Optimism, bright smiles and big growth characterizes the current attitude of Salvador Gomez and Cesar Granillo of R&E Pallets in Michigan City, Indiana. But it wasn’t always that way.
The company has undergone a major overhaul after core shortages and a tight lumber market made it difficult to obtain material to fill orders. R&E used to rely on lumber brokers and cut stock for new lumber. But that has changed as the company purchased a cant cut-up line from Baker Products in late 2013.
Granillo, the sales and operations manager for R&E, stated, “We used to outsource our lumber production to brokers. But when the wood recession hit, we were left in the dust. There were times when it was hard to get lumber. We now have opted to go direct and find sawmills and sources for raw materials. This has helped us secure supply and cut costs.”
Thanks to the new Baker line, R&E can be more versatile as the market and customer dynamics change. Granillo explained, “The Baker equipment has positioned us for growth. We have been moving to direct purchasing for wood supplies, and this new line provides the versatility to take whatever the market can supply.”
Salvador Gomez, the co-owner of R&E, added, “We now have the ability to cut everything ourselves, produce every-thing ourselves and provide much more competitive pricing to our customers.”
Clyde Reed, the sales manager for Baker, said that R&E has transitioned to using more new wood as pallet cores have become harder to find, and the company needed to be able to process material to supply customers and secure its supply chain, which he added has been a growing trend for many Baker customers including pallet recyclers.
New Baker Line Adds Versatility
Before the new line was installed, R&E had a Baker A resaw with a return and a Baker ABX resaw. Granillo explained, “Previously, we were not setup to efficiently process cants. There was more manual labor involved with processing cants in our old way of doing things.”
The previous sawing equipment was used to cut boards to size for custom orders. The quality and performance of the original Baker equipment is what helped sell R&E on Baker as its preferred supplier when the company decided to upgrade its cutting operation, commented Gomez.
Baker utilized some of the existing equipment to cut the total cost of the new line. For example, Baker worked the ABX resaw into the line as the cant sizer positioned just after the four-head multi-select chop saw. Granillo said, “We only got 400-600 pallets worth of material per day with our previous equipment.”
He added, “After seeing the possibility for growth, Salvador Gomez went ahead and bought a Baker Products complete cant cutting line. This gives us the capacity to produce up to 2,000 pallets worth of material per day. We are really happy with the results from the Baker line and our increased production capacity.”
The new line starts with a three-strand unscrambler where bundles of cants are broken apart and each individual cant is delivered down a conveyor. A Baker 3-strand unscrambler with a package deck efficiently processes cants. A single operator sits in a chair with a control console that allows him to manage the line from the unscrambler through the four-head multi-select chop saw.
The operator can flip the cant to properly position it or to identify defects in the wood. If a cant has a bad spot, the operator can defect cut to eliminate those areas using the select cut option on the chop saw line. Or the operator can perform a multi-cut allowing for four pieces of material to be cut to size at once if no defects are found.
A Baker ABX resaw sizes the cants horizontally ensuring it is the right size profile to fit the pallet specifications. Sized cants then go to a lateral transfer conveyor with star turner and staging functions. A second worker monitors the line at this point to make sure cants are properly positioned before entering the five-head resaw line. This area provides a buffer zone and a way to handle any bottlenecks that might occur at the front or back of the full line.
Cants then enter the Baker five-head Model C resaw line which cuts them into boards. A third operator pulls shim cuts and watches to monitor the pace and quality of production. Boards are then processed by a Baker M4i deduster to remove excess dust. Two workers at the end of the line hand stack boards.
R&E also bought a Baker Double Notcher that stands alone from the line. It can process up to 4,000 stringers per hour, which is very fast. And thus it only has to be run a few days per week to keep pace with production. R&E primarily only uses the cant line to process deckboards. The company currently buys stringer material from outside sources and then cuts the notches as production requires.
So far the Baker line has delivered on its promises and positioned R&E for growth. Gomez stated, “Baker Products has exceeded our expectations in terms of the capabilities of our saw line. The machinery is very durable and reliable.”
Currently, the company is running just one shift. But it hopes to launch a second one soon to produce material for it and other cut stock customers. R&E does sell some surplus lumber when it has the extra supply.
Also, R&E hopes to add a dust collection system soon. Right now workers clean up the dust piles daily to keep the production environment safe and clean.
R&E uses primarily aspen, oak, pine, poplar and basswood in its cant processing line. The company has worked to develop a big network of sawmills and lumber suppliers. And the new Baker lines is a major part of the company’s strategy for the future.
Granillo commented, “This new line has freed us up quite a bit, and has given us greater control of our supply chain. We have been able to cut costs because we produce deckboards ourselves.”
Obtaining material still requires vigilance and a willingness to look outside the local area. Granillo explained, “In some cases we acquire cants as far as eight hours away. We source material from as far away as northern Michigan.”
The company’s location right on the Indiana border gives it a strategic shipping advantage due to larger load weight limits allowed in Michigan.
Enhanced Pallet Production with Viking
Significantly boosting lumber production capacity has led the company to look to increase pallet manufacturing capacity as well. Granillo commented, “The Baker Product saw line gave us extra material, and we knew that we needed added nailing capacity to take advantage of that increased supply. Escalating labor rates have led the company to look to move to greater levels of automation.”
Instead of adding extra workers to produce pallets, the company decided to buy a new Viking Champion QC306 and a refurbished Viking Duo-Matic. The reasons that R&E opted for the Champion is its ability to use recycled lumber as well as produce large and odd-sized pallets. The typical Champion QC306 can produce up to 72 inch pallets. But R&E produces some very large pallets, so the company specially ordered a Champion capable of manufacturing 96 inch long pallets.
The Duo-Matic can produce between 1,000-1,200 pallets per eight hour shift. This strategy enables the company to boost production without breaking the bank. Some odd-sized pallets are manually produced by workers on tables. R&E produces 10,000 new pallets and 25,000 used pallets per week. A fleet of 10 trucks and a large number of trailers allow R&E to supply both small and large orders on a just-in-time basis.
Started as a Recycler, Expanding New Pallet Capacity
R&E started out as a recycler, but the company has expanded into pallet manufacturing. And it has shifted production to making more new and combo pallets as the core supply has become much worse in the region.
The company is housed in an 80,000 sq. ft. facility with four loading docks. All pallets are stored and serviced under roof. Its recycling operations include three Smart trim saws and three Smart dis-mantlers. Ten repair stations allow the company to produce enough repaired pallets to meet demand.
As the market has changed, the company has responded. Granillo explained, “Sometimes there have been so few cores that we have had to supplement what was available on the market with new wood on repaired pallets.”
Using reclaimed lumber has become a more critical part of the process. And all of the new equipment is designed to give the company versatility to ensure supply. In the repair department, the focus is on production output, not getting the most out of every board. So the company directs employers to use new material to help produce as many #1s as possible. Granillo lamented, “We do have surplus of #2s right now because there is a surplus of bad pallets out there in the market right now.”
He added, “Sometimes there is such a shortage of cores, we have to utilize new material to repair our pallets or to build our pallets. We do that to go the extra mile and keep our customers happy.”
Employees Committed to Success
After working as a truck driver for a pallet company, Salvador Gomez launched out on his own and started R&E Pallets in 2006. From nothing, R&E has become a successful company with strong growth. In his 20s, Salvador began the company thanks to the support and encouragement of his father, Isaias, who is a co-owner with his son.
Salvador’s sister, Mary Gamboa, works in the company helping to manage the books and business records. R&E employs about 40 people. The company recently hired a dispatcher, Juan Alvaredo, who ensures that deliveries get made on time. The production manager, Julian Ornelas, oversees the warehouse and has become the go-to for production issues.
Granillo said that the people are what make R&E such a strong company. The flexibility to serve whatever pallet needs a customer has is one reason R&E has grown and why the employees are smiling. They know the company will be around for a long time as it keeps on following its winning strategy for success. Specialty pallets and odd sizes have become the mainstay for the operation, and that means the company is positioned for the future.
The new equipment from Baker and Viking have given R&E needed capacity to grow as well as the tools to respond to changing market dynamics.
