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American Products Is a Different Kind of Pallet Recycling Company
Maryland Company Focuses on Wood Fiber Products
By Diane Calabrese
Date Posted: 9/3/2002
UPPER MARLBORO, Md. -- American Products Inc. focuses on keeping used pallets out of landfills by recovery, sorting and re-selling, and grinding and processing to produce wood fiber products. The two-year-old company is co-owned by Mark Pearson, president, Jim Jenkins, who handles marketing, and John Stalcup, who is charge of operations and dispatch.
Mark, Jim and John did not leap suddenly into the pallet recycling business. Fifteen years ago they worked together in the air freight industry. But their career paths diverged as each man pursued different endeavors for many years. Finally, recalling the great synergy they had when they worked together previously, they linked up again to launch American Products.
Located in Upper Marlboro, Md., American Products is situated about mid-way between Baltimore and Washington, D.C. The company collects pallets from businesses along the Baltimore-Washington corridor and Northern Virginia.
American Products is not a traditional pallet recycling business in that it does not rebuild pallets and sell them. Instead, it provides a service to remove unwanted pallets, sorts them, and sells the cores to other pallet recyclers for immediate resale or repair. Pallets that are not suitable for resale are put through a grinder and processed into colored mulch that is sold wholesale and retail. Making the most of every pallet is a high priority for American Products.
When the company recently replaced a small grinder it had outgrown, it sought a machine that would be versatile enough to keep pace with a rapidly expanding line of wood fiber products. In the spring, American Products invested in a Peterson Pacific Corp. 2400-B Portable Heavy Duty Recycler. The horizontal grinding machine, equipped with a 450 hp engine, can produce about 270 cubic yards of mulch per hour, providing a steady stream of wood grindings for the company’s colored mulch operations.
Mark said the decision to buy the Peterson Pacific horizontal recycler was an easy one because "Peterson-Pacific is a high quality design" that "creates a very fine product." He particularly appreciates the "solution" oriented approach of Peterson Pacific, which helps match customer needs and equipment profile. For example, the model 2400-B can also be fitted with a 580 hp engine that grinds 25 percent more material per hour.
For now, the Peterson-Pacific machine is used to produce different types of mulch. "We're making mulch with various screen sizes," said Mark. Coloring is accomplished with a Morbark 4000-P system that has been in place for 18 months and colorants supplied by AmeriMulch.
In the near future, American Products plans to add wood grindings for animal bedding and playgrounds to its product line. Moreover, as soon as it can secure investors or other sources of funding for specialized equipment, the company plans to begin milling operations to manufacture wood pellets for fuel.
The Peterson-Pacific machine operates 30 hours per week. Mark said he has been very impressed with the recycler and with the quality of the service and support he gets from Lyons Sawmill and Logging Equipment and Supplies Inc. in Allenwood, Pa., where American Products bought the machine. "Any little problem," said Mark, "we've been able to call" and get it resolved immediately.
The Morbark 4000-P mulch coloring system gets a good review from Mark, too. "We move it around the yard very often," he said. He and his partners chose the Morbark equipment because of its mobility and high-volume production. The Morbark 4000-P has been coloring up to 250 yards per hour with no problems, Mark reported. It is designed to be towed by a truck with a pental hitch.
American Products makes primarily red and black colored mulch but also produces mulch in custom colors. The market for "colored mulch is just beginning to grow" in the region American Products serves, said Mark.
The Morbark 4000-P requires about 2,400 gallons of water per hour, according to Mark, and water is supplied by a pond on the premises. Colored mulch dries to a "no drip" stage within a day, he said.
The Peterson-Pacific 2400-B horizontal recycler also stays in the yard at the company's four-acre site. It is fed a steady diet of scrap hardwood pallets.
American Products recovered about 750,000 pallets in the last 12 months. About half were sold to other pallet recyclers to be remanufactured, and the other half were ground into mulch.
The company sorts about 10 different types of pallets. About 80-90% are the 48x40 GMA size.
American Products dismantles a small volume of pallets in order to recover used lumber that is manufactured into a specialty product for a customer in the printing industry. An Industrial Resources Basic Pass One dismantler is used to disassemble 48x42 pallets to reclaim deck boards. The company takes six of the used deck boards and fastens them together with power stapling tools to make a top for securing pallet-loads of bundled paper. The customer binds the paper to the pallet with metal strapping, and the wood top secures the load and prevents the metal bands from cutting and damaging the paper.
The Industrial Resources Basic Pass One is a disc-type dismantling machine. "We knew we didn't want a band saw," said John. Industrial Resources modified the machine to run on 120 volt direct current.
A separately owned transportation division is operated to haul pallets and mulch for American Products. It is equipped with 24-foot straight trucks for pallets and dump bodies for mulch. International and GMC vehicles are among those used.
American Products owns equipment for moving and handling mulch. The company has two Case 621C loaders equipped with five-yard buckets. Mark described them as the "equipment of choice for loading and unloading." The loaders and the buckets were purchased locally from Folcomer Equipment Corp. in Upper Marlboro. The company also has two New Holland bobcats that were purchased at Gateway Ford in Upper Marlboro, a Nissan forklift truck and Crown pallet jacks. Mark prefers to buy from local dealers when possible because it enhances the economy of scale in getting service and replacement parts.
American Products has a 75x100 building with loading docks. The company has nine workers in its combined operations. Located at the junction of Maryland Route 4 and U.S. Route 301, it is centrally placed in the region it serves. A driver "can get anywhere in a truck quickly," said Mark. There is easy access to Interstates 95, 295, 495 and 695.
Seizing strategic advantage is important to American Products. Given the three co-owners had significant experience in air freight, they "saw lots of pallets," said Mark, and they knew businesses had problems with disposing of unwanted pallets. "We saw people would pay to get rid of them," said Mark. So, long before they started their company, the three men were considering ideas about how to convert excess pallets into a viable business opportunity.
They are still considering ideas and researching them further. For example, American Products expects it will soon be supplying a wood fiber product for horse bedding. Its location in Prince Georges County is well suited for this market. The Prince Georges' Equestrian Center in Upper Marlboro uses about 30,000 bales of bedding annually. Maryland’s Eastern Shore is dotted with horse farms and riding stables, too. The company will add tumbling equipment in order to get he proper size particle for horse bedding and expects to be up and running soon. It is also seeking to obtain an endorsement of its product.
American Products also is moving into the market for wood fiber products for playground surfaces. It is in the process of having its product analyzed and certified for this application, and the product is expected to be available soon.
The owners at American Products are also very excited about the potential of the pellet fuel market. Jim has been doing preliminary market research in this area. Although the 2001-2002 winter was one of the mildest on record in the Baltimore-Washington metropolitan area, the supply of wood pellets for pellet-burning stoves was 90,000 tons short of demand in the region, according to Jim. He has found two companies that will purchase a year’s supply in advance as soon as American Products has the production capability.
Generally sold to homeowners in bags weighing between 20 and 40 pounds each, pellet fuel has already become an attractive alternative to wood-burning stoves in Canada, according to the British Columbia Pellet Fuel Manufacturers Association. Some appliances fueled by wood pellets can generate up to 500,000 btu of heat, according to the association.
American Products is having its prototype pellet product tested. The company is striving to develop a pellet that "will be adaptable to just about any stove," explained Jim.
Jim, John and Mark are all natives of southern Maryland. As for how they chose the name for their business, Jim said, "We're pretty patriotic. We did a lot more than pallets."
The overarching philosophy of the company is "service," said Jim. American Products aims to "give better service" than anyone else, he said. According to Mark, the "main customer attraction" is the ability of American Products to "get them out of problems they have" and "provide the service" they need.
John once had a delivery business, and he said he thought a good deal about "how to get paid multiple times for the same product." When moving goods and keeping a truck full, it should be possible "to get paid at the beginning, middle and end" of a run, he said.
"Unlike a restaurant with a small margin," John added, a business like American Products is able to "get paid three or four different times" for essentially one product -- pallets -- through its pallet removal service, supplying other recyclers, recycling some pallets for specialty products, and processing scrap pallets into wood fiber products.
Jim brought landscaping and building experience with him to American Products. He said, "I do a lot of sales. I love the challenge."