Camden, Tennessee—This company feature provides an opportunity to look into the mind and life of an entrepreneur. Always an educational process, this interview was particularly interesting.
Freeman Cole, after building his life around being the plant manager of a silica plant, took a bold step in 1989 when he was a middle aged man. Freeman started Cole Pallet, a new wooden pallet manufacturing company in Camden, Tennessee. He had a limited exposure to pallets, but, as he put it, he “mostly enjoyed piddling in business.” He had a small trucking business on the side, utilized bulk pneumatic tanks to transport dry silica sand, and was involved in the scrap iron business.
Freeman started Cole Pallet primarily because he wanted to stay active as he grew older and was looking for a business that his stepson Scott Dudley could manage and run. Freeman’s employer went through a couple of ownership changes, and after a lifetime of management in the silica industry, he devoted himself to working along side his stepson Scott. Scott owns 25% of the business; Freeman plans to transfer total ownership to Scott upon his retirement.
Managing Successfully
In Difficult Times
Cole Pallet grew to employ as many as about 35 people. Now the number of employees is down to less than two dozen, not because of any loss of business, rather because of a change in the plant’s production.
Ask a typical pallet company owner today and you will usually find that business volume is down, and profits are lower. Not at Cole Pallet. Freeman indicated that sales totals have been relatively stable for several years. He volunteered that Cole Pallet got real competitive when things started slowing down. They took on more customers by offering competitive prices along with dependable service and quality.
The hardwood pallet belt that stretches across the eastern part of the country includes Tennessee, Kentucky, North Carolina, Arkansas, and Missouri. Historically pallet cant prices have been competitive in that belt; north central Tennessee and south central Kentucky are known as being one of the most price competitive and volatile areas of the country. In the later part of 2008, cant prices softened some around Camden, which allowed Cole Pallet to become competitive but remain profitable. Freeman expanded his customer base to replace the volumes he had lost due to reduced pallet orders. Efficient manufacturing and more competitive local cant prices combined to let Cole Pallet become more aggressive without sacrificing profits.
Freeman handles pallet sales; he has avoided selling through brokers and has chosen to work closely with his customers. He knows where the potential customers are in his marketing area. He depends on relationships and competitive pricing, service, and quality. Freeman stated, “Price can get you in the door, but service and quality can get you kicked out.” He indicated that Internet bidding is still going on. One of his biggest customers just put all its business up for Internet bid.
Cole Pallet has taken a new direction in cut stock production. Freeman found that he could buy precut material about as competitively as he could cut it. So, the company is complementing its efficient lumber cutup lines with precut material from the surrounding region. Buying some precut material helps keep the pressure off of local cant prices, which has a double benefit. This allowed Cole Pallet to reduce its work force, thus cutting payroll and expenses, while still maintaining enough lumber to support its customer base of 20 or more loads of pallets weekly.
Freeman has grown his business slowly and gradually through two decades. He is content with the company’s current size and has no plans to expand in the near future. Freeman said, “I am content and am not looking to get any bigger. We started without a single customer and have grown to serve the market region within about a 100 mile radius, including Nashville, Jackson, and Dyersburg. We have not yet reached heavily into the Memphis market.”
Changes in Cole Pallet’s cut stock production line have been central to the company’s survival in this difficult market time. More details on Cole’s Brewco cutup system are included in the section on manufacturing practices.
Manufacturing Practices
Certainly one of the most important issues in pallet manufacturing is that of acquiring cut-to-size lumber. How do you procure lumber products and cut them efficiently into pallet stock? No matter how you nail a pallet, your greatest expense is the cost of the lumber positioned at the nailing station.
Cole Pallet started with a two-headed thin-kerf bandsaw; it later upgraded to a four-headed bandsaw system.
Over time, Freeman has preferred using 2” bands to the smaller 1” and 1-1/4” bands. Cole Pallet now has two Brewco 2” resaw cutup lines. Each line has two B-800s heads for sizing incoming cants and five B-800 resaw heads to cut the sized cants into boards. Cole Pallet has two more Brewco B-800 heads on order to convert one of its lines into a seven head resaw line. When these two new heads are delivered late this December, Cole Pallet will have a total of 16 Brewco B-800 resaw heads. This will make one five-head resaw line and one seven-head line. One of the five-head resaw lines is idle now because of the volume of cut stock they purchase on the outside, but they want to keep both lines ready. The seven head line will provide additional cutting options and efficiency.
Freeman said, “We really like our B-800 saws, primarily because of their ability to de-dust the boards with air jets, and the high production we can get from them. Brewco’s de-dusting guides eliminate having to use a de-dusting unit behind the bandsaws. De-dusting units tend to jam when you try to push high production through them. Another good feature of the B-800 saws is that they use 2” blades. Although 2” blades are rather expensive, they have a long useful life. Unlike smaller 1” and 1-1/4” blades, your saw line stays in production and you are not shut down so often with blades changes and breaking.”
Freeman has been an advocate of Brewco’s 2” heads since the early days when he bought one of the first units produced. A lot of B-800 modifications were Freeman’s ideas. Initially these heads were designed for cutting grade hardwoods, but Brewco modified them as needed to fit the pallet industry.
Freeman said, “I did not like the 1” bandsaws, but thought the 2” looked better. I tried two as sizing saws and then put in my first 2” five-head resaw system from Brewco. It worked great. The 1” blade lines were just too much aggravation.”
When asked what he prefers about Brewco, Freeman responded, “I like their 2” saws. They have pressure guides and air de-dusters behind each guide. The de-duster system is not perfect, but much better than the other options on the market. I do not have to use a separate de-duster.
“With Brewco we do not have any problems. I suggested several modifications to Devin to make his saw more user friendly. He already had a good saw but was willing to make many of the suggestions I made.”
Cole Pallet has made a practice of building much of its own machinery, including trim saws and other straightforward machines. It continues that practice today but has chosen to purchase some of its biggest machinery systems, such as its Viking nailers, Brewco resaw systems, Brewer notcher, Pendu stackers, and Kiln-Direct pallet treaters.
Freeman said, “We think that our Brewer BR4000C notcher is an excellent notcher. The company also uses Pendu 4600E stackers to stack finished boards at the end of its two Brewco resaw lines.
Products and Lumber
As already mentioned, north central Tennessee is in the heart of hardwood land. Cole Pallet purchases precut pallet stock from the mills and reman operations around him, as well as mixed hardwood cants. That part of the country has one of the most versatile mixes of hardwood species you find anywhere in the world. Oaks, hickory, gum, sycamore, yellow poplar – the list just goes on. It has one of the most dependable cant supplies in North America.
There is a significant lumber grade influence in north central Tennessee. The grade market is coming through a time when demand was almost nonexistent; signs are pointing to a little improvement. Hopefully the worse is behind us.
Cole Pallet manufactures new hardwood pallets, mostly in full tractor trailer loads but also in smaller quantities. It is not actively involved in the used pallet market. It lost the one customer who was working with them on a closed loop system. It builds some #2 pallets out of shims from its cutup lines; Cole uses pneumatic tools and fasteners from Southern Fasteners in Nashville to nail these pallets. Since Cole does not have a sawmill, its primary wood fiber residue is sawdust, which goes to the paper industry as boiler fuel. Some smaller scraps of wood are sold for firewood.
Cole Pallet manufactures hardwood pallets, mostly on its two 1988 and 1992 Viking DuoMatic systems, both bought used. The 1992 DuoMatic was upgraded by Macon Machine for increased efficiency. Freeman said, “We really like our improved Viking. It is very user friendly and has tremendously increased our production, particularly when building a four-stringer pallet.” MidContent Nail supplies bulk nails used in machine nailing. Cole ships most of its pallets on 53 foot flatbed trailers, but they have two closed trailers as well.
Cole builds a large number of small pallets, which allows it to make efficient use of much shorter pieces of lumber. One customer buys at least 75 different pallet specifications.
About 50% of Cole’s pallets are heat treated. Freeman believes that required domestic treatment is likely in the future. He bought one of Niels Jorgensen’s early Kiln-Direct pallet heat treating chambers. At that time, Niels furnished components, such as the controller, processor, and burner kit, selected to fit an existing unit. Freeman anticipates the likelihood of purchasing another new Kiln-Direct unit in 2010. He has found Neils to be a knowledgeable, fair businessman.
Challenges
What is the biggest challenge that Cole Pallet faces? Freeman stated, “The biggest challenge we face as a company and an industry today is labor – a willing work force. It is difficult finding good people who are willing to work.” This is not surprising since many pallet company owners have expressed a similar feeling over the years. This fact is reinforced by the fact that pallets were the first industry targeted for immigration raids a few years ago.
Freeman indicated that Cole Pallet has a stable workforce, but a few people seem to have a hard time getting to work on time. Unemployment is up, but many people still don’t want to work. The company offers paid holidays and a paid vacation after the first year. Thus far, competitive conditions have made it difficult for the company to pay medical benefits. Whatever the federal government decides about health insurance is likely to have a distinct impact on the pallet industry. Freeman’s work force has a good racial mix, a few blacks, a half dozen or so Hispanics, and the rest Caucasian.
The second challenge would have to be the economy. Freeman stated, “tough times. I have never seen anything like the last twelve months.” Again that tune is often repeated across the pallet industry.
When asked if he had any words of wisdom to share with readers, Freeman said, “The pallet business is very competitive. You can go under if you don’t pay attention to what you are doing. I learned Excel and built spreadsheets so that I could identify every cost as it relates to our products. I try to maintain a good net profit and a volume that is sufficient that they will together cover our fixed cost and overhead. A successful business requires attention to details. It is not always easy to figure costs accurately by the order.”
Cole Pallet is bracing at the prospect of becoming even more aggressive in its sales if conditions worsen. This year was a pretty good year for them with sales about the same and some margins actually improved due to reduced lumber costs. Freeman doesn’t expect to see the cant supply tighten to a painful level in its region, but opinions on this vary between regions and individuals.
Looking into the future, Freeman sees the wood fiber demand for the biomass market as a potential double edged sword. Some members of the forest products industry look toward this future enthusiastically because our forest resources may have a new potential market. Certainly North American forests are plentiful and might play heavily into the biomass future. Freeman said, “I am real concerned. I am certainly not convinced that an active biomass market will be beneficial to the pallet industry. Our lumber suppliers buy a lot of pulp logs to run on scragg mills. This is the lower end of the wood fiber supply chain and is likely to be a target for those seeking biomass supplies.” Readers will be well advised to watch out for both opportunities and challenges in the emerging biomass world.
Brewco Inc. Features Benefits of a 2” Band Blade
Brewco Inc., located in Central City, KY, for decades has been a leading manufacturer of bandsaws and pallet equipment. Eleven years ago Brewco Inc. collaborated with Lenox, Inc. to design a 2” bandsaw blade to saw wood. The two engineering staffs successfully designed a 2” blade that allowed not only fast and accurate cuts, but is able to be resharpened many times without the need for a filing room.
Over the years Brewco Inc. has perfected its B-800 resaw to run this 2” blade at cut speeds approaching 130fpm. The patented Brewco floating guide and several trade secrets enable this resaw to perform more like a gang saw than a 1” or 1-1/4” thin-kerf bandsaw, with a ultra-fast cutting speed and cleaner, straighter boards. In Brewco’s grade division, this 2” blade cuts grade cants up to 18” wide.
Brewco Inc. also manufactures heavy-duty gang saws, trim saws, notchers, and material handling equipment. Brewco manufactures heavy-duty scragg mills and has its own in-house automation specialist.
Please call 800-237-6880 or visit Brewco on the web at www.brewcoinc.com for more information. A free DVD is available for all the equipment it manufactures.
