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Diversification Helps Rapp Bros. Thrive in Competitive Recycling
''We Sell Ourselves on Quality and Service.''
By Diane Calabrese
Date Posted: 6/4/2002
EASTON, Penn.-Somewhere between too big and too small there is an optimum size for a business, one that maximizes return on investment. Robert Rapp, owner of Rapp Bros. Pallet Service Inc., a company that reconditions and repairs used pallets, strives to keep his enterprise at just the right size by fine-tuning it regularly.
The family-rooted Rapp Bros. once included a sawmill. Today, besides recycling pallets, the company recycles plastic, cardboard and Gaylord boxes. It also does hauling. Over his 50 years in the business of repairing pallets, Robert has followed the demand for products and shaped his company accordingly.
In fact, when he talked with Pallet Enterprise in April, Robert was looking forward to attending Expo Richmond in May. He wanted a good look at the new Smart Products automated pallet dismantler that was scheduled to be exhibited at the pallet and sawmill machinery show. Robert had read about the dismantler in the April issue of Pallet Enterprise and its projected capability of handling 3,000 pallets per day. The possibility of such high volume in pallet dismantling got his attention.
For now, Rapp Bros.’s operations depend on three JBC bandsaw dismantlers for disassembling pallets and reclaiming used lumber. The JBC machines get an excellent review from Robert. "We've had them for 10 years," he said. "We are very, very satisfied with them."
Two of the JBC dismantlers were retrofitted with gasoline motors so they can be moved into the yard. The portability is an important benefit because Rapp Bros. handles pallets of unusual sizes, including some exceedingly large ‘stevedore pallets,’ explained Robert.
Rapp Bros. has three facilities: its headquarters in Easton, Penn., its original site in Carpentersville, N.J., and a sorting facility in Clearfield, Penn.
Easton, a town of 25,000 residents that has long been an important center of heavy industry, and Carpentersville lie on the Pennsylvania and New Jersey border along the Delaware River. Easton is about 15 miles east-northeast of Allentown, north of the Lehigh River, and Carpentersville is south of the river. Clearfield lies close to the center of the Keystone State and about 230 miles west of Easton. At Clearfield, Rapp Bros. employees sort pallets and perform some pallet repairs on-site at a Wal-Mart distribution center.
Rapp Bros. produces about 3,500 pallets a day, including used pallets that require no repairs and may be returned to service immediately. The company’s workers quickly identify the potential No. 1 or A pallets, check them thoroughly, and if deemed flawless, put back in use.
"We do a lot of sorting," said Robert. "We sort 4,000 to 5,000 per day." Rapp Bros was in the process of designing, fabricating and installing its own sorting line at the time Robert was interviewed.
Rapp Bros. sells excess pallets to pallet suppliers and other recycling-related businesses. "We sell a lot of pallets to our competitors," said Robert. Some pallet suppliers buy cores from Rapp Bros and dismantle them to recover used lumber; other companies buy scrap pallets and grind them into mulch. Grinding is not an option at the three Rapp Bros. facilities.
Rapp Bros. relies mostly on recycling wood from incoming pallets for components for repairs. With the three JBC bandsaw dismantlers, Robert said the company recovers about 12,000-15,000 feet of lumber per day. Nearly all incoming pallets -- about 95%, Robert estimated -- are made of mixed hardwood, mainly oak, maple and birch species.
The company also buys some used deck boards and new material. "We buy recycled boards," said Robert, "and we use new yellow pine from the South for runners up to 12 feet long." He buys about 22,000 board feet of Southern yellow pine at a time. "We keep it as a safety valve, really," he said.
"We have always focused on odd sizes," said Robert, such as large, over-size ‘stevedore pallets’ to small, 24x32 pallets supplied to a concrete company. Accordingly, the company does not rely heavily on the GMA market.
The company’s operations generate one to three truck-loads of waste wood daily. Rapp delivers the waste wood to a company that grinds it into mulch.
Depending on contracts, Rapp Bros. employs 35 or 40 employees across its three facilities. The staff works one eight-hour shift Monday through Friday and five hours on Saturday.
Two employees are deployed at each JBC bandsaw. One does most of the dismantling work while the other worker removes the reclaimed material and puts it in racks according to size. Two Smart Products cut-off saws and two Vermont American rip saws are used to trim boards to new dimensions, said Robert. All nailing is done with Bostitch power nailing tools.
In an eight-hour shift, one worker at a repair table produces an average of about 200 pallets. The company has 15 repair tables. If there is a big job, Robert pays for overtime work.
The Carpentersville site dates to 1877, when Robert's great-grandfather, Andrew Rapp, established a sawmill there. In its earliest days, the mill was powered by water. By the end of the 19th century, Andrew had started a basket factory adjacent to the mill. The factory made the company one of the largest producers of peach and apple baskets in the U.S. by 1936. Leon R. Rapp, Robert's father and Andrew's grandson, patented a unique, continuous stave basket that was used for peaches and apples.
During the Korean War (1950-1953), the family company began to make pallets for military depots. It quickly earned other contracts. The business got a big jump-start with work from Union Carbide. "In 1950, I had a call from Union Carbide," said Robert. "They had a lot of pallets and didn't know what to do with them." At first, Robert collected the pallets and disposed of them at a landfill. Then he got a better idea. "I realized a lot of pallets they were sending us could be repaired."
The customer roster of Rapp Bros. includes many well-known corporations representing such industries as technology, health care products, soft drinks and breweries. Blanket purchase orders are responsible for 75% of pallet sales. In 1998 the company grossed close to $7 million. A 38,000-square-foot building is under construction in Easton. It is situated on five acres, just across from the existing facility. When it is completed, the building will replace the older 28,000-square-foot building. One-sixth of the space in the new structure will be used for pallet repair. The larger part of the building will be used for the other parts of the recycling business -- plastic, cardboard and Gaylord boxes -- and forklift truck maintenance.
Growth is on Robert's mind as he considers whether to move his pallet dismantling and repair line in the direction of automation. He expects new orders soon to increase sales by $2 million over the company's 2001 level.
Diversification has been an important element in Robert's dynamic plan to keep the business growing and strong. For example, Rapp Bros. is a dedicated hauler for a nursery company and transports nursery stock to 60 locations in five states; Rapp also repairs pallets for the nursery business.
The arrangement with the nursery works well because Rapp Bros. can "get pallets on back load," said Robert. The pallets accumulated via the return trips come from as far as 250 miles away; Robert can often buy them cheaper than comparable pallets in Easton because the local markets is very competitive.
Rapp Bros. has an extensive fleet, including 10 tractors, 12 flatbed 48-foot trailers, and dozens of van trailers. Freightliners predominate among the tractors. Mack and Peterbilt are also represented.
At age 73, Robert has now spent more than half a century in the wood products business. His goal has been the same throughout the many years. "We try to keep up on everything," he said. Sometimes that means diversifying the business.
By 1966, Rapp Bros. had grown to the largest pallet company in the region. However, Robert decided to scale the company to a size that would allow him to stay involved in front line operations.
The company’s operations historically have relied heavily on manual labor. "Our main interest is the bottom-line," Robert explained. "We feel we are more efficient than most pallet companies."
When the sawmill was operating, the company had 250 employees and 15 family members involved. The sawmill purchased the first gang rip saw made by Frick.
The history of the company is a story rich enough for a book. Its endeavors over 135 years include building and operating a high-production lumber mill in Canada and importing maritime pine from Portugal in the 1960s.
Although Robert likes the current size of the company, he plans to add some employees because of new contracts. He appreciates being able to know workers and understand each person's contribution to the company. "There isn't a job I haven't done," he said.
Kenneth Rapp, Robert's older brother, was a partner in the business until his death last year. Ken was active mainly in sales and machinery maintenance, but he was also involved in virtually every aspect of the business. "He deserves special mention in any article about Rapp Bros.," said Robert. "We leaned on each other."
Robert has three sons, including two by adoption. One son, Keith, takes care of some of the hauling for Rapp Bros. through his own company, LJK Transport Inc. Another, Jeff, has a local trucking company. And Brad takes care of the legal matters of Rapp Bros.
Robert’s two adopted sons are Philip Gleason and David Lippincott. Philip runs the operation in Easton when Robert is not there and David takes care of the Carpentersville location. Both will come into the business as partners very soon.
Two secretaries, Gail Swauger and Jackie Lindaberry, have been with the company for more than 20 years, and some other employees have been with Rapp Bros. for 35 years or more. Robert also singled out his receptionist, Kathleen Knibbs.
"I have some real good people that work for us," said Robert. The employees are so good and trusted that in the last few years he has been able to take time away from the business for vacationing in Cape May, N.J.
Nevertheless, Robert is a man who loves his work. "I think I like the pallet business because of knowing it inside and out," he said. The challenge of meeting a customer's needs is "like putting a puzzle together."
Robert said his philosophy is to get as close as possible to client companies, to thoroughly know and anticipate their needs "so they can depend on us."
He has no illusions about the pallet business. "Today it's very competitive," he said. So much so, he said, that Rapp Bros. has "four or five people that customers can call on the weekend" if they need anything. "We sell ourselves on quality and service."