Being green is more than just good public relations for Primo Barzoni, it is a way of a life and a key focus for his family’s pallet manufacturing operation in Viadana, Italy. PALM SPA produces EPAL, Eco and CHEP pallets on its fully automated Storti nailing lines. The company is capable of manufacturing 7,500 pallets per day or almost two million pallets per year.
Primo Barzoni, president of PALM, explained the company’s philosophy when he said, “I want to run a sustainable, environmentally sound business. The environmental cost of the pallet is in everything we buy, so we as producers need to be ethically correct in how we run our businesses.”
Barzoni added, “The pallet is not considered by many people, and it is an important part of the supply chain. I am trying to change public perception about wooden pallets.”
A Sustainable Business Model
In 2001, PALM was the first pallet company to be certified for using FSC and PEFC lumber in Italy. These certifications are used to trace the origin of lumber to ensure chain of custody that logs are sourced from legal sources using sustainable practices. PALM uses only precut lumber, which is one reason the facility is so clean. About 10% of the lumber is FSC certified while most of the remainder is PEFC certified. The company does buy some from a Hungarian supplier that is in the process of obtaining certification.
A number of other pallet companies in Italy have followed the example set by PALM and are using mostly certified lumber. Barzoni commented, “Innovators will do things before others, and I do think in the long run that using certified lumber will help me secure business.”
“PALM gives additional value by sourcing material from nearby forests and does quality control checks,” commented Masenelli Dario, the controller for PALM.
In addition to sourcing from green suppliers, PALM has planted 120 hectares of trees in northern Italy, which helps offset any environmental impact of the trees the company harvests. Also, PALM works with 720 companies in the area to collect wood waste and ensure it is properly disposed of and recycled.
Even the production facility was designed to minimize environmental impact, the company installed a $300,000 wood waste filtration system to reduce pollution and keep the air clean.
Barzoni outlined the company’s future plans when he said, “We have a corporate goal of -50% carbon footprint goal by 2020.” In 2007, PALM had a -10% carbon footprint, and today it is at -32%. Every year, the company works with an Italian university to audit its records and develop its official sustainability scorecard.
Barzoni added, “The keys to our success as a company have been quality, sustainability and respecting employees.”
Storti Provides Dependable, Flexible Nailing Production
While all the environmental focus is nice, without strong production, the company couldn’t be competitive when it comes to the other type of green – the bottom line.
Barzoni stated, “The Storti equipment is very flexible. People find it easy to work on due to the ergonomic design of the machine. And it has greater flexibility than other options on the market to produce even small one-way pallets.”
The first line is a Storti Flex system, which is ideal for custom pallet orders due to its fast changeover times. Barzoni estimated that the Flex line can produce more than 400 pallets per hour. The company has a second Storti line that is used primarily for CHEP production, and it can push out about 325 pallets per hour. This CHEP line is integrated with an outdoor paint and conveying system.
Barzoni explained, “Our paint system for pallets is outside to keep the smell away from the main production area and to overall keep the shop clean.”
A movable conveying system with a swing door allows pallets to move outside without having to leave the door open all the time, which would otherwise allow heat to escape the production facility.
“Storti designed this innovative paint booth design, which allows us to keep workers warm in cold winters,” said Barzoni. “This door mechanism keeps me from having to pay to heat the outside.”
Barzoni commented, “Storti sold us more than just a machine. It helped to develop unique solutions to solve our challenges, such as the system for conveying pallets from the line outdoors to the paint booth.”
In addition to the two previously mentioned Storti lines, the company also uses a third line that can produce 300 pallets per hour. Most of what PALM produces is high quality pallets for multiple trips although it does make a small amount of one-way pallets for agricultural and salad shipments. Barzoni said, “PALM focuses on product quality not the lowest price so that our product has some dignity in the marketplace.”
A Family Affair
The Barzoni family through successive generations has lived in the same village for 1,450 years. Primo’s father started the pallet company. And, he is part of the second generation that has seen the company thrive. Today, Primo works with his family, Antonio, Lorenzo, Maurizio, Aldina and Tina.
A key side business for the company is PALM Designs, which creates wood-based furniture and products made from recycled pallets. Primo was doing upcycling with old pallets before it was the trendy thing to do. Upcycling is where a recycled material, such as wood from a pallet, is turned into a higher value product than the original item.
PALMDesign has built a full studio where pallet creations come to life and are displayed. This side company brings classes of students to its workshop to make things out of recycled pallets. The upcycling business has deep personal connection for Primo who has a disabled child. And the proceeds from PALM Design go to cover care costs associated with Primo’s child as well as benefit other disabled children in the area.
Barzoni explained, “This is social economics where we develop solutions instead of rely on public assistance.”
PALM Designs produces a wide variety of items from pallet speaker podiums to chairs and tables to racks to desks and even some display booth structures. They have even worked with design centers in Milan to bring pallets to the chic world of trendy home fashions.
Italy Remains a Challenging Market
Despite the company’s success, it faces a never ending series of competitive pressures. The entire market has been hampered by a financial crisis that has seen the total number of pallets sold drop significantly, 20-30%.
Dario stated that pressures from used pallets is also impacting new pallet market demand.
The two biggest costs for the company are lumber and labor. PALM obtains most of its lumber from various suppliers across Europe ranging from Germany, Austria Slovak Republic, Czech Republic, Hungary and Lithuania.
Dario commented that the company is looking to diversify its supplier base. But it can be difficult to get guarantees of delivery time and quality they want from new suppliers. Also, payment terms can be difficult to navigate.
Probably the biggest headache is the escalating cost of labor. Dario explained, “The cost of labor is one of the most critical factors for the Italian pallet industry… Finding operators is not the problem. The problem is the cost of operators, which can run as high as 25,000-30,000 Euros per year. Half of that is taxes, and half goes to the worker.”
He lamented, “Labor rates have gone up 4% over the last three years.” And those rates were already very high compared to the U.S. market, so any increase is a big hit on the total profitability of the company.
Despite it all, PALM has succeeded in both the white-wood market and supplying CHEP hundreds of thousands of pallets per year. And along the way, the company has helped define and drive a green agenda for the industry in Italy.
Green Business Strategy for the Pallet Industry
• Certifications trace the origin of lumber to ensure chain of custody that logs are sourced from legal sources using sustainable practices.
• PALM uses only precut lumber, which is one reason the facility is so clean. About 10% of the lumber is FSC certified while most of the remainder is PEFC certified.
• PALM has planted 120 hectares of trees in northern Italy to help offset any impact of timber harvesting.
• Every year, the company works with an Italian university to audit its records and develop its official sustainability scorecard.
