Hearing from industry leaders and innovators is a major service that Pallet Enterprise offers its readers. And this article is the first in a series of discussions with industry leaders and risk takers who are striving to make a better future for their companies and the industry.
Participants represent a variety of companies across the country including pallet manufacturers, recyclers and sawmills. They agreed to take part in a conference call moderated by Chaille Brindley, publisher of Pallet Enterprise. They discussed key issues facing the industry, changes taking place in raw material markets, important business metrics to watch and evolving customer expectations.
A special thanks goes out to those who participated in this discussion and shared their business insights. The panel includes: Jeff Edwards of Edwards Wood Products, one of the largest pallet manufacturers in the U.S; Asher Tourison of ACME Pallet, a major pallet producer in Michigan with an affiliated sawmill; Carolyn Beach Skinner of Westside Pallet in California and former president of the Western Pallet Association; Joe McKinney of McVantage, which has sawmill and pallet operations in Alabama and Tennessee and is expanding into the South American country of Guyana; and Sam Donadio of Power Pallet, an innovative pallet recycling business in upstate New York.
Pallet Enterprise: What are you most optimistic about when it comes to your business and this industry in particular?
Carolyn Beach Skinner: First of all, I’m just optimistic that wood pallets, I think, will always be in demand like they are now. And through the Nature’s Packaging initiative to promote wood packaging, the message that wood is good is going to get stronger and stronger and be even better for all of us.
Sam Donadio: I agree with that…I do agree wood pallets will always be in demand because I think it’s the cheapest way to move product. I like the diversification aspect. I like being involved in all aspects of the industry: custom pallets, new pallets, the dry recyclables, the mulch, and the freight. I don’t want to have to depend on only recycled wood pallets in our business.
Asher Tourison: I concur with everyone else so far. It’s interesting that different areas of the country have different customer bases, different idiosyncrasies – all different. Like where we are, right now you can’t give mulch away. You’re always going to have these ups and downs. By and large, the trend that I am seeing is — I guess you either got to go big or you go home. In new custom manufacturing, customers aren’t as able, maybe even as willing, to slap you around on price as they used to be five, 10 years ago because, quite frankly, they put some of these people out of business that were willing to do it for nothing. That is starting to change, and I think it will continue to change.”
Joe McKinney: When I was chair of the (National Wooden Pallet and Container Association) and I led us into 2000, we had almost the exact same number of members as we have today. However, the average size of those companies was much smaller than it is today. So I agree there are fewer pallet companies, but I think it has as much to do with government regulation as it does, you know… being a more efficient organization. The regulations and all the things you have to put up with require a larger company to support the overhead needed just to be in business. I’d hate to be starting a business from scratch today.
Asher Tourison: I started from almost scratch 39 years ago, and I couldn’t do it today. Everything has changed so much. If you don’t have control over some of your own lumber resources, if you don’t own at least a couple of nailing machines, I don’t see how you can start today without a lot of capital.
It used to be it was a low barrier to entry. And now, in new pallet manufacturing, it just isn’t that way any more. It’s still easy to get in the recycling business, but to get into new, you have to have a lot of equipment that you didn’t used to have many years ago.
Sam Donadio: It’s not that easy to get into the recycling business any more either. It used to be all you needed was a pickup truck, hammer and crowbar. I’ve been doing this for 41 years. I could never do this over again or start from scratch. Even in the recycling business you still need a substantial amount of equipment to make everything work.
You need trucks, trailers, saws, stackers, conveyors, heavy equipment, forklifts, possible grinder, plusmuch more, and most importantly, if you can’t meet federal and state regulations, chances are, you won’t last long. So, I believe you’re looking at a considerable amount of money even to get into the recycling business these days.
Jeff Edwards: I’m optimistic about our company because of its diversity. We’re into pallets, grade lumber, cypress lumber industrial timbers and chip mill production. It keeps us from being at the mercy of one particular lumber industry market segment. That’s what makes me optimistic about our company in particular. As far as from the industry standpoint, I agree with Carolyn. I believe wood is the material of choice. It has been for a long time. There’s a niche market for plastics, as we all know, and corrugated and various other materials. (Wood is) renewable, sustainable and cost-effective.
Editor’s Note: Look forward to the second installment of this roundtable discussion in the June issue of Pallet Enterprise.
