Palcon LLC – A Pallet Company that Is Adjusting to Market Changes
Palcon has taken an interesting path to adjust to the changing pallet markets. Its focus on wood fiber products includes recycled pallets, wooden pellets, and filter soxxs, a relatively new opportunity for a pallet company.
By Ed Brindley
Date Posted: 8/1/2012
Muncy, Pennsylvania — Matt Carey, owner of Palcon LLC, is adjusting to both survive and thrive in the competitive pallet world of central Pennsylvania, one of the biggest and most competitive pallet regions in the country. To avoid the low-priced market of full tractor trailer loads of pallets, Palcon builds pallets in smaller quantities and customized specifications. This part of the pallet market requires more hand holding, variety of products, and focus on designing pallets. Carey also believes the pallet and fiber recycling markets hold the promise of future success for Palcon.
Matt Carey’s father, Dan, called D.F., was originally a farmer by trade. But when the Agnes flood in 1972 wiped him out, he took a job at a local mill which he took over in 1975. Matt Carey started working at the mill when he was 14. At that time, the family had a sawmill. Now, however, it is dedicated solely to pallets, crates and wood fiber. After getting an associate degree from Penn College (then Williamsport Area Community College), Matt Carey joined his father at the pallet plant, which was later renamed as Palcon LLC. D.F. retired but still drives for the company part-time and serves in a consulting role. Carey moved Palcon LLC to its current Muncy location in 2000, where it owns a 15 acre industrial site with a 22,000 sq.ft. building.
Palcon’s Product Mix Emphasizes Wood Fiber Markets
Palcon’s focus is on providing customized specialty products. It is a member of the National Wooden Pallet and Container Association and uses the PDS pallet design system to design pallets for its customers’ needs. Its professional business approach is illustrated by its website. While it is not unusual for a pallet company to have a website, Palcon has had a web presence for an unusually long time. Carey said that he has no proof, but he believes that Palcon was one of the first pallet companies to have a web site; certainly it was one of the early ones.
Carey believes that wood fiber and recycling markets offer the best potential for a pallet company that is adjusting to the changing environment. While Palcon focuses on specialty new pallets, its growing pallet recycling emphasis has taken on more of a 48x40 focus because that is the nature of pallet recycling, and the company relies quite a bit on combo pallets. Palcon has a variety of core sources including some pickers, customers who ship pallets to them, and some spot trailers. They pick up pallets for free or for a small charge, depending upon the customer. Like most pallet recycling companies, Palcon is always looking for cores. Carey believes that used pallet prices will probably go higher in the future because of the core supply issue and prices, making room for an improved demand for new pallets.
Carey indicates that he has good relationships with all of his service and machinery suppliers. The company has really honed in on buying from American suppliers and services, including many that are locally positioned. D.W. Bands of Liverpool, Penn. supplies bandsaw blades, and Miller Saw Sharpening of Middleburg, Penn. supplies Palcon with its circle blades. The only machines Palcon has for recycling are its Smart bandsaw dismantler and Smart double end-trim saw. All of its repairing and combo construction are done on hand tables with tools and fasteners supplied by Bostitch. After hiring its fiber grinding out for several years, Palcon purchased a used Mobark 1100 grinder a couple of years ago.
Its primary ground fiber markets are colored mulch, wooden pellet stock and organic filter soxx. A lot of fiber is available locally. The company’s own wood waste fiber and unusable pallets are supplemented by waste generated by local land clearing for the natural gas industry.
Strong mulch markets have helped sustain the company. Palcon purchases colorants from CMC (Custom Milling Consulting, Inc.) in Fleetwood, Penn. Matt’s step-brother Andy Hooker owns Penn Ram Corp, a company that manufactures incinerators, boilers, and anything to do with burning. He built Palcon’s machine to color the mulch. Palcon sells very little animal bedding material, which is another significant wood fiber market for some sawmills and pallet plants.
One of the hottest growing wood fiber markets has been wooden pellets, particularly for export into European markets. Because it costs about $1.5 million to $2 million to enter pellet manufacturing, Palcon decided to partner with Instant Heat in New York. Palcon ships pellet stock and receives pallets of bagged pellets back. From Instant Heat Palcon both wholesales and retails pellets from its Muncy, Penn. location. Carey believes that wooden pellets have a bright future and plans to stay active in that market.
Pallet companies are always alert to potential opportunities. So, when Carey told me that he supplies wood fiber to the organic filter soxx industry, it caught my attention.
Palcon works in conjunction with Weaver Express in Massillon, Ohio to manufacture and sell Filtrexx® filter soxx. This interesting wood fiber product is used as a perimeter control device. Carey said, “Filtrexx filter soxx is rapidly replacing silt fence to protect fragile environments from harmful runoff caused by all types of construction throughout the United States. The market for this relatively new product is certainly not exclusive to one region. Because organic filter soxx is extremely effective in protecting our environment, is easy to install and is relatively inexpensive, Palcon believes organic filter soxx is a product that’s here to stay. At Palcon this is exactly the type of innovation we look for to expand our boundaries, yet stay within our realm of industrial wood products and recycling of wood fiber. I never really considered myself to be an environmentalist per say, but I guess I’m doing my part while making a living. I’m kind of proud of that!”
Palcon receives mesh soxx tubing from Weaver Express, fills it with wooden mulch, palletizes it, and ships it to sites where customers need this kind of product for environmental and runoff control. It is used, instead of a silt fence, as a perimeter control device. It stops nasty stuff like sediment and pollutants (such as phosphates, nitrates, and hydrocarbons) from leaving the jobsite. Filtrexx filter soxx stops pollutants in two ways – by allowing water to temporarily pond outside the sock and by cleansing water as it passes through the sock. Materials either settle out or are filtered out.
Palcon relies heavily upon its relationships with both suppliers and its own staff. Palcon has a good in-house maintenance garage and inspection mechanic, as illustrated by its ability to build some of its own production machinery. So, it does not need a lot of outside machinery maintenance help. Regardless of who is handling maintenance and management tasks, it always involves people, so people relationships are important. For pallet companies, relationships with lumber suppliers are particularly critical. As Carey said, “Without good lumber suppliers there would be no Palcon. Because we have lost a lot of sawmills in our region, our lumber supplier relationships are very important.”
Labor cost is high in central Pennsylvania due to local competition. Market changes and lost customers have made competition very keen. The number of pallet makers in the region is down from eight or nine in 2000 to just two or three today. Palcon has relied upon its relationships and longevity to complement its variety and quality of products, adding customers and sales slowly, looking for the right fit.
Palcon has about 17 full-time or part-time employees and employee turnover is very low. The learning curve is difficult for a specialty company like Palcon, so it offers benefits that keep good long-term employees. It offers paid vacations and holidays and its human resource package includes health insurance. The average tenure for employees is eight years or more. Carey is a hands-off owner who focuses on the big picture and coordinates office management. However, he has a CDL and still makes some deliveries. This allows him to go in under the radar as a driver and interact with customers. Alex Seyler is the CFO and office manager. Bryan Stamm is plant manager. Carey said, “Bryan is the boss out there. He leads by example.” Alex, Bryan and Carey coordinate to handle sales. Jamie Lundy handles customer issues and customer service.
New Pallet Manufacturing
Palcon manufactures most of its pallets from mixed dense hardwood from Pennsylvania and southern New York mills. It processes both cants and 4/4 boards. Lumber manufacturing machinery includes an in-feed deck, unscrambler, a five-head multicut trimsaw, a Cornell gang saw, and a retrofitted Baker multihead horizontal resaw. In addition to the Cornell gang line, Palcon has customized three Baker A resaws with a turnaround into a three-head resaw line. To produce the high quality pallets required by Palcon’s customers, a Baker Deduster cleans unwanted wood dust off the boards.
Palcon has found a way to automate and avoid excessive hand work but still maintain efficiency. The gang saw is used for cutting stringers and sizing cants before sending them through the retrofitted Baker bandsaw line. Cants from the gang are sized mostly to 3-1/2". A G. Wine stacker is used in conjunction with the Cornell line.
Palcon does most of its nailing with MidContinent Nail bulk nails that are manufactured in Poplar Bluff, Mo. Most pallets are nailed on a Viking 504 which Palcon bought used from Viking Engineering. With today’s sales levels, Palcon nails about 3500-5000 new pallets a week with sizes running from 24x30 through 72x48. Palcon has a West Plains notcher and does very little chamfering. Its G. Wine stacker is used to stack lumber behind the Cornell gang saw and West Plains notcher.
Block pallets are not part of Palcon’s product mix at this time. It focuses solely on stringer hardwood pallets. Carey does not see that the convenience of full four-way entry is worth the cost for most of his customers. Palcon has a current capacity of supplying about $5 million worth of pallets a year, even though the recession has kept volumes depressed.
Pallet and Crate Products
Palcon manufactures over 300 sizes and specifications of pallets and crates, and its crate business is growing. Matt has hired additional personnel to just to cover that demand. Crates are handmade custom work, mostly designed for unique applications. Palcon makes crates out of hardwood, softwood, and OSB materials. Carey believes that crating is on the upswing because of growing export markets and more high dollar machine shipping.
Palcon’s heat treating chamber was custom designed by Hooker. Measuring 25x25x22 ft. high, it can heat treat two tractor trailers of products at a time. It uses propane gas to treat 70% to 80% of Palcon’s pallets. The company’s heat treating certification is handled by Package Research Lab, which Carey indicated works well for them.
In addition to ISPM-15 heat treating, Palcon built its own dip treatment tank for pallets. Most of its custom dip treating is done for the military. It was an early player in the pallet treatment business. At one time the company advertised its DT150 pallet treating systems in the Pallet Enterprise.
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