Learning from other key industry leaders is a critical way to improve your operation. This is the second article in a series based on a roundtable discussion of industry leaders who shared insights on many key issues and operational concerns.
Special thanks goes out to the people who were part of this discussion. The panel includes: Jimmy Wilson of Bay Wood Products, Bill Schneider of Remmey – The Pallet Co., Jim Kesting of Madison County Wood Products, Steve Mazza of Bettaway Pallet Systems, Mike Hachtman of reLogisitics Services and Howe Wallace of PalletOne.
You can join the discussion by asking some of these same questions at your organization and posting your thoughts on the Pallet Enterprise Facebook page at www.facebook.com/palletenterprise.
Pallet Enterprise: Has there been any awareness from end users of their responsibility when it comes to ensuring clean and mold free pallets? Everybody has had problems where you ship customers a load of pallets that are fine, but they store them in the wrong place and in a month, mold grows on them.
Howe Wallace: There is no question that in almost every case it wasn’t that we shipped the company a moldy pallet. It was that mold grew on the pallet after the customer received it. We are having to do a lot of customer education on mold because it truly is a supply chain partnership issue. It all starts with how we buy the lumber — what our suppliers dip it in if they dip it at all. It also involves our storing processes and what the customer does with the pallets. We are doing mold seminars all the time with customers and use material that we have obtained from Virginia Tech to educate customers. We explain the alternatives and what customers can do to eliminate problems.
If customers say they want mold free pallets, we start by asking about their handling and storage practices. We use that request as an opportunity to educate the customer.
Jimmy Wilson: It is our position to try to educate the customer if they will allow you to do that. A lot of the time, customers will push back on you and try to blame the pallet guy. After the annual meeting, I thought the strategy that John Dye of Scott Pallet presented was the best. He doesn’t give a guarantee although his company offers various grades of service to eliminate mold. His highest grade targets a 90-95% quality standard if you start with a dry pallet. Behind door number two, there is a cheaper alternative that may or may not allow for mold growth. Door number three, if you demand a green pallet, then you just take the risk that mold will grow. If you don’t dry a pallet, treat it, keep it dry and properly store it, you should expect mold to grow in the right circumstance. I just love how John Dye presented it giving the customer the choice, but higher service levels come at a higher price.
Pallet Enterprise: Given recent tightness in both core and lumber supplies, what things need to change in the industry to help pallet recyclers remain competitive in this tough market dynamic?
Steve Mazza: I don’t want to repeat what everybody knows that there is not a lot of cores out there right now. The lumber situation does impact recyclers too because we use lots of repair boards. The lumber shortage is certainly affecting us because companies are looking at buying used thanks to escalating new pallet prices. But we have a limited capacity to take on new customers.
Mike Hachtman: The last boom we had before the Great Recession, we saw club grade recycled pallets approach the price of a cheaper new pallet. And that is going to be hard to do right now even with escalating prices in the recycled market because if there is no lumber for new pallets, the price of the new pallet will be really high. There has to be some relief on the new pallet side. Eventually, the market all flushes out. We don’t have that relief now where customers can pop out to the new market when used pallets approach $8-9.
Pallet Enterprise: If you could ask for any dream machine to improve your operation what would it be? (This is a piece of machinery that doesn’t exist right now but you would like for somebody to invent. Go ahead, dream big here. Be somewhat realistic though.)
Mike Hachtman: From a recycler standpoint, we have sort machines today. But they are not anywhere near as versatile as a human being. If you have a five stacker sort machine, you can sort to five grades. But if you get a sixth in there, you have to hand stack one on the side. I am sure that there is somebody in Europe using robots to sort and stack pallets. If this technology could be developed to help make sortation lines more versatile, that would be a big benefit for recyclers dealing with various sort requirements from major retailers. The problem is the expense. Hopefully, the cost of robotic technology comes down for doing complex pallet sortation.
Steve Mazza: I agree that robotics could play an important role in the future. From the recycling end, there is not too much research and development that has been done on simple dismantlers, chop saws and things like that. I have two guys standing beside a saw to take apart pallets, it seems to me that this process should be able to be automated fairly simply. I wonder why there hasn’t been much innovation. We have been using the same type of saws for about 20 years now.
Jimmy Wilson: With the rising cost of wood, one idea is to finger joint wood to construct a component that we can build a pallet out of. This technology already exists. But maybe the economics have changed to make it more doable.
Howe Wallace: I came up with intelligent stackers that are smaller. Right now the nature of stackers is that they require a pretty high quality of wood to run as efficiently as they need to in most pallet operations. We are having more and more adjustments on the backside of our operation to get the most out of our wood and still run an efficient operation. To automate for higher processing speed usually means that you have to put a better quality of wood through the system. But that is counter productive at this point given escalating lumber costs.
Jimmy Wilson: With the ISPM-15 no bark rule, those requirements kick out a lot of wood that has bark on it. If we had a way to capture the good fiber that is left over and to put that into a pallet component, that would be a real benefit.
Pallet Enterprise: It looks like the fire issue in terms of local and national regulations will come back in the next revision cycles for both the NFPA and ICC. What changes do you think should be made if any in terms of pallet storage and pallet facility layout? What have you done to reduce fire danger in your facilities? Any best practices?
Bill Schneider: This is a serious issue. A few of us were there for the ICC meetings. We really need to look inward and see what we can do to improve the situation. We have had a number of fires in plants that have made the news. We do need to take this issue seriously and to focus on what we can do to protect our people, plants and the industry.
Howe Wallace: There is no substitute for good housekeeping. Most of the time, the fire didn’t start because the pallets were stacked too close together. They started because there was poor housekeeping in some way. Or bad practices in terms of limiting your fire risk. When you have a lot of wood at a plant, you have to respect the fact that it can go up in flames quickly if you don’t watch it and reduce risky behaviors. We have to spend the money to keep our plants clean and orderly. If you look at all those places where fires have occurred, many times it happened because of poor maintenance or housekeeping situations, not because the pallets were stacked too close together.
Steve Mazza: In New Jersey, we already have stacking and fire break rules. We have it all. And I think the most important thing that was spoken about here is the need to maintain proper housekeeping practices. If the industry were to develop some best practices that would help out a lot. The wood sitting there doesn’t start on fire itself. There is something that has to be the catalyst for the fire. And that is where we can make some improvements with everything from electrical boxes being properly shielded to installing fire suppression systems to having fire extinguishers in the right place and keeping our places clean.
Mike Hachtman: The problem is that there are lots of very small recyclers out there. And often they are the guys who have stuff stacked up everywhere. Something else starts the fire, but because the pallets are stacked up in one big giant mass with no fire lanes and right up against the fence, you see a big fire. We are going to have to put together some industry best practices or somebody else is going to tell us how to do it. And it is much better for the industry to come up with best practices. Sure, that will tick some people off. But an industry cooperative effort is better than being put at the mercy of the regulators.
Bill Schneider: Best practices would be a huge step forward to help the industry. But we must remember that the mindset of the fire marshals is that they are the ones in charge. Fire fighters are the ones that must put their lives on the line if a fire does break out. We can’t be ignorant of that fact. They control the playing field here gentleman. Best practices may or may not work here because of the renegades in our industry that aren’t going to follow or adhere to them. And the fire marshals are going to design codes and regulations to cover them also.
Pallet Enterprise: What key industry best practices or benchmark studies would most help your operation in the near future? In other words, what piece of research would you most like to see developed?
Steve Mazza: With the core shortage that has occurred over the last few years, I would love to have some ammunition to use with our customers to explain what is going on. If we could look at how many 48×40 pallets are being heat treated and sent out of the country, which causes the supply chain to have a higher velocity of turns with recycled pallets. Plus, there is not as many 48×40 new pallets going into the system. I would love to see a study explaining those factors.
Howe Wallace: How about a study investigating the causes of pallet plant fires in the industry and looking at what we can do to eliminate them?
Pallet Enterprise: What is one operational change that you made over the past 2-3 years that helped you improve your production, worker safety or customer experience?
Jimmy Wilson: Automation in general has improved our operation. From stacking, materials handling and processing through the end product. This has reduced the number of workers required and improved throughput speeds.
Jim Kesting: We put in a sawdust-fired boiler, which saved us a tremendous amount of money and reduced our costs of heat treating and drying pallets. Compared to using propane, which recently had a scare, sawdust is a much more economical fuel source. We also put in a new block pallet machine to boost capacity. We are keeping that machine pretty busy. We put a couple dip tanks in and are using some chemicals to treat pallets for various customer requirements. We put ink jet machines on our nailers to improve the efficiency in marking treated pallets.
We are also putting up a new maintenance shed with double bays and heated floors so that maintenance staff can work in good conditions when the weather is bad outside. In order to keep a really good truck maintenance guy, you must have those resources in place to attract and keep the right talent.
From a software perspective, it is interesting that customers are asking for more information from you. If you have computerized systems that can give them that information, that becomes very helpful. We are definitely buying more sophisticated logging equipment and are trying to take chainsaws out of loggers’ hands. We are trying to improve logger safety through enhanced automation.
Bill Schneider: We are trying to go more paperless and to use computerized files to improve and document customer communications. We are transitioning to the use of the production print capabilities of the Pallet Design System™ for our shop prints for new customers. This makes it easier to share prints and files between plants and ensure key measurements and board placement for your machine operators.
Howe Wallace: The issue is not the lack of labor, but the lack of qualified labor. We have continued to try to embrace the reality of our labor situation. Our society is not creating people who are used to working like previous generations. They haven’t worked outside enough to know what hard labor is. We have to work hard with them to get them over the hump. If you look at the statistics, there are more high school dropouts than ever in this country. And they are not prepared to take on higher skilled jobs. They are less motivated than in the past. We figure the next person through the door is not going to be any better. So we work harder to coach the talent we have. We tweak supervisor ratios and do what is necessary to motivate and train staff.
This shift in attitude has reduced our turnover. There are plenty of people out there, just too many of the bad ones and not the goods ones. It is our job to turn them into good workers. We have had to professionalize the human resources functions in plants. Too often, it gets reverted to a payroll/clerical job. When you are bringing people in to coach people on safety and train them through the orientation period, that can’t be somebody who doesn’t know how to handle themselves. You have to be willing to pay for quality individuals in those positions.
Jimmy Wilson: What can you do to get workers to stay? If you get them past the first 30-60 days, you usually are able to win them over. You have to teach them life skills. What does it mean to be an employee? Things like you have to get to work on time. You must stay a full day. A lot of these guys just don’t understand that. You have to make employees feel valued. It’s not so much the starting pay as it is making them feel a part of something worthwhile. Employees want to feel appreciated.
One of the things that workers said was more important than the pay is the ability to be able to take some time off to do things with their families.
Editor’s Note: This is the second half of a two part series from a conference call held with industry leaders in April. For the first half of the discussion, look for it in the May issue of Pallet Enterprise. Thanks to all the participants for sharing their candid insights.
