More than just a new name, the country’s largest pallet recycler is returning to its roots as CHEP Recycled rebrands under the name 48forty Solutions. Having just been divested by Brambles, which owns the CHEP pallet pool, the leadership team of 48forty has wasted no time in creating a new corporate identity, structure and culture.
The divesture was finalized in February, and the new corporate identity was launched on March 13, 2018, focusing on the mantra Pallet Management Made Simple™.
In a press statement, the recycler explained, “The former CHEP Recycled is now executing a bold new name and brand image that positions it for growth while celebrating its position as the leader in one of the foundational businesses of the supply chain and logistics industry.”
The 48forty name comes from the fact that the standard wooden pallet used in North America is 48 by 40 inches in size.
With more than 225 network facilities, and 2,400 employees, 48forty starts fresh, having a solid customer base and recycler network to fuel growth. Currently, the company manages 90 million pallets per year for 2,700 customers across a number of key sectors.
Kyle Otting, the new CEO of 48forty Solutions, recently sat down to discuss the transition process, the new structure and plans for the future.
Growth and further enhancements to already sophisticated operations are going to be major goals for the company moving forward. The new brand looks back and forward at the same time. For more information, visit its new website at www.48forty.com.
Pallet Enterprise: Please provide some background explaining your experience with the company.
Kyle Otting: I started in 2003 as an assistant manager at a plant in Columbus, Ohio when the company was IFCO. I did everything you can think of, from dispatching trucks to fixing bandsaws and repairing pallets—all the fun stuff. I moved into a general manager role and held various director roles for IFCO with regional responsibilities.
That took me through 2011 when Brambles bought IFCO and put us under CHEP. Shortly after the acquisition, CHEP installed a functional organization. Instead of a general manager model where each GM owns everything and makes key decisions, CHEP split things out and had a dedicated operations team and sales team. When that decision was made, I took over as vice president of plant operations for all the white-wood plants. I served in that role for about three years. During that time, we did a lot of work around improving our safety program and installing lean manufacturing processes in all of our plants. We standardized our operations such as metrics and reporting.
I then moved into the role of vice president of national sales for the CHEP Recycled business. Last August when Brambles made the decision to divest the recycled pallet business, I was chosen to lead the business through the sales process. Once the deal was finalized with the new owners, Grey Mountain Partners, I was appointed CEO.
Pallet Enterprise: There have been some rumors about changes in the company management. How has the new ownership brought management changes?
Kyle Otting: The leadership team that I put in place a year ago is intact and came with the sale. There are seven of us with over 70 years of experience in the industry; we’re a tight, knowledgeable group.
Our goal is to ensure that we have continuity at the leadership level with individuals who know the industry and our business well. The nice thing is that many of the employees that we had before Brambles bought the business are still with the company today. There is rumor and speculation about our management team, which is to be expected with any change in ownership, but we’re running things like we did before the Brambles acquisition with many of the same local managers.
While under Brambles’ ownership, we became more sophisticated in our operations. We implemented new processes and technology, which will benefit us competitively.
Pallet Enterprise: One thing the Brambles CEO mentioned about divesting CHEP Recycled was that it would be better run as a stand-alone company. Can you talk a bit about that and share your perspective? What are you changing back to the old model? What is staying the same?
Kyle Otting: I absolutely agree with what the Brambles CEO said. I witnessed it firsthand. When you are part of a large, global company like Brambles, you have robust standardized processes and structure in order to operate efficiently. When you pool assets like Brambles, you need to have regular audits and processes to protect those assets. Traditionally, the pallet recycling industry has not been geared to that level of structure; it’s a much more flexible, market-driven business model. Appropriate levels of oversight and approval processes are necessary and need to be designed for the risk profile of the industry, or else you slow the decision-making process down to the point that it puts strain on the business.
Under Brambles, we had a large, global corporate structure we had to support as well. For example, we were paying for an office building in Sydney, Australia. The overhead costs we had were not typical for other recyclers. It made it tough for us to compete.
Those constraints were appropriate for a pooling company, but they don’t really work in an entrepreneurial business such as pallet recycling. We are now removing the structures that worked against us, while keeping the improved technology, processes, and controls made under Brambles’ ownership.
Pallet Enterprise: So, are you going back to more local control where the general managers call a lot of the shots?
Kyle Otting: When I took over as the leader of the business last August, the first thing I did was eliminate the functional structure. We put the general managers back into the roles of operating their economic radius, owning their own P&Ls. We are giving them the ability to operate in their local market to be customer focused and competitive.
We continue to have oversight and processes to ensure that local managers don’t get off the rails so to speak. We also have pricing approval processes that the senior leadership team monitors. We want to make sure local managers make good decisions for the entire business.
Pallet Enterprise: Are you a player in the acquisition space right now or are you taking more of an attitude that you want to get ahold of what you have right now?
Kyle Otting: The immediate challenge that we have post divestiture is we are now responsible for things a parent company provides you such as insurance and treasury management. Out of the gate, we have to make sure that our infrastructure and back office are operating properly as a standalone business. Beyond that, our goal is to grow. Whether geographically or in specific markets, we need good partners to do that. We currently have 180 new pallet manufacturers and recyclers we work with through our affiliate network and plan to grow those partnerships.
Pallet Enterprise: What is the main message and purpose behind the new name and branding?
Kyle Otting: First and foremost, we want to make things as simple as possible for our customers — product manufacturers, distributors and retailers. Our name and brand allude to that. 48forty is who we are and what we do. Yet, the logo is also sophisticated and reflects our commitment to business-enabling technology, such as our customer portal, digital bill of lading and online ordering for pallets. We are among the first pallet companies, if not the first, to invest in these technologies because they make things easier for our customers.”
Pallet Enterprise: Where do you see the recycling market moving? The industry has an aging pool. Everybody wants As, and they are hard to find. Everyone is talking about labor. There are a lot of inferior quality pallets in the market. Your challenges aren’t really different than other recyclers. They are just bigger due to your size. How do you view the future?
Kyle Otting: These are challenges the entire industry faces regardless of size. Because of 48forty’s size and scale, I think it’s our responsibility to be leaders in attacking some of those issues. Members of our staff are very active in the industry and committees within the National Wooden Pallet & Container Association and also work at the customer level to find solutions.
Labor is one of the issues we all struggle with. When you look at the Millennial workforce, which is much more comfortable with digital devices than manual tools, hiring people for our plants is very different than what it was when I started in the industry 15 years ago. We have to think through how we can provide an atmosphere and work environment that meets the needs of this new workforce and keeps them engaged and working. It’s not an easy fix!
Pallet Enterprise: Is the new company going to be more like a normal recycler in how it looks at the markets?
Kyle Otting: When we were IFCO, our purpose was to help grow the RPC business. At the end of the day, we were bought for the container segment, and the pallet recycling business was used for supply chain synergies and savings. As 48forty, we are creating a new normal. This is the first time since the PalEx days that we exist for ourselves and are focused entirely on growing our pallet recycling business. We dictate our strategies, not those of a corporate parent. I think customers will see and benefit from the new 48forty.
Pallet Enterprise: Tell me a bit about Grey Mountain Partners, the new owners of the company. Why are you excited about them? There is starting to be some interest from private equity in the pallet market. Why do you think that is the case?
Kyle Otting: We met with many private equity firms in the divestment process. They are always looking for opportunities. And our opportunity is unique in that private equity firms tend to like corporate carve outs because it has a good customer base and infrastructure.
We thought Grey Mountain would be a great fit, and they’ve been awesome to work with through this whole process. Our leadership team has been kept intact because of the confidence Grey Mountain has in us. We are out on our own now, and I couldn’t be more excited for our employees.
Pallet Enterprise: It was a bit surprising that the rebranding happened so quickly. Was the name a challenge? And what is your focus for the next six months to a year?
Kyle Otting: The new name was critically important as we emerged from being under Brambles ownership. We made the decision early in the divesture process that we had to come out of the gate with a different name because we need to separate ourselves. Our staff has done a lot of work in getting the new name, logo and website up and out to our team, our customers and the industry.
As for our strategy for the next six months…We feel liberated right now. We’re interacting more with people in the industry again. Getting our back office functioning as that of a standalone company. And we’re returning to our roots of being a customer-centric company and having a bit of fun. If you aren’t having fun, this can be a tough business to work in.
Pallet Enterprise: What are your strategic advantages in the white-wood industry?
Kyle Otting: It goes back to our motto: pallet management made simple. That’s our strategic advantage. The supply chain is changing every day. Where customers are shipping, how they’re shipping—everything is in flux. Managing their pallets should just happen. Manufacturers and retailers shouldn’t have to ever really think much about pallets. That’s where our value is. We send our people in to pick up/deliver pallets. We give the manufacturer or retailer the transparency they need with our customer portal. They sign for deliveries on a tablet so they don’t lose paperwork. We take care of the pallet issues that can distract customers from their everyday focus.
Pallet Enterprise: How are you looking to work with others in the pallet industry in the future? Will there be any difference compared to how you functioned under Brambles?
Kyle Otting: About a year ago we made the decision to put more resources into our brokerage division. This division will work with recyclers and new pallet manufactures in areas that we do not have a plant to meet customer needs. We added people in that group to grow and expand those relationships with both our customer base and the industry as a whole.
I think what people will notice most about 48forty is our enthusiasm. With our new name and ownership comes the flexibility and responsibility to deliver the products and service people expect. Our team is excited to be back in the entrepreneurial growth mode!
