When insurance providers refused to insure Turner Lumber’s south building because of its pallet operations, it provided an extra incentive to grow its pallet operations. The company moved them into another building with plans to construct two additional structures, paving the way for increased cut stock and pallet production.
TURNER, Oregon—Turner Lumber, a diversified lumber re-manufacturing and pallet company, is looking to significantly boost its pallet capacity after its current expansion project is complete in 2024.
Operating on over 100 acres in the Willamette Valley, the company is known for the precision-cut roofing system components it produces for big box stores and warehouses. The company now employs over 150 people.
But there is much more to the story than its flagship roofing components business. Turner Lumber is a great example of a company that has grown to take full advantage of its material generation. While roofing components are manufactured from the highest-grade material, the residual material is used for cut stock, sold through a network of lumber brokers, as well as for new and recycled pallet production. The company specializes in custom new pallets in addition to 48x40s. It makes use of its lowest-grade material for pallet repair. Repaired pallets account for about 25-30% percent of its pallet production.
Over the years, Turner Lumber has become extremely adept at processing peeler cores for maximum recovery. And according to Ben Ponce, who oversees the pallet operations, peeler cores provide a competitive edge that it can pass along to customers. Purchasing industrial lumber in the open market is much more susceptible to price fluctuation.
Ben Ponce stated, “Peeler cores provide a predictable monthly supply versus the ups and downs of the lumber market although it does involve more processing.” Turner first started running peeler core material in 2008.
The south building, about 250,000 square feet, houses the pallet cut stock operation where the residual material from the north building flows. The company runs two Producto lines and intends to install a third Producto system. The building has had new space open up after the pallet assembly and recycling activities were moved to a separate building close to the south building, refurbished to accommodate the move. Two additional buildings are also planned to boost dry material and finished pallet storage. The company also has paved 20 additional acres to accommodate the expansion.
The company is headed by Rod Lucas, the second-generation owner. The general manager is Hector Perez, who started many years ago as a cleanup boy and gradually worked his way to the top. Ponce oversees the pallet division, including northwest sales. Kirk Potthoff oversees the cut stock and deals with lumber brokers. Southwest sales are handled by Bill Kelly, who is based in southern California.
The company was started in 1966 by Virgil Lucas, Rod’s father, who started out in his garage. With the permission of his supervisor, he brought home damaged sheets of plywood from his day job at the plywood mill and recovered smaller cuttings that he sold to lumber yards. With $400 in his wife’s savings account, he created Turner Lumber. The company supplied retail lumber yards and, for a number of years, prefabricated roof trusses, before finding its sweet spot in lumber manufacturing in 1979.
Since 1994, Lucas has served on the Board of Directors for grading agencies, first the West Coast Lumber Inspection Bureau (WCLIB) and subsequently with PLIB after the agencies merged in 2019.
Serendipity: Turning a Challenge into an Opportunity
When it was time to renew his insurance last year, Lucas was taken aback, like many others in the pallet industry. “I’m going to be honest with you,” he recalled, “we got caught by surprise.” His existing carrier was refusing to provide insurance for the company’s south building because it contained the pallet manufacturing operation. He had to turn to Lloyds of London, which covered 50%, and an additional six carriers that covered the other 50%. “Our insurance didn’t double,” he reported. “It tripled.”
The decision was made to move the pallet operation to a different building to help mitigate the insurance increase. That course of action was also welcome and serendipitous news for the pallet division. The pallet team was looking to aggressively grow that part of the business, and the expansion would provide the elbow room and needed cash influx to do just that. Both Ponce and Kelly said they were extremely excited for the expansion, for this move would give the pallet department the required help to accelerate its growth trajectory.
Cut Stock and Pallet Sales
The pallet division produces both cut stock and pallets. It was launched in 2009 with 11 employees, including Ponce. Today, six of that original squad remain with the company. There are currently about 25 employees in the cut stock operation, around nine operators for the nailing lines, about 15 custom pallet builders, plus forklift operators.
Cut stock is sold exclusively through brokers, with production running between 10 and 15 loads daily. A key reason for this approach it to eliminate any problems with receivables. “Working with brokers, we get paid in 10 days, and there is never a problem collecting money,” Ponce noted.
For pallet production, the company relies on a combination of in-house sales from Ponce and Kelly and broker relationships. Kelly joined the company about four years ago after working for many years as a broker for Pallet Central Enterprises. He started working with Turner about a decade ago as an Atlanta-based broker and subsequently moved to California.
Most brokerage firms are located in the Midwest or on the East Coast, Kelly noted. He said that they can find dealing with pallet companies in the West challenging. Given his experience on the broker side and now the plant sales, however, he finds that he is well-positioned to help them navigate their needs in the West. He appreciates working with pallet brokers. “They’re well-financed, they pay their bills on time, and they have a heavy, big reach,” he said, commenting on their ability to bring additional sales to the company.
The company generally benefits from favorable freight rates, which allow it to ship competitively up and down the West Coast as well as Idaho, Nevada, and Arizona. Because of the sheer volume of loads coming out of Turner Lumber in terms of roofing components, cut stock, and pallets, it enjoys competitive pricing from freight brokers. In addition, the pallet division enjoys favorable pricing southbound into California as truckers look to cover their fuel expense on that backhaul route.
Two More Woodpeckers on Order, Focus on Custom New Pallets
The company currently runs two Rayco nailing machines that it purchased used, as well as two Woodpeckers. Turner Lumber produces an estimated 125,000 pallets per month. With the projected growth of the pallet department, Turner Lumber purchased an additional two Woodpeckers set to deliver in 2024. The choice was simple based on the quality of the materials used, the safety features integrated, the user-friendly design and craftsmanship of the Woodpecker nailers.
Turner Lumber also houses 15 custom new pallet building stations.
When asked what he likes about Woodpecker, Ponce was quick to stress the straightforward design and ease of maintenance. “I love the simplicity of the machine,” he said, “just air and hydraulics.” He added that he can quickly get new employees up to speed. “We can train somebody in one day and be cranking out 800 or 900 pallets the next day.”
He also likes that his maintenance department can easily pinpoint any issues and quickly get them back up and running. The pallet division also has had success using an incentive program on the nailing machines to ensure that targets are regularly met.
The same perspective has also flavored other equipment purchase decisions. While the company has several package saws, it recently chose Oregon-based Pacific Trail for its latest purchase. “We just wanted something local that would be easier for our maintenance guys,” he said. Turner Lumber has experienced that with some suppliers based across the country, they have remote diagnostics, but if something goes wrong, it still requires a technician to be flown out to Oregon. This is an issue that they are trying to limit.
With new custom pallet capacity increasing, the company is bullish on the future. For his part, Kelly sees continued investment in automation by customers as an important driver for the new pallet demand. “These big companies are building multi-million dollar manufacturing plants and warehouses with high levels of automation that is very fine-tuned,” he said. “They need pallets that are exactly to spec and used pallets won’t do. If they spend $20 million remodeling a production line at a beverage or food-grade plant, it has to run perfectly. Whether it is an eighth of an inch tolerance or one-sixteenth, it’s got to be the same way every time. We are seeing that growth, especially on the West Coast.”
For his part, Ponce isn’t overly concerned about the down economy currently being experienced. “We are seeing some sectors cooling off, but the pallet industry has seen a down economy before. Turner Lumber pallet division was born out of the 2008 recession. During that time, while other sectors in the company were experiencing tremendous stress, the pallet department was picking up steam.
Staff Retention Success
Turner Lumber also enjoys a staff retention rate of almost 90%. Lucas attributes this success to its policy of paying 100% of health insurance, as well as a profit-sharing plan with employees that is shared around Christmas. “Either the weekend before Christmas or two weeks before, we have a big holiday party. It’s a fun event. And like I tell our guys; the number one thing is our employees.”
Increasingly, Lucas is transitioning into semi-retirement. His passion is off-roading, and he recently came back from an extended vacation in Arizona with his wife. Lucas is looking forward to continuing his family run business and emphasizing business growth.
