Every detail was well thought out, and the systems were designed to reinforce quality control at every turn. That is what stood out at Neopal during last year’s NWPCA fall plant tours. I have been to many pallet plants. Few if any showed more forethought on every detail like this facility. Neopal is a masterclass on quality control and precision in pallet manufacturing.
That’s not surprising because Jeff Krug, the owner of Neopal, is a former engineer with Compaq who got into the pallet business after he struggled to find pallet suppliers who could meet the demanding needs of the electronics industry. This facility in Houston, Texas was designed from the ground up to fit Neopal’s mission. This is the second facility in the company’s history. Krug opened up this facility to the industry even as he is planning the next generation of manufacturing at a new plant to be built within the next few years.
During the tour, Krug called his vision of the future, “Reimagining beyond automation.” This new facility will completely rethink every part of the operation, both assembly operations and lumber processing. Krug explained, “Every aspect is going to be completely reimagined from the ground up and will employ more advanced technologies and new approaches beyond what is seen today.”
Neopal relies on Storti nailers for its current pallet production due to its great accuracy and precision for board placement. The facility can produce up to 12 pallets per minute on each Storti line for standard designs.
What Does Reimagining Beyond Automation Mean?
Neopal is not resting on what it has built. Instead, the company is intentionally laying the groundwork for what it believes pallet manufacturing must become over the next decade.
Neopal’s Houston-area operation sits on roughly 19 acres split across two sides of Cross Continents Drive. The south side, totaling about 14 to 14½ acres, houses the existing manufacturing campus. The north side, another five acres purchased at the same time, represents the company’s future. Krug calls the entire property simply “the campus,” a term that reflects both its long-term intent and Neopal’s deliberate approach to growth.
“This was always part of the master plan,” Krug said. “We bought all of it for the same purpose—giving us a home for the next 10, 15, 20 years and the growth space to support that.”
Architectural drawings outline Neopal’s next major move: a new manufacturing building of roughly 100,000 square feet. While plans have evolved over the years, the current vision calls for relocating most pallet assembly operations to the north campus. This would free the south campus for expanded lumber processing and specialty capabilities.
Importantly, the new facility will not simply replicate what exists today. “We generally run equipment for 10 to 12 years,” Krug clarified. “Even if it still looks good, opportunities for improved performance and technology change over time.”
Neopal plans to install entirely new equipment in the new building, running both plants in parallel until the new lines are fully operational. Only then will older equipment be retired. This phased approach minimizes risk and protects customer supply.
Krug is intentionally non-committal about suppliers. While Neopal uses well-known equipment platforms today—many heavily customized—Krug expects the next generation to push even further beyond off-the-shelf solutions.
“We define what we want to accomplish first,” he said. “Then we find or build equipment to support those objectives.”
Rather than chasing a fully lights-out, autonomous facility, Neopal is targeting something in between: a manufacturing model that better allocates human labor while using technology where it adds the most value.
One major area of focus is lumber optimization. Today, Neopal largely cuts lumber to uniform lengths and grades afterward. In the future, Krug envisions a system that evaluates each incoming board individually, optimizing cut decisions to extract maximum value while meeting pallet requirements.
While high-end scanners and optimizers exist in sawmills and millwork applications, Krug noted, “Cost and speed limitations have historically made scanners and optimizers impractical for pallet manufacturing. I believe that gap is narrowing—and is exploring customized approaches that blend scanning, automation, and AI-driven decision-making.”
Finished pallet quality inspection is another target for this technology. Neopal has invested heavily in machine-vision inspection projects, not as a replacement for people, but as an aid.
“The goal is better inspection than a human alone can do,” Krug said. “Long-term, maybe it reduces labor, but that’s not the primary driver.”
For pallet inspection, Neopal was evaluating the Universal Logic Neocortex pallet inspection system at the end of one of the Storti Flex 61M lines during the tour. This system is sold and serviced by Pallet Machinery Group. It can inspect up to 700 pallets per hour looking for anything from raised nails to missing or misaligned boards, broken components, incorrect nailing patterns, dimensional tolerance, etc. Universal’s system uses a laser-based scanner to fully inspect each pallet. Problem pallets can be kicked out for repair or further inspection. The machine does take a picture of the pallet, but it is primarily used to tell the operator what components need to be fixed. Neocortex utilizes artificial intelligence (AI) technology to inspect new pallets in real-time for quality control. The system wasn’t fully operational during the tour, and Krug is not fully convinced that he has found the right solution yet to deploy in his new plant.
Krug commented, “We have total confidence in PMG and the guys there. They’ve been a long-term partner that we love working with for over 25 years, and we are still evaluating the Neocortex technology, among others looking for the optimum solution.”
Currently, Neopal uses a human-based inspection process for finished pallets. Every piece of equipment is assigned to a person providing accountability for production every second. Each line has an integrated quality inspector who, at the touch of a button, can eject any individual pallet requiring further inspection or repair. The end of the line has two operators manually inspecting every pallet stack. They are looking inside and up and down the pallets. There is a second step where an auditing station pulls random samples of pallets to double-check the work of the inspectors, ensuring that everyone knows they will be held accountable for the quality of the process.
When it comes to compensation, Neopal has sought to find the sweet spot between production speed and quality control. Employees are paid hourly but are rewarded and advanced based on output. Krug shared, “Our employees know what we charge our customers for each function or step of the manufacturing process in both assembly and lumber processing operations and are incentivized to improve the process because the company shares part of the savings they are able to find with the employees.” This bonus approach aligns the workers’ interest with the company’s interest.
The company tracks production and posts it above the machine on monitors to provide operators real-time information on how they are doing. The monitors tell operators if the machine is running normally, the percentage performance of the machine, downtime during the shift, production count, the reasons for the last downtime and the average small stop time. Comprehensive stoppage or downtime data is automatically tracked and transmitted to both the maintenance and operations management teams in real time.
To control quality, all the lumber is stored indoors in separate buildings.
The facility has a wood dust collection system, which is one of the reasons that it is so clean. A Cresswood grinder is used to process wood waste. Neopal works with Direct Fastener and Legacy Fastener. Always focused on quality, Krug stated, “Both nail suppliers do a great job for us.”
Neopal uses a human-based inspection process for finished pallets. Every piece of equipment is assigned to a person. This provides accountability for production every second.
A Strategy Built on Selectivity
Underlying all of Neopal’s operational decisions is a business strategy that deliberately avoids chasing volume for volume’s sake. The company does not employ a traditional sales force. Growth comes through existing relationships, referrals, and carefully chosen new partnerships.
“We’re not trying to be everything to everybody,” Krug said. “We focus on high-volume users of custom pallets with high expectations.”
Neopal targets customers interested in long-term, value-driven partnerships rather than transactional pricing battles. Krug is blunt about avoiding zero-sum relationships. “If the focus is just squeezing price, that’s not our customer,” he said. This selectivity enables Neopal to plan infrastructure ahead of demand, rather than scrambling to react to it.
Neopal focuses on major accounts located relatively close to its campus. Krug noted, “About 60-70% of customers are within a 30-40 minute radius.”
Neopal relies on AIT stackers sold and supported by Pallet Machinery Group.
Deep Look Inside the Current Plant
Only about ½ of the operation was running during the tour due to safety concerns, with some lines intentionally paused to open up safe space for large groups and limit visitor exposure to high forklift activity, material flows and tight operating spaces. But you can tell that the facility is designed for efficient production and quality control. No cant processing is done at the plant; only 2×4 and 2×6 material is resawn to size.
According to Neopal, its Houston plant is believed to be the only LEED certified pallet manufacturing facility in the world. And almost every aspect of the manufacturing equipment was customized in some fashion to help the company achieve its performance goals. The plant is designed to service customers with high-volume, 24/7 operations and high-quality expectations. Neopal has grown steadily since it began in 1999. This Houston manufacturer does not have a sales team and is selective on what clients it takes.
Explaining the company’s philosophy, Krug said, “Everything we do is for immediate response. We deliver within 15 minutes before the client’s requested delivery time, occasionally early, never late …We are selling on value.”
The company is currently training employees to work a second shift. It has over 70 employees. The facility can build up to 60x 60 width pallets on various Storti nailing machines.
The main production building has 116,000 sq feet of space. Pallets are made out of KD pine sourced from domestic and international sources. Usually, the company has on hand about five million board feet of international lumber and five million board feet of domestic material. Neopal custom designs pallets to a client’s specification; currently it produces about 65 different designs.
Walking the plant, one of the most striking features is how Neopal designs systems to avoid bottlenecks. Nowhere is this more evident than in lumber processing. Neopal operates multiple Brewco resaw lines built around pairs of double-head bandsaws—24 saws total—running at approximately 80 linear feet per minute. Each resaw line is designed to deliver 240 linear feet per minute of output.
What makes the system distinctive is how it responds to disruption. If one saw needs a blade change or maintenance, the operator can take it offline via a touch-screen. The remaining saws automatically increase speed to maintain total output.
“The system doesn’t stop,” Krug explained. “There’s no difference in output whatsoever.” This philosophy—designing independence within integration—runs throughout the operation. It allows Neopal to manage routine maintenance, changeovers, and unexpected issues without shutting down entire lines. The result is consistency, not just speed.
Either single long length bundles of lumber or a combination of shorter length bundles side-by-side totaling up to 20’ can be run simultaneously to fully utilize the capacity of the Brewco trim saw system. Neopal will automatically feed incoming Southern Yellow Pine 2x4s and 2x6s on the infeed line into the system. The system includes a tilt hoist, unscrambler and strip remover. The boards go through a board feeder at a rate of 60 lugs a minute into Brewco’s seven-saw multi-trim undercut trimmer. This custom-designed trim saw has five inner saws that are moveable using interconnected hydraulic servo positioning cylinders. Saws can be quickly moved automatically by the operator inputting the desired lengths on a touch screen control pad. All the inner saws have the ability to drop out of the way in order to provide the different cut lengths as needed. This happens automatically from the touch screen without direct human intervention.
Neopal was evaluating the Universal Logic Neocortex pallet inspection system at the end of one of the Storti Flex 61M lines during the tour. This system is sold and serviced by Pallet Machinery Group. It can inspect up to 700 pallets per hour.
Boards exiting the trim saw are automatically sorted by size and destination with an in-house built system and are transported to either two Baker notchers or the resaw lines to produce deck boards. There are four custom resaw lines, each with an in-house designed and built fully automated feed and distribution system along with AIT TS300 stackers at the end of each line. Two of the lines each incorporate six modified Brewco saw heads, and the other two lines incorporate newer custom-designed high-precision resaws, called the Neopal MachX, manufactured exclusively for Neopal. For details on the unique innovations developed by Brewco to handle unique challenges on the Neopal saw line, read the article in Pallet Enterprise at https://tinyurl.com/5n6sv76w.
Keeping the facility as well as the pallets clean is a major priority for Krug’s team. Neopal doesn’t use traditional brush dedusters. For the first two resaw lines (12 saw heads), Neopal worked with Brewco to design an air driven dedusting system internal to each saw head. For the second two resaw lines (3 & 4), the resaws are not made by Brewco, but are a custom, high-performance design exclusive to Neopal, and Neopal designed a completely different air driven dedusting system, which is outside of the saw heads, given the different approach of stacked saw heads rather than sequential heads as on the Brewco system. Rather than use air tubes as on the Brewco saws, Neopal designed and manufactured a series of ultra-thin, multi-ported directional air jet nozzles ejecting dust directly out of the kerf of the saw blade into vacuum ports.
The pallet manufacturing part of the process relies on equipment from Storti in Europe. Neopal can produce either block or stringer pallets. It specializes in complex designs, such as the CP7 and others. The pallet manufacturer used to use seven Raycos and could push out 2-3 pallets per minute on each machine. These lines were also custom designed for Neopal back in 2011, and some of the enhancements and technologies Neopal engineered with Rayco have been incorporated into newer Rayco equipment currently on the market.
Krug admitted, “Raycos were great machines. But we just needed higher production…The Storti equipment offers great accuracy and precision for board placement.” Now the facility can produce up to 12 pallets per minute on each Storti line, although the more complex pallet designs run a bit slower. This switch was made starting in 2013.
Two Storti Flex 61M/62M lines anchor the center of the plant. There is a Storti Flex 50M and a Storti Flex 60M for building mats. And there is a third Storti Flex nailing system custom designed to build block pallets for Neopal.
The company produces both stringer and block pallets; about 60-70% of production is stringer designs versus about 30-40% block pallets.
Taking Care of Employees Who Deliver for Customers
One key to the company’s success is the longevity of employees; the average tenure was 12 years, although that number has dropped a bit since staffing up for a second shift. Krug noted, “We give people a true career path, which explains the employee longevity I mentioned earlier.”
Employees receive competitive pay with 401k matching up to 6% and full health care for the worker and his/her family. Neopal thinks about the little things when it comes to employees. The break room has a huge bank of microwaves. Krug explained, “We want the employees to enjoy their break, not to spend the entire time waiting for a microwave.” The break room seats 80 people and can double as a training room. Employees are given free company-approved footwear. Workers can opt for their own, but they must get approved to conform to safety standards. Everything is well marked in the plant, and it is one of the cleanest pallet plants that I have ever seen.
Continuous Innovation, Everyone Tied to the Same Mission
As amazing as this facility is, Krug and his team are continuing to look for the next evolution in manufacturing, so it will be interesting to see what this will look like. Regardless of the plant or the layout for any pallet producer, execution matters most. And the entire Neopal facility is designed to function as a team focused on quality and efficiency.
