ASHLAND, Ohio — The pallet industry is intensely competitive, posing significant challenges to company managers responsible for maintaining profitability. A successful manager must pay attention to even mundane aspects of the plant's operation in order to achieve success.
American Wood Products has addressed the challenges it faces to remain profitable in a very competitive marketplace by vertically integrating the business. It has control over costs from every step of the manufacturing process, from the time the tree is cut through shipment of finished pallets.
The company has also focused on doing business with equipment vendors who “provide us with the superior products we need to get the most out of our production process,” said company president Randy Emmons. One supplier in particular, Econotool, has demonstrated how seemingly small improvements in the production process can help a pallet company trim costs and increase productivity.
American Wood Products is located in north-central Ohio, which gives it easy access to the state’s major cities across the region's manufacturing belt. Started in the late 1970s by Jim Kiste, now CEO, the company got its start building pallets by hand to service nearby accounts.
American Wood Products now employs about 50 people. The company produces 10,000 or more new pallets per week and in excess of 2,000 recycled pallets. Wood scrap is ground into mulch. American serves mostly manufacturing clients within a 100-mile radius.
American strongly emphasizes customer service. In fact, the company takes the approach that a customer cannot receive too much service, according to Randy.
The emphasis on service has been driven both by Jim’s business philosophy and by market considerations. “We've always been service oriented,” Jim said. “I want my company to service our customers with the same kind of service I like to receive from the people I do business with. That means we're in a ‘we ship yesterday' situation almost to a fault. I can't imagine anyone asking for pallets today and not receiving them.”
To ensure that customers can have that kind of strong service and support from American, Jim developed a business that gives him complete control of all aspects of the manufacturing process. For American Wood Products, the manufacturing process begins at the tree stump. The company buys more than $500,000 in logs annually. They are delivered to one of seven sawmills
owned by Amish businessmen who saw the logs to order. For the most part, logs are milled to 3 ½x6 or 4×6 cants. However, the ability to do specialty sawing for individual customers gives American Wood Products flexibility that many pallet plants do hot have.
American uses the Pallet Design System computer software, which was developed by Virginia Tech and is available from the National Wooden Pallet and Container Association. “So if a customer can get by with a lighter board,” said Jim, “we can have our mills saw cants that will yield exactly what we need without increasing waste or costs for either the customer or ourselves.”
Jim buys timber and contracts with the sawmills. Most day-to-day operations of the plant are handled by Randy. “Randy really runs the operation,” said Jim. “He's done an incredible job over the years of growing the company. His assistant, Nancy Cahill, coordinates shipments and makes sure everything is going smoothly for customers. Between the two of them, they don't leave me much to do.”
American Wood Products consists of three complementary, affiliated businesses. American Wood Products manufactures new pallets, American Pallet Recycling refurbishes damaged pallets and builds ‘new’ pallets from recycled lumber, and American Hardwood Mulch processes the waste wood from the other divisions into colored mulch.
In the pallet plant, cants from the sawmills are resawn with a Pendu gang saw system; the Pendu line includes a Pendu M2400 gang rip and a Pendu 4400 HD stacker. Waste is minimized by the high efficiency of the gang saw system and because the cants are sawn to order. The plant has a Hazledine notcher and a Hazledine chamfering machine for notching stringers and chamfering deck boards. Both the notcher and the chamfering machine are equipped with cutting heads supplied by Econotool, a Pennsylvania company that provides a variety of cutting tools to the forest products industry.
Pallets manufactured in volume are assembled on a GBN Excalibur nailing machine. The GBN nailing system features GBN's trademarked Tru-Drive™ compensating nail chuck, which is designed to provide consistent countersinking. Nails that are countersunk consistently help provide a smooth deck surface, which benefits American’s customers by eliminating cases snagged on nails and resulting product damage. “Customers demand quality, and that's what we are capable of giving them with our state-of-the-art manufacturing system,” said Randy. Finished pallets are loaded aboard one of American Pallet's own trucks (the company maintains a fleet that includes five tractor-trailer rigs) and often are shipped the same day the order is received.
Some years ago certain customers began asking for pallet repair and removal services, and Jim and Randy realized that full service should include pallet recycling. They decided to add pallet recycling operations, and today American Pallet Recycling recycles pallets and builds about 2,000 pallets per week from recycled lumber. The company’s recycling operations are equipped with an MSI tipper, a Smart Products band saw dismantling machine, and an MSI Trim-Trac saw for trimming reclaimed lumber to appropriate length.
The volume of scrap wood created by the recycling operations prompted yet another expansion: the creation of American Hardwood Mulch, which makes colored mulch for landscaping and other uses.
The complete integration of all aspects of the pallet manufacturing process, from the stump to finished pallets, gives American Wood Products greater control over each step and its costs, enabling it to be a strong competitor in the pallet marketplace. Buying its own logs and having them sawn to specification allows American to make quick adjustments according to the needs of its customers while reducing waste and other expenses. The company also is committed to state-of-the-art equipment in its plant for efficient, consistent production of quality components and finished pallets.
Econotool has shown how important a reliable supplier of top quality equipment can be to American’s profitability, Randy noted. Econotool provides cutting tools for three aspects of the company’s operations: cutting heads for the notcher, cutting heads for the chamfer, and saw blades for a trim saw used to cut recycled lumber. Each of these operations puts significant stress on the cutting tools, Randy noted, and each machine must run consistently if production schedules are to be met.
“That's why we use Econotool,” said Randy. The Econotool heads and blades not only perform well, they are very durable, have long life and are cost effective, he said. “They just seem to last a lot longer.”
Randy also has been impressed with Econotool’s commitment to service. “When we do need service, we get the same kind of service from Andy (Andrew Middleton, the owner of Econotool) that we try to give our own customers.” That level of commitment from a supplier is critical, he added, “because our equipment just can't be down when a customer needs pallets.”
“We've told Andy we thought his tools might be a little expensive, and he's told us he can't offer the kind of quality he insists on at a lower price,” Randy said. “He went so far as to encourage us to go ahead and try something else if we felt we had to, so we did. We were back with Econotool almost immediately. Their tools last so much longer and the service is so much better that, in the long run, we've found them to actually be quite a bit more economical for us.”
Econotool supplies circular saw blades that are used on American’s MSI Trim-Trac, which trims reclaimed deck boards and stringers to proper size. The Econotool Shark Teeth™ blades cut through nails. The blades, available in any size, are carbide-tipped and may be re-sharpened and re-tipped, services which Econotool also provides.
“It’s been a Godsend,” Jim Zeno, American’s maintenance superintendent, said of the Shark’s Teeth blade. The carbide-tipped blades are very durable, he said. “The teeth don’t break.” A single blade can be used to trim three to five pallet loads of reclaimed deck boards and stringers before needing to be re-sharpened, according to Jim.
There are many pallet manufacturing companies that are bigger than American Wood Products, but perhaps few operate with the same kind of efficiency. In fact, it has shown how the efficiencies and process controls that large companies have depended on in recent years to maintain profitability may be utilized to fine tune and improve the operations of smaller companies. By integrating all aspects of the pallet production process and paying close attention to even the small details of the plant's operations, as exhibited by the company's relationship with Econotool, American Wood Products has managed to prosper and grow in an intensely competitive marketplace.
