Sometimes a company can be a victim of its own success, making it reluctant to leave the comfort of existing ways of doing business to change with the times. For Herwood Inc., however, the pride of a past steeped in its unbridled attention to quality and customer service remains top of mind today, even as it experiences rapid growth, reassesses its relationships with customers, and makes investments to position itself for future growth.
Herwood is located in Windsor, Quebec, situated between Montreal and Quebec City. Company president Jason Wheeler describes their location as “well positioned” between the two cities. Herwood is also on the main highway that goes to New England. It is about 35 minutes from the Vermont border. “We can easily serve as far down as Boston and into Massachusetts,” Wheeler explained.
Wheeler’s grandfather, Henry Edgar Robert Wheeler, started making skids for the paper industry in 1945. “My grandfather worked with his father Lawrence to satisfy some of the pallet needs of the paper mill that was local here at the time, and it has evolved ever since.” Wheeler grew up in the family business from the time he was 12 years old, spending the summer and days off of school in the pallet shop. “From the beginning it was an interest for me,” he said.
Today, the company provides heat treated and green pallets to diverse industries, including food, automotive, pharmaceutical, construction products and the paper industry. “It is well spread out,” Wheeler continued. “If there is one industry that is struggling, there will be another one that is in a boom phase. So, if you have the right mix, you are able to hedge losses.”
Managing Rapid Growth
“We are in a key-transition period,” Wheeler explained. “We have had good growth over the last five years. But there is another step to go in the market, and we have to meet certain new product needs. We are looking at expanding, looking at retooling, and are in the evaluation stages now.”
“Our growth has been phenomenal over the last five years,” added Mark Tame, manager of sales and business development, “We’ve had an average of 18.5% per year over the last five years.” He noted that there have been growing pains, but called it a good problem to have, choosing which customers are best to take on to complete the proper product mix. Herwood has made a number of significant and positive changes to enable it to attain continued growth.
We are sitting pretty, if you don’t mind me saying so. It is a good problem to have, especially with today’s lumber market. We have done a number of significant and positive shifts in the market to be able to attain continued growth.
When it comes to looking at investment in equipment, easing workforce pressure is a top priority, given that people are so hard to find. “For sure we want to reduce labor costs,” Wheeler said. “We want to be able to grow with the same amount of people we have.” He stressed that skills have to be developed. “Why not a job market where people are going through schools learning to make pallets or run saws?”
With new machinery coming onto the market, however, Wheeler believes that new skills are required. “As we get new machines, you almost need a computer tech to debug programs, and enter new products into programs,” he said. “You need a new type of specialty for certain things, and the rest you have to develop the labor you find and it is a challenge.”
Nailing Capacity Upgrade
Herwood currently has a production capacity of 13,000 pallets daily or about 3.5 million pallets annually. As volumes increase, it continues to add nailing capacity. The company’s most recent acquisition has been an upgraded Viking Duomatic, purchased from Pallet Machinery Group (PMG). Wheeler is very positive about the value that PMG brought to the purchase, including technical support.
“When we first purchased the machine, we got to meet some of the techs firsthand,” Wheeler said. PMG employees provided installation and training services. “We just developed a good relationship with their staff, as well as with Greg Wine. Beyond just a retrofitted nailing machine, PMG offers service techs and expertise. Greg Wine can bring you other machines, he can help you automate. He can bring in new companies that can help you automate, so that’s how our relationship developed with Greg.”
Current production with the Viking is approaching 2,000 pallets per 8-hour shift, with three operators. “For the investment, we are getting as good or better production than new,” he continued. “It has been a great machine.”
Herwood also operates three USIFAB vertical automated pallet nailing machines, as well as two Doigs. The USIFAB machines are manufactured in Quebec. The company purchased the second Doig from a company that had closed. The original intention was to purchase it for spare parts, however, both of the versatile machines continue to operate. Wheeler acknowledged that as order sizes continue to grow the USIFAB and Doig units are not as efficient as a large volume machine, but they are still valuable for building a part load, finishing off an order, or for running specialty pallets.
Wheeler still appreciates the versatility of the Doig units. “I’ll always be scared to take the last one out because there will be weeks where it sits there and doesn’t run but then at other times we’ll need it to run for half a week if we have a flaw in other equipment, or if we need extra production. It will make anything.”
In order to support increased volume, Herwood will be installing a major new nailing system in 2018, but Mark Tame declined to reveal the type of system the company will be installing.
Cut-Up, Kilns and Grinding
Herwood runs three cut-up lines, including two-blade and four-blade resaw lines, all with sizers. Equipment from Morgan, Pendu and Baker is utilized.
Wheeler has been very happy with the performance of the Morgan resaws. “They are maintenance free,” he said. “Those wheels will turn forever, and never require bearings to change. For sure we have a good maintenance program, but it is the thin kerf that saves us the wood that pays for the machines. You save on the kerf every time you are sawing with one of those resaws. It is a lot of material you are saving.”
Herwood has had to be flexible in terms of softwood and hardwood utilization. “The volume of softwood being used here has gone down dramatically,” Wheeler said, calling it “overpriced.” Also, a slowdown of the CHEP stringer pallet market in Canada has acted to increase hardwood availability. He said the company looks to find the best combinations it can for softwood and hardwood, being mindful of dimensions and thicknesses to produce a competitive product.
Finished pallets are heat treated in one of Herwood’s three Cathild dry kilns. Cathild kilns are produced in France. Herwood purchased its first unit about five years ago. “We looked at various types of kilns, and we looked at various ways they would get their heat,” Wheeler said, “but here we have the natural gas line and it is readily available.”
“The experience has been very nice, super-efficient, you know exactly your costs,” Wheeler added. He reported that very little maintenance is required, and there have been no surprises. A fourth new unit is being considered for installation this year.
Wood waste is processed in a Rotochopper. In fact, wood recycling has become a significant component of Herwood’s marketing. “We are 125% green,” Tame commented, explaining that the company recycles 100% in-house and receives almost 25% more wood waste from its clients. When Herwood delivers pallets, it offers a free pickup at that time for scrap pallets, wood packaging or other wood waste. “We’ll take those back of course and put them in the Rotochopper,” he said.
The company is fortunate to have a nearby panel plant which purchases its fiber for raw material or energy. As a result, Herwood has not had to explore markets such as mulch or invest in a coloring system.
Herwood recovers usable pallets from its pickups and offers repair for some customers. It runs 35 dry van trailers and five flat decks. The company partners with a local recycling company to swap its cardboard and plastic recycling residuals for scrap wood pallets.
Herwood continues to progress with a foundation based on a strong past. The company has an eye on investing in the future. “We based it on the philosophy of the Wheelers, who always saw business as a pride thing,” Tame said. “You are buying from us, and you know you are going to get the proper product, quality and service.”
Tame added, “I’ve always worked with an open book policy on what we can and what we can’t do for you.” He described the evolving Herwood approach as an open slate, a total customer-focused approach to the business.
