Last year ended with a bang in terms of mergers & acquisition (M&A) in the pallet sector. Three deals closed near or just after Christmas with the latest taking place on January 4th, 2022, when 48forty Solutions bought located in Eastford, Connecticut. Long-time industry leader, Joe O’Brien, is owner of Industrial Pallet and well known in the pallet sector.
Industrial Pallet is a provider and manufacturer of a wide variety of wooden pallets. With over 75 dedicated employees, the company sorts, builds, and delivers more than two million recycled wood pallets annually with their fleet of over 200 privately owned trailers. In addition to domestic services, the company offers heat-treated pallets to international customers. The company is run today by principal and owner Joe O’Brien, who joined in 1998, with operations led by Randy Therrien, Industrial Pallet’s original founder.
Mike Hachtman, 48forty CEO, said, “The Northeast region is a key area in the pallet industry. We have been looking to expand our footprint in this region and believe the acquisition of Industrial Pallet will help us to broaden our reach significantly.”
Joe O’Brien, Industrial Pallet principal, added, “Forming a union with one of the nation’s largest pallet recycler and pallet services company means great things for our loyal customers. As I move to retirement, it gives me great comfort to know that our employees will be taken care of with the respect and care that they deserve.”
This is the sixth acquisition 48forty has completed since Audax Private Equity invested in the company in November 2020.
Kamps Inc. Seeks to Solidify Northeast Footprint
Continuing to grow its network of company-owned facilities, Kamps Inc. bought two companies with plants in the Northeast. Kamps first acquired Gorgo Group, a collection of companies that provide pallet, packaging, and logistics solutions across the region. Gorgo has two asset-based locations in Southern New Jersey, and one in Harrisburg, Pennsylvania.
The current management team has grown Gorgo Pallet significantly over the past decade. Gorgo Group’s Pallet Division specializes in full-service pallet recycling and custom pallet manufacturing. The packaging and logistics divisions provide auxiliary support for supply chains in the region. Across the three divisions, Gorgo employs over 200 individuals and operates close to 400 trailers. All employees, along with the owners, will stay onboard.
Shortly after the Gorgo deal closed, Kamps finalized an agreement to acquire Greenway Products and Services LLC. Greenway is a full-service pallet recycler and new pallet manufacturer with three asset-based facilities in the Tri-State area.
Greenway originated as a result of a merger in 2015 between two regional pallet recyclers: Pallets Unlimited and Generated Ltd. The merger created a single full-service pallet recycler with leadership that retains over 65 years of combined industry experience. Harnessing the capabilities of the two companies, Greenway quickly grew to become the largest pallet recycler in the Tri-State area. Greenway has two locations in North New Jersey and one in Baltimore, Maryland. Greenway employs 225 individuals and operates 250 trailers. All employees, including the leadership team, will stay onboard.
Mitchell Kamps commented, “Greenway has been a great Kamps partner for many years. Their uncompromising service and dedication to excellence has aligned our companies well. Together, we now have seven locations in the Northeast region to service our local, regional and national customers. Greenway has proven success in launching greenfield sites, for example the Baltimore, Maryland location. For these reasons, and many more, we look forward to expanding our horizon in the Northeast with this outstanding team.”
The acquisition of Greenway follows a series of strategic investments Kamps has made this year, with six total acquisitions made in 2021. With the addition of Greenway, Kamps now has 48 asset-based locations across the nation. These locations recycle over 200 million pallets per year.
Berry Industrial Group Sold
Another major transition was the acquisition of Berry Industrial Group by Olympic Forest Products in January 2022. Peter and Debra Berry have built Berry Industrial Group into a respected name in pallet sales and brokerage. They have both been very active in the pallet industry through serving in various leadership roles within the National Wooden Pallet & Container Association and the Pallet Foundation.
In the deal, Cleveland-based pallet brokerage, management and sales company, Olympic Forest Products, bought Berry Industrial Group and its affiliate, Shade Lumber Company.
Fairfield Capital Advisors (www.fairfieldcapitaladvisors.com) assisted Berry Industrial Group in the transaction. Fairfield Capital Advisors works with middle market privately held and small cap public companies facing moments of transition whether seeking capital, pursuing an acquisition, considering a sale/divestiture, or facing distress,
The Berry family established their company in 1984 as an industrial pallet broker and wholesaler. Berry Industrial’s affiliate, Shade Lumber Company, Inc., has operated a manufacturing and recycling plant in central Pennsylvania since 1982. Shade Lumber
was acquired by Berry Industrial in 1990.
“Berry Industrial and Shade Lumber have been our life’s work. After nearly forty years of building Berry Industrial, finding the right partner to take over the business was of the utmost importance to us and we are excited to see it continue to grow under the stewardship of Olympic Forest Products,” said Debra Berry, CEO of Berry Industrial Group.
The purchase of Berry Industrial and Shade Lumber allows Olympic to expand its brokerage and manufacturing operations and more efficiently service its national client base.
“We’re proud to have the opportunity to carry on the Berry Industrial and Shade Lumber names,” commented Dan Andrews, CEO and owner of Olympic Forest.
What’s the Future of the Consolidation Trend?
According to industry sources both 48forty Solutions and Kamps Inc. are posed to make more M&A deals in 2022. A number of major outside investors have looked into the pallet industry over the last year, and another major financial player could enter the market any day now. It doesn’t look like consolidation will slow in the next year or so. One big reason is that acquiring plants and companies is a good way to secure new accounts, seize control of cores and find talented people in a dry labor market. The right fit can help these mega recyclers fill holes in their network.
In 2020, the buying frenzy focused on the new pallet market. In 2021, the focus shifted to recycling operations as 48forty and Kamps significantly grew their footprints. See Sidebar 1.
So, what can pallet companies do to prepare themselves for the recycling rumble of 2022?
First, keep in mind that mega recyclers can’t service every customer. There will be business for other recyclers. The big question is will there be core supply?
Independent companies can consider some of the following strategies:
• Streamline operations, institute lean thinking principles.
• Consider transitioning to more specialty pallets, sizes and re-manufactured pallets.
• Work to solidify core accounts through world-class service and fair, transparent pricing.
• Rethink your operations, automation (consider new semi-automated or automated trim saw lines). There are many options on the market now.
• Prep business to sell and sell after a year of strong sales. This doesn’t have to mean you sell. Consider your business goals and succession opportunities. But strong businesses have the right people, processes and data collection to ensure success.
• Join up – form coalitions/networks with recyclers in other regions. The more connected you are, the stronger you are in the new pallet world.
• Develop PALNET II with other recyclers. This involves a national brokerage office connected to independent, quality pallet companies with brick-and-mortar facilities. Basically, do your own brokerage and cut out the middleman if possible.
• Focus on non 48×40 market; convert customers to odd sizes.
• Secure stronger relationships with bankers to be able to better fund lumber and core purchases.
Remember that the smart and nimble pallet company will survive. You have to chart your own course and be confident that you have identified ways to thrive in the coming years.
Rundown of Major Mergers & Acquisition Activity in the Pallet Sector
Some big names have changed hands in the last two years…
2020 Activity
• UFP Industries bought PalletOne
• Freeman Spogli & Co. acquired a majority interest in Kamps, Inc.
• Alinda Capital Partners and The Universities Superannuation Pension Fund (USS) bought PECO Pallet
• Ralph and Karl Rupert acquire Johnson Industries
2021/2022 Activity
• FCA Packaging bought Timber Creek Resource
• Royal Oak bought Garnett Forest Products
• 48forty Solutions acquired ReLogistics, Prime 360, Bailey Pallet/Oregon Pallet, J&B Pallet, Allegheny Recycled Products and Industrial Pallet
• Pallet Logistics of America bought Pal-Serv
• Kamps Inc. acquired Pallet Industries of Florida, D & H Bark, Green Trip Recycling, Total Pallet Solutions, BDL Supply/PALNET, Tritz Pallet, Gorgo Group, Greenway Products & Services
• Olympic Forest Products bought Berry Industrial Group
