Training Proposal for: Frito-Lay, Inc. Agreement Number: ET Industry Sector(s):

Transcription

1 Training Proposal for: Frito-Lay, Inc. Agreement Number: ET Panel Meeting of: January 25, 2013 ETP Regional Office: San Diego Analyst: R. Swier PROJECT PROFILE Contract Attributes: Priority Rate Retrainee Industry Sector(s): Manufacturing Counties Served: San Bernardino Priority Industry: Yes No Repeat Contractor: Yes No Union(s): Yes No Number of Employees in: CA: 42,000 U.S.: 168,000 Worldwide: 285,000 Turnover Rate: 8% Managers/Supervisors: (% of total trainees) FUNDING DETAIL 7% Program Costs - (Substantial Contribution) (High Earner Reduction) $499,824 $0 $249,912 50% = Total ETP Funding $249,912 In-Kind Contribution: 100% of Total ETP Funding Required $945,984 ETP Single (08/16/12) 1 of 5

2 TRAINING PLAN TABLE Job No. Job Description 1 Retrainee Priority Rate Type of Training Business Skills, Commerical Skills, Computer Skills, Cont Imp, Mgmnt Skills, Mfg Skills, OSHA 10/30 Estimated Range of No. of Hours Trainees Class / CBT Lab Average Cost per Trainee Post- Retention Wage 534 $468 $14.69 Weighted Avg: 26 Minimum Wage by County: $14.69 per hour for San Bernardino County Health Benefits: Yes No This is employer share of cost for healthcare premiums medical, dental, vision. Used to meet the Post-Retention Wage?: Yes No Maybe Although employer provides health benefits, they are not being used to meet Post-Retention Wage. Wage Range by Occupation Estimated # of Occupation Titles Wage Range Trainees Carton Handler 26 Packer 138 Sanitor 45 Admin 30 Quality Technician 11 Crewing Coordinator 5 Material Handler 89 Processing Operator 43 Packaging Machine Operator 50 Maintenance Mechanic 40 Supervisor 27 Manager 8 Driver 22 ETP Single (08/16/12) 2 of 5

3 INTRODUCTION Frito-Lay, Inc. (Frito-Lay), a division of PepsiCo, Inc., is headquartered in Plano, Texas. Frito- Lay ( manufactures and distributes a wide variety of snack and convenience foods including Fritos, Doritos, Ruffles, Lays Potato Chips, Cheetos, and Sun Chips. Frito-Lay s customers include major retail outlets such as Sam s Club and Costco, vending retailers, major grocery stores, and food service distributors. In 1961 the Lay Company and the Frito Company merged to form Frito-Lay, Inc. In 1965 Frito- Lay merged with Pepsi-Cola Company to become PepsiCo, Inc. Frito-Lay qualifies for standard ETP funding as a manufacturer. (Title 22, California Code of Regulations, Section 4416(i)(1).) In California, Frito-Lay maintains three manufacturing facilities and numerous sales operations/distribution locations. The training outlined in this proposal will be delivered to employees at Frito-Lay s facility in Rancho Cucamonga which produces raw materials to finished goods and transports throughout California. There are three other proposals by Frito-Lay before the Panel this month, each requesting approximately $250,000. See also ET , ET and ET PepsiCo has merged with and/or purchased numerous businesses. In 2004, PepsiCo launched a Business Process Transformation initiative to align its vast business systems and processes. This business transformation initiative is a multi-year, phased effort that continues to impact the entire organization; and once completed, PepsiCo and Frito-Lay business operations will be unified and streamlined, allowing each enterprise to focus on its core business efficiencies. To support this goal, Frito-Lay must further its investment in technology and implement new business processes. PROJECT DETAILS The Rancho Cucamonga facility is installing fully-automated transformational packaging lines that will require additional training. The new equipment uses software that will change processes and optimize performance. In addition, the new packaging equipment software will change the way Frito-Lay manages performance in the packaging room with implementation of the new advanced Packaging Room Management and Foreign Matter Detector online system. The new packaging room equipment and software upgrades cost approximately $8 million dollars to install. Training expenses for the new system and software are not included in the equipment purchase. The Rancho Cucamonga facility is also one of three Frito-Lay facilities in the nation implementing Autonomous Maintenance and 5S initiatives across its business. To support this process, every employee at the facility will require 5S training. The facility is also installing fully Automated Guided Vehicles (driverless forklifts) that will require additional staff training. Training is needed for new positions to operate this equipment, as well as training for current employees on how to interface with this equipment. The project estimates are in excess of $4 million dollars in equipment, installation and start-up costs. Vendor training is not included in the purchase cost of equipment. The cost of this training at the Rancho Cucamonga facility is not directly supported by PepsiCo. Operations in the California region (part of the Western Division of PepsiCo) are solely responsible for workforce development. The California operations have been privileged to ETP Single (08/16/12) 3 of 5

4 receive ETP funds in prior agreements. This has enabled Frito-Lay to be a leader in employee development. In fact, Frito Lay recognized its California sites for having the most evolved and best trained workforce within the company and has implemented similar training in other regions. ETP s continued assistance with Frito Lay training is vital as it helps ensure that the California locations remain competitive. Training Plan Frito-Lay seeks funding for classroom/laboratory hours per trainee in the following areas: Business Skills (25%) will provide all occupations with the skills necessary to improve decision-making, problem solving, understanding of profit and loss, and operating new technology to improve performance across the Supply Chain. Commercial Skills (5%) will consist of a multitude of training topics. For example, Autonomous Maintenance training will focus on eliminating forced deterioration of equipment; increasing efficiency, and lowering costs. Also, Equipment Training will focus on clean, inspect lubrication standards. Training will be provided to manufacturing operators, packers, mechanics, sanitors, managers, and administrative staff. Computer Skills (10%) will provide all trainees with the new skills necessary to operate software programs consisting of management, forecast demand, mapping, production scheduling, and financial forecasting. Frito-Lay will also provide laptop and hand-held computers skills training to material handlers, packers, warehousers, and receivers to improve inventory control, and for integrated loading. Computer skills will include intermediate/advanced MS Office needed to operate in this new environment. Continuous Improvement (15%) training for all occupations will focus on processes for strategic change. Lean Methodology and Six Sigma. The training includes value stream mapping, rapid four-step set-up, Kaizen Events, 5S and DMAIC phases. All training will improve Frito-Lay s team-based manufacturing practices. Changes in technology make it imperative that all employees have the skills needed to lead, in this highly technical performance culture. The training focuses on both individual and team development. Management Skills (15%) training is limited to managers and supervisors and will focus on implementing new systems, tools, and processes. Manufacturing Skills (27%) training for all occupations will focus on quality systems, processes, and tools. Training will enhance job skills and impact cost, quality, service, and people. Each member will be trained and certified on systems, equipment, and processes that support the transformation to high speed equipment that will enable Frito-Lay to reduce its water supply, electricity, and natural gas. Specialized technical training for each classification that enhances job skills outcome is certification in each job class (certified on systems, equipment and processes that support the business changes). The majority of the ETP contract training will be in manufacturing skills due to the upgrade of new equipment. OSHA 10/30 (3%) OSHA 10/30 will be provided to Supervisors/Managers and limited frontline staff. This will be the first time the Rancho Cucamonga plant has offered this training. Commitment to Training Frito-Lay represents that ETP funds will not displace its existing financial commitment to training. ETP Single (08/16/12) 4 of 5

5 In California, Frito-Lay has an annual training budget of over $4 million for 2,800 employees at 4 sites. Each California facility has a dedicated training budget included in the Annual Operating Plan. This budget leverages prior-year run rate (prior year spent) to determine dollars needed for future expenses. The ETP funding will act as a supplement to support the additional training required to stay competitive. Frito-Lay recognizes its California sites as having the highest engagement and performance culture of all its US locations. Frito-Lay represents that safety training is, and will continue to be, provided in accordance with all pertinent requirements under state and federal law. High Earner Reduction The Panel approved a High Earner Reduction of 50% for new projects (regardless of facility) for any parent company, including its subsidiaries, divisions, branches that has earned more than $1 million in ETP funding over the past five years. As a division of PepsiCo, Frito-Lay s request for funding is being reduced by 50%. Collectively, PepsiCo and its various subsidiaries and divisions have benefitted from ETP funds totaling more than $1 million in the past five years. RECOMMENDATION Staff recommends approval of this proposal. PRIOR PROJECTS The following table summarizes Frito-Lay performance under prior ETP Agreements completed within the last five years: Agreement No. Location (City) Term ET * Statewide 4/01/08-3/31/10 Approved Amount $1,155,600 Payment Earned $ % $931,931 (81%) 8/8/06- $1,678,383 ET Statewide $1,678,383 8/7/08 (100%) *ET The Company reported that the Rancho Cucamonga facility did not participate in the ET contract. DEVELOPMENT SERVICES N/A ADMINISTRATIVE SERVICES N/A TRAINING VENDORS To Be Determined ETP Single (08/16/12) 5 of 5

6 Frito-Lay, Inc. ET Exhibit B: Menu Curriculum Class/Lab Hours Trainees may receive any of the following: BUSINESS SKILLS Supply Chain Optimization Geographical Enterprise Solutions (GES) Performance Deep Dive Analysis Performance Management Skills Run Right Business Planning Process ARM eprm/auto Foreign Matter Detector COMMERCIAL SKILLS Transformational Packaging Autonomous Maintenance Traffic Idling Training Engineering Maintenance Go Green Defensive Driving Training (Safety) Driver Decision Making Training AGV Training Equipment Training on Components COMPUTER SKILLS Integrated Performance Management (My Learning) Automated Online Network (Safety) Behavioral-Based Automation Consolidated Services Software Skills Advanced Laptop Computer Skills/Traffic SAP Ordering/Invoicing System SAP/Kronos Financial Payroll System Oracle Billing/Invoicing Manufacturing Operations Attainment Tool (Scheduling) Online Bidding Upgrades Manufacturing Execution System (Transformational Packing Tracker) TMAP (Traffic) AuditMatic Intermediate/Advanced MS Office CONTINUOUS IMPROVEMENT Change Leadership Planning Lean Methodology Six Sigma Tools 5S ETP 100 Exhibit B Menu Curriculum (02/13/12) 1 of 2

7 Frito-Lay, Inc. ET Leadership Skills Integrated Network Team Skills Speed of Trust True North Team Forward Integrated Performance Skills Generational Differences Advanced Dynamic Individual Skills MANAGEMENT SKILLS (managers and supervisors only) Resourceful Leadership Performance Management Process (PMP) Servant Leadership Certification Management Resource Development Curriculum Peer Coaching Generational Diversity GetAbstract PepsiCo University Leading at the Speed of Trust Change Sequencing MANUFACTURING SKILLS Quality Assurance LEAN Tools Automation Optimization Performance-Based Technical Training Environmental-Based Technological Training (EMIS) Whse Dynamic Standards CCAT New Automation Implementation Global Food Safety Initiative Viligio (Traffic Performance Tool) OSHA 10/30 (certified OSHA Instructor) OSHA 10 (requires 10 hours completion) OSHA 30 (requires 30 hours completion) Safety Training cannot exceed 10% of total training hours per-trainee Note: Reimbursement for retraining is capped at 200 total training hours per trainee, regardless of the method of delivery. ETP 100 Exhibit B Menu Curriculum (02/13/12) 2 of 2