sustainability / Green Practices A Fresh Perspective

Traditional Focus is Inward Looking

Lighting, HVAC, forklift & truck fuel, packaging,

recycling, green purchasing, etc.

Added Focus is Outward Looking - Site Level Green / Sustainable Practices In many cases these represent “low-hanging fruit” with short ROIs.

Native Prairie Planting – why plant & maintain,

economic ROI (return-on-investment) results.

Trees + Prairies Carbon Sequestration

Facility Design: Stormwater Management –

how to be green and economic at the same time.

Urban Heat Island – mitigation strategies

Solar Power Generation – using state of art

technology, designed and manufactured in Bloomington, MN.

Impact of Solar on Mortgage Finance

LED Lighting & ROI Analysis / Decision –

350,000 sq. ft. case study in Eagan by Murphy

Carbon Neutrality – Murphy’s practices getting very close

at 12.83%

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A Question I Ask Industry Audiences:

Have you ever given much thought to your facilities?

Landscape?

Stormwater?

Case 1 - Native Prairie vs. Lawn


….You Should…!!!

A Question I Ask Industry Audiences:

Have you ever given much thought to your facilities?

Landscape?

Stormwater?

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Native Prairie vs. Lawn Three Questions

1. Is there a cost difference?

2. Is there an environmental difference?

3. Do they look OK?


Fridley Logistics Campus 4700 & 4850 Main St NE, Fridley, MN 55421 Location of cost figures & 500,000 sq. ft. of warehouse.

Brown areas are native prairie Photo taken in early spring.


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Facility Design Native Prairie vs. Lawn

Is there a cost difference – YES Annual Maintenance Costs

Why have manicured lawn entirely surround large DC & manufacturing facilities?

Manicured lawn costs 7.3x move to maintain than native prairie plants!

Much more environmentally friendly and sustainable!

Site: 4700 & 4850 Main St NE, Fridley, MN 55421

Actual data from Murphy expense records

$4,240

$21,650

$-

$5,000

$10,000

$15,000

$20,000

$25,000

6 acresPraire Areas

4.2 acresLawn Areas

Tota

l Costs

Native Prairie vs. LawnTotal Cost Differences


Native Prairie vs. Lawn Is there a cost difference – YES

Annual Maintenance Costs If all 10.2 acres is cut lawn




$4,240

$21,650

$52,652

$707

$5,167

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Praire Areas6 acres

Lawn Areas4.2 acres

If All CutLawn

10.2 acres

Co

st

per

Acre

To

tal C

osts

Native Prairie vs. Lawn Total Cost Differences

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If all

Cut Lawn

Prairie Lawn Lawn

Areas Areas AreasAnnual Costs 6 acres 4.19 acres 10.19 acres

Maintenance 4,240$ -$ -$

Mowing - 12,015.00 29,220.25

Watering - 8,630.00 20,988.00

Fertilization - 1,005.00 2,444.14

Total Cost: 4,240$ 21,650$ 52,652$

Cost / Acre.: 707$ 5,167$ 5,167$

Existing Set-up


Annual Maintenance Costs Component Costs

$ 4,240

$12,015

$8,630

$1,005

$-

$2,500

$5,000

$7,500

$10,000

$12,500

Native Prairie vs. LawnComponent Cost Differences

Praire Areas 6 acres

Lawn Areas 4.2 acres




Prairie Maintenance Key to success…!!!

Provided since day one by

Prairie Restorations of Princeton, MN web-site: www.prairieresto.com

Services include site visits 4-6 times per

growing season and burning every 2-3 years.

Brown areas are

Native Prairies

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Native Prairie vs. Lawn Is cost difference significant - YES

Economic Impact

“Over the last 16 years we have saved over

$947,428 while being green by planting

native prairies on 2 logistics Campuses!!”


Lawn Irrigation Sustainability Eagan Site

Smart Management Tool at Eagan Plant Need + Soil Moisture Level + Rain Forecasting & Adjustment

Soil moisture sensors Weather adjusted irrigation 24/7 automatic site monitoring Internet mgmt. Est’ed ROI: 3 years


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Maint. Cost

6 Acres

Lawn: 31,002$

Prairie Install Cost 34,320$ 1.28 Years

Prairie: 4,240$ Savings per Year 26,762$

of Prairie vs. Lawn

Cost Difference: 26,762$


ROI of Prairie vs. Lawn Installation

* Does not include $30,000+ cost of sprinkler system.



Install Cost Install Cost

6 Acres vs. Prairie

Prairie 34,320$ -

Seeded Lawn* 48,000$ 1.4x

Sod* 111,000$ 3.3x


Native Prairie vs. Lawn Is there an environmental difference - YES

Native plant materials selection.

No watering required, or significantly less in dryer climates.

No fertilization required.

Roots are deep and assist stormwater infiltration.

Lawn Grass:

1-3 inches

Prairie Grass:

3-15 feet


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Native Prairie vs. Lawn Results of Native Plantings – “Wildlife” Fox, Deer, Eagles, Hawks, Numerous Bird Species, Ducks, Fish

Eagles dive into water and pull out fish!

Pictured right is a 12 point buck at the 7033 Fridley

Facility, Fall 2009.

Former EPA Superfund site cleaned and developed by Murphy in 1999. 7033 Central Ave NE, Fridley, MN 55432

7 acre native prairie surrounding retention and

ground water pond. Site where Eagles dive for fish.


Native Prairies & Trees Environmental Metrics

Carbon Sequestration Annual Benefits 14 Acres of Native Prairie

24.93 MtCO2e/Year

732 Trees

275 Oaks, 274 Maples, 183 Spruce/Pines

117.1 MtCO2e/Year

Carbon Sequestered by Murphy’s Trees and Prairies over 14 years:

5,009,961 pounds


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Native Prairie vs. Lawn Do they look OK?

Neighbors love it…!!! We run thousands of trucks through

the neighborhood yet the #1 thing I hear is…...“oh, you’re the guys with all the pretty flowers on Main St.”

Start-up Issue…. Prairie plants often do not meet city

lawn height ordinances!

Needed a variance in 1994 with 1st one.

Former Landscape Architecture student

of mine was Fridley’s Assistant City

Planner and understood what we

wanted to achieve and allowed us to

proceed - the rest is history!

Photos show native prairies at Murphy’s Campuses -

14 acres total at four facilities.

Prairies installed in 1994, 1996, 1999 and 2008.


Edge

Much like a picture frame gives order to a busy painting, a cut lawn edge does the same for a prairie.


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Edge Key element in working with Prairies in urban areas.

Without an edge prairies are very, very rough looking.

Note flowing line (“edge”) between prairie and lawn

Note straight line (“edge”)

Typical look with no edge. Note roughness visual quality.

Gets worse as plant height increases Note flowing line / edge

between prairie & lawn

Native Prairie vs. Lawn Do they look OK?

Not only do neighbors love them We have been robbed twice!

One 4th of July a van was seen pulling away from the property with plants in back. Police arrested the individual.

Contacted Ron Bowen of Prairie Restorations

for a value per police request he responded:

“they’re priceless!”

These were 7 year old plants with deep roots.

Summer 2009 an elderly couple were seen digging up plants. Unfortunately not caught.


http://mfile.akamai.com/6066/rm/www.fbi.gov/real/kids/training.rm

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Facility Design Stormwater Regulation Impacts

Changing facility design & management

Traditional Focus: get stormwater off-site fast

Today’s Focus: handle stormwater onsite and reuse

Few outside profession realize growing impact…!!!

EPA mandated cities to control their stormwater – quantity & quality

Regulations required cities to comply with no additional Federal Funds, thus local fees.

Stormwater fees growing 2000+ cities to date nationwide.

Minneapolis - $3,400 per acre (i.e. $0.12 per sq. ft. of warehouse). Most DC/warehouses use 20+ acres; cost is $68,000+/yr.

Case 2 - Stormwater

Minneapolis Logistics Campus Stormwater Project 701 24th Ave SE, 55419

• 22 Acres, highly urban site

• Buildings dating from 1904 – 1980’s

• 24/7 busy logistics operation.

• 95% impervious before project 58% building, 37% pavement, 5% green

New suburban regulations often require 25-40% green coverage

Nearly 100% of Stormwater running off site.

Kasota / Rollins Ave.

24th Ave SE still combined storm

/ sanitary line.

Goal #1 – reduce / eliminate annual stormwater

fee of $68,000.

Goal #2 – here for long haul, therefore, be a good

corporate citizen and do the right thing.

Goal #3 – leverage environmental leadership in

our business strategy.

Case 2 - Stormwater

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Minneapolis Logistics Campus Stormwater Project

Two Solutions Explored

1. Underground Storage

Very expensive system – extra $300,000 for our

project & added 5 more years to ROI.

2. Permeable Pavements - Concrete, Asphalt & Pavers

Great idea – per respective industry associations: not capable today of withstanding the constant grinding & shear stress from truck’s turning while pulling back into docks.

Case 2 - Stormwater

Minneapolis Logistics Campus

Stormwater Project

Basic Water Flow Design

Key:

Main Retention Pond

Bio Retention Basins

Surface and underground pipe flow

Underground only flow

Overflow release to area storm system

Prairie grass infiltration area

Case 2 - Stormwater

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Net Result

100% stormwater fee credit

$68,000 annual savings

50% federal depreciation deduction*

* NOTE: not known till after completion.

NOTE: Original design generated 78% stormwater fee credit.

“As-built” drawings = 102% net credit.

Site: 22 acres

% impervious: 95%

Project Cost

(Design + Const.) 580,000$

Annual Storm water Fee 68,000$

Payback in Years: 8.53

+ Federal Stimulus Package

Immediate 50% Depreciation: 290,000$

7.0 yrs after Fed Credit & Tax Impact

8.5 yrs simple pre-tax basis

Case 2 - Stormwater


Case 2 - Stormwater

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Major Retention Basin NW Corner of Site

Photos show 1st summer plant growth

Case 2 - Stormwater

Major Retention Basin NW Corner of Site

Photos Show 2nd Year Growth

Important to recognize that native prairie plantings will take 3 years to show maturity. One must be a bit patient.

Case 2 - Stormwater

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Facility Design Gray + Green Infrastructure

Cities starting to treat & regulate street trees like sewers and roads.

To handle urban heat, stormwater, and improve real estate values thus higher property tax values.

Only a matter of time before they look to private property to help in this cause.

Gray Infrastructure Green Infrastructure

Site Level Green

Green Urban Infrastructure Why Trees Will Be In Your Future

Trees and Stormwater Management

Mature trees hold nearly an acre-foot of stormwater…!!!

Mature tree’s leaves & branches hold 80% of 1” rain in 24 hrs. In Minneapolis this represents 90% of all storms!

Reducing stormwater prolongs life of sewers and pipes. Cities today can’t afford to replace current old and wearing out systems!

Site Level Green

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“Urban Bonsai”

That’s what we grow for city trees today

Typ. 15+ year old city trees Natural 10 year old tree

vs.

Site Level Green


To Receive Benefits More Soil Needed For Root Growth

It’s a very simple concept

Site Level Green

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Urban “Heat Island” Impacts From Trees

Urban Infrastructure

New planting technologies allow more soil: Tree root growth - thus bigger trees

Stormwater - holding & recycling

Gray Infrastructure - reducing stormwater prolongs life of sewers and pipes. Cities today can’t afford to replace current old and wearing out systems

Shade - more due to bigger tree growth reducing urban heat island impact

Increased property values

Silva Cell example in Minneapolis (http://www.deeproot.com)

Technique readily useable on Logistics / DC Campuses

Site Level Green

Green Urban Infrastructure Impacts From Trees

University Ave LRT Corridor Trees & Stormwater Control

Stormwater

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Urban “Heat Island” Logistics / Distribution Campuses Built of large and tall buildings with flat roofs

Typ. Size: 3-500,000 sq. ft. ( 7-12 acres under

roof )

Typ. Hgt.: 24-38 feet

Typ. Truck Yard space: 30-40% of building size.

Typ. Impervious Cover: 60-70%

Case 3 - Urban Heat Island & Mitigation

Urban “Heat Island” Typ. Solution Today: White Roof Reflects more solar radiation, thus reducing heat

Regular roof

White roof

147°F

Air Temperature: 102°F

122°F

Location: Phoenix, Arizona


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Urban “Heat Island” Potential Solution – Green Roofs

Chicago City Hall In 2000 the City of Chicago roofed its half of a

building in a green roof with striking results as noted.

Situation in Photo: 90-degree day

90ºF – Roof Temp. City of Chicago side

(green roof)

170ºF – Roof Temp. Cook County side

(normal built-up roof)


Urban “Heat Island” Potential Solution – Green Roofs

Minneapolis Library Green roof temperature statistics

Situation: 90-degree day

Green Roof: 92° F

White Roof: 125° F

Dark Ballast: 145° F

Black Roof: 170° F


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Green Roof Can Become Stormwater Retention Basins

Multiple Benefits:

Delayed runoff onto site

Delayed storm surge into system

Reduced size and cost of site

infrastructure

Reduction of stormwater fees


Green Roof Challenge today – Expensive

Often 2-3x cost of normal roof Therefore rarely seen on private projects

Today government buildings where they are seen

Normal white roof: $5.00 per sq. ft.

Green roof: $10+ per sq. ft. w non-watered plants

Green roof: $15-25+ per sq. ft. w watered plants

Roof membrane life longer since it’s protected from solar rays

Normal roof: 20-25 years.

Green roof: 40-50 years est’ed.


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Green Roof Target Center, Minneapolis

Cost: $26.00 per sq. ft.

Green roof: $12.00 per sq. ft.

Irrigation: $2.00 per sq. ft.

Electronic leak Detection: $1.50 per sq. ft.

Waterproofing Membrane: $10.50 per sq. ft.

Data Source: ASLA.org/stormwater


Green Roof Cooling aspects around roof air vents

Proven application: Research shows even a 50 foot ring around air

intake vents proving beneficial.

Temp difference often 30+ degrees – between

green & std roofing.

Therefore, 30 degrees less energy needed for

cooling fresh intake air in summer.

Benefits accrued without green roof spanning

entire roof area

50 foot radius green roof

around fresh air intakes


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Energy Creation - Solar Power Roofs - Large available flat areas “just sit there” LEED Credit Points….

Commercial solutions include:

“Solar Energy Service Provider” - 100% responsibility to design,

build, own and operate the asset - including all upfront purchase

and installation costs….challenge in Midwest – utility rates too

low for economic models!!!

….to solutions where building owner owns the solar assets and

provider merely design-builds the system.

Staples Store, CA

2 Solar Providers:

Case 4 – Solar Power

Energy Creation Solar Power

Myth: Solar PV better in hotter climates.

Fact: Solar PVs are more efficient the colder they get. Minnesota’s climate is perfect!


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Energy Creation By Murphy

4th Largest Solar Energy Producer in MN Ikea is #1 & other in top 10 are government entities

Murphy installed 8 systems 2010 - 2012 320KW total power

5 buildings

Fridley Logistics Campus: produces 50% of energy use on 2% of roof…!!! 2 LEED Gold site

5 Major Innovations (state of art in world today):

Run at low voltage – increases efficiency and solves fire department issues with live systems; system can be turned off when fire dept. shows up for fire!

Solved “shadow problem” – shading a portion of panel now doesn’t shut system down!

Can Utilize 3M Solar Reflector Tech – only solar manufacturer who can utilize this boasting power.

Smart Panel Technology – panels only produce power when asked by control device.

No Roof Penetrations – held in place by weight array (vs. attaching to roof with potential roof leaks!)


Energy Creation ROI of Solar Power

1st Three Systems in 2010 Project Cost for 120KW power: $1,000,000

• Normal, non grant supported solar ROI period is 20-25 years.

• Murphy’s project ROI period is 4 years…!!!

4 Grants at work here:

1. Xcel Energy Grant (Utility Company)

2. Federal Stimulus

3. State Stimulus

4. State special grant for using MN solar tech.

Murphy paid $90,000 (of $1M system cost)

3M Solar Reflector Film

tenKsolar Panel

System designer, installer & grant consultant

Jon Kramer, NABCEP certified PV installer

240-463-3688; [email protected]


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Energy Creation 2012 Case Study in Eagan

350,000 sq. ft. Building Built 1978-80

Empty for 8 years

2012 Murphy purchase

$3.8M in upgrades • Lighting

• Fire System

• HVAC

• Dock equip.

• New access road

• Re-establish rail

• 90 trees

• 1.5 ac. Native prairie

LEED Platinum / Gold target

40 KW array - Nov. 2012 install

40 KW Solar PV


Energy Creation 2012 Case Study in Eagan

40 KW Solar PV Array Dakota Electric vs. Xcel ROI

Jon Kramer

NABCEP certified PV installer

Sundial Solar

office phone: 612-926-8506 cell phone: 240-463-3688 website: www.sundialsolarenergy.com

Dakota Electric Xcel


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Energy Creation Eagan ROI of Solar Power

Why Install with 11 Year ROI? SBA Mortgage Loan Impact

• Original finance goal was to secure an 80-20 loan structure (80% loan with 20% Murphy cash investment).

Market is closer to 70:30 to 75:25 structures

• Explored 5 different banks, 1 REIT, and the insurance market.

• Two of the banks suggested we explore SBA track as part of total mortgage package.

• Because Murphy, plus others in our industry, have large buildings with few employees per sq. ft. we never meet SBA criteria. This time it was no different.

• HOWEVER…..when the SBA saw on our application that we are installing solar power (i.e. renewable energy) we automatically became eligible!

• Result: 95:5 structure….unheard of today!!! 95% is mortgage with only 5% Murphy cash

Murphy Minneapolis Logistics Campus

1 of 4 solar arrays onsite


Energy Creation Eagan ROI of Solar Power

SBA Loan PR Benefits From Murphy’s Education Effort National + Local Coverage

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Lighting Since 1980’s Have Been Changing Fixtures w New Tech

ROI of 1.8 Years Typical

Minneapolis Site: 3x so far since 80’s

Fridley Central: new bldg. in 1999

and changed fixtures after 5 years

All facilities now T-8

Case 5 – LED Lighting

LED Lighting Leading Edge in Mid-West For Facilities 100,000 sq. ft. +

We Couldn’t Find Anywhere to View in Upper Midwest! Murphy Eagan

350,000 sq. ft. in size

Built in late1970’s

Old high pressure sodium

Upgrade options: T-5 or LED

Existing

Proposed

Vs.

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LED Lighting Narrowed to 2 Options

Lithonia vs. Lusio

Motion sensor on each fixture

Lenses on each fixture to reduce glare and protect food if damaged

Lighting

LED Lighting Lithonia Fixture Selected

Brochure Comparison Data

Lighting

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LED Lighting Why?

Multiple Benefits:

Long-term energy use reduction

Long-term maintenance cost reduction Fluorescent lighting needs the bulbs

replaced every 2.5 - 3 years.

LED fixtures will not be touched for 40-50,000 hrs. or 20+ years!

LEED / Energy Star impacts

PR Leverage value in corporate strategy

ROI

Install Energy Cost Savings Period

Fixture KW Cost * per Year per Year Years

HP Sodium 223.16 -$ 64,937$ -$ n.a.

Existing

T-5 118.56 210,000$ 23,576$ 41,360$ 4.1

LED 89.38 445,000$ 17,773$ 47,164$ 7.8 **

* Includes sensors on each fixture.

** Savings from no T-5 bulb replacement & disposal every

3 years not included. Dakota est'ed utility credit included.

Breaking News: a revised rebate calc.

reduced the LED ROI to 5 yrs.!!!

Case 5 – LED Lighting

Dock Plate Heat Loss Steel Plates Act as Ice Cubes in Winter to Cool Bldg.

Murphy Designed In-house Solution Very Low Cost With Huge Returns!

Increased temperature around docks 10+ degrees

Reduced bldg. heat expense 15%

• Note: we hold at 55° in winter

First installed in 2000.

• A few years ago dock equip. suppliers started to offer this product.

Dock Insulation

40

Transportation Trailer Wind & Mileage

Smart Truck “Under Tray” System

Enhanced cross wind stability per Murphy drivers experience

Tougher / stronger solution than curtains

• Expect less winter snow & ice damage

7% mileage improvement with system Murphy installed

• Smart Truck has additional items that reach 12%.

http://smarttrucksystems.com/

Transportation

Transportation Trailer Wind & Mileage

Smart Truck “Under Tray” System Murphy’s ROI Analysis Calculations

Installed May 2011 on 2 test trailers

7% mileage improvement expected with system Murphy installed

Murphy ROI Analysis

Assumptions:

Diesel Pice (per ga.) 4.00$

7% Fuel Savings (per ga.): 0.28$

Miles Driven by Trailer (per day) 500

Device Installed Cost 2,500.00$

ROI Calculation (per unit):

Miles / Day 500

div by Avg. Fleet MPG: 5.2

Gallons Used 96.15

x 7% Fuel Savings Expected 0.28$

Savings per Load 26.92$

Device Installed Cost 2,500.00$

div by Savings per Load 26.92$

ROI in Days 92.86

Transportation

41

Why We Went LEED Especially at the Height of a Recession Put Another Way: Why Does Murphy Voluntarily Do Green Projects/Practices?

5 Part Strategy

1. Leader’s and Family’s Perspective on

Leadership

2. Doing most of the actions anyway so why not

get 3rd party recognition

3. Strategic Business Reasons

4. Green practices are showing positive

economic ROI results

5. Marketing and Branding

Why LEED

Why We Went LEED Leadership Strategy (Item 1)

• Leader a Landscape Architect “what can we say…..”

• 4th generation family business “in for the long haul”

• Family believes it is important to be a leader - being sustainable is important and will grow

Why LEED

42

Why We Went LEED Business Strategies (Item 2)

• Doing most of the actions anyway so why not get 3rd party recognition Client’s sustainability departments

don’t understand what we have been up to for years.

They do not readily understand where the rubber literally hits the pavement.

Why LEED

Why We Went LEED Business Strategies (Item 3)

• Listening and responding to our client’s “future” needs Major corporations will have “Green”

initiatives and requirements – esp. once the recession in finally over!

They need assistance from their Carriers, 3PL’s, Suppliers, etc. to contribute to their “greenness” measures.

They cannot achieve their goals without the suppliers involvement and assistance.

Why LEED

43

Why We Went LEED Economic and Marketing / Branding Strategies (Items 4 & 5)

• Green practices showing financial paybacks & positive ROI In many cases must be willing to take

longer view than Wall Street ROI period of 2 - 4 yrs.

• Leveraging “Green” brand via marketing / PR Murphy gets far more “press” time

than a typical business its size – esp. at the national level.

Opens up a totally new avenue for marketing and sales penetration.

Why LEED

Top 50 Green Supply Chain Partners List Murphy has been listed since list inception 5 years ago

Why LEED

Why We Went LEED Branding Impact

Industry Recognition Placed upon Top 50 “Green” Lists

44


World Trade 100 2012 Article Highlighting Murphy

“You can’t buy this kind of exposure”


KARE 11 TV Richard Interviewed on Simply Science Feature Discussing Murphy’s Prairies and Stormwater

MN Pollution Control Agency Small Business Enterprise Newsletter Feature

Why LEED

45


Business School Case Study on the Economics of Green Exploring Stormwater ROI Issue at Murphy

Why LEED


Sierra Club Article 2,000+ word article for publication late 2012 Writer for the club contacted Richard based upon web research & networking and heard we were the company to contact!

Murphy Warehouse Company Has Long History with Green Initiatives

By Cassandra Hall

With over a century under its belt, the Murphy Warehouse Company has been a fixture of the Twin

Cities business scene for quite a while—and reinforces its commitment to stick around by investing time

and money into the latest green initiatives for their fleet of warehouses.

The Murphy Warehouse Company started in 1904 as a simple horse and buggy affair, hauling materials

off of paddle boats and barges; at one point they carried materials for building the St. Paul capitol.

Warehouses have always been part of, and grown with, the company. Now on their fourth and fifth

generations of family shareholders, and proud owners of five buildings out of their fleet of twelve

warehouses, the Murphy family continues to serve the Twin Cities area in third-party contract

logistics—that is, distributing people’s products when, how, and to whom they need them shipped. A

number of industries use Murphy Warehouse’s service, including the food, medical supply, paper,

industrial product, recycling, retail, beverage, and building material industries.

It is difficult to think of a thriving business taking the time to consider how their actions are impacting

the environment, especially when environmentally-conscious moves might cost money. On the

contrary, according to President and CEO Richard T. Murphy Jr., not only is Murphy Warehouse

dedicated to doing right by the community and the environment, doing so is not financially impractical

at all and actually makes a lot of business sense. To begin with, being environmentally-conscious is a big

part of listening and responding to clients’ needs for the future.

Why LEED

46

3873

724

0

500

1000

1500

2000

2500

3000

3500

4000

Typ. Warehouse / DC

Murphy Warehouse Bldg.

Only

Met

ric

To

ns

of

CO

2e p

er Y

ear

GHG Emissions MeasurementTyp. Modern DC

vs. Murphy Northtown DCMetric Tons of CO2e per Year

Toward Carbon Neutrality Murphy Northtown Fridley Facilities 500,000 sq. ft.

12.83% carbon emission vs. standard warehouse **

** Source: US EPA / US DOE Energy Star Program; 3873 GHG reflects an

average warehouse with score of 50. Murphy bldg’s scored 99 & 98

respectively out-of-possible 100 points, thus placing them in top 1% category.

GHG Emissions for Warehouses

Metric Tons of

CO2e per Year

3873

724

3149

Additional Emissions Reduction Measures

142

85

227

Toward Carbon Nuetrality

724

227

497

Total Additional GHG Emission Reduction

Actual Murphy Bldg. GHG Emissions

Total Murphy Additional GHG Emission Reduction

Net GHG Emissions (for a 406,000 sq. ft. warehouse)

Murphy Warehouse - Moving Toward Carbon Nuetrality

Typical GHG Emissions (460,000 sq.ft warehouse)

Actual GHG Emissions (Murphy's actual same size bldg.)

Emissions savings due to energy efficiency measures

On-site Carbon Sequestration in trees and prairie

Altnerative energy generation (Solar PV power)

100%

12.8%

724

-142-85

497

-150

-50

50

150

250

350

450

550

650

750

Murphy Warehouse

Bldg Only

Tress & Prairies GHG

Sequestration

Solar Power GHG

Reduction

Net Murphy Campus GHG

Metr

ic T

on

s o

f C

O2e p

er

Year

GHG Emissions MeasurementMurphy Northtown Campus

Metric Tons of CO2e per Year

November 29, 2012

Richard Murphy Jr. ASLA

President & CEO, Murphy Companies

Past President, American Society of Landscape Architects – MN Chapter (ASLA-MN)

Past Chair, Center for Transportation Studies (CTS), U of MN

Past Chair, Council of Supply Chain Management Professionals (CSCMP)

E-mail: [email protected]

Murphy Warehouse Company Case Owner’s Perspectives

Greening The Grounds:

Finding Economic and Sustainable Returns In Supply Chain Logistics

Greening the grounds finding economic and sustainable returns - murphy - nov 29- 2012 prof pesch guest - st cloud state university

Education

murphy expense

annual maintenance

solar power

supply chain

richard murphy

green urban

leed branding

leed business