Continuing the roundtable discussion initiated in the June issue, this second half covers historical trends, current customer demands, innovation and more. As has been tradition in recent years, the Enterprise editorial staff has moderated a roundtable discussion with key industry leaders from all aspects of the pallet supply chain and turned the discussion into a series of articles for the magazine.
The discussion was moderated by Chaille Brindley, publisher of Pallet Enterprise. A special thanks goes to those who participated in the roundtable this year. Each participant is an accomplished industry leader who has something important to say. The panel includes: Kathleen Dietrich of Commercial Lumber & Pallet, Ansir Junaid of Prime Woodcraft, Bill MacCauley of John Rock Inc., Bob Swan (father) and Rob Swan (son) of Battle Lumber Co., Bill Hildenbrand of Pallet Express, Lindsey Shean of Valley Pallet, and Nick Wenner of Pallet Services in Minnesota.
Pallet Enterprise: What has changed the most about the industry since your company first got involved in pallets? What has stayed the same?
Kathleen Dietrich: When you think you’ve been regulated enough, another regulation comes into play. We weren’t quite as regulated 15 years ago as we are today, and there’s no comparison to when we started in 1941. Regulations add a lot of costs.
Labor availability across the country is tight. Labor— that is our number one challenge right now. It is difficult to find effective labor that will stay with us. For every 10 we hire, we keep one after 90 days.
Bill MacCauley: I agree with Kathleen about the labor problem. Another trend has been the removal of wood from the new pallet. The Pallet Design System™ has had as much to do with the change in the industry as anything. You find out you can ship the same load with less wood and keep the cost down by using less wood.
Bob Swan: One of the biggest changes I have seen is the use of national pallet accounts. Many larger companies are using national pallet programs to supply their plants throughout the country with new and recycled pallets. Since we only build new pallets, this has allowed us to create strong relationships with other pallet companies that specialize in these types of programs. The one thing that has stayed the same is the customer’s expectation of a quality product, delivered on time.
Nick Wenner: Being very responsive to any customer issue remains a top concern. It’s way easier to keep an existing customer than to find new ones — making it easy for our customers to do business with us and offering special services, products, and processes that our competitors don’t offer.
Customer sensitivity to mold, bark, and other general quality and appearance requirements seems to be a constant challenge. We have to be more creative with our processes, ordering patterns, and so on to ensure we remain competitively priced while delivering a quality product in a timely manner. This sensitivity also has prompted us to try to work more proactively with the customer to understand their needs and to make sure that what they think they want is actually what they need. It’s a delicate dance.
Pallet Enterprise: What innovative practices are you doing or see others doing? What are the data points you’re looking for?
Ansir Junaid: Investing in Web portals has allowed our customers to log in, view what’s being unloaded from their facility, tally pooler pallets and access several other items/commodities. We are currently in the process of adding more solution-oriented commodities to keep our customers aware of the various available services. This is accomplished by focusing on the customer’s wants and needs.
Customers often purchase several things at once, and they want to see sophistication behind the receiving/attainment process. They want to know if you can manage their pallets while juggling other services, like their purchased film for packaging and boxes. We are their purchasing agent, an extension of them. Our approach is, ‘We do it for you.’ Additionally, we provide retrieval data and buying patterns along with facility-based reporting.
Bill Hildenbrand: Retaining employees will never cease to be a problem…The ratio that Kathleen mentioned, hiring 10 to keep one, that sounds about right. That will always be a challenge for us in our industry. That hasn’t changed, and I don’t believe it ever will.
Data management and customer reports has changed a lot. We started doing reports four years ago on incoming cores. Every load that comes in is counted and detailed — how many GMA, CHEP, red (PECO), plastic, and so on. It’s definitely more time consuming. We’ve built up an enormous amount of data that customers want, and it’s given me great insight as to who’s sending us what. Loads are also graded…That’s been a great change for the good.
The overall professionalism of everybody in the industry has improved. As the recycling industry has matured, we have thinned out the great majority of problem people. It’s a great entrepreneurial business. But to do this, you have to love it.
Bill MacCauley: The drug issue is an epidemic. It’s everywhere. Marijuana, cocaine those are real problems. We try to create a good environment to work in. That’s why we need robotic equipment — because we can’t get enough good people to do the work.
Pallet Enterprise: Have you discovered any effective ways to deal with drug abuse?
Bill Hildenbrand: Even though we have a pretty large workforce, I’ve never gotten too far from trying to deal closely with people, especially the people I know. The only effective way is to try. I do it on an interpersonal level, but there’s only so much you can do. We don’t have any formal programs per se. I’ve tried everything. Addiction is an illness, but the treatment isn’t like any other illness. It’s very difficult.
Pallet Enterprise: A number of sawmills report having problems getting rid of residuals and waste material. What are you doing in this regard? How will this challenge impact your operations if new markets are not developed soon?
Bill MacCauley: One thing that would help this challenge is if oil goes back up to $100 a barrel. But there is no guarantee that will happen. Right now it’s easier for a homeowner to turn up the heat instead of buying wood fuel pellets. People bought heating oil this past winter because it was cheaper.
Another factor is that everything’s going digital. There’s not as much paper required. And there’s no major solution on the horizon for those markets. Sawmills and pallet shops are having trouble moving sawdust.
Kathleen Dietrich: For the first time ever, in southern California we’re getting a little price pressure for our residuals. Our usual markets are sitting on inventory instead of coming and picking up our sawdust.
Bill Hildenbrand: We grind wood waste to make mulch at both facilities. We used to have a good revenue stream, sold it wholesale clean, uncolored. But our markets became so overloaded, that we added colorizing this year. It used to be a profitable part of the business, now it’s a net zero thing. We’re a new player in this colored mulch business, and we have to undercut other prices to get rid of it.
Bill MacCauley: California passed a regulation — you can’t offer plastic bags for retail sales any more. We’re seeing that more and more, where paper is being put back for a choice for bags and may be the preferred bag of choice at retail.
Kathleen Dietrich: You’re absolutely right in California. You have to pay for paper bags or bring your own bags.
Ansir Junaid: A large number of companies in Europe have been like this for the past decade. They have been proactive in recycling and sustainability. We are catching on with many states and municipalities having some very good initiatives.
Nick Wenner: Most of our residual wood fiber goes to farmers who use it for animal bedding. We currently do not have any issues with kiln-dried wood fiber, but green softwood and hardwood have become harder to move, and prices are lower than 12 months ago.
Pallet Enterprise: Customers are always demanding. But what are they asking for right now that is different from the past? How are you meeting these changing expectations?
Lindsey Shean: One thing we’re adding is getting information for our customers. Offering data on the recycling side, we’re providing transparency so customers know what’s going in, what’s coming out, and so on. Everyone is moving to a more environmentally friendly approach — eliminating waste streams and reducing carbon emissions.
Ansir Junaid: We thrive on customer feedback to continuously improve. We consolidate the channels and provide data that helps the customer. For us it’s extremely important to understand the customer’s business so we can provide customized solutions for them.
Rob Swan: I have only been in the industry for a few years, but in my short time I have seen an increased demand for better pallet quality. Mold is an issue we constantly battle. We dip all our lumber in a mold inhibitor to help prevent mold. This treatment along with informing our customers of proper pallet storage practices has helped tremendously. We also have added quality control personnel to check all the pallets we build to ensure that every load that leaves our plant will meet the expectations of our customers.
Nick Wenner: As business processes grow and become more sophisticated and technologically advanced, many customers expect that those in their supply chain have a similar commitment to quality, accountability and data. Customers want good information quickly, so we have invested in the Palmate™ and Plant Floor systems to help us manage everything from customers and vendors to production scheduling, inventory management, and shipping and receiving functions. Now that this software is up and running, the reporting capabilities have become endless. We are excited to see how this data will continue to help us serve our customers better and continue to drive positive change in our company.
Pallet Enterprise: Consolidation is starting to occur somewhat in the industry. There are more multi-site operations, larger networks. Why do you think this is happening? And what are smart companies doing to take advantage of this trend?
Nick Wenner: I think technology has a good deal to do with this trend. The ability to conduct business remotely and network plants together makes it easier for people to be more efficient. Once this investment in infrastructure is made, business and processes become more scalable. With good systems and reporting in place, managers can develop key metrics to help them keep tabs on organizational health when they are not physically onsite.
We are always looking for ways to leverage new and existing technology to make us faster, more accurate, and more reliable. Consolidation is a normal part of the business cycle as an industry matures. Pallet sales for a single manufacturing location have limited reach due to shipping constraints. Joining together with other manufacturers throughout the country, networking through things like the pallet industry associations (NWPCA, WPA & CWPCA), and partnering with national pallet providers like First Alliance Logistics Management to pool our resources and pursue national accounts together — these are great ways to expand growth opportunities.
