LA PUENTE, California – Mario Santana, owner of Santa Fe Pallet, thinks the worst of the recession is already behind him. Business has begun to pick up, he said, and he expects it to continue to improve the rest of the year.
Mario does business in Los Angeles County, where there is no shortage of pallet suppliers. California has an enormous economy. The state’s gross domestic product was ranked 8th worldwide in 2007. The Los Angeles area supports over 300 pallet suppliers. However, the region has evolved into a high volume, low profit market for pallet companies, and they have been hit hard by the recession. Companies that manufacture unique products are surviving.
Mario’s company specializes in recycled pallets, and using Eagle Metal connector plates is a key part of the operations.
Mario, 50, is a native of Mexico. His family emigrated to the U.S. when he was 16, relocating to La Puente, which is about 18 miles east of Los Angeles.
He worked in warehouse management and later for a company that provided tire repair services to truckers.
Mario had a friend who was in the pallet business and learned a little about it from him. About 15 years ago he asked his friend if he thought there was room for another pallet company in the Los Angeles area. “There’s plenty of room,” his friend said. “You can always try it.”
He had no connections with businesses that bought and used pallets, so Mario began going door-to-door to solicit pallet cores and sales of used pallets, mainly calling on warehouses. Meanwhile, he kept his job with the tire repair service business.
Within just a few months he determined he could quit his job and work full-time in his new business. The first couple of years, he moved the business several times, operating in three locations, but the past 13 years the company has been in the same place.
He used to advertise in the Yellow Pages, but over the years he has built up his customer base and company reputation. Now he has businesses calling him, and he no longer has to constantly chase after new customers.
Mario began hiring employees after about a year. “The first year was like a try-out,” he said. He was still learning the business and needed to keep his overhead low. He rented a tiny shop for $250 a month to store his truck and pallets. After about a year, he felt comfortable with the business and felt he could be successful at it, and he was in a position financially where he could begin hiring workers.
Santa Fe Pallet now has five employees. The business operates out of a 24,000-square-foot yard with some open-air sheds for shade and to store tools and equipment. The company has annual sales of about $1 million.
Mario sells mainly to warehouse businesses in the Los Angeles County area. Most customers are within about a 40-mile radius.
“Manufacturing is gone in California,” said Mario.
About 80% of the company’s pallet production is recycled pallets, and the other 20% is new pallets. Santa Fe Pallet makes about 14 standard size pallets for customers and keeps them in stock. The company also will make any custom pallet for a business, such as a 10-foot by 20-foot multiple stringer pallet. In the recycled sector, the company also supplies ‘combo’ or combination pallets – pallets that combine the use of new lumber and recycled lumber.
Santa Fe Pallet is equipped with a number of machines and pieces of equipment – most of it from Eagle Metal, which also supplies connector plates to the pallet industry.
For repairing pallets, the company has four Eagle Metal lead board remover-repair tables and two Eagle Metal plating repair stations. These are the workhorses of the pallet repair operations. The Eagle Metal lead board remover can take off a damaged leading edge deck board and also doubles as a table to work on the pallet. The plater repair stations are integral to the company’s operations because it uses them to repair and strengthen cracked stringers.
Workers use Stanley-Bostitch pneumatic nailing tools for fastening repair stock or building pallets and a generic brand of collated nails.
For dismantling pallets in order to reclaim and recycle used lumber, Santa Fe Pallet has an Eagle Metal pallet dismantling machine, which uses pneumatic cylinders to pry off boards. A worker operates the machine via a foot pedal, leaving both hands to maneuver the pallet. Nails are removed from the reclaimed boards with an Eagle Metal nail cutter. This machine, with attachment, also removes nail heads and previous ‘nests’ from stringers to provide clean recycled material for repairs and remanufactured pallets, skids, boxes and crates.
The Eagle Metal pallet dismantler, like the Eagle Metal lead board remover, operates on air only. Many pallet yards are handicapped by limited single-phase electrical service. These Eagle Metal machines enable recyclers to avoid costly electrical service upgrades, especially to rented or leased facilities, for machines and equipment that require three-phase electrical service.
The company also has an Eagle Metal nail cutter for working on block pallets.
For resawing material into pallet stock, the company is equipped with a Go-Fast bandsaw powered by a 24 hp gasoline engine. For cutting material to length, workers use a hand-held power circular saw.
The company also has a Morgan Saw single-head notcher that, like the bandsaw, is powered by a 24 hp engine.
Plating operations are important to Santa Fe Pallet. Plating a cracked or damaged stringer to repair and strengthen the stringer allows the company to sell it as a No. 1 or A recycled pallet, which get a higher price. Repairing a damaged stringer by adding a companion stringer alongside of it downgrades the pallet to a No. 2 or B, which sells for less.
Mario has the Eagle Metal plating repair stations placed strategically between two of the Eagle Metal lead board remover tables so that a worker at either table can use the plater to make a repair.
The company also uses an Eagle Metal large throat splicing plater to splice new and recycled 2×4 and 4×4 material. Two pieces of equal length are spliced in the middle to make one complete stringer for a custom pallet that uses 4×4 stringers.
Mario began using the Eagle Metal repair plates about a year ago. Pallets repaired with plates have been well received by customers, he indicated. “They think they get a better quality pallet,” he said, and the pallet looks “cleaner.” In fact, initially some customers thought they would have to pay a higher price for pallets with plated stringers.
When buying new softwood lumber, Mario usually buys economy or utility 1×4, 1×6, 2×4 or 2×6 in random lengths. He buys 4×4 in random length, and short pieces left over after cutting the material to length are spliced together.
Mario buys Lenox saw blades and Profile Technology notcher cutting tools from a local supplier and another supplier in Oregon.
Sales have taken a downturn because of the recession, Mario acknowledged. “Hopefully, things will pick up.” Other pallet suppliers find themselves in the same position, he indicated.
Mario bought a small trucking company, Crossroads Transportation, in May of 2008, and transferred trucks from his pallet company to the other business. “We’ve tried to do more business with that,” he said.
Crossroads has about 14 trucks. Mario tries to use each business unit to generate sales for the other. If he hauls freight for a customer, he may be able to sell them pallets, too; if he supplies pallets to another customer, he may be able to get their trucking business, too.
Many pallet recyclers stage empty trailer vans at customer locations, and customers fill them with surplus and scrap pallets; the recyclers bring another empty when the trailer is full, leaving the empty van and hauling away the full one.
Mario has put a different twist on this service. Three years ago he invested in a roll-off truck and 14 roll-off containers. Instead of staging empty trailer vans at customer locations, he provides a service to leave a roll-off container. Customers fill them with scrap pallets and other scrap material, and Mario’s company hauls it away.
Mario supplies wood scrap material to a recycling business that grinds the material into mulch. He pays a $50 tipping fee to unload the material at the recycling yard. “The market here is very complicated,” he said. “I wish I could find a place where I could get paid” for the wood scrap material.
He purchased extra containers to serve businesses with wood waste material, but he has had difficulty getting customers for the service.
Santa Fe Pallet gets most of its pallet cores from its warehouse customers, but Mario has other suppliers, too. Occasionally he buys ready-to-go pallets from other pallets suppliers. “Right now, the way the economy is, everyone wants to sell pallets. Nobody wants to buy.”
“We’re ready with the equipment…When the market picks back up,” the company is positioned to respond to the upturn. In fact, Mario indicated that business already has begun to pick up, and expects it will continue to improve the rest of the year.
Mario is in charge of sales. He has two family members involved in the business. His wife, Vilma, is the receptionist. A son, Mario Jr., is going to college and works at Santa Fe Pallet part-time; Mario Jr. does computer-related tasks, including billing, and also some customer service work. The company’s five employees do not include the family.
Mario tries to avoid selling on price. When a company calls for a price on pallets, he tries to make an appointment to go visit them and help them determine what kind of pallet they need, based on what it will be carrying and other factors. “It’s the best way to do it,” he said.
Employees are paid an hourly wage and receive paid holidays and vacation.
In his free time, Mario enjoys spending time with his family. In addition to Mario Jr., Mario and Vilma have two other children, 14-year-old Jorge and 15-year-old Janeth.
There is plenty of competition from other pallet suppliers in the region, according to Mario, especially Los Angeles County. It is “crowded” with pallet companies, he said. Mario tries to differentiate his business through service and quality.
Eagle Metal Plates, Equipment Keep Pallets Connected
Eagle Metal Products supplies connector plates for the pallet and container industry as well as equipment and machinery for repairing and recycling pallets.
Connector plates can be used in manufacturing new pallets and containers and top frames in order to strengthen and protect them. They also are used to repair damaged components so that pallets and containers may be recycled.
Eagle Metal manufactures various equipment for attaching connector plates, including a hand-held plater, a plating station, a three-in-one work station, a top frame plater, and a stringer splicer.
In addition, it manufactures other equipment for repairing and recycling pallets, such as a lead board remover, a pallet dismantler, and a block pallet repair table.
Demonstration videos of its machines and equipment are available through the Eagle Metal Web site, www.palletplates.com.
For more information, call Eagle Metal at (888) 490-4300.
