FORT SMITH, Arkansas – Like other businesses, General Pallets & Crates has found labor to be a challenge during the pandemic. The Woody pallet nailing machine from Viper Industrial has proven to be an effective solution to automate pallet production.
During the pandemic, labor has been “extremely tough,” admitted Werner Hugo, owner of General Pallets & Crates. Like other businesses, it has been a challenge to help protect employees from contracting COVID, and some people have been reluctant to work in group settings. Add to that the federal government-boosted unemployment benefits. When that started, “This machine made a lot of sense for us,” said Hugo.
General Pallets & Crates, which focuses solely on manufacturing new pallets and crates and has no pallet recycling operations, is based in Fort Smith, Arkansas.
Hugo worked for 21 years in the trucking and logistics industry before purchasing General Pallet in 2019. His previous position was as president of a publicly held trucking company. Werner Hugo’s title at General Pallets & Crates is president. His wife, Theresa, co-owner, is vice president of sales and marketing.
Building the Dream – Focused on Automation to Boost Efficiency
“When we bought the business, I felt like the pallet industry was one of the industries that was left behind when it came to automation and forward thinking,” said Hugo. “I always had a dream to turn this company into an industry leader. (The previous owner) did a tremendous job building a great base for 23 years.”
Since overtaking operations in 2019, Hugo and his team have worked to make General Pallets & Crates a quality-focused, efficient production operation. General Pallets & Crates manufactures a high volume of GMA pallets and custom pallets using softwood lumber. “We supply a lot of Fortune 500 companies,” said Hugo. “Our pallets are high quality. Ninety percent of our customers need food-grade pallets.” All pallets are heat-treated. General Pallets & Crates serves customers in Arkansas, Texas, Missouri and Oklahoma.
Hugo and his wife acquired another pallet business, Southland Manufacturing in Bowling Green, Kentucky, in June. Southland has been in business for more than 60 years and is the only new pallet manufacturer in that immediate region. The company used to manufacture only hardwood pallets, but Hugo quickly introduced SYP to the company. Today, the operation consists of 50% pine and 50% hardwood. This strategy has proven to give customers more options. The Southland plant serves customers in Kentucky, Tennessee, Indiana, Illinois, Ohio and Missouri. “It has a good footprint in the Midwest,” explained Hugo. “There’s a lot of opportunity up in that area.”
General Pallets & Crates has four of the Viper Industrial Woody pallet nailing machines. The Woody is a one-operator machine. The operator places the components into a jig that is on a vertical incline. A nailing gantry with pneumatic nailers and using collated fasteners automatically moves down the incline to nail the lumber into place. The operator turns over the pallet, places the remaining boards, and the machine completes the nailing process. Then, the machine automatically discharges the pallet into the stacker to be stacked to a programmed stacked quantity. The roller outfeed will hold three complete stacks.
Werner invested in one Woody machine at the beginning of the year. “Like anything new, there are a few things to figure out. Once we got it going, production went up. We have a similar one-man nailing machine, and the Woody out-produced it by far.” Hugo subsequently added three more Woody machines that arrived in April, June and September. He also invested in two Viper Industrial Woody pallet nailing machines for the Southland plant. “They made an immediate impact at that location,” he said.
What Makes the Woody Stand Out from the Rest?
“What’s intriguing about the machine,” said Hugo, “Is that it is on a vertical incline, whereas many pallet nailing machines are oriented horizontally. The incline makes it easier for workers to put lumber into place. Also, the vertical design saves floor space. Another factor was that the machine can be operated by one employee, which saves labor. “We’re very focused on key performance indicators in the business,” said Hugo. “We do time studies and look at operator fatigue and how it affects production.” He was favorably impressed with the volume of pallets that one worker can build in a day on the Woody, he added.
“So those three things got my attention – volume, the one-man operation, and the level of fatigue and the endurance of the operator.”
Nailing machines that require only one operator are much more productive and efficient than having pallets built by hand at a table with two workers, noted Hugo. A two-man team is lucky to build 180-200 – maybe 220 – pallets per day. With one man, the Woody can assemble about 320 pallets per day. This is a complex, heavy-duty five quarter board design. “There’s just no comparison between the Woody and manual built production,” said Hugo.
“For efficiency and volume, it’s a huge savings in labor costs,” added Hugo.
The Woody machines frequently are used for assembling a heavy-duty GMA pallet. The machines enabled the company to increase production 18-22% compared to other machines that are operated by one person.
The machine is very easy to operate and change over, observed Hugo. For example, the pneumatic nailers can be removed by simply opening a Destaco clamp. The machine can be changed over to a different pallet in less than 60 minutes compared to 2 hours or longer for other machines. The Woody also has numerous safety features: it requires the operator to ensure the lumber is secure and to press a button before the nailing gantry is activated. Electronic components are compact and clearly designated. “Overall, it’s a great design,” said Hugo.
Viper Industrial Woody pallet nailing machines are manufactured in China. All four arrived in a timely manner although the first one was delayed a few months due to challenges in shipping. Luckily, Hugo noted, they ordered the other machines before the height of the increase in shipping costs and delays.
An engineer came from China for a full week along with a Viper Industrial representative to train the General Pallets & Crates staff. “The service was really superior,” said Hugo.
General Pallets & Crates provided input to Viper Industrial and the Chinese manufacturer to make two modifications to the Woody, and those modifications are now available to other customers. “The machines are made for very square lumber,” noted Hugo, but pine boards sometimes have wane, and boards with wane did not always fit properly into the machine.
The ‘dogs’ that hold the boards in place were too short and tended to climb over boards with wane. General Pallet’s plant engineer, Tom Davern, and Viper’s Tony Grilo, designed a solution – slightly extending the dogs – and drew up the blueprints for it. Viper now offers different thickness dogs to accommodate various size. Viper Industrial worked to quickly get the new parts shipped from China within 72 hours after the manufacturer received the drawings.
“We installed it, and it worked well,” said Hugo. The modifications are now available to other customers. In addition, changing the dogs enables the machine to nail pallets made with recycled lumber. “I think that was a solid change for Viper,” said Hugo.
General Pallets & Crates uses Viper Industrial exclusively to supply collated fasteners for all its nailing machines. “I can’t say enough about Todd Mazur (owner of Viper Industrial) and Tony Grilo (director of automation),” said Hugo. General Pallets & Crates has been able to increase business 50% in a little over a year, so it needed a much larger supply of nails, accordingly. “They have very competitive pricing and are always up front with price information,” added Hugo.
General Pallets & Crates is equipped with a number of other pallet nailing machines; the company has 12 in all. Beside the four Woody machines, one of the latest additions is a pallet nailer from Universal Machinery. In addition, the company has two Woodpecker machines for building block pallets, eight Rayco nailing machines, and a Viking 505 pallet assembly machine.
People Focus: Human Resources Can’t Be an Afterthought to Succeed…
Hugo entered the pallet industry because of the “untapped potential” room for growth. A market analysis projects the industry will continue to grow through 2027, he noted. “Sit in an office and look around,” he said, “and find something that did not ship on a pallet. The industry is somewhat recession resistant. It’s something everyone needs.”
When Hugo and his wife bought General Pallets, he hired key personnel “you normally don’t have in this industry” – a highly skilled maintenance engineer, a production manager, quality control manager and a plant engineer…”That’s just the way I wanted to do it. I wanted to put out a superior product with great service.”
“People say, ‘A pallet is a pallet.’ I don’t believe that. We’re not for everyone. We differentiate ourselves on pallet quality and service. We wanted to be small enough to provide high quality and strong service but big enough to serve national accounts.”
Hugo implemented an extensive benefits program for employees. “It was very clear that people needed benefits,” he said. “We went out and got them extremely good benefits,” based on feedback and input from workers. The benefits include health, dental and vision insurance, supplemental insurance, and a 401(k) savings plan that General Pallet contributes 50 cents to for every $1 contributed by an employee.
He also implemented a “lucrative” incentive pay plan. A certain percentage of the company’s profits are paid to employees as bonuses if incentives are met. The plan is based 70% on the company’s performance and 30% on an individual’s performance. “Everyone has an opportunity to earn more money,” said Hugo. The entire bonus amount was paid out last year, and this year the bonus is even higher.
The incentive pay plan has paid dividends for the business. “It created an extremely great sense of accountability,” explained Hugo. “Everyone knows what is expected from them.”
In the past the company experienced a considerable amount of waste – in missed-cut lumber, for example. “All of a sudden, those things began disappearing, getting better,” said Hugo. Employees generated ideas for eliminating waste and other improvements. “People realized, ‘Hey, we’re wasting our own money.’”
“Waste levels now are so low they’re unheard of,” explained Hugo.
Safety is the company’s number one priority, stated Hugo. “Our employees are the most important people besides our customers. We’re building a great culture. Profitability is achieved in a way that everybody understands. And employees enjoy what they do. I think we’re setting a very good example of what a pallet company should look like and how it should be operated.”
Quality Drives Growth
One thing Hugo is especially proud of is the company’s reputation for quality. Since owning the company for three years, it has never had a load of pallets returned for defects or poor quality. He explained, “That comes down to employees who care about what they’re doing, working safe, and being absolutely committed to a superior product that we set out to make.”
General Pallets & Crates seeks to position itself as a strategic partner to vendors. The company works with customers to truly analyze their pallet needs to see if the current specification is the right pallet for the job. Hugo commented, “We will redesign the pallet, change wood species, remove or add lumber. We provide solutions. We let customers know that we are more than just a pallet builder. We are a solutions provider.”
For pallet design analysis the company uses the Best Pallet™ software from White & Company. The company’s engineer, Tom Davern, recommends the software program due to its capabilities and cost.
The engineering position is one of the top positions we added. “It’s made an enormous difference for us,” said Hugo. In the past, all pallet designs and specs were on paper. Now, every pallet has a SKU number, and all the specs and designs are stored on a computer and accessible with the software. This system ensures the right pallet is produced for the right client.
Another unique thing about the process at General Pallets & Crates is its fully enclosed production process. All the company’s operations are under roof – it has almost 200,000 square feet of space for raw material and pallet inventory. “The first time a pallet is outdoors is when a customer puts it outside,” noted Hugo.
General Pallets & Crates also manufactures a lot of crates. All the work is custom, built by hand, except the cut-up operations are automated. Crates are built with a combination of pine lumber, plywood, and in some cases, oriented strand board.
Another key differentiator is its logistics expertise and service. Werner Hugo comes from the logistics industry and has worked to make the company’s delivery top notch. In addition, with access to 12,000 carriers he reduced freight costs to customers by 30 % within six months.
A service that General Pallets & Crates provides new customers is prompt delivery on their first order. After determining the customer’s pallet specification, General Pallets will have the first load out in 48 to 72 hours. After that, the schedule can be daily or weekly.
Hugo stated, “From the first order on, we strive to deliver prompt service. That helped us out a lot during COVID. During the pandemic, many pallet companies did not have pallets to supply their customers. We got calls from a lot of customers. That 72-hour commitment really helped us grow new business.”
