When Paltech Enterprises began in 1999, the plan was to acquire some more pallet companies, grow them up and then sell them off. Almost 20 years later, the plan is to just keep on growing. Paltech Enterprises and the related companies manage seven pallet facilities across the Midwest in Iowa, Illinois, Indiana, Missouri and Arkansas.
John Swenby, the president of Paltech Enterprises, explained, “We had a ten year plan when we began, and we are now 19 years into it. In 2008 the economy was bad so we knew we would not be able to get what we wanted for any of the plants. The companies were continuing to work, and we had developed a good leadership team. So our strategy now is to keep on growing strategically.”
The plants are separated into four different companies. They are run as autonomous units although they share some similar customers and business processes. Swenby stated, “As we acquired businesses, we did so regionally to complement our existing businesses. Plus, we wanted to keep from building one big conglomerate that might be hard to sell in the future.”
One advantage of having multiple plants is the ability to establish networks for regional customers. This is especially true for the plants in Missouri and Arkansas. Swenby commented, “The synergies really work there. And the major factor is really the distance between the plants. To go from Springfield to Carthage is less than 80 miles, we go from Carthage to Springdale, which is about 70 miles. In the Missouri, Arkansas, Oklahoma corner, we have really been able to maximize service networks, even a little bit into Kansas.”
One key change that Swenby and the other Paltech managers have done is make face-to-face contact with customers a bigger priority. Swenby said that some of the operations they bought relied mostly on phone calls and fax communication. He said that you have to visit customers to really understand their businesses.
Lessons Learned from Missouri Fire
In 2014, the Paltech plant in Ozark, Missouri suffered a catastrophic fire. The incident started when debris from the incinerator hit a stack of pallets. Swenby said, “It smoldered for about three hours before it ignited. Then the fire just got so hot there was nothing to slow it down.”
The main production, office and storage building was completely destroyed causing $2.4 million in damage. The good news is that nobody was hurt, and the response went as planned from the employee evacuation to the worker count and contacting the fire authorities.
Swenby stated, “Our response aspect we had well documented how to handle an incident. What procedures to follow, etc. And it all went as planned.”
The fire started around 1:00 p.m. on a Wednesday, and the property was a loss by 4:00 p.m. The company worked to open up production in its secondary building the next day establishing two shifts to make up for lost time. And the company increased its manpower while working with other suppliers in the area to service customers.
Swenby added, “Our employees worked overtime to make sure that customers were serviced despite the fire. We were lucky that we had a second building, and we had recently updated our ability to store records off-site in the cloud.”
The most important lesson that Paltech learned from its fire is to maintain the backups of all of your records. This includes personnel, payroll and customer information. The company also has off-site storage for business documents that are necessary, such as checks. Swenby explained, “We thought about scanning everything. And we found that we were spending days upon days scanning documents. We only scan a document now if it has a signature on it.”
Another major lesson is to work with an insurance consultant who can ensure that you file the right paperwork to get reimbursed for everything you will need. The problem is that many companies tend to be too general and leave out a ton of specific items. Swenby explained, “Instead of simply writing down air hoses, the consultant detailed the hoses, the disconnects every 20 feet and all the other little aspects that we had missed.” He added that the consultant saved them thousands of dollars in knowing how to file the claim correctly and getting what they really needed to replace what was lost in the fire.
Swenby suggested that companies keep an updated, detailed list of assets from vehicles, machinery and tools to office furniture and every aspect of the building and manufacturing infrastructure. Another thing to consider is all the little things you may need, such as manuals for telephone systems, passwords, driver records, etc. Those are the little things that can drive you crazy if you haven’t planned well in advance.
One area that didn’t go very well was the response to the local media. A local TV reporter wanted an immediate interview, and company managers could not fulfill the request when the reporter wanted it. This resulted in some negative exposure. Swenby didn’t think he would do anything differently, but he did suggest you have to be aware of the need to get positive, truthful information out to the customers, employees and the press in a timely manner.
The big difference maker was the response of the employees who hand loaded trucks, worked overtime and did whatever it took to get the operation back up and running. Swenby boasted, “The real customer service heroes were our staff. Once they knew they could get the paperwork, the local managers and employees led the effort to serve customers.”
Right Suppliers Lower Costs
Although Paltech does have automation in its plants, the company strives to keep capital expenditures low and only buy what is needed. Some of the equipment is designed by employees at Paltech. For example, the odd-sized pallet tables at the Belvidere plant spin to provide workers maximum access with minimal walking. Swenby explained, “The table bases are made out of old tractor axles. They spin, easily reducing worker wear and tear. We produce about 15,000-20,000 pallets per week at this one facility on those tables.”
After nailing, new pallets move down a conveyor and are stacked in Pallet Chief standard stackers. Alex Rengers, operations manager for Paltech Enterprises of Illinois suggested, “These Pallet Chief stackers are great. A simple design, all pneumatic operation, they keep on humming with little effort to maintain. There isn’t a lot to fix, and they can stack 9-10,000 pallets per week.” Production is tracked using a color-code system.
The Pallet Chief standard stackers are used in the Belvidere and Hammond, Arkansas plants. AMS stackers are used in the Iowa plant.
One piece of equipment that the Belvidere plant couldn’t do without is its LM Equipment package saw. The company has had it for 12 years to cut lumber packs into just the right size. Rengers commented, “I don’t know what we would do without the package saw. It is just so efficient when it comes to cutting large packs of lumber. And the LM saw has performed great with minimal maintenance. It allows us to buy a wider variety of sizes and cut what we need ourselves.”
Paltech uses the LM Equipment saw produced in Burnaby, British Columbia. This plant also uses Smart dismantlers and a Trim Trac saw. When it comes to pallet repair, the sortation takes place at the repair tables except for loads that have lots of one size. And in those cases, the forklift drivers may do some sorting.
The Belvidere plant processes about 65,000 recycled pallets per week. It is all done manually on repair tables. Rengers added, “We are working hard on safety issues and are using training aids to ensure that workers slow down and be safe.”
At the Hammond, Indiana plant, Paltech turned a former steel processing plant into a recycling facility. It has a custom heat treatment system using an old trailer. Swenby said, “It works great, and was much cheaper than other options.”
Ray Rodriguez Jr., who manages operations at the Hammond facility as well as the books for the companies, said, “We use Mill Manager from Innovative Data Systems, and that software has been great. It helps us keep everything in the business straight. It has more capabilities than we even use.”
Currently, Paltech only uses the program for placing and tracking orders. Rodriguez added that the company did use the program in the past for tracking worker production. But the company has moved away from piece work for many functions.
Rodriquez added, “Alan Miceli and his team has been great to work with. He is always available to help us better use the software.”
Paltech uses Fleetmatics software for tracking trucks and driver activity. The company still uses paper logs for hours of service information. Swenby said, “The Fleetmatics software can suggest alternative routes, monitor driving habits, track average driver times, etc. It can even provide e-logs for hours of service if you desire.”
Another key supplier has been HUB Industrial Supply, which provides all the miscellaneous shop supplies as well as bandsaw blades for the various Paltech plants. Swenby gave kudos to HUB for its customer service. He said, “HUB is Johnny on the spot in terms of delivery. HUB works with us as one group offering volume pricing even though we operate multiple autonomous plants with separate invoices. We run each location as an independent profit center.”
From shop supplies to safety equipment and other consumables, HUB has helped Paltech simplify its purchasing process while offering competitive pricing.
TPM from Your Local Pallet Guy
“Beyond just selling a customer a pallet, we are committed to total pallet management (TPM), which is more than just a buzzword for us,” explained Swenby. TPM means providing spot trailers for customers that facilitate the efficient removal of cores and wood materials. TPM means just-in-time delivery so that customers can reduce inventory and storage needs for pallets. TPM means custom pallets produced to fit each unique shipping requirement. TPM means offering specialty non-wood pallets for applications when wood doesn’t work well.
Swenby added, “We are dedicated to recycling. Our objective is to reduce the amount of materials that go into the local landfills by finding alternative markets or other uses for the wood material. If we cannot find a way to recycle the wood, we grind the materials into mulch. We pride ourselves in producing high quality wood mulch for use as plant and animal bedding, landscaping, and many other uses.”
TPM has become a business approach that many customers associate with large national players. But Swenby suggested that Paltech can do the same thing with the local feel of having a pallet guy that you know and can see face-to-face. He stated, “Our customers are our best advertisement.”
