HENNIKER, New Hampshire – When international phytosanitary standards arose for wood packaging used for export, pallet manufacturers like HHP Inc. had some scrambling to do to install equipment to treat pallets.
“Those discussions had been going on for years,” said Ross D’Elia, president and co-owner of HHP, “and the date kept getting pushed out further, so many people really didn’t take it seriously until a date was firmly established.”
HHP, co-owned by Richard Carrier, vice president, has sawmill and pallet manufacturing operations. The company produces about 500,000 pallets annually, representing about $3.5 million in sales. It supplies pallets to manufacturing businesses in New England and the Northeast.
As of September 2005, pallet manufacturers producing pallets for export were required to comply with the International Phytosanitary Measure, ISPM-15. The measure mandates that wood packaging must be fumigated or heat-treated in order to kill wood-eating insects and prevent them from migrating from one country to another. ISPM-15 complements the U.S. Export WPM (Wood Packaging Material) Fumigation Program.
“What we found was when the due date arrived, the issue in the industry was not about the additional money involved,” said Ross, but how fast suppliers could equip them with heat-treating systems.
Nyle Heat-Treater
HHP invested in a Nyle pallet heat-treating chamber. The decision was easy. Ross already had been in discussion with Nyle to buy dehumidification technology for a new Better Built dry kiln. “Nyle is a local company (based in Bangor, Maine), so that helps transportation-wise,” noted Ross.
While HHP was waiting for its Nyle pallet heat-treating chamber to be delivered and installed, it contracted with another pallet supplier to provide heat-treating service.
The Nyle system arrived in February. “They designed and manufactured the whole 50-foot by 25-foot building capable of holding up to 900 pallets,” said Ross. A 1.5 million BTU propane burner fuels the heat-treating chamber.
Pallet manufacturers that supply wood packaging certified for export are audited for compliance and must adhere to very strict rules. The American Lumber Standard Committee (ALSC) administers the certification program, which requires participating companies to enroll with an inspection agency accredited by the ALSC. Pallet components or finished pallets that are treated according to regulations are marked with a stamp to certify compliance with ISPM-15. HHP uses the National Hardwood and Lumber Association as its auditing agency.
ISPM-15 requires heating the wood to a minimum wood core temperature of 133 degrees Fahrenheit for a minimum of 30 minutes. This heat-treating process kills insects and their eggs and fungi.
The heat-treatment process takes about four hours in warmer months and about five hours in the dead of winter. HHP currently heat-treats about four loads per week. Once the pallets are loaded into the chamber, the temperature is increased to 133 degrees and maintained for the 30-minute treating period.
Three temperature probes, located in various locations in the chamber, are inserted into a pallet in order to monitor the process. “Once we turn on the chamber, a computer-generated graph displays the heat of the chamber as well as the heat inside each of the three test pallets,” said Ross. “The probes communicate with a pc that automatically shut off the chamber once the pallets hit the target temperature and that temperature is maintained for 35 minutes.”
At the conclusion of the cycle, each pallet is stamped to certify that it has been properly heat-treated.
Pallet Plant, Sawmill
The sawmill gives HHP an advantage in its pallet manufacturing operations, Ross noted. “The pallet shop has a steady supply of raw material, which keeps the shop running when there are spikes in lumber prices because of lumber shortages or other reasons,” he said. “We can ride those things out a bit better than other shops.”
The HHP sawmill supplies about 50% of the raw material needed by the HHP pallet plant. “From that point, we have to go out on the market and buy pre-cut,” said Ross. “We also have ongoing programs with other hardwood sawmills that sell us cants and lumber for the pallet shop.” The company buys 4/4 3A and 3B lumber as well as 4×4 cants. HHP’s pallet operations use Northern hardwoods, such as red oak, soft maple, hard maple and yellow birch.
Cants are processed by a Pendu cut-off and gang saw system that produces most of the pallet lumber. A crew of three or four men pulls, sorts and stacks boards exiting the gang saw. “If any need to be cut back because of defects, they cut out the defects immediately,” said Ross. Boards go through an unscrambler and then a rollcase to a pop-up saw to be cut to length, and the finished lumber goes by belt conveyor to a 12-foot round turntable to be sorted and stacked. A McDonough 48-inch center-split band resaw is used to split 4/4 boards into two ½-inch deck boards. The cut-up operations produce about 100,000 board feet of pallet stock a week.
Pre-cut stock is placed into inventory so it is ready to use in filling an order. “We are trying to make stock two to three days ahead,” said Ross.
HHP has two Viking pallet assembly systems for automated nailing: a Champion and a Turbo 505. Specialty or custom pallets and small orders are assembled by hand with pneumatic nailing tools.
The Viking machine operators are given specific nailing instructions for a given pallet on a card that identifies the customer and other information. “For instance,” said Ross, “there might be information about the number of nails to use, the spacing requirements and so forth.” The operator of the Turbo 505 can retrieve the pallet specs from the machine’s computer memory. The Viking Turbo may assemble three or four different pallet types during a day, assembling a combined total of 1,200 to 1,500 pallets.
The Viking Champion is set up in a different area of the plant. Because the set-up time on the Champion is longer, it is normally used for long runs; the machine is only changed over two or three times per week.
Two or three workers assemble custom pallets manually. Some of the company’s custom pallets are up to 84 inches long, and HHP fills orders for as little as 20-100 specialty pallets.
Finished pallets are moved into a trailer immediately for delivery or in some cases may be placed into inventory for a customer. Common pallet sizes include 48×40, 36×36, 42×42 and 42×40.
Strong Customer Service
Ask Ross what is noteworthy about HHP’s pallet business, and he will tell you the focus on giving customers superior service. “We pride ourselves on giving quick turnarounds by having customers’ most common sizes in stock and ready to ship when they need them,” he said.
The HHP loading dock can accommodate eight trailers, so HHP has plenty of dock space to load trailers with finished pallets for shipment or storage. “Most of our customers require multiple sizes, so we can accommodate them by putting multiple sizes in one load right on the truck for delivery,” said Ross.
The company also must pay careful attention to maximizing yield from its sawmill and buying raw material that can be efficiently remanufactured into pallet stock.
HHP has sold pallets through brokers in the past but recently shifted more to direct sales. “Someone in-house keeps apprised of our customers’ needs so we always know if they need a load of pallets sooner or if there are design changes we have to consider,” said Ross.
Production is based on customer orders and anticipating their needs. “Every morning we check the purchase order list before we start producing,” said Ross. The orders are reviewed to identify common pallets and components so that the cut-up and assembly operations can operate efficiently.
“It’s all about nailing efficiently,” said Ross. “It’s critical for us to have a large customer base and a lot of different sizes to offer so when a piece of lumber passes through the system there will be very little going through the chipper. Lumber and pallets are worth far more than anything going through the waste stream.”
Employee Benefits
HHP offers its employees a generous health insurance plan as well as a profit-sharing plan and a 401K retirement plan. It provides employees with monthly safety training.
“In order to maintain that level of benefits, it’s critical for us to be profitable and operating as efficiently as possible,” said Ross.
The company strives for continuous improvements in its operations. “These are everyday issues, such as how to get heat recovery to warm our buildings in the winter,” said Ross. “We’ve invested in recovering the heat losses from our pallet shop, and that is paying off during these days of increasing energy costs.”
HHP employs some Cambodian workers through a Massachusetts labor contractor. “We’ve been using them for about eight years, and they’re integrated into our workforce and are trained to do everything from lumber inspection, to operate forklifts and run cut-up systems,” said Ross. “They are very smart, good workers who add a level of consistency to our production.”
Some of the Cambodian employees do not speak English, but communication is not a problem because some co-workers are bi-lingual and translate. In addition, signage throughout the pallet shop is in both English and Cambodian.
Ross singled out a couple of managers. Pallet mill manager Russ Bishop began working at HHP in 1973, when it was owned by his father, and continued through college. A graduate of Clark University, he served in the Army from 1982-1993 and then returned to work at HHP. Assistant manager Nancy Kocsis joined HHP last year but has 15 years of prior experience in the pallet industry and reels. She is responsible for scheduling, sales, and the company’s heat-treating program.
Defeating Challenges
HHP takes nothing for granted when it comes to its operations and satisfying customers. “We make sure our customers are content by maintaining open relationships with them so if there are concerns we can deal with them right away,” said Ross. “This is one of the main reasons we are focusing on dealing directly with our customers because it’s hard to replace a customer who has left.”
Customers know they can rely on consistent, on-time deliveries because of HHP’s sawmill and its relationship with other sawmills and lumber suppliers. “Our customers have the peace of mind that their pallets will arrive on time,” said Ross, “and our suppliers know they can count on us to be there to purchase their production because we buy material consistently throughout the year. When the industry experienced a wood shortage a few years ago, HHP was able to navigate it with minimum difficulty or setbacks.
The company is located near the White Mountains, and the forests produce plenty of saw logs. The process of qualifying to bid on timber on national forest lands is arduous and expensive, however. “But once you secure a woodlot, you can be assured of a large volume of quality wood,” said Ross. “Woodlots of this size are difficult to get in New England because the landscape is broken up so much. We can set up a (logging) crew for maybe five winters on one job so we have enough wood for our customers.”
Markets in the Northeast have been fairly stable since the beginning of the year, but HHP — like other companies — has increased pricing to pay for increasing fuel and related transportation costs.
The lumber business is “terrible,” Ross noted. “The market in red oak has been challenging for over a year, and it doesn’t look like it will pick up in value for some time.”
The recent shutdown of two New England pulp mills could reduce demand for low-grade logs, Ross noted, which could lead to reduced availability of hardwood logs. “That could work itself out based on weather conditions or if other businesses disappear from the scene, which means inventories will drop. When demand picks up, a lot more wood will flow.”
Ross is relatively comfortable with HHP’s future even though market conditions are not the best. “Our log costs are higher than we would like to see,” he said. “There are a lot of unknowns out there. People are trying to work down the high inventories they built up this winter. Interest rates are on the rise and housing is slowing down, so it’s hard to have a real warm feeling about the industry.”
