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Pallets a Complementary Business For Minnesota Packaging Company: Tilsner Carton Supplies Corrugated Cartons, Point of Purchase Displays, Pallets
Tilsner Carton: Minnesota-based Tilsner Carton primarily manufactures corrugated packaging and point-of-purchase displays, but pallets remain an important part of its business.
By April Terreri
Date Posted: 10/1/2008
ST. PAUL, MINNESOTA – It is not often that an employee spots a new source of revenue for a business owner.
An employee’s foresight, however, provided the impetus for Tilsner Carton Co. to become involved in the pallet industry.
The company has its roots in 1918, when Isadore Tilsner discovered he could make a decent living by collecting and reselling used cardboard boxes from liquor stores.
“He picked up the used boxes with his horse and wagon and resold them to grocery stores,” said Joel Tilsner, 49, Isadore’s grandson and now the owner and president of Tilsner Carton.
After Isadore died, Joel’s uncle, Mike Tilsner, took over the business after World War II. “He still handled used boxes, but they were in knocked-down form. He would visit different factories where he bought these boxes, and then he began to buy boxes that other manufacturers had discarded because of printing errors on the boxes.”
Soon, Mike began to buy trailer-loads of these discarded, ‘mistake’ boxes. Tilsner’s customers, who were used to buying a particular size of these discards, began regularly ordering boxes of the same size. Mike asked a carton manufacturer to make trailer-loads of plain boxes of these particular sizes for his customers.
“After a while, he had standard sizes on the floor at all times,” said Joel. “This was the beginning of our stock box program, and now we have about 150 standard sizes of plain brown cartons always in stock.”
Enters Recycling, Pallet Industry
Serendipity intervened in the 1970s as the company’s driver was delivering an order.
“There were a bunch of pallets just sitting on the dock, and one of the workers asked our driver if we could use the pallets back at our warehouse,” said Joel. “So the driver took them. On the way back to our warehouse, he had another stop at a box manufacturer who made cartons for us. The shipping superintendent asked about the pallets he saw on our truck, and he wanted to buy them. Our driver sold him the pallets, and that is how we got into the pallet business.”
Today, Tilsner Carton is still focused dominantly on the corrugated packaging business and point-of-purchase displays. Pallets, however, remain an important part of the company’s operations, accounting for about 10% of revenues. Although the company’s pallet operations initially were dedicated to pallet recycling, pallet production now is about evenly divided between new pallets and recycled pallets. Tilsner Carton produces about 2,000 pallets per day.
Joel became president and owner at 28 when his uncle died in 1986. The business has grown significantly under his leadership. “The bulk of our growth has been within the last 20 years,” he said. Now, Tilsner Carton is a thriving business with annual sales of about $23 million and about 100 employees.
One of the benefits of focusing more broadly on packaging, including transport packaging, is that Tilsner Carton can sell multiple products to the same customers. Many customers buy both corrugated cartons and pallets from Tilsner Carton, and the company continues to generate additional business from existing businesses who start out as customers for either cartons or pallets.
“We get ourselves established in one area, and then, when our customers realize they like working with us, they look to us for their other requirements as well,” Joel explained. “They realize they can access more than one thing from one supplier. They can get stock boxes, custom boxes, and point-of-purchase displays from us. We also sell packaging products like tape, stretch wrap, bubble wrap, foam wrap, and packaging peanuts. So we are really a one-stop shop.”
Tilsner Carton has its own corrugated manufacturing operations as well as printing operations. The company buys sheets of corrugated cardboard and is equipped with machinery to process it into cartons. Tilsner Carton offers stock cartons in various sizes and also can supply custom cartons.
The company invested in converting equipment in 1989 so it could have its own carton manufacturing operations. “We wanted to have more control over our own destiny,” said Joel, “and the business really continued to grow after that.”
Tilsner Carton established a separate company, Meridian Display, to handle its display packaging business. Meridian offers flexo, litho-offset, digital, and screen printing capabilities. It also has a catalog business, selling in stock displays.
“You can place an order today and receive it today or tomorrow,” Joel said. “And we own the tooling for a variety of displays. For example, cutting dies for the average floor display might cost $10,000, but for a minimal charge for print plates, these displays look unique to the customer. So, not only do they not have to spend extra money on cutting dies, they do not have to wait long to get their order. They can customize the display to make it look uniquely their own.”
With a staff of seven people in graphic design, customers can get a special, signature appearance for their display packaging. The staff consists of structural designers and graphic designers. The company sells display packaging throughout the U.S. and into Puerto Rico.
The pallet operations are housed in 37,000 square feet of a 200,000-square-foot building that sits on 13 acres. “It’s a lot bigger than we need, but we also use the building to store some of our corrugated products,” said Joel.
“Our building is located on a land-locked piece of property. It is long and narrow, with the pallet operations at the north end of our building because that is where our storage yard is. We bought this building and made three additions over the years.”
Tilsner Carton makes new pallets from both hardwood and softwood material. The company buys pre-cut pallet stock from mills in Minnesota and Wisconsin. For big runs of standard sizes, pallets are nailed automatically on a Viking Champion or a Rayco Edge. Small quantities or custom pallets are assembled by hand with pneumatic nailing tools.
Tilsner Carton supplies both one-way and heavy-duty pallets, two-way entry, four-way entry, stringer and block-style. Stock pallets include 40x48, 40x24, 48x40 and others. Recycled pallet sizes range from 32x40 to 48x48.
Tilsner Carton supplies export pallets, too. It is equipped with a BOLDesign pallet heat treater with a capacity of over 500 GMA pallets. Export pallets are heat-treated to comply with ISPM-15 regulations, and they are certified by Package Research Laboratory.
Customers who buy corrugated cartons are an important source of used pallet cores. “When I deliver an order to a box customer, they just put their used pallets onto my truck,” said Joel. “By offering to do this, we help our customers streamline their needs. We make it easier for them to do business with just us rather than them having one company who is a box supplier and another company who is a pallet company.”
Providing services to remove surplus pallets is an incentive for a prospective customer. Businesses often turn to Tilsner Carton for corrugated cartons because it can take care of removing surplus pallets, too. The company also ‘spots’ empty trailers at distribution centers to obtain used pallets.
At Tilsner Carton’s pallet operations, used pallet cores are sorted into pallets that will be repaired and pallets that will be dismantled for recycled lumber. “If they are sizes we want and they don’t need work, they are sorted out and they go right into our inventory,” said Joel. “If they are repairable, they go to the pallet repair line.”
The non-repairable pallets that have salvageable lumber are staged. Eventually they are dismantled by one of two machines, a Clary Hustler and a Clary Sidewinder. The recycled lumber is trimmed to length with a trim saw, and the parts are sorted by size and stacked for repair stock or to build remanufactured pallets.
Scrap pallets and material is processed by a Cresswood grinder. The wood grindings are sold wholesale and eventually are used by farmers for animal bedding.
The company has a fleet of seven semi-tractors and 85 trailers to make deliveries and pick up loads of used pallets.
Dependability, Strong Service
Having been in business almost a century, Tilsner Carton has more than proved its mettle at surviving the various economic ups and downs.
“We have watched as our customers closed down, were bought out, or as they moved out of the state,” said Joel. “We learned early on that we just have to have the wherewithal to adjust to things that are constantly changing. Sometimes you get hit more than other times, but we have always had the ability to change and react. We are fortunate in having the ability to absorb the effects of seeing our customers closing or moving. Although there are always bumps in the road for any business, there hasn’t been anything that put our business at risk.”
If business takes a downturn, Joel prefers to sit on inventory rather than cut prices. “Then when the market recovers, I have the inventory ready,” he said.
When the economy is strong and business is brisk, the company can still face challenges. “When this happens, it becomes a question of how do we continue to take good care of our customers when business speeds up,” said Joel. “We do this by adjusting how we use our workforce because it is very important for us to keep that level of service up. Our customers expect that from us.”
Providing strong, reliable service for customers, such as stocking inventory for them, is an important aspect of the company and is a marketing strength. “We aren’t the highest price or the lowest,” said Joel, “but we are always the most dependable. We don’t do business with empty shelves, and we always have a lot of inventory ready to go to our customers at any time.”
“The thing about our company,” he added, “is we have staying power. Customers can always find a lower price, but if they want the dependability we offer day in and day out, they stick with us. If some companies want to save a nickel or a dime here and there, they can find another company to deal. I don’t want to do business with anyone who doesn’t value what we can do for them and the service we provide.”
Having the ability to supply a range of diverse services and products is an important strategy for success. “We offer our customers many options,” said Joel, “whether within our pallet business, our corrugated business or our display business. We are by no means the biggest in any one thing we do, but we do a lot of different things well.”
In its corrugated business, the company has the capability to turn around orders quickly and to supply special orders. “Our lead times are very short,” said Joel. “Part of our staying power is doing things other companies don’t want to do.”
Tilsner Carton provides employees with group health and dental insurance, and other benefits are optional. The company also has a 401(k) retirement savings plan for employees.
The company has a safety committee that conducts regular safety inspections. The management team meets bi-weekly to discuss safety matters and other issues.
Most workers in the corrugated operations earn an hourly wage while those in the pallet shop are paid piece work wages. The company employs three full-time maintenance workers and a supervisor to oversee the maintenance of all machinery and equipment.
Joel is a member of the Young Presidents Organization and does fund-raising for a variety of non-profit organizations. During his time off from the business, Joel enjoys spending time with his family – wife, Gail, son, Danny, and daughter, Laura – and playing golf.
Although he was always interested in the family business, Joel never thought he would end up working at the company once he graduated from the University of Minnesota with a business degree.
Joel worked in the business from the time he was in grade school. “When I was a kid, I worked for my uncle before we had pneumatic tools. I fixed pallets with a crowbar and a hammer. One day a guy walked in with pneumatic tools, and when he showed us how they worked, we all thought we had died and gone to heaven.”