One of the biggest deals in the recent pallet industry consolidation trend just closed with Kamps, Inc. acquiring John Rock, Inc., headquartered in Coatesville, Pennsylvania. Over the years, John Rock has developed a reputation as one of the most technologically modern facilities in the country. In addition to its impressive megaplant in Pennsylvania, John Rock also owns two sawmills in Virginia and a lumber brokerage division. As one of the preeminent pallet manufacturers in the country that is vertically integrated with multiple sawmills, this is a big deal. It has also raised a lot of questions in the industry.
The executive team from Kamps as well as John Rock’s owner, Bill MacCauley, have sat down with Pallet Enterprise to talk about this deal and why it makes so much sense. This Q&A article is based on those conversations.
PALLET ENTERPRISE: This is a different kind of deal than Kamps has done in the past. It is the first time that Kamps has acquired a sawmill. And John Rock is one of the preeminent new pallet companies in the country. Is this a shift in strategy? What’s the strategy behind this deal?
Bernie Kamps, CEO of Kamps: We obviously realized that it is a different move. It’s not a shift in our strategy. We are just building out our strategy to be a full-service company with broad capabilities for all of our customers… Some customers require tight specifications that recycled pallets cannot meet. So that’s where we see the opportunity for new pallets. This acquisition also augments our national retrieval programs for non-GMA pallets.
Mitchell Kamps, President of Kamps: John Rock was a key supplier for us through our New Pallet Sales division. We have many customers that overlap them. And this isn’t the first acquisition with considerable new pallet capabilities. Last year, we acquired Realm Companies, which is a major pallet manufacturer serving six states. Many of our customers are looking for new as well as recycled pallets.
PALLET ENTERPRISE: Why sell now? Explain how the process unfolded.
Bill MacCauley, President and owner of John Rock: When I was approached at the end of 2021 about selling the company, I didn’t know what to think. I started to realize that I won’t be around forever. And I should start to figure out what is next for John Rock before something happens to me as the sole owner.
The Kamps team flew in this past summer, and within a few minutes, they realized that the Rock needed to be added to their group. When you’re in the pallet business, the industry is like family. Our vendors and customers become your close friends. Soon, you realize that pallets are in your blood.
I have known the Kamps family for over 25 years, and the more we talked, the more this deal made sense. They have the same values we at the Rock have and are driven like our team. This is what is going to propel the Kamps Companies into the future.
By joining Kamps, our team can spread its wings and grow even more. My M&A attorney asked me why I was selling. I am 57, and I told him that I don’t need to sell. But when the right opportunity came along, I knew that I needed to act. This deal makes a lot of sense for the future growth of the Rock, Kamps, and our employees and customers. Mitchell and Bernie have built a tremendous company with a lot of depth and talent, and I thought our team would fit in.
This is a new challenge. Kamps wants to grow. We bring a lot to the table. Kamps is a progressive company. I had to think about my people. If something happened to me, it was going to be a mess. Now, my employees and customers know that everything will work out fine. We have a lot of capacity – both pallet and sawmill – to grow.
PALLET ENTERPRISE: How will vertical integration help Kamps? What challenges arise when you throw sawmills into the mix?
Bernie Kamps: Well, the mills are in Virginia. They can supply cut stock to facilities throughout the eastern and southern United States. So, when you think about our Atlanta facility, our Charlotte plant, all the way up the eastern seaboard into Pennsylvania, Ohio, and maybe as far West as Michigan, Indianapolis, Kentucky, Tennessee and Ohio, that is a huge footprint.
Bill MacCauley: In today’s market, I don’t need sawmills. But a year from now, I will be glad that we have them. These shortages are getting closer and closer together. But sawmills aren’t for the weak of heart. Just take whatever issues you have with a pallet plant and multiply those times five, and that’s the daily life in a sawmill.
Mitchell Kamps: John Rock has proven equipment and staff. Bill has invested in these mills, and they are state-of-the-art equipment. These are not tired facilities. They have a lot of potential to produce even more lumber than their current levels of production. We are going to rely on his team to continue to run the sawmills as they have been doing.
PALLET ENTERPRISE: The timing of the deal has surprised some in the industry due to slowdowns in the economy and concerns about pallet demand in the near future. Why do this deal now? Is Kamps going to slow down its acquisition activity heading into uncertain economic times?
Bernie Kamps: This is how Kamps has been different from other pallet companies for decades. We are not guiding our business decisions by a season or concerns over a recession. We have been pursuing the same strategy for decades. We are trying to drive costs out of the supply chain. And adding a sawmill and highly automated pallet capacity will help us achieve this goal.
Bill MacCauley: Companies like mine don’t go up for sale very often.
Bernie Kamps: Bill probably has the best pallet plant in North America. From his top-notch team to his cutting-edge machinery, John Rock has developed expertise that we hope to use to inform our other plants. Bill has got it dialed in so that he knows both where his material’s coming from and where he has to be, as well as from a delivery point of view to think that he can deliver to nine states profitably. He has proven he truly has the best one-site place in all of North America.
We have all these choices. So, we’ve got new pallets, we’ve got sawmills, and we’re vertically integrated. We’re not dependent on just cut stock from someone else. Also, with the retrieval of these pallets and all of the recycling business that we’re doing, we have quite a quiver full of service offerings for the customer. John Rock fits really well with one of our core goals: driving costs out of the supply chain. Bill has proven that he can be an efficient producer. We are going to be bringing his cut stock into our plant. We have brokered pallets through his company and this acquisition allows us to sell more directly to the customer.
Through the pandemic, the whole supply chain has demonstrated to be so fragile. I think we’ve got the silver bullet right now when it comes to being able to deliver on our promises, and John Rock only helps us in this mission. It’s bigger than just a one-year recession or anything else. We’re going to be able to build ourselves into the best full-service pallet company in North America.
PALLET ENTERPRISE: How has John Rock Inc. grown over the years?
Bill MacCauley: 2023 marks the 50th anniversary of John Rock. When I started at John Rock Inc., we made about 1,800 to 2,000 pallets per day. In the last 25 years, our production has risen to over 25,000 pallets per day. I have been blessed to have some of the most loyal, driven and talented employees in this industry. I remind them often that this isn’t as easy as we make it look, and if it were, everyone would do what we do.
PALLET ENTERPRISE: What are some of the successes, challenges and even surprises when it comes to integrating the different companies that you have acquired? Obviously, when you are growing this big and this fast, you are going to have some growing pains.
Justin Kamps, vice president of Northern Operations: The first part of integration is that we want to maintain our culture. We want to maintain the standards that we have for our service levels, quality control and what our facilities look like. You get that message across to acquired employees and establish expectations up front. And that’s always a challenge because sometimes it’s a big change for providers. Sometimes, it’s not, and those transitions are much easier.
The second thing is that you have to make sure that you are aligned with the team that is already there. You have to understand how they operate. Most of the time, we are buying good teams with established leadership. That’s what we’re looking for. But even when you’re doing that, you have to figure out how they operate and then try to show what our Kamps message and goals are and integrate that into their processes. The pace of our growth can make that challenging.
PALLET ENTERPRISE: Do you see buying more, or is this a very special situation?
Bernie Kamps: It’s truly a special situation. I don’t think we’re going to speak to what we’re going to do next. But our plan is to integrate John Rock and learn about its operations. Bill and his team are going to continue to run the sawmills. They have that technical expertise that we do not have now.
If the sawmill proves successful, this might not be our last sawmill acquisition. We are going to first integrate and learn how much this capability can help us across the country to drive out costs and make sure that we have enough raw material to never miss an order for customers.
PALLET ENTERPRISE: What are your plans for the future in terms of John Rock and your visible leadership in the pallet industry?
Bill MacCauley: I never forgot the opportunity Mr. John Rock gave me 26 years ago, and I promised him I would never tarnish his good name, and we would make him proud. I talked to him a couple of weeks ago, and he agreed that the Kamp Group will be a great fit for the Rock. My plans are to remain with Kamps for the foreseeable future and do whatever I can to help blend the Rock into their group.
I plan to continue to help the Pallet Foundation grow our funds and reinvest in our industry. We are all fortunate to work in an industry full of entrepreneurs who recognize the need to give back for the good of us all. Most people know that I am an auctioneer, and two of my favorite auctions of the year are the ones I do for the Pallet Foundation. The energy in the room for our auctions is second to none, which is the reason we have been able to build the Foundation.
