WAUKEGAN, Illinois — A few years ago when the global phytosanitary issue was just beginning to appear on the horizon of the pallet industry, Reggie Ash caught a glimpse of the future.
Reggie, sales manager of American Pallet in Grayslake, Il., was quickly convinced there would be a growing demand for export pallets and heat-treating service. Within six months, the company invested in a pallet heat-treating system supplied by Marshall & Henderson.
"I knew it was coming," Reggie recalled. "We decided to buy one quickly and be the first one on the block."
The foresight enabled the company to become a leader among pallet suppliers in the greater Chicago region that could provide export pallets to meet the new phytosanitary rule and heat-treating services. In addition, the company already has recouped its investment and is earning additional profits by supplying export pallets and heat-treating services.
A lot has changed in 18 months, however. The latest and most significant change: American Pallet merged with Paltech in July to form American Paltech. The company is owned by Reggie’s wife, Tammy, Raymond Rodriguez, Larry Johnson and John Swenby. Tammy is president Waukegan facility and John is president over plants in Belvidere, Illinois and Urbana, Iowa.
The merger combined four plants. American Pallet operated a plant in Grayslake, Illinois and then moved a few short miles to Waukegan, which is located in the northwest corner of Illinois, about 35 miles north of Chicago. Paltech’s plants were in Belvidere, Urbana, and Springfield, Missouri. Belvidere is also in northern Illinois, about 60 miles west of Waukegan. Urbana is over 200 miles further west from Belvidere. Springfield is in the southwest portion of Missouri and considerably distant; it is about 500 miles from Urbana, the closest other plant in the company.
American Pallet was launched by Tammy in 1996. A graduate of Loras College in Dubuque, Iowa, where she received a bachelor’s degree with a double major in accounting and finance, Tammy worked for a number of years as a comptroller in her father’s automotive parts business. She moved to the Chicago area after marrying Reggie, who worked for a pallet supplier in the region.
Ray and Larry have been partners in different business ventures for about 20 years. They bought Paltech Enterprises in 1998; at the time, the company had only one location, the Urbana plant. They acquired four other pallet companies in the following years.
"American Pallet needed more room and wanted to grow," said Reggie. He and Tammy didn’t want to grow it into a larger company in one area; they wanted to expand the company by adding more locations in other regions. "Ray, John and Larry wanted to grow quickly," he said, "so it was a great marriage for both all us."
In Springfield, where Paltech earlier had acquired Industrial Wood Pallet, about 80% of production is recycled pallets. In Urbana, about two-thirds of production is recycled and one-third is new pallets; the recycled pallets include a considerable volume of ‘combo’ pallets, which combine recycled and new lumber. Waukegan produces mainly recycled pallets. Production at the Belvidere plant is about 60% new pallets and containers and the remainder recycled pallets.
Collectively, the four plants have about 16 acres combined, about 100,000 square feet under roof, 130 employees, and approach $20 million in annual sales. The Waukegan facility produces about 30-40,000 pallets per week and the other three locations, about 30-35,000 combined.
American Paltech has customers in the pharmaceutical and grocery manufacturing industries. Each plant serves customers within about a 150-mile radius, which puts the company mainly in Illinois, Iowa, Missouri, Indiana, and Wisconsin.
The company produces from 150 to 200 different size pallets and footprints, Reggie estimated, although it has a strong focus on the GMA market and the 48×40 pallet. Sizes range from 19×24 to 120×60. "We do some highly technical specialty pallets," Raymond noted. For example, the company has manufactured pallets used to transport slot machines.
In its pallet recycling operations, the company is able to reclaim and recycle a considerable volume of used lumber that is used both for repair stock for recycled pallets and to build ‘new’ pallets from used material.
The company also buys cut stock for the new pallet and container operations at its Belvidere plant, sourcing pre-cut material from local suppliers in the greater Chicago region as well as mills in Wisconsin, Michigan and Canada.
Production Machinery Decisions
The Belvidere plant also buys cants and remanufactures the material into new pallet parts mainly for its own use and with some material being supplied to the Waukegan plant. The cut-up operations are equipped with Morgan resaws and Whirlwind chop saws.
Most pallet assembly is done by hand with power nailing tools. The company has one automated pallet assembly system, a Viking Champion nailing machine, at the Belvidere plant.
American Paltech has automated ‘nail on the fly’ pallet repair lines in Missouri and Iowa, systems that were supplied by Automated Machine Systems. "We’re pleased with them," said Ray. The automated systems make it easier to train workers, and new employees can become productive immediately, he noted. The equipment makes it easier on employees because the work is not so physical, he added.
American Paltech does not use automation in its Waukegan plant. In a large, urban market such as Chicago, there is a larger work force, Reggie observed, which negates the need for automation to a certain degree. "I don’t believe in assembly line equipment," said Reggie. The company is able to pay workers more, which provides an incentive for workers to show up on time, do good work, and remain with the company, he added.
For reclaiming and recycling used pallet components, the company’s operations are equipped with Industrial Resources bandsaw dismantlers and trim saws as well as Pallet Repair Systems Trim-Track trim saws. The dismantlers are used for disassembling pallets with usable lumber, and the trim saws are used to cut the recycled lumber to the appropriate length.
The Waukegan plant invested in a Trace Equipment Corp. single-head notching machine; in fact, the machine is so new the company has yet to replace the Econotool notching heads.
The company needs a steady supply of bandsaw blades for its pallet dismantling machines, and it uses blades from Suffolk Machinery. Reggie has tried blades from a number of different suppliers and is persuaded of the cutting performance and durability of Suffolk Machinery blades. A local vendor supplies circular saw blades.
Power nailing tools and fasteners are supplies by New Supplies, a distributor for Max nailers and New Supplies collated nails.
American Paltech has several different methods for disposing of residual material, broken pallets and scrap material. At the Iowa plant, a hopper-fed West Salem Machinery grinder processes the wood into mulch that is sold wholesale to government agencies for landscaping. At Waukegan and Belvidere, scrap material is removed by contract grinders. In Missouri, the rural location allows the company to incinerate waste wood.
Like other sizeable pallet recycling businesses, American Paltech provides pallet retrieval services to customers. The company leaves empty trailer vans at some customer sites, and the trailers are filled with surplus and damaged pallets. American Paltech hauls a filled trailer away with a tractor, leaving another empty van in its place. The company has some 225 trailer vans in its fleet – about half of them serving its plant in Waukegan.
Heat-Treating Using
Marshall & Henderson
Two years ago, American Pallet only had a small handful of customers that required export pallets, and the volume was small. However, Reggie was
convinced there would be a growing
demand for export pallets and heat-treating service. He reasoned correctly
that other customers would need heat-treated pallets for export applications, and that American Pallet could pick
up new business because of its heat-treating capacity.
A lot of U.S. manufacturers export their products, Reggie noted, and there are a considerable number of manufacturers in the greater Chicago region that export goods. "Being a leader in heat-treating and export pallets would do nothing but benefit us," he said. American Pallet was one of the first pallet suppliers in the region to enter the heat-treating arena, according to Reggie.
In order to provide export pallets that would meet the global phytosanitary rule for wood pallets and packaging, American Pallet initially began fumigating pallets with methyl bromide, an accepted alternative to heat-treating. However, the company soon decided to invest in the pallet heat-treating system from Marshall & Henderson. Since then, the heat-treating business has increased significantly. The company supplies heat-treated pallets to customers and also contracts to provide heat-treating services to other pallet suppliers.
Reggie researched a number of different suppliers, comparing construction materials and methods, computer systems, and other factors. "I think Marshall and Henderson has the best unit out there," he said.
There were a couple of other factors in his decision. Heat-treating is more ‘environmentally friendly’ than the fumigation process, Reggie noted. In addition, if the company had chosen to continue to treat with fumigation, it would have faced steady, ongoing costs for the service. With an investment in a heat-treating system, once the investment has been recouped, there are no significant ongoing costs except fuel. The heat-treating system already has paid for itself, so now its operation is essentially clear profit.
Reggie was impressed by the construction of the Marshall & Henderson system. "They’re basically built out of a container trailer," he said, "which is built stronger than a regular trailer. It’s more rigid and will stand up longer." They also are insulated well, using the same type of insulation as is used in some furnaces. Also, the air return system allows heat to be recycled so that cool air is not constantly re-heated.
"Ken Henderson, president of Marshall & Henderson, has really tried to perfect his software program and computer system on the unit," added Reggie.
The company has experienced virtually no trouble with the Marshall & Henderson heat-treating system since it bought the equipment, he said.
Other pallet suppliers in the region have entered the heat-treating arena since then. In fact, Ray was on the verge of investing in a Marshall & Henderson heat-treating system for one of Paltech’s plants. "That was part of the attraction" of merging Paltech and American Pallet, he explained.
The Marshall & Henderson heat-treating system will treat 440 GMA pallets at one time, according to Reggie. Depending on the ambient temperature, recycled pallets take a little under two hours to treat; in the winter, it takes longer. Pallets made of new lumber require a longer period to heat-treat.
The company has been using propane for fuel but is in the process of switching to natural gas, which Ray believes will be more cost-effective. Using propane for the heat-treating system in the past actually helped the company save money on the cost of buying propane for its forklift trucks; buying a larger volume of fuel enabled the company to get a much better price.
Benefits of Mergers
Paltech began with one plant in 1998 and through mergers and acquisitions has grown. "We’re going to continue to grow, internally and through acquisitions," said Ray. "We are looking actively at strategic locations that will help link our facilities."
Each previously separate business had its own established best practices, Ray noted – most efficient ways of completing various tasks and functions. Now, American Paltech can benefit from that and began to pick and choose best practices and implement them throughout the overall company.
The company uses a variety of different compensation plans for employees, including piece work rates, wages, salary and commission, depending on the position. The company also offers retirement and health insurance benefits. "Like everybody, we’re concerned about the spiraling costs for health insurance," said Ray.
Asked how the company distinguished itself in the competitive region, Reggie said, "I strongly believe there are too many people in this business who sell pallets as a commodity. You have to sell them as a value-added product. You have to sell on service and quality."
"I try to make it a constant practice to treat people the way I want to be treated, and I demand the same kind of work from others that I demand of myself," added Reggie.
Faith is a daily part of his life, Reggie said, including his work. He believes it is the reason for the company’s success. "It’s the exact truth," said Reggie. "We have been extremely successfully in the pallet business because of my ties to the church, I believe," said Reggie, a member of the Roman Catholic church. "Every morning I ask for guidance in the pallet business, and I’m never disappointed." The best partner he has, he said, is the one "upstairs."
"I owe it to the Lord…I talk to Him every day and ask for divine guidance in his decisions."
Asked about the pallet market in the Chicago region, Reggie said, "It’s doing about as well as a swimming pool on a hot summer day." Both sides of the business, recycled pallets and new pallets, are doing well, although there is a shortage of cores in the recycled market, they noted. However, the core shortage contributes to more business for new pallets.
"We think we’re building a great team of people," said Ray. "You’re only as good as your people."
M & H Adds Human Machine Interface
The Human Machine Interface (HMI) is one example of the latest technology that Marshall & Henderson Inc. uses to run its pallet heat-treating chamber.
The machine interacts with the operator during the whole time the chamber is in operation. It actually tells the operator at the beginning of the cycle that it will only run in automatic. The HMI also has a back-up hard drive that stores data in the event of a power loss.
HMI was designed to make the day-to-day operations as easy as possible. It allows the operator to view four different temperature zones at onec during the heat-treating cycle. The chamber has to treat for 30 minutes at a core temperature of 133 degrees, and the machine counts the minutes to the end of the cycle.
Marshall & Henderson is in the process of programming the HMI to troubleshoot itself in the future. With the new self-troubleshooting capability, if a problem arises, the HMI will flash a code on the screen to alert the operator.
The Marshall & Henderson HMI comes programmed standard in two languages, English and Spanish. In addition, it can be programmed for two more languages, German and Japanese.
For more information, call Marshall & Henderson at (662) 547-6228.
Marshall & Henderson Established Roots in Wood Packaging
Marshall & Henderson Inc. was established in 1972 as a manufacturer of wood packaging. The company started with one customer, two employees, and $6,000 in working capital.
From the early days of working in a rented garage with second-hand or home-built machinery, the company has grown steadily. It has constantly improved its manufacturing facility, buying land, constructing new buildings and upgrading equipment. Sales have increased an average of 12% annually during the past 22 years, and Marshall & Henderson has grown to 24 employees.
In recent years Marshall & Henderson worked with the Department of Defense on numerous accounts to supply wirebound boxes, crates and carts. The company has been doing heat-treating for about three years for the export of wood pallets.
Marshall & Henderson is now specializing in manufacturing heat-treating chambers for the export of wood packaging overseas. It has a wide range of customers from the East Coast to the West Coast and North to South, with over 40 units operating outside the U.S.
Marshall & Henderson has a skilled management team that can assist with any questions about the company’s heat-treating chamber, and the company is committed to provide strong customer service.
For more information, call Marshall & Henderson at (662) 547-6228 or visit the Web site at www.heat-treated.com.
