PALLET ENTERPRISE

PALLET ENTERPRISE

Winter 2014

Check this guide for the following:

• Review of top news articles and issues affecting the industry •• How-to tips for everything from machinery maintenance to online marketing •

• Case studies covering some of the top plants and operations in the world •• Trends that you need to be aware of to keep up with the latest developments •

• General advice on basic business topics •• Strategies for improving the production of your facility •

• Equipment and machinery innovation •• Forward thinking editorial from our staff of experts •

Short highlights from the best articles, innovation and ideas of2013 for the pallet and low-grade lumber industries

Edited by the staff of Pallet Enterprise magazine

BestOfWhitePaperWinter2014.pmd 2/11/2014, 11:50 AM1

2 SPECIAL REPORT/BEST OF 2013

Table of ContentsREGULATORY IMPACT5...Insights for Developing a Proper Fire Safety Plan: Expert Suggests Many Pallet Companies Are Not Prepared8...Obamacare: Preparing for New Health Care Requirements13...OSHA’s New Hazard Communication System… Are You Ready?

MARKETS & RAW MATERIAL6...Lost Infrastructure Brings Growing Pains to Forest Products Industry12...European Biomass Demand Continues to Grow

GENERAL ADVICE3...Proven Strategies to Inhibit Mold Growth on Pallets 5...Website Marketing Gurus Share Best Practices 11...Don’t Set Aside the Core Mission for a Good Idea 13...Key Concerns for Getting Started In the Pallet Recycling Business16...Incident at Detroit Area Plant Highlights Theft Risk and the Need for Adequate Alarm Systems 17...Business Networks Can Improve You and Your Company

BEST PLANT6...Robots and Pallet Press Improve Quality Control at European Pallet Recycler7...Lumber Sales & Products Uses Unique Lumber Stacking Method to Improve Operations8...Employee Ownership, Controlling Its Supply Line Help M & H Crates Succeed 14...Tips for Moving a Machine15...Plant and Conveyor Maintenance Tips17...Cut the Fat with Lean Practices18...Safety Takes Leadership, Time

INDUSTRY NEWS3...Lamenting What Could Have Been – The Downfall of iGPS 9...Railway Authorities and EPAL at Odds in Europe11...Losing Major Customers Forces CPC to Go into Survival Mode

INDUSTRY TRENDS4...The True Cost of Pallet Logistics – Recyclers Are Likely Losing Money Returning Stray Proprietary Pallets 10...Ongweoweh Develops Unique Data and Reporting Capabilities for Customers10...Dirty Tricks That Pallet Buyers May Encounter and How to Avoid Them14...Third Party Logistics Growth Provides Business Opportunities for Pallet Companies18...Texas Pallet Company Succeeds by Focusing on Specialty Pallets19...FCA Sets High Standard for Customer-Centered Innovation and Service in Packaging

PROCESSES & INNOVATION4...Recycler’s New Direction Pays Off: Power Pallet Expanding Into Recycling Other Materials7...PalletOne Embraces Lean Manufacturing to Improve Its Butner Facility9...Company to Offer New Technology to Air-dry Pallets, Prevent Mold12...Intern Programs Can Spark Innovation15...Spanish Pallet Manufacturer Relies on Automation and Robotics to Ensure Quality and Productivity 16...Obstacles Don’t Stop Pennyrile Pallets


SPECIAL REPORT/BEST OF 2013 3

BEST OF 2013 – INDUSTRY NEWS

Lamenting What Could Have Been – The Downfall of iGPS By Chaille Brindley

BEST OF 2013 – GENERAL ADVICE

Proven Strategies to Inhibit Mold Growth on Pallets By DeAnna Stephens Baker

Bob Moore, the founder of iGPS, is a good salesmanwho was able to convince investors that he couldrevolutionize an industry that had seen little advance-ment in technology in years. But most of the iGPS hypewas based on assumptions that turned out to be mis-guided and wrong when tested in the real supplychain.

iGPS claimed it could be cost competitive becauseits technology and iDepots cut logistics costs. But thisnever materialized because it required a sizeable pool,a large customer base and broad geographic cover-age. Also, the company suggested its RFID technologyand tracking software would reduce lost pallets. ButiGPS admitted losing 1.5 million of its ten million palletpool.

The plastic pallet was supposed to be more costeffective because it would last years without repairs.But iGPS experienced higher damage rates than an-ticipated and struggled to replace pallets after a legalbattle with its pallet manufacturing partner.

iGPS attracted many customers, but had supplyproblems when it stopped buying new pallets andfound that many were lost or damaged. iGPS was avictim of its own success, it grew too much and hadtoo many pallets scattered around to effectively supply

some of its customer base.One major unforeseen fac-

tor was the impact that usinga fire-retardant containingdecaBDE would have on itspublic image. While it was aknown carcinogen that manycompanies were movingaway from, iGPS decided touse it anyway. As media cov-erage of the decaBDE issue became a bigger deal, itsuse raised environmental and public health concerns.

When these factors combined, the bright promisethat iGPS initially offered quickly evaporated. To com-pete and attract business, iGPS agreed to matchwooden pallet companies on price. And this turnedout to be among the most fateful decisions becausethe company lost its premium product status by mak-ing a price concession.

The big lesson here seems to be that it takesmore than a new pallet design to revolutionize theindustry. You have to develop a business model andsupport structure that will handle the logistics andsupply issues. And that may be the toughest trick ofthem all.

Preventing mold on wooden pallets is increasinglyimportant as more pallet users demand mold preven-tion treatments.

Mold needs several things to grow. It needs a foodsource, the right temperature, moisture content, andair. Wood is a good medium for that because thesugars and starches in it are a food source and thehigh moisture content in green wood provides plentyof moisture for the survival of fungus. If thetemperature’s warm enough, it makes a great envi-ronment for mold. Most hardwood pallets are pro-duced using green lumber, which makes new palletsa prime source for mold growth.

The key to preventing mold growth is controllingone or more of these elements. Controlling air is virtu-ally impossible and controlling temperature is noteasy as the temperature range that is conducive tomold growth is also the range that is comfortable for

workers. That leaves mois-ture and food source as themost viable options.

Many pallets users thinkthat heat treating palletshelps prevent mold. But dry-ing for mold preventionis different than heat treatinga pallet. Heat treating getspallets hot, but it does not dry them, as heat treatmentstandards are not designed for moldprevention. It has little to do with prohibiting moldgrowth unless the pallet is dried to less than 20%moisture content. The heat treating process canactually make wooden pallets or lumber moresusceptible to mold, by bringing moisture and sugarsto the surface that are necessary to facilitate moldgrowth.



BEST OF 2013 – INDUSTRY TRENDS

The True Cost of Pallet Logistics – Recyclers Are Likely

Losing Money Returning Stray Proprietary Pallets By Chaille Brindley

BEST OF 2013 – PROCESSES & INNOVATION

Recycler’s New Direction Pays Off: Power Pallet

Expanding Into Recycling Other MaterialsBy Tim Cox

Are you really making money collecting and return-ing stray proprietary pallets? The real answer maysurprise you.

A Pallet Enterprise investigation, based on analysisfrom researchers from Penn State University, indicatesthat many pallet companies likely are losing money,especially when they handle the return transport ofthese pallets.

Researcher Chuck Ray said, “A lot of recyclers don’thave their accounting system set up to track true costs.The average recycler doesn’t understand the cost ofalternative actions, called ‘opportunity costs.’ Over time,many were making less money in servicing CHEP’spallet pool than they would processing non-CHEP pal-lets, but because these opportunity costs weremasked as ‘revenue from CHEP’ on their books, it wasdifficult to recognize where any loss was occurring.”

Ray pointed out that the largest source of this op-portunity cost that went undetected was involved withtrucking pallets back to a depot. You are using yourtrucks to ship pallets to a competitor all the while tyingup key transportation resources needed to ship tocustomers and bring in new core inventories. Thestudy estimated that recyclers lost $2.38 per pallet onaverage after the compensation received from CHEP.

The following are key costs to consider when

evaluating your real costs for processing proprietary pallets.• Acquisition costs if you have to pay for a complete

trailer.• Transportation costs

from collection pointto the recycler.

• Sortation and han-dling costs.

• Storage costs.• Admin and paper-

work costs.• Delivery transporta-

tion costs.• Lost opportunity costs associated with trucking and

other considerations.• Equipment costs needed to retrofit your facility to

efficiently handle proprietary pallets.If you can’t avoid collecting proprietary pallets, Ray

suggests you presort and stack them out of the way asearly in your process as possible then never touchthem again.

Full details of the analysis and a decision tree tohelp you evaluate the effectiveness of your currentrelationship with proprietary pallet companies can befound at http://www.palletenterprise.com/assetrecovery.

Power Pallet in Amsterdam, N.Y. has been expand-ing in a new direction in recent years, a directionmanagement views as being critical to its future suc-cess. The company leveraged its fleet of about 400trailers, spotted at factories and distribution centers tocollect used pallets, and entered the arena of recyclingother materials, such as corrugated, plastic, glass andmetal.

In essence, Power Pallet became a “one-stop shopfor everything,” explained Sam Donadio, president.“Customers didn’t have to deal with one business forused pallets, another vendor for corrugated, anothercompany for plastic, another for metal.”

Power Pallet made the process easy for customers.It put in baling equipment at no cost to customers and

allowed them to loaddifferent recyclablematerials in the sametrailer.

The strategy pro-vided an importantbenefit for Power Pal-let. “It secured the ac-count for us,” said Donadio. Although their palletprices are competitive, “some customers will leave youfor a nickel or a dime,” he noted. “Now…they’re goingto lose the whole package.” A customer that moves toa different pallet supplier would also have to set upnew relationships to handle all the other waste materi-als being recycled by Power Pallet.



BEST OF 2013 – REGULATORY IMPACT

Insights for Developing a Proper Fire Safety Plan: Expert

Suggests Many Pallet Companies Are Not PreparedBy Chaille Brindley


Website Marketing Gurus Share Best Practices By Chaille Brindley

The Pallet Enterprise spoke with Gordon Hughes,president and owner of Wood Packaging Solutions,about fire safety in the pallet industry.

“It is important that all wooden pallet and woodpackaging companies stay current with changes tothe policy directive of the NFPA or the ICC dependingon which is used in a particular company’s state,” saidHughes. “The NFPA and ICC regularly post updatesthat occasionally affect companies in the pallet indus-try.”

He added, “Given the number and severity of thefires that the pallet industry has had in the past fewyears, you can expect most fire departments... will beconsidering new rules proposed for outdoor storage ofidle pallets and evaluating the new standard.”

When helping companies complete customized firesafety plans, Hughes said the key questions he asksinclude whether a company has sprinkler protection orwhat types of flammable materials are on site.

“By customizing a fire plan it becomes easier to inte-grate this plan into the business plan,” said Hughes.

According to Hughes, wood dust accumulation is a

fire hazard that palletcompanies oftenoverlook. It can accu-mulate in rafters orcorners and takesonly a small spark toignite.

“That mini explo-sion could disturb other accumulated dust, whichcould lead to a larger explosion that could endangereven more workers or structures,” he said.

When it comes to insurance fire coverage, palletcompanies are typically not getting enough coveragebecause it is expensive annual cost that some neveruse.

“But when you need it, you will be glad that youhave it,” said Hughes. “Many hope they will never havethe need to file a claim. Clearly, if you suffer a loss,adequate coverage will protect you from losing yourbusiness. Always remember, it is the responsibility ofthe pallet/packaging company to have an adequatefire safety plan in place.”

You have two key audiences in website design -customers and prospects and search engines andsocial media websites. But many companies focus toomuch on themselves and not what customers want orwhat search engines use to decide a website’s rel-evance to particular keywords.

Steve Dustin, co-founder of Adeo, an Internet mar-keting firm, said, “Google has three major things itlooks at when it ranks a website. Those are content,backlinks and social media mentions and activity. Ifyou are not offering any value, and the content isstrictly marketing a company, you are not going to getany retweets or social media mentions.”

That is where many pallet or lumber companiesstruggle to develop effective websites. They don’tkeep the content current or don’t offer content thatattracts the attention of potential customers or searchengines.

One effective strategyis to develop static con-tent about your companyand pallets in general.Then create a blog that isupdated at least severaltimes per month. It canhave tips and tricks forcustomers, news onregulatory issues, or in-formation on pallet purchasing 101.

Key content should be produced in HTML not PDFor other proprietary formats as these seldom appeartoward the top of keyword searches. Also, websitesshould present easy to follow calls to action.

Dustin said, “If you are not saying call us or fill outthis form any place on your website, you are missingout on an opportunity to convert that lead.”



BEST OF 2013 – MARKETS & RAW MATERIAL

Lost Infrastructure Brings Growing Pains toForest Products IndustryBy Jeff McBee

BEST OF 2013 – BEST PLANT

Robots and Pallet Press Improve Quality Control at

European Pallet RecyclerBy Chaille Brindley

The housing market’s demise created a plunge inactivity throughout all sectors of the forest productsindustry.

During the past five years, the forest products in-dustry lost people and production at every level. Theindustry lost loggers. Some sawmills closed perma-nently. Others suspended operations, but have beengone so long now that they may not be back. Alongwith the lost sawmills, the industry lost many skilledworkers. The combined losses make even modestgrowth difficult.

The lost infrastructure has now left the forest prod-ucts industry in the middle of a fiber crunch that isimpacting all levels of the industry.

Softwood mills have upped their production levelsbut have been unwilling or – in most cases – unable to

bring on additional shifts.The extra productionhelps industrial softwoodsupply levels, but offshoredemand has kept indus-trial softwood suppliesand pricing challenging.Offshore markets havebeen a large part of theproblem.

Most – if not all – of themarket-related problems point back to infrastructureissues throughout the forest products industry. Unlessadditional capacity comes available to deal with fu-ture supply challenges, the entire forest productsmarket may be in for some intense growing pains.

Robots can handle tough three dimensional tasksthat basic automation can’t efficiently do, such asdismantling a block pallet or positioning a number ofboards in unusual patterns. Robots can be programedto produce or repair a wide variety of pallet types,which can significantly reduce changeover timescompared to basic automated systems without robot-ics.

Because robots need lots of work to do, it is best toutilize them in tasks that are always working when aproduction line is running. Is the job heavy and can itcause repetitive stress injury or physical harm toworkers? Then robots can be a good option in thosesituations.

A neat idea thatany pallet companycan use is the addi-tion of a pallet pressat the end of the re-pair line. Using a hy-draulic press and asteel bar, the pressensures that joints are tight and no large nails areprotruding. The press vertically presses the pallet nailpoints to improve quality.

Robotics also ensure that the workers who are onthe line are not worn out as fast, stabilize theworkforce and ensure consistent quality production.




Lumber Sales & Products Uses Unique Lumber

Stacking Method to Improve OperationsBy Tim Cox


PalletOne Embraces Lean Manufacturing to

Improve Its Butner FacilityBy Chaille Brindley

Lumber Sales & Products Inc. in Jackson, Wis. hasdeveloped a little trick of the trade to help cut downon mold forming on freshly cut deck boards. Whenthey are stacked automatically, heat emanates fromthe center of a tightly packed bundle on warm, humiddays, noted president Jim Francois, promoting moldon wood that is still green.

After each layer is stacked, a worker on the backside of the pallet spreads it out, said Francois, justusing a hand or knee to push the row out two inches.That allows air to get between each row and preventsmold. “It cuts it down close to 60%,” he said. “I know

nobody else thatdoes this. It’s justsomething we’velearned over theyears.” The same stephelps prevent palletparts from freezingtogether during coldwinter temperatures.

“We try to use fresh lumber all the time and not let itsit around and get moldy,” said Francois. The com-pany cuts lumber every day.

PalletOne Inc.’s Butner, N.C. plant follows the 5Slean manufacturing strategy, which focuses on howbest to organize a workspace for efficiency and effec-tiveness. The 5S phases are: sorting, set in order, sys-tematic cleaning, standardizing and sustaining.PalletOne added a 6th S in safety to its focus.

The managers tackled its production lines as itsinitial effort. The idea was to impact an area in thecenter of the plant and move outward so that everyonerealized this was more than just management’s latestlittle idea.

“Thanks to the lean process changes we are makinga pallet a nickel cheaper than we were a year ago,”said Howe Wallace, PalletOne’s president and CEO.

Supervisors took pictures of the work area beforethe project began so that they could demonstrate toothers and remind themselves of the conditions beforeand after the process.

The entire line was analyzed to optimize the locationof every item. Supervisors make sure that only what isneeded for the day’s work is placed near machines toreduce clutter, and anything that could be a safety

concern or cause un-necessary strain onworkers was cleanedup.

They put nail gunstands near the work-ers and placed hoseson reels for easy feed-ing and storage. Fanswere moved from thefloor to overhead andout of the way. Eachmachine received its own color-coded set of tools anda board to store them, making it easy to tell if some-thing was missing by a quick glance. Lift tables wereplaced near the pallet lines so employees had to bendover less while working. Ladders were added on bothsides of the production machine to make it easier foremployees to access the top of it from either side. Theplacement of everything was questioned to optimize it.Managers would ask, “Why is this here?” or “What is inthe way?”




Employee Ownership Controlling Its Supply Line

Help M & H Crates Succeed By Chaille Brindley


Obamacare: Preparing for New Health Care RequirementsBy Chaille Brindley

M & H Crates in Jacksonville, Texas has grown byfinding little areas of improvement to cut costs. Theseinclude automating with stackers, reducing the num-ber of times that a worker touches a piece of lumber ora pallet, reducing logistics costs and empty miles, up-grading equipment to relieve bottlenecks, and findingmore lumber sources to improve supply options.

“I learned from my father the importance of theattention to every little detail. We have to look for littleways to cut waste and get the most out of the log,” saidRandy McCown, president and CEO.

In 1998, M & H Crates was sold to the employees.When employees own part of the business, they take adifferent attitude about their work. McCown said, “Sta-tistics show that employee owned companies havebeen the most successful through the recent reces-sion. All employees have a dog in the hunt.”

Commonly referred to as an employee stock owner-ship plan (ESOP), these businesses provide the

workforce with anownership interest inthe company.

McCown said theownership programhas been especially ef-fective for managerswho realize they aren’tjust making money for the McCowns, they are makingmoney for everybody when they do little things tobecome more productive and grow the business.

The company has also grown through its 2001 ac-quisition of Crosscut Hardwoods in Alto, Texas about25 miles from the main facility. This has allowed thecompany to control its own lumber supply and becomemore efficient in sourcing lumber and reducing logis-tics costs. It also gave M & H Crates extra capacity, awider geographic distribution and capabilities to pro-cess a wider variety of material.

Are you having trouble knowing how to prepare fornew health care rules, reforms and penalties underObamacare? By answering these questions, you canget a good picture of where you stand and what strat-egies to consider.• Do you have 50 or more full-time or full-time equiva-lent (FTE) employees?• Do you have more than 100 employees?• Do you offer or plan to offer health care coverage toemployees?• Will any of your employees buy coverage on a statebased or federal exchange?• Do you have fewer than 25 FTE workers?• Is your state planning to and ready to develop its ownexchange?

• Is your current health care plan a high deductiblehealth savings account (HSA) type program?• Do you have part-time employees?



Company to Offer New Technology toAir-dry Pallets, Prevent Mold



Railway Authorities and EPAL at Odds in EuropeBy Chaille Brindley

By Tim CoxLumber Sales & Products has developed a propri-

etary technology and method for air-drying pallets toprevent mold and mildew.

The approach uses a regular 53-foot trailer vanspecially modified with vents and fans. It also relies ona system of staggering the stacks of pallets in thetrailer to allow air to move around the pallets. Theobjective is to reduce the moisture content of thelumber down to 19% where there is not enough mois-ture to foster mold growth.

The process was tested by the Sardo pallet lab atVirginia Tech and “came through with flying colors,”said Jim Francois, owner. The tests showed palletsonly had 0-5% mold.

“I really think this is going to help the pallet indus-try,” said Francois. “Particularly companies that supplygrocery manufacturers and other mold conscious in-dustries.”

Francois added, “Although pallets may be treated

with chemicals toprevent mold, manygrocery manufactur-ing businesses willnot use chemicallytreated pallets. Theprocess is also muchcheaper than chemi-cal treatments be-cause it eliminates the recurring cost of purchasingchemicals.”

The trailer will enable pallet companies to drop-shiploads of new pallets. Without air-drying, a load ofgreen pallets may turn moldy in a few days before thecustomer opens the van to begin using them.

Francois has started another business, Air-FlowTrailer Systems, to market the technology. For moreinformation, call 262-677-9033, [email protected] or visit http://www.aftstrailers.com.

The European Pallet Association (EPAL) and theInternational Union of Railways (UIC) have split waysover what appears to be a squabble about the certifi-cation organization that oversees quality control forthe EPAL Euro pallet pool.

EPAL stated it changed to Bureau Veritas becausethe “former audit company was not one of the bestthree proposals from a financial or qualitative per-spective.” While it is not clear if UIC Working Group forPalletization took action only in response to the ousterof Societe Generale de Surveillance (SGS), it appearsthat the rail authorities preferred the former vendorstay in place. Regardless, the UIC decided to redefinethe conditions for the approval of new pallet organiza-tions and subsequently named two other organizationto be approved for developing future pools; this in-cludes SGS and a European pallet dealer.

The UIC claims it wants to develop a “One BrandStrategy” where pallet organizations and license hold-ers cooperating with it in the future utilize labeling withthe letters UIC instead of the EPAL/oval mark. This is

an attempt to exertcontrol over any futurepallet organizations.

EPAL has ceased allcooperation with theUIC for the foreseeablefuture. EPAL suggestedthat exchange of EPAL/oval and EUR/ovalmarks without restriction should continue. It has alsodecided to remove from the center block the mark ofthe respective national railway.

With so much at stake, it appears the right thing todo is for the UIC and EPAL to come to some arrange-ment or the results could be harmful for the industry.Both organizations recently released a statement ex-plaining that they were working on an agreement thatwould allow the open exchange of pallets bearingtheir trademarks. This is a sign that although EPAL andUIC may not be as close as they were in the past, theyare finding ways to work together.




Ongweoweh Develops Unique Data and ReportingCapabilities for CustomersBy Chaille Brindley


Dirty Tricks That Pallet Buyers May Encounter andHow to Avoid Them By Rick LeBlanc

When you look at Ongweoweh Corp.’s investment inpeople and technology, it is more of a data and man-agement company than a typical pallet operation.Keeping track of pallets requires a major commitmentto collecting data along a customer’s supply chain aswell as from recycling partners.

One added value service Ongweoweh offers is anauditing process for dock sweeps. Field reps audittrailers, establishing a check and balance system.

“That is an extra piece we bring to the table that ourcustomers appreciate,” said James O’Neil, vice presi-dent of operations for Ongweoweh.

Audit data is collected and shared with customersusing NativeTrax - a Web-based software platform fortracking pallet activity, reviewing core metrics, placingorders, reconciling bills and auditing pallet counts. Itprovides data on key metrics such as expenditures,landfill diversion, returned income, pallet tracking, etc.It helps coordinate activities when Ongweoweh ser-vices many regions of the country for one customer.

“Our national customers like that one-stop shopapproach,” said Daniel F. Bonamie, president andchief executive officer. “But the difficulty for us is

trickling that downto the plant leveland getting the co-operation of thecustomer to supportus at the plantlevel.”

Accurate dataassists in this pro-cess while providing accountability for everyone in theprocess. Bonamie said that Ongweoweh has becomeeffective at breaking through those barriers and get-ting communication through with mid-level managersat customer locations. Although the process can re-quire some finesse, it is a core advantage forOngweoweh because of its successful track record aswell as its software analysis and data capabilities.

Bonamie explained, “When you first go into a newcustomer location, people think you are just themiddle man who is going to skim some of the creamoff the top. You have to show them what value youbring. I can honestly say in most cases, over time,customers see the value.”

There are a number of ways that pallet buyers canbe shortchanged when purchasing pallets. This hap-pens because frequently pallets are not subject to thesame rigorous quality and inventory systems as otherproducts used by the pallet buyer. When you don’t payattention, you are in danger of getting ripped off.

Here are some “dirty tricks” that pallet buyersshould look for when dealing with pallet companies,especially new suppliers that drastically undercut ex-isting suppliers.• Not receiving the amount of pallets billed.• Lower grade lumber used or cheaper species.• Pallets not stenciled or branded as requested.• Undersized lumber used (i.e., 3-inch boards insteadof 3.5-inch boards quoted).• Shorter nails or fewer nails than quoted.• Pallets delivered to the pallet buyer’s supplier to putunder load for delivery are a lower grade than was

originally quoted to the actual pal-let buyer.

So what steps can a palletbuyer do to ensure that they arenot subject to dirty tricks? It basi-cally comes down to treating pal-lets with the same respect that isgiven to other products and ser-vices. Given that most companieshave rigorous receiving controls, the receiver’s countof pallets received should not be treated lightly. Thepallets received should be accurately received, andthat information should be clearly communicated toyour accounts payable department.

At the end of the day, reputation is important, and itis important to deal with pallet companies that havesolid quality assurance programs and a reputation fordelivering the pallet specified.




Losing Major Customers Forces CPC toGo into Survival Mode


Don’t Set Aside the Core Mission for a Good Idea By DeAnna Stephens Baker

After losing major Canadian retailer Loblaw amongother clients, the Canadian Pallet Council (CPC),which has operated North America’s largest stan-dardized industry pool since 1977, considered a pos-sible shutdown by the end of 2013 although it laterdecided to continue operations as long as possiblewith reduced capabilities. The organization has beenhemorrhaging members for years and has struggledto keep pace with CHEP Canada. Cost concerns aboutrepairing old pallets and other issues have hurt theorganization and its pallet pool.

Belinda Junkin, president and CEO of CPC, stated,“This decline has become an acute concern as aresult of Loblaw’s withdrawal from the exchange pro-gram. Few suppliers can now use CPC pallets for all,or even a substantial portion of their business. Forsome members, this has meant a complete conver-sion away from using CPC pallets.”

The CPC has sought other solutions and ways toserve existing members, has cut its costs and reducedstaff.

Junkin added, “The Loblaw decision to withdrawfrom the CPC has been a tipping point for our organi-zation. CPC pal-let use is down,and is expectedto continue todecline as mem-bers move to a palletoption that is universallyacceptable.”

The CPC has received enough support from keydistributor members to continue although the organi-zation said it was imperative that members repairpallets, only ship good quality CPC pallets and payCPC-related management costs.

There are many helpful ideas and concepts inStreet Smarts: An All-Purpose Tool Kit for Entrepre-neurs, a business strategy book written by NormBrodsky and Bo Burlingham, columnists for Inc.magazine.

One of the best pieces of advice is to never riskyour core business for another opportunity. The au-thors said that no opportunity is worth going after if itjeopardizes your core business. And that goes beyondthe financial side of it, because you have a limitedamount of time. The book suggests asking two ques-tions about any new opportunity. “Will it keep me from

putting in the time re-quired to build or main-tain my core business?And, if the opportunityturns in to a financial di-saster, will my core busi-ness be crippled? If theanswer to either questionis yes, you probablyshould rethink whetheror not this is a good op-portunity.”



BEST OF 2013 – MARKETS & RAW MATERIALS

European Biomass Demand Continues to GrowBy DeAnna Stephens Baker


Intern Programs Can Spark Innovation

Wood-based energy markets have grown signifi-cantly over the past decade. This trend is expected tocontinue, driven by domestic and international renew-able energy policy.

In 2012, a record of 3.2 million tons of pellets wereexported from North America to Europe. Much of thisis due to the European Union’s 20-20-20 targets ofreducing greenhouse gas (GHG) emissions by 20%,increasing consumption of energy from renewablesources to 20%, and improving energy efficiency by20% by 2020. Converting existing coal capacity to burnwood pellets or co-firing with wood is one of thecheapest ways of meeting these targets.

A glut in carbon credits decreased the incentive toburn wood pellets in Europe over the past year, butEuropean demand is not dropping off. It may, however,shift to the United Kingdom where analysts expect themajority of future development will be centered.

Demand has started to ramp up and is expected to

increase quickly inthe next five years,likely over one milliontons annually. Manynew biomass facilitiesin western Europe willbe coming online by2016, after which demand will probably start levelingout.

European demand is driving North American infra-structure and logistics development with investmentsin pellet mills and port infrastructure totaling in thetens to hundreds of millions of dollars. Much of this ishappening in the Southeast United States, wheremany pellet plants and port facilities are in variousbuilding and planning stages. States are actively tryingto attract that investment capital with incentives forcompanies that locate their mills in their states, alongwith investments in port infrastructure.

One way to attract top talent and differentiate yourbusiness at the same time is to add one of the studentscoming out of the Virginia Tech packaging programthat is developing in conjunction with Center for Pack-aging and Unit Load Design (CPULD). The CPULDplaces students in summer internships around thecountry.

These young professionals bring a wide variety ofskills, having worked alongside sharp packaging andwood science minds. From technical experts to pack-aging designers to sales staff, they can help almostany pallet company that wants to do more than justcompete on price. If you want to snatch up one ofthese bright young minds for the summer, you shouldconsider contacting the CPULD quickly before an-other company does.

You can hire an intern for the summer at a minimal

cost and see justhow much it couldhelp your opera-tion. Interns cantackle specificprojects, such asplant optimizationand lean businessstrategies, improving product design and packagingfor customers, revamping sales literature and techni-cal communications to customers, etc.

To find out more information about available stu-dents and skill sets, contact Laszlo Horvath, theCPULD director at [email protected]. Or list an availablejob or internship with the Department of SustainableBiomaterials by contacting Angela Riegel [email protected] or calling 540-231-7107.




OSHA’s New Hazard Communication System…

Are You Ready?By Jary Winstead


Key Concerns for Getting Started In the

Pallet Recycling BusinessBy Clarence Leising

U.S. companies need to train their employees onthe new Hazard Communication and Chemical SafetySystem, the United Nation’s Globally Harmonized Sys-tem (GHS).

According to the Occupational Safety and HealthAdministration (OSHA), the three major areas ofchange are in hazard classification, labels and SafetyData Sheets (SDS.)

• Hazard classification: The definitions of hazardhave been changed to provide specific criteria forclassification of health and physical hazards, as wellas classification of mixtures. These specific criteriawill help to ensure that evaluations of hazardous ef-fects are consistent across manufacturers, and thatlabels and safety data sheets are more accurate as aresult.

• Labels: Chemical manufacturers and importerswill be required to provide a label that includes a

harmonized signalword, pictogram, andhazard statement foreach hazard class andcategory. Precautionarystatements must alsobe provided.

• Safety DataSheets: Will now have aspecified 16-sectionformat.

The new GHS breaks down chemical hazards intothree types, health, environmental and physical haz-ards. The GHS will be requiring changes to the warn-ing labels, placards and pictographs that people seeon the chemicals used every day. Labels will require apictogram, signal words, a hazard statement, and aprecautionary statement.

The most important thing in the recycling market isyour core supply. If you are going into the market witha lot of automation, this increases the need for reliableand growing core supplies because you will have topay for the equipment even when your core supplyshrinks. One of the advantages of workers is that youcan always send them home or lay them off if you don’thave enough pallets to keep the operation humming.

Another consideration when you startup a facility isto have enough land to be able to inventory pallets forfuture use. This allows you to sit on pallets and sellthem when customers need them versus having toalways keep product moving which might mean yousell a pallet for less than you want just to get it off youryard.

One of the problems of innercity pallet shops is that they getland locked by the city. Even ifyou own the land, it may bebest to move your facilitysomewhere else and rentout your land to a moreprofitable tenant. Insteadof starting a recyclingoperation, you may beable to buy an existing facility especially if the owner isgetting older and is looking to retire. A high percent-age of pallet companies are owned by people in their60s, and you may be able to find a good company withsolid core supplies if you look.




Third Party Logistics Growth Provides Business

Opportunities for Pallet CompaniesBy DeAnna Stephens Baker


Tips for Moving a MachineBy Chaille Brindley

According to Marc Althen, president of Penske Lo-gistics, the 2013 State of Logistics Report reveals op-portunities currently available to logistics service pro-viders. He said that U.S. shippers spend over $1 trillionto manage their supply chains, but companies likePenske Logistics are only capturing a little over $141billion of that, creating tremendous opportunities forlogistics service providers to provide services that arein demand.

“We see more shippers continuing to outsourcevarious elements of their supply chains to logisticsproviders to further reduce warehousing, trucking andshipping costs while improving service levels,” saidAlthen.

Pallet companies interested in exploring new mar-kets or expanding their existing logistics servicesshould consider this possibility. This includes offering

warehousing, reverse logistics, asset management,packaging design, re-packaging, recycling servicesbeyond pallets, trucking and other logistics services.With an ever-growing focus on making supply chainsas lean as possible, being able to offer existing as wellas new customers these types of services while help-ing them reduce costs could be a profitable opportu-nity.

Moving a machine is difficult. And unless you havea top notch person doing it, the machine may not runas efficiently as it did before, according to Paul Baileyof GBN Machine.

GBN will come in and help disassemble and move amachine; but if a company prefers to do it itself, Baileyrecommends that the person moving the machinetake measurements between each part and makesure that everything is reinstalled, square, level andanchored securely to the floor. Gaps between differ-ent components should be the same as they werebefore the move.

“In older machines, all the wiring was done point-to-point so you have a bundle of wires and manypieces of liquid tight, seal tight or conduit that wentinto each box,” Bailey said. “And all of those wiresterminated in that box at a different place.”

He also recommends taking good notes and a lot of

pictures about where every-thing belongs and how it allfits together.

“We recently talked to acustomer who was buying aused machine,” said Bailey.“They wanted to put it onasphalt, which won’t hold aconcrete anchor. The onlyway to do that is to con-struct rods that are drivendown through the asphalt into the ground or con-struct a steel framework that connects the entire ma-chine together. Shims that level the machine wouldhave to be welded to the machine to prevent themfrom moving around or simply coming out. That is amuch harder installation than installing a machine onconcrete.”




Plant and Conveyor Maintenance Tips By Clarence Leising


Spanish Pallet Manufacturer Relies on Automation

and Robotics to Ensure Quality and Productivity By Gordon Hughes

Making maintenance a habit is the most importantpart of a maintenance routine. Suppliers can be help-ful in learning what regular maintenance should bedone and what spare parts should be kept on hand tominimize downtime.

Many people don’t think much about the conveyorsystems in a pallet recycling operation. But conveyorsfeed the productivity of your line. Before starting theconveyor every day, inspect it to ensure nothing is outof the ordinary. Belt tension should be regularly moni-tored since a loose belt can indicate deeper problems.Roller bearings that appear sluggish or make exces-sive noise can also indicate a problem. Loud squeaksor noises are not normal and are signs that an areaneeds attention.

We regularly greased each bearing. Daily, we blewout the motor and hydraulics and checked fluids.About every three months we would change the fluids.

We used a slidingbelt conveyor insteadof a roller conveyor. Ithas the advantage ofonly having a beltand four bearingscompared to theroller type that hasbearings on eachroller. Having a set timeto do major mainte-nance cuts costs and ensures you stay on schedule.You should keep records for accountability. Thisshould cover what was done, when and by whom. Youshould also survey your conveyor systems and developa list of key components to keep on hand for replace-ment.

When AGLOLAK Pallets in Valencia, Spain switchedfrom a mostly manual production process into an as-sembly line system, it was producing 60 pallets perhour.

The goal of boosting production had to be temperedby the following factors: each worker could only movea reasonable amount of weight during a shift, only twoworkers are allowed on each line to ensure greaterconsistency while reducing the manpower needed,and the primary responsibilities of the line workerswere to control production and ensure proper functionof the assembly line process.

These conditions required a higher degree of auto-mation than most pallet plants deploy today.AGLOLAK opted to use mechanical transporters witha vacuum system and robots – similar to what is widelyused in the automotive industry. Despite all the atten-tion put on the automated equipment, the biggestchallenge was the quality of timber needed to makethe system work properly. The company had to workwith timber suppliers to obtain uniform material that

would work well in a“blind” handling ofthe boards.

AGLOLAK haslooked for ways tofurther automate itsoperations. Auto-matic material feed-ing systems haveboosted throughputfrom 11 pieces for aworker to 72 piecesfor a KUKA robot to 100 pieces for the automatedfeeding system per minute. Any easy and repetitivemovement was analyzed to see if automation couldreplace workers or if a better automated process couldimprove production.

Automation has improved the quality of operationswhile boosting production from 1,200 pallets on anarea of 20,000 m2 to 5,000 pallets per shift on an areaof 50,000 m2.



Obstacles Don’t Stop Pennyrile Pallets By DeAnna Stephens Baker

Incident at Detroit Area Plant Highlights Theft Risk and

the Need for Adequate Alarm Systems



Pennyrile Pallets LLC in Crofton, Ky. was facing ahurdle when its largest lumber supplier went out ofbusiness. The owners considered different options butdecided to put in their own mill and started productionin 2008. Having its own sawmill has been especiallybeneficial to Pennyrile Pallets as it has dealt with alumber shortage in the region.

“We can recover a lot faster by producing preciselywhat we need at the given time,” said MelvinKauffman, co-owner. “Whereas when you are depen-dent on purchasing cants from local sawmills youdon’t have that flexibility. You normally just receivewhat they’re cutting at the present time.”

A lot of the credit for the mill setup belongs toMahlon Graber, the sawmill manager, said Kauffman.Beyond his help starting the sawmill, Graber also had

the idea to design aboard accumulatorthat handles the ran-dom width cants pro-duced by the mill. Heworked with Key-stone Machinery inEphrata, Penn. to de-sign and build a system that makes processing themsmoother and more efficient.

The maintenance manager, Cephas Beachy, hasalso made notable contributions, using his expertise toredesign parts of a nailer that have improved produc-tion and quality, such as adding a soft-touch systemthat eliminated stringer breakage while increasing thespeed.

When a botched break-in leads to a fire, a badsituation transforms into a horrific incident. That iswhat happened when a large fire recently broke outin 2013 during the middle of the night at KampsPallets in Detroit, Mich.

The fire destroyed a large part of a building andsome inventory. Bernie Kamps, the chief executiveofficer, confirmed that video surveillance caughtthieves breaking into the facility. They accidentallystarted an electrical fire while attempting to removemetal from the facility. The Detroit facility had cam-eras but no alarms even though it was in a somewhatrisky neighborhood.

Kamps said, “Some of my plants have alarms onthem. After this incident, all of my plants are going tohave alarms and cameras.”

The pooreconomy com-bined with thehigh streetvalue of pre-cious metalshas made cop-per and othermetal fixturesan attractive target for would-be thieves. Portableequipment, such as forklifts, as well as tools and evenloads of pallets and lumber are also possible targets.Pallet and lumber firms must take steps to deterthieves and let them know that this will not be an easyscore. From cameras and alarms to good lighting andfences can make the job of any thief much harder.



Business Networks Can Improve You and Your Company

Cut the Fat with Lean PracticesBy DeAnna Stephens Baker



Lean business practices have helped companies inmany industries become more efficient while reduc-ing waste and saving on costs.

For companies interested in implementing a leanbusiness system, it is important to define a businessproblem, make sure the owners or management be-lieve in the idea, have a designated lean leader, andobtain education and training on the principles.

Defining a business problem gives a reason for thechanges and effort that lean practices require. Thereason could be company survival, competition, sav-ing costs or one of many possibilities.

The person designated to be in charge of a leanconversion is called a “change agent” in some sys-tems and, according to the Lean Enterprise Institute,should have the willpower and drive to initiate funda-mental change and make it stick. At the beginning,

this ability is moreimportant thanhaving detailedknowledge oflean principles.The changeagent can workwith an expert orpull from manyresources to gain the knowledge that is neededthroughout the process.

For an even simpler starting point, a company haseveryone clean up their work areas and setup forMonday morning during the last hour of the Fridayshift. This is a simple way of describing one of themain tenets of lean manufacturing, “5S” which standsfor sift, sort, sweep, standardize and sustain.

The Pallet Enterprise asked Eric Foust, president ofCustom Forest Products in Spartansburg, S.C. whatthe best piece of business advice he had ever re-ceived was, and he said that it was to join a businessnetworking and benchmarking group.

“Join C12 Group,” said Foust. “It is a Christian CEOgroup that meets monthly. A group of 12 owners fromdiverse industries discuss improving their businesses

for maximum spiritual andeconomic impact. I joinedin 2008, and it is the bestthing I ever did for CustomForest Products. We arenot the same company,and I am not the sameleader.”



Safety Takes Leadership, TimeBy DeAnna Stephens Baker

Texas Pallet Company Succeeds by

Focusing on Specialty PalletsBy Chaille Brindley



Effective safety programs require an ongoing em-phasis – both to see change happen and to maintain asafe work environment. Safety is an ongoing job and itis important to not give up on a program just becauseit does not give fast results. Some companies make themistake of trying a safety program and giving up on itin under a year when incident rates don’t quickly drop.They then switch to a new program, which can causeworkers to see safety programs as nothing more thanshort-lived fads that no one really believes in.

“One big mistake I’ve seen in safety is people ex-pecting a problem that has been growing over five orsix decades to be solved in six months,” said Terry

Evans, the safety managerat Boise Cascade, amanufacturer and dis-tributor of engineeredwood products, plywood,lumber, particleboard andbuilding materials and anOSHA SHARP participant.“If you’re going to committo changing culture andimproving safety, then you have to be committed forthe long-haul, and that’s a minimum three year com-mitment.”

Despite tough market conditions, Pasadena Skid &Pallet in Pasadena, Texas has found ways to remaincompetitive.

A major bright spot for the company is specialtysizes and packaging types. For example, the companymade a specialty design used to move the field for theHouston Texans football team. It makes sturdy palletsused in the petrochemical market, such as a 60x60hardwood with a solid top and bottom deck boltedtogether.

Today, less than 10% of the pallets made by Pasa-dena Skid are GMAs. It produces lots of 48x48s,46x46s and 45x45s. Many of its customers preferhardwood over softwood.

When it comes to spe-cialty orders, Pasa-dena Skid will evenmake pallets out oflumber certified undereither the SFI or FSCprograms for compa-nies wanting to en-sure that green andrenewable practiceswere used in sourcing wood material. Rob Trexler,president and co-owner commented that woodenproducts were green before green ever becamepopular in the corporate world.



FCA Sets High Standard for Customer-Centered

Innovation and Service in Packaging


FCA LLC is not your typical packaging company.More than just producing unique packaging, FCA willoversee the entire process offering customers com-plete solutions from start to finish.

FCA has a “complete solution” approach to customindustrial packaging, focused on serving large originalequipment manufacturers (OEMs).

David Wilsted, vice president of sales and market-ing, said, “OEM customers have unique requirementsincluding JIT [Just-In-Time] delivery schedules and oftenlow-volume, highly-customized packaging for their prod-ucts. FCA has built our business to meet those needs.”

With JIT delivery, some plants receive multipletruckloads per day; order turnaround times are typi-cally 15-24 hours with the capability of 2-hour emer-gency service.

FCA provides complete packaging managementand reverse logistics services. This includes containerand skid management, washing, tracking, recycling,repair and refurbishment. It will also develop kittingand repacking services to enable efficient transport.The in-house design & engineering team creates pre-

cise packagingspecifications thatenable custom pro-duction at the plant-level.

FCA essentiallybecomes the pack-aging design de-partment for theOEM, eliminatingthe need for thirdparty lab testing, orexpensive engineering consulting. FCA’s DTEC lab cangenerate an ISTA-certified report on each test con-ducted, providing the data to validate each uniquepackaging design.

These experts are more than just packaging experts,the team includes Six-Sigma Black Belts and plantmanagers trained in the art of lean management prin-ciples. These principles enable FCA to achieve greaterefficiencies, reduce waste, improve quality and re-sponse time, and lower costs to customers.


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PALLET ENTERPRISE