Wisconsin Pallet Company Spins Off Grinding Business

Three years ago, Terry was plant manager for a pallet business, Performance Pallet, owned by him and his brother, Jim, who started it. That year the company invested in grinding machinery and began converting waste wood into ground wood fiber that was sold for mulch, animal bedding and boiler fuel.

Earlier this year, the grinding operation was spun off into a separate business, Performance Wood Products Corp., with Terry at the helm.

Grinding wood waste is regarded by many in the forest products industry as little more than a necessary evil according to Terry. They may be forced into grinding their wood scrap if there are no other cost-effective solutions for disposing of it. “A lot of people aren’t going to get into it,” he said.

However, Terry is committed to growing the business, to marketing and selling the company’s products and services in order to build the fledgling enterprise into a profitable venture.

One of the keys to growth will be marketing the company’s service as an environmental-friendly and cost-effective alternative to disposing of wood waste in landfills, and developing suppliers of raw material above and beyond Performance Pallet.

Terry previously owned a trucking company for about 15 years; the business had nine tractors and 30-plus trailers. He also has been involved with Performance Pallet since his brother launched the company in the early 1990s, and joined his brother full-time at Performance Pallet as plant manager in the mid-1990s. Performance Pallet’s 55 employees manufacture and recycle pallets at the company’s facilities about 15 miles from Green Bay.

When Jim and Terry began grinding operations three years ago, they experimented briefly with a tub grinding machine before investing in a mobile system supplied by Rotochopper. Earlier this year, they added Rotochopper’s system for coloring mulch.

The impetus to start grinding was provided by state regulators who frowned on the company’s previous practice of burning scrap wood. However, the brothers quickly seized on the potential. “We just said where else can we start to grow the company,” Terry explained. The two men agreed that grinding wood and converting it into marketable products was an area of opportunity.

Performance Wood Products grinds wood to produce colored mulch, animal bedding and boiler fuel. Most of the company’s raw material is hardwood. The company grinds scrap pallets, end cuts, and scrap boards and ends from the Performance Pallet manufacturing and recycling operations. The company already has developed a handful of other grinding customers — such as pallet companies and sawmills — although at this stage about 80% of its raw material is supplied by Performance Pallet. Terry’s goal is by early next year to reduce the company’s reliance on Performance Pallet to a level of about 50% and to continue to reduce it as he broadens the base of raw material suppliers.

Terry, 39, is busy marketing the company’s grinding service as an alternative to disposing of wood waste at landfills. His efforts to sell colored mulch are aimed mainly at landscaping businesses. The company sells its ground wood fiber products at wholesale although retail sales could be an option in the future. “Time will tell,” said Terry. “It’s just a matter of how long you can sustain the market with a new product.”

Terry realizes his efforts to market colored mulch will take time to pay off. “It just takes time…up to two years…That’s what it takes before people start banging your door down for it.”

It has been a slow process to educate landscapers about colored mulch, Terry conceded. They are somewhat hesitant because it is a new product, he said, and they want to be assured that colors will hold as well as the color of natural mulches. However, he has found that there is a snowball effect — “the more you get out there, the more it sells.”

One of the most important factors in the Brills’ decision to choose Rotochopper for supplying the grinding machinery was the capability for a one-pass system that both grinds and colors. The capability was important to the Brills even though they did not plan to begin producing colored mulch immediately. The Rotochopper system allowed them that option down the road. “That was always in the back of our heads,” said Terry.

Performance Wood Products operates out of the same facilities as Performance Pallet, although Terry is beginning to consider sites to relocate the business. In addition to the Rotochopper machine, the company has a pair of tractor-trailers to make deliveries. The company is small. Besides Terry, who has multiple duties that include marketing, sales and running the grinder, his wife, Janet, handles bookkeeping, and another employee, John Wudtke, operates the machine. Terry is looking to add another employee.

The Rotochopper is idled for a portion of every Friday for routine preventive maintenance. “It runs super,” Terry said of the machine. His earlier career in the trucking business convinced him of the merits of preventive maintenance. “You need to do the maintenance because it saves you (money) in the long run,” he said.

The payloader and forklift are maintained the same day, and they do a little extra cleaning up. The grinding tips of the Rotochopper also are refaced monthly.

The machine’s production ranges from about 30 to 35 cubic yards per hour for colored mulch to about 70 to 75 yards for boiler fuel. The average is about 45 cubic yards per hour, according to Terry.

The Rotochopper was devoted to producing colored mulch for about three months earlier in the year. The volume, therefore, represents about 25% of the company’s business. Sales are higher than 25%, however, because colored mulch earns greater revenues than animal bedding or boiler fuel.

Earlier this year the company produced colored mulch in red, brown, black and orange. Red and brown proved the most popular. The company will be adding more colors. Performance Wood Products uses colorants supplied by Ameri-Mulch. “They’ve been great to work with,” said Terry.

Rotochopper supplies both grinders and complete coloring systems. Its machines can process cut-offs, pallets, slabs, edgings, cants and brush. It offers both diesel and electric models. Its EC-156 model, for example, grinds, colors and loads mulch at the rate of 25 yards per hour using only 150 hp. Rotochopper also offers systems that have capacities of up to 125 yards per hour.

Terry initially targeted markets within 30 miles of Seymour but began getting calls from potential customers up to 75 miles away. “We’ve already gone out to 75,” he said, and next year will be delivering to markets even further away. “Our main target is to stay within 30 miles and move as much product as possible” within that market area, he said.