Jeff Otto is the owner of Pallet Recycling in St. Paul, Minnesota and an early leader in the U.S. recycling sector.
Pallet Enterprise: You were one of the early leaders in the recycling industry, particularly when it came to organizing. Tell us about that, what your objective was.
Otto: When I attended National Wooden Pallet and Container Association (NWPCA) meetings 40 years ago, they were understandably focused on new pallet manufacturing. The real value for me was at the lunch break, talking to other recyclers.
After a few meetings I organized round table meetings for recyclers. We’d talk about issues facing recyclers. One guy would talk about nails; another guy would talk about labor. We’d do a plant tour. That led to a meeting of about 75 companies, and we formed an association, the International Association of Pallet Recyclers. We did that quite a few years, and I became visible in the industry. I was approached by companies like UPS and Procter & Gamble that needed a national pallet recycling entity, but I told them the association was just a group of independent companies.
That idea grew, and I formed the Pallet Recycling Association of North America (PRANA). It later failed, and we picked up our marbles and started over again.
Pallet Enterprise: How has pallet recycling changed for the better, and how has it changed for the worse?
Otto: For the better, we used to be the undesirables of the industry. We were the outsiders. New pallet manufacturers didn’t like us. They changed their attitude, and now they do recycling as well. Now, almost all new pallet manufacturers are also in recycling. So, the industry has changed for the better. To be a successful pallet company, you have to do it all.
Pallet Enterprise: Looking at how your business has changed over the years, what is the current state of your business?
Otto: Our business has ebbed and flowed, like everybody’s. In 2008-09 we had to go back to the drawing board…We’re doing very well right now. The Twin Cities are booming. In fact, we’re doing extraordinarily well right now. We’re getting calls almost on a daily basis, multiple times per week, from companies we never heard before that have plants in the vicinity. They want us to quote on pallets and if we have the availability to service them.
One of the worst things that has happened in the industry is the brokers. From the standpoint of big companies, their bottom line, they’re being ill-served by the brokers price-wise, quality-wise, and service-wise.
Pallet Enterprise: What about COVID-19? How has it impacted your business and what customers ask for?
Otto: Pallets were declared part of critical logistics infrastructure, so we didn’t have to stop. We implemented the use of personal protective equipment, and initially business slowed down badly. We were concerned and didn’t know what was going to happen.
The last few months have been really strong for us. Last month, it was unbelievably strong. So COVID-19 has had zero impact on our business. Now, we are careful to protect our employees. They are wearing masks and we are sanitizing our facility as needed. In that case, it has had an impact. However, in terms of dollars and cents, we’re doing very well.
Pallet Enterprise: What are some of the best business lessons you’ve learned?
Otto: I’m an entrepreneur and a salesman. I’m not as good a businessman as I am a salesman. Fortunately, my wife is an excellent business person and knows how to run a business.
As a salesman, I have always tended to say yes. I would say yes to some deals that I probably should not have taken. I’ve had to learn to say no sometimes because it is best for our business and even for the customer because we wouldn’t have been able to service them well.
When you’re a small business, you have to be aware of all the possibilities so you’re not cutting off your nose to spite your face. Sometimes a high-volume, low-margin piece of business is good; it helps the bottom line. Sometimes they can sink you.
