PORTLAND, Indiana — If a couple with no knowledge of the pallet industry can start a little business repairing pallets in their spare time, and in a little over 15 years propel it into a $27 million-a-year business, can we all agree they must be doing something right?
Wade and Susan Kohler have achieved nothing short of phenomenal success since they entered the pallet industry. And the growth of their company, Pioneer Packaging, has been achieved by and large organically — increasing sales, opening new facilities to expand their territory — as opposed to acquiring other pallet businesses and their accounts.
Wade would be the first to tell you that some very down-to-earth values have been the foundation for the company’s flourishing — values like determination, hard work and long hours, and doing just about anything to keep a customer happy. They’ve also certainly been helped by Susan’s background in finance and Wade’s experience in sales.
Doing What Others Don’t Do
A lot of the company’s growth has come from sales of different types of combination pallets as well as 100% remanufactured pallets. Accordingly, pallet dismantling is a very important — and big — component of the company’s operations in order to keep it supplied with the large volume of recycled deck boards and stringers it requires for building combination and remanufactured pallets as well as repairing pallets. Pioneer dismantles 8,000 pallets per day.
The company’s plants have more than 40 bandsaw pallet dismantling machines. “We just bought four more from Wood-Mizer,” said Wade. All dismantling machines are operated by single men. Morse and Lenox bandsaw blades are used on the dismantling machines.
Wade has repeatedly turned to Wood-Mizer for more of the Pallet Hawg dismantling machines for two reasons: durability and simplicity in design and construction. “If you can keep a piece of machinery simple,” said Wade, it will perform with more reliability, he suggested. “They don’t have a lot of bells and whistles that can break.”
Pioneer also makes and uses a lot of spliced stringers, cutting damaged reclaimed stringers to 24 inches and joining them in the middle with truss plates to form usable 48-inch stringers.
By offering combo and remanu-factured pallets, Pioneer Packaging has been able to sell better quality than a normal recycled pallet without the higher cost of a new pallet. This process does require more manual labor to cut and prep boards. But the company has found the endeavor worthwhile given the escalating prices of lumber.
Drivers Act as Customer Care Representatives
A key interface between the company and customers are the truck drivers. They do more than just deliver pallets and pick up empty trailers. First of all, the same driver makes deliveries to the same customers all the time. The driver is responsible for monitoring the customer’s supply of pallets. He decides if their inventory is getting low to send another load ahead of schedule or, if their inventory is heavy, to delay a scheduled shipment.
“With most of our customers, we somewhat self-manage their inventory even when they don’t realize it,” explained Wade. Pioneer takes that proactive approach, essentially managing a customer’s inventory of pallets, because customers have “bigger and better things to worry about,” observed Wade.
For that reason, Pioneer recruits and hires people who can do more than drive an 18-wheeler. “We try to hire very, very, very good people,” said Wade. The company seeks people with “very good personalities who are willing to go the extra mile to help the customer.”
A tactic Wade uses in marketing and selling to a potential customer is to offer something different at a lower price. In marketing to a business that buys only new pallets, for example, Wade will recommend combination pallets — “something better at a lower price.”
Flexible Operations Lead to Better Customer Success
Pioneer Packaging also has thrived because of the flexibility in its operations. Wade has experimented with nailing machines in the past but has found that automated nailing — as well as other automation — is not a good fit for his company. “Automation is not very ideal because we’re doing so many different things that automation does not fit well,” he said. The company relies on 30 manual stations where pallets are assembled or repaired by hand.
The reason is that automated systems are designed to work with uniform materials, whether they be lumber or whole pallets, so “you’re very limited as to what you can offer.”
“We are very creative in being able to do things that other companies can’t and won’t do because they don’t have the resources to do it.”
The company uses a Rotochopper grinder at its main plant to process scrap wood material into livestock bedding, which it began producing in 2012. The operations produce over 1.5 million pounds per week. Scrap wood material is collected from all the plants and used in the grinding operations, and the company also obtains scrap wood from other pallet suppliers. The finished product is delivered in ‘live’ walking floor trailer vans.
Pallet Production Up Close
Growing to meet customer demand from one location to five, the company now has two plants in Portland, Indiana, two in Marion, Indiana, and the newest one in Bowling Green, Ohio. The Portland facility, located close to the Ohio border, is the company’s headquarters and main plant.
Pioneer’s customers are mainly in Indiana, Ohio, and southern Michigan. Pallet production is about 10,000 per day.
The majority of the company’s pallet production is custom sizes and styles. It supplies pallets that are 120 inches long by 50 inches wide and as small as 36×36 and even smaller. Pioneer also supplies new and recycled wooden crates and boxes.
Most of the new pallet components used in the company’s operations is cut stock purchased from mills in Indiana, Ohio, and Michigan. The company also buys lumber, notably 2×4, 1×4, 1×6, as well as sheets of plywood and oriented strand board, and remanufactures it into pallet parts.
Pioneer has over 900 semi-trailers, many of them staged at customer locations to store their pallet inventory or to retrieve pallets that will be recycled.
The company’s annual revenues of $27 million include pallet sales, industrial lumber sales and revenues from the other business units. Pallet sales include new softwood and hardwood pallets, combination pallets made of a mixture of new and recycled lumber and remanufactured pallets assembled from 100% recycled lumber, and repaired and recycled A and B pallets.
Pallet sales account for 70% of the company’s revenues, and industrial lumber sales, about 20%. The remainder comes from sales of livestock bedding material and warehousing services.
“We are very, very diverse — thank goodness,” said Wade. “We do a lot of different things in huge volumes for different companies, for different reasons.”
Hard Work and American Values Guide the Company
Wade and Susan have an entrepreneurial spirit and had several other small businesses they operated outside their regular employment when they were younger.
Wade worked for a plastics molding company for 22 years, first in design and then for the majority of those years in sales. When a customer asked if he could recommend a pallet supplier, he didn’t even know what a pallet was. His answer was, “Show me what you’re talking about.”
Wade sold this customer a lot of plastic packaging. He decided to solve their pallet problems and promptly found himself in the pallet business. His philosophy of giving customers what they want continues today.
“We grew through hard work, determination, customer service, caring,” said Wade. “Caring is the biggest thing…Those things are what have propelled us to where we are today, striving to be the best.”
As important as the financials are to taking on a new customer account, Wade does not get caught up in over-scrutinizing or over-analyzing costs and margins. “If you looked at every number,” he said, with the mentality of an engineer and allocated every cost down to the pennies or even less, you may end up being scared off. Wade has taken the approach of getting his foot in the door with a customer, learning to understand the work involved, and figuring out how to do it efficiently so he can make a profit. He is a “firm believer” in taking on new opportunities with that mindset.
“We jump at it,” he said.
Family Equals Success
Wade, 50, is involved in sales and managing the company’s customer accounts. He also keeps an eye on raw materials flowing into the company’s plants to ensure they have enough pallet cores, cut stock, or lumber. Susan, the company’s chief financial officer, is involved in overseeing operations related to trucking, hiring and personnel issues, and various government filings.
Their oldest son, Scott, 25, works in the business, too. He did door-to-door sales for a few years and now is transitioning into helping manage both sales and day-to-day operations at plants in three locations.
“When you get so big…you need blood in the business,” said Wade. “You can hire somebody, but nobody is going to do it like blood will do it.”
The experience Wade and Susan’s gained from working for corporate America was an asset. They knew what was expected of them as pallet suppliers. “We wanted to be the absolute best at what we did,” said Wade. “From day one, that’s just how we have always treated the customer…We still try to treat every customer like they’re the only customer we have.”
That means if it’s 5 p.m. on a Thursday night and a customer calls and needs pallets, “We find a way to get that trailer loaded and get it to them.” And the same applies on weekends.
In addition to their oldest son, Scott, a graduate of the Indiana University Kelley School of Business, Wade and Susan have two other sons. Andy is enrolled in an electrician apprenticeship program, and David is a high school senior and planning to attend college to study computer science. The Kohlers enjoy outdoor activities as a family, including camping, boating, fishing, and attending Indianapolis Colts football games.
Pioneer Packaging was recognized as one of the Indiana Companies to Watch in 2015, an awards program of the state of Indiana and the Office of Small Business and Entrepreneurship. At the recognition ceremony, one official noted that Pioneer had grown at an annual rate of 65% since its inception.
“If you’re extremely driven…you’re just wound up tight, I think you’re going to be successful,” said Wade. “No matter what kind of business you get into.”
