John Rock ? A Prescription to Growth in Pallet Manufacturing

COATSVILLE, Penn. — During the last few years, John Rock has grown from being a large Mid-Atlantic manufacturer to being one of the largest pallet companies in the country. In the less than four years since we last had the privilege of featuring John Rock, the company has grown from a typical weekly production of about 40,000 pallets to around 70,000 today. Sales have grown 20% to 30% a year so far this decade for its 200-300 customers. The number of employees has grown from 45 to about 85 for this one shift plant. In a day when numerous pallet manufacturing companies are searching for a formula to success, John Rock’s no nonsense philosophy of manufacturing efficiency and total customer commitment should serve as an example.

                      Coatsville, Pennsylvania, the new home for John Rock, is about 16 miles east of Lancaster on Route 30 in the heart of the beautiful and quaint Amish country in southeastern Pennsylvania. Bill MacCauley, owner of John Rock, has put together a lean management team that combines the resourcefulness and determination for which their region of the country is so well known.

                      Located in the I95 corridor region in the Mid-Atlantic region of the country, John Rock’s major customer region of 150 or more miles includes one of the greatest concentrations of manufacturing anywhere in the world. Its customers include a wide spectrum of industries, including chemical, pharmaceutical, automotive, clothing, and food.

                      John Rock has provided pallets in its market region for over 30 years. It relocated to Downingtown in 1980 and moved to its new location in Coatsville last November. Very few companies get to make a fresh physical start after they have already reached a level of success in the marketplace. John Rock did just that when it moved its plant into a new120,000 sq. ft. building on a totally concrete yard, made from 8500 yards of concrete. The inside space is divided into 70,000 sq.ft. for production, 30,000 for warehousing, and about 20,000 for recycling and recovery. Imagine starting to move five Viking Turbo 505 tandem nailing systems on Thursday morning and having them all installed and running on Tuesday. John Rock is probably one of the few pallet manufacturers that know how to assemble the Viking conveyors with their tricky 90 degree turn. A sixth new Turbo 505 was installed the next week.

                      John Rock started its new cutup operation with four Brewer saw lines. Two and a half of them were installed new; the other one and a half lines had been in operation for only about two and a half years. During the move, every customer received its pallets without a delay. If they had not been told about the move, they would never have known about it. John Rock successfully moved a 70,000 per week pallet manufacturing plant about ten miles and never missed any production.

People Make It Work

                      The company’s resilience was illustrated in a devastating fire on February 23, 1996. Fire destroyed their whole sawing line on Thursday, and they were back building pallets on Monday morning. After what had been the best day they had ever had on their bandsaw line, a clutch caused the fire. John Rock replaced its destroyed Brewer ten-head bandsaw line and Pendu gang line with a Brewer gangsaw system, which matched the previous production capability.

                      After the fire, Jeanne Ryan, who runs the order desk and manages the office, kept everything organized and flowing so well that every customer’s orders were filled without delays. "Jeanne is so good that we have customers who won’t talk to the rest of us," said Bill. "She just takes care of them."

                      While the company’s emphasis on efficient production is evident, the real secret of John Rock’s success is its people and how they work together. Bill joined the company in 1994 as plant manager. After receiving a degree in agricultural business management from Penn State in 1987, Bill worked in his wife’s brick company, drove a fork lift for a pallet recycler from 1990 to 1994, did a little subcontracting for John Rock in late 1993, and joined the company in 1994. Three years later, Bill bought the company on May 12, 1997. Since that day, John Rock has dramatically changed its attitude to take on Bill’s personality and philosophies.

                      Bill is a hard charger who expects nothing less from his management staff. It is hard to believe that a management staff of four men, Bill, Steve Marrs, Steve Hedrick, and Penn Cooper, can provide the energy needed to set the standards and keep production moving in such an impressive plant. From sales to electrical work to supervision, they handle it all. The company sells about 35% of its pallets through wholesalers, but the remaining 65% of the business is handled without an in-house salesman.

                      Bill said, "Ninety percent of the time a customer knows that we are making the pallets that are sold through wholesalers. We work well with wholesalers because we respect what they contribute. We are often asked to quote against what we are already supplying. If we know this is the case, we will not quote. Customers often ask us to by-pass the wholesaler. We can’t do it."

                      Penn emphasized, "Nobody remembers the many good things, the times we helped them out of a jam, the dependable deliveries, etc. But they will remember the one problem. We strive to deliver a quality pallet at a fair price and do it on time, every time."

                      When asked about Internet bids, Bill didn’t hesitate when he said, "Forget it!"

                      At the time of my visit, John Rock was temporarily without a maintenance man. The fact that things were flowing so smoothly is testimony to how involved the production people are in handling routine maintenance responsibilities. Bill stated, "Everyone on the floor has the right, in fact the responsibility, to stop the entire process if they think something is wrong, even if the person who made the mistake is me. But it rarely happens."

                      The company uses 24 motion sensitive cameras to record plant activities; it keeps a hard drive backup. Management people can view current and past camera records from their houses if need be. One example of how this has provided dividends was their discovery of why a previous night shift had not been able to produce as expected. It is well known that night shifts often do not perform up to their potential, but the surveillance cameras showed that the people had really been slacking off and taking advantage of the company. Since then they have found that a 47-1/2 hour work week works better for them. Long days on Monday thru Thursday and a shorter Friday are favored by the employees.

                      Penn says that they have a great labor pool, mostly Hispanic. The company does everything that the law requires, pays a fair hourly wage and tries to accommodate the training needs of its people. Safety materials in both English and Spanish are used for things such as lockout-tagout and forklift maintenance. While they are not fluent, most of John Rock’s foremen speak some Spanish. Of course, most of the Hispanic employees learn some English as well. John Rock has a waiting list of potential employees who are eager to join the team.

                      Everybody at the company wears multiple hats, especially management people. Bill said, "We have a team approach. We are a team, a glorious group of misfits. We do what we do well. My policy is to treat people the way I want to be treated. Our policy is to get the absolute most out of everything."

                      Penn said, "Bill has furious, if not fanatical, expectations. He demands the best from his people, and they gladly give it."

                      Like NASCAR teams, the company pays monthly financial incentives or bonuses based on group performance to keep the entire staff working efficiently toward common goals.

                      John Rock carries its race car theme to an extreme with the car that it sponsors at the Pocono raceway. The company has a certain number of driver experiences each year that it uses mostly with customers and suppliers, who get to take a certain number of laps in the John Rock car.

                      Bill says, "We attempt to make every day like a Super Bowl day. We don’t take any excuses for not delivering exceptional values.” In addition to bonuses, the company distributes Hershey Park and Philadelphia Zoo tickets to its employees and their families. An Employee of the Month program is being planned to expand the company’s human resources efforts.

Lumber Sources and Machinery

                      Recently one of the hottest topics in the pallet industry has been obtaining sufficient lumber sources. One of the most unique characteristics of John Rock is its varied and widespread sourcing of lumber. Most hardwood pallet companies in the Mid-Atlantic region predominantly buy rough low-grade hardwood lumber from local sources and supplement that material with lumber from further south where material is typically enough less expensive.

                      On the other hand, John Rock buys most of its lumber from outside of Pennsylvania. When inventories are stable, such as a summer period, the company will turn its inventory about every ten days. Much of John Rock’s material is cut-to-size hardwood stock (40%-58%); most of the remainder is low-grade rough hardwood. Sources include Canada, New England, Virginia, West Virginia, Maryland, North Carolina, and South America.

                      That’s right, South America! Many readers may have heard that some North American pallet lumber is coming from South America but may have wondered how. It has made sense for some buyers in the last few years when supplies have been so tight and prices have been higher. But, to our knowledge, the only people who have found it to be viable are those located close enough to major ports to receive the South American cut stock. John Rock buys Eucalyptus that is bulk loaded on a vessel and transported from Uruguay. The supply is very limited which is a reason that more people are not successfully buying South American imports. Competition for Eucalyptus includes the European Union and China. We are now definitely part of a global marketplace. Brittle heart is a problem defect that John Rock has learned to avoid in Eucalyptus.

                      John Rock has turned to Canadian hardwood cut stock from Eastern Canada as a reliable raw material source. Kheops and SPEQ are dependable major cut stock suppliers.

                      Many small sawmills are going out of business, and the bigger mills are getting bigger. Bill believes that long term lumber supplies will be tight. The need for raw material has pushed them toward using softwoods, but they have become hard to locate as well. They are hearing about improving cant supplies, but so far it has been talk instead of reality. Red and white oak flooring market pipelines have been filling up which may help supply more 4/4 material.

                      Pallets require both wood and nails. John Rock uses about 3-1/2 tons of nails (about a million nails) a day. The company goes through a tractor trailer of nails about every seven to ten days. It typically inventories about two trailer loads of nails. North American Industrial and Viking Engineering supply most of John Rock’s bulk nails. Penn stated that they are big on quality. Quality nails make sure that nailing machinery functions smoothly.

                      John Rock builds around 15,000 pallets a day in a single shift. While most are built on the six Viking 505s, John Rock hand builds about 800-1000 pallets a day using Stanley-Bostitch hand nailers and collated nails. In addition it recycles 500-1000 pallets a day. While the company has not made an effort to increase its involvement in recycling, it provides recycling as a service to customers who need it.

                      John Rock uses Stanley-Bostitch hand nailers because of the company’s great service and reliability to go along with its competitive pricing.

                      Bill has stuck with Viking nailing systems because they have been so dependable and are flexible enough to meet its needs. Staying with the same system keeps down the number of parts they may need to stock. John Rock’s best crew has nailed over 3,000 pallets in a single ten hour shift. He estimates that 80% or more of their orders are in tractor trailer quantities.

                      Viking and Brewer cooperated together to make the Viking Way and Brewer Blvd. sign that hangs where it is immediately seen when entering the plant. Bill is cooperative with Viking and Brewer for them to use his plant as an eastern show case to illustrate their machinery used to its maximum efficiency.

                      Four Brewer saw lines provide the flexibility for John Rock to process all forms of incoming raw material. Two-and-a-half lines were installed new when the plant was built last year, and the others are only a few years old, carrying over from the previous plant. These four lines provide both flexibility and dependability. One line is for cants and the other three are versatile enough to process either boards or cants. The company can quickly cut for an order that needs immediate attention. Just about every kind of Brewer sawing concept is included in this extremely versatile plant, including bandsaws, gangsaws, notchers, and chamferers. John Rock has a 1-1/2" radius Brewer notcher.

                      Bill said, "Brewer’s bandsaw is tremendous. Our Diamond Eagle 4" band runs without any concerns. Employees are not getting any smarter. Saws need to be as easy as possible to use. Put on the bigger blades. Run it and forget it."

                      Penn emphasized how cooperative both Viking and Brewer have been to work with John Rock. Because their machinery represents the biggest part of the company’s capital investment, having a partnership kind of relationship is valuable to all parties. He said, "It is nice having suppliers we can trust. Brewer stuck in there with us when they were going through the difficult recession and allowed us to continue expanding our cutup lines when we built our plant last year." Both suppliers have a show place for their machinery, and John Rock benefits from very efficient production.

                      John Rock uses Econotool indexable tooling. Its blades and blade maintenance are supplied by S&D Saw (circle saws) and G&M (band saws), both in Pennsylvania.

                      A progressive pallet supplier does more than ship nailed up wooden pallets. It provides the kinds of products that its customers need. The most recent value-added benefit pallet customers need is heat treating for export. How extensive heat treated pallets will be in the future is still not known, but they are rapidly gaining acceptance today. Some customers will probably segregate heat treated pallets for export from non-treated domestic shipment pallets, while others may heat treat them all to avoid duplicate inventories.

                      John Rock has seen a significant increase in heat treating interest since February. It has a five million btu Converta Kiln chamber that can treat 1700 pallets in a couple of hours. The company can heat treat four to six loads per day. A second Converta Kiln is on order. Penn said, "We researched it and found the Converta Kiln to be very efficient." John Rock is not giving away its heat treating services; they represent an opportunity to both serve customers and add value.

                      One of the lessons to be learned at John Rock is that of keeping records and using them for better production and product control. For example, the company uses AMS’s PalDraw program to draw pallets for customers. Penn said, "PalDraw does a good job of drawings to provide a professional value-added service for our customers; it is great. We have 500-800 regular designs with over a thousand designs stored. PDS, the Pallet Design System from the NWPCA, does a good job of structural analysis. Our Viking TurboPro program relays nailing placement information to our Turbo 505s. We are currently working with AMS to get its drawing program to interface with PDS. We want to be able to enter a pallet’s information in one time and then address all of our programs."

                      One of the computer possibilities that John Rock is working on is the potential of tracking the production of its six Viking Turbo 505 lines in real time. If a large board could broadcast current production totals, it could add to John Rock’s friendly competitive

environment.

                      The new plant has allowed the company to take some progressive steps that would be difficult for an established plant. For example, heating coil pipes in the floor keep the production area a comfortable temperature of the mid-50s during winter months. This winter it cost about $3000-4000 a month to keep the plant heated. This has added benefits when it comes to processing and nailing frozen lumber, running machinery without cold weather problems, and making it easier for people to work to their potential. They had no winter issues during the plant’s first winter of operation.

                      All wires and exhaust pipes are extended from the ceiling, keeping them out of the way of production and away from potential damage to themselves. Warm air that is exhausted along with sawdust is returned to the building for more heat after the dust is removed.

                      John Rock uses an Arasmith grinder, which Penn says is one of their best pieces of equipment. "It runs and runs, never needs any maintenance."

                      John Rock has an interesting way of dealing with its wood fiber residue. The system requires no employees. A customer’s driver uses John Rock’s loader to load fiber from the outside storage into his truck. John Rock moves 100-200 cu. yds. of sawdust a day for horses and 100-200 cu. yds. for mulch. Horse racing is popular in Southeast Pennsylvania and requires a regular supply of sawdust. Scrap wood is ground for mulch raw material which customers regrind into mulch.

                      The company has 14 tractors and about 75 trailers. John Rock’s innovations extend into all phases of its operations. Drivers drive, they do not typically run fork lifts or tie down stacks of pallets. They drop an empty trailer and pick up one ready for delivery. The people who tie down pallets know how to do it efficiently. That is their area of specialty. They quickly nail a vertical board up the end of a loaded trailer to maintain stability and prevent a pallet from working loose and falling off the back.

Bill Leads the Team

                      Bill believes in the value of networking and being active in the National Wooden Pallet and Container Association. An excellent auctioneer, Bill has conducted the annual NWPCA auction at the annual meeting to raise money. The annual auction now provides money for the Pallet Foundation, which supports research, marketing, and educational opportunities for the overall pallet industry. This year’s auction raised over $10,000. Our industry owes Bill a hand of thanks for his assistance in this project.

                      This year Bill has been selected to be one of the auctioneers at the nation’s largest sheep sale to be held in Missouri. Raising sheep has been Bill’s hobby all his life; you might say it is his passion. He is currently president of the United Suffolk Sheep Association.

                      Bill said, "Our goal is to be the best, not the biggest." But the way that John Rock has expanded both its production capabilities and its market influence, it appears they may be on the path to accomplishing both.

                      Penn said, "We often have visitors who indicate that they had heard we were crazy, the way we have expanded our production equipment, but now that they have visited us they are certain that we must be at least a little off. But all of our plant expansion is carefully calculated and based upon cost per unit. We keep our equipment in tip-top shape and replace it when it makes economic sense to do so. Keeping machinery in peak running shape keeps production up and costs down."