FORT WAYNE, Ind. — Steve LeFebvre thinks he has the right solution for the tight labor market that is a proverbial thorn in the side of the pallet industry: automation.

Steve, 36, is on the verge of taking his pallet recycling company, K&S Pallet, to the next level with the installation of an automated pallet repair line.

"Labor is tight right now," he said, and it is difficult to hire and retain good workers. The company pays good wages, he said, but pallet recycling work is physically demanding, he noted. An automated repair line "will be a tool for hiring," Steve believes. An automated system should help with labor-intensive GMA production, and Steve also is expecting it to contribute to improved pallet quality.

Steve has narrowed his choice of suppliers to two companies and plans to implement a system by the start of the new year. He envisions putting in an automated repair line for three or four production workers. "We probably could double our production with an automated line," he said. Existing machinery will be incorporated with the pallet handling system.

Steve has enjoyed a measure of success in the pallet recycling business in a relatively short span of time. His fiancé, Karen Gramling — the ‘K’ in K&S — has been an integral part of that success. It has been a team effort between the two of them "since day one," he said.

Steve gradually worked his way into the pallet business while he was employed in night club management. His introduction to the pallet business was in 1990. He began collecting pallet cores and selling them to a trucking company owned by a brother-in-law of one of his nightclub employees. "It just started out as a way to get some extra money," he recalled. In the beginning, the couple used Karen’s station wagon.

Within a year he began providing a similar service to a Michigan-based pallet company that opened a location in Fort Wayne, collecting and selling 48x40 cores. His fledgling business employed two or three men and was based out of a storage rental unit. Within another year Steve decided he could compete effectively in the arena and began supplying recycled pallets to customers in Fort Wayne in 1992. A year later, in 1993, he rented some commercial space for the growing business.

The company has moved twice more since then and now is based in a 7,000-square-foot building on a 1-acre site that Steve purchased in 1996. K&S Pallet, now with 13 employees, delivers about 3,500 to 4,000 pallets per week to its customers. With the exception of one foreman who operates the forklift, all employees are production personnel. Steve has an accountant but handles all the remaining duties himself — management, sales, and administrative.

Karen, who remains a partner in the business but has reduced her involvement, primarily has done bookkeeping and answered the phones over the years. In the beginning, however, she worked side by side with Steve. "She ran the de-nailer, the saw — the whole nine yards," he said.

As Steve began gravitating more toward the pallet business, he was pleasantly surprised by his success. "It was a little different, but then I ended up finding out that sales was a niche for me. I did pretty well...better than managing the night club."

One of the company’s most significant milestones was buying a tractor and trailers in 1994. Until then, pallets were hauled on a flatbed trailer pulled by a pick-up truck.

In addition, in 1996 he began investing in more machinery. The only equipment the company had up to that point was one disc-type pallet dismantler, a hand plater, and nailing tools.

The company’s first piece of machinery was a Rogers 54-B disc-type dismantler, which it still has. Since then, Steve has relied on Smart Products for pallet recycling machinery. He invested in a pair of Smart bandsaw pallet dismantlers and two Smart cut-off saws. K&S also is equipped with a Clary Maxi-Plater and an MMT single-head notching machine. Automation will be the next phase.

Most of the company’s volume, about 75%, is repaired pallets, GMA footprints and odd sizes. The other 25% is comprised of pallets assembled with reclaimed lumber, including some combination pallets, such as pallets made of new stringers and used deck boards. In addition to the GMA footprint, K&S produces pallets of about 20 different sizes, including large skids up to 12 feet long. K&S is finding itself building more pallets from scratch, according to Steve. The company previously bought a steady volume of cut stock but has moved away from that practice since gearing up the two Smart bandsaw dismantlers.

Incoming pallets are sorted into two categories, those that can be resold and those that will be dismantled, and also according to size. Sorting is done by the workers who run the dismantling equipment; they sort first, then tear down pallets for good lumber.

Steve prefers to remanufacture reclaimed material quickly instead of putting it into inventory. "We’re kind of an in-the-door, out-the-door operation," he said. Reclaimed pallet parts are sorted by length.

K&S pays an Amish company from Michigan to haul away waste wood, which is converted to mulch.

Steve used to visit potential customers in order to make sales calls but now handles most by telephone. With the company’s current volume, he has not needed to make much effort at sales and marketing in the past year or two, although that is expected to change as he seeks to expand the company’s customer base. He also relies on sizeable advertisements in the Yellow Pages. "Customers kind of come to us now," he said, because K&S has established a reputation.

Fort Wayne is located near the northeast corner of Indiana in the heart of the north central region of the U.S. The city lies within a 250-mile radius of 17% of the U.S. population. It is situated along Interstate 69 between Indianapolis and Lansing, Mich. and about 40 miles from Interstate 80, which runs across the northern borders of Indiana and Ohio. Within a radius of 161 miles are such cities as Detroit, Chicago, Indianapolis, and Cincinnati.

The metropolitan region encompassing the city has a population of more than 456,000, with Allen County growing at the rate of about 15,000 people every decade since 1970. The area has about 725 manufacturing facilities. It is the headquarters for several large companies. Leading employers include Lincoln National Corporation, General Motors Truck and Bus Group, Dana Corporation, ITT Aerospace Communications Division, GTE, and General Electric.

K&S has about 30 customer accounts. They include food manufacturing or processing companies, businesses that make packaging, and automobile parts manufacturers. The company’s single largest customer accounts for about 60% of its business, buying about a truck-load of pallets each day. Customers are close to Fort Wayne — within 60 miles. "We’ve looked into going further...We’ve never felt — at least at this point — that it’s cost effective to do that." The company now spots a dozen trailer vans at customer locations.

The heavy reliance on a single customer is something Steve intends to change. "We want to expand," he said. "I would like to see a ratio of 75:25 — 75% of our business with other companies and 25% with our main account. We’re a little vulnerable right now."

Steve has thought of going to a piece-rate pay system before but does not have the right kind of facility. "In a small plant...it’s hard to put something like that in place. I don’t have space to spread them out and monitor what they’re doing. The guys work in fairly tight quarters."

Steve purchased the Rogers de-nailer in 1991. He invested in a Smart dismantler in 1996 and added the second Smart machine in 1997.

For Steve, it was a relatively easy decision to go with a bandsaw machine instead of more disc-type de-nailers. The bandsaw machines can produce more and the parts they yield are higher quality, he said. "The bandsaw machines produce cleaner material," he said, while other kinds of de-nailers tend to tear up a pallet.

Still, he didn’t arrive at the decision quickly. "That was a long decision for us," he said, because he was concerned about the cost of blades. In fact, even after buying the first machine he was somewhat reluctant to use it until his workers became proficient with it. Once they got the hang of it, however, he found the bandsaw dismantlers were a cost-effective way to reclaim good lumber from used pallets.

Like other pallet recyclers elsewhere, Steve has found pallet cores in dwindling supply. "They’re scarce," he admitted. "It’s a tight market."

In addition, the quality of the pool of available pallets has been deteriorating. "I see that," Steve said. K&S has noticed that GMA cores are nowhere near the condition the company was previously accustomed to buying. "People are really hanging on to these before getting rid of them," said Steve. "By the time we get it, it’s ready for the tear-down (dismantling) machine. And guys that have them are aware of the market and are getting top dollar if it’s a good quality pallet."

A native of Fort Wayne, Steve’s main other interests are investing in real estate — a sideline he shares with Karen — and antique hunting, including antique cars. For about the past five years he has been buying residential and commercial property, renovating and reselling them. He currently is involved in a land development project. "If nothing else, you could probably say real estate is my hobby."

Steve feels his previous experience in night club management was of little value when it came to launching and successfully growing a pallet recycling business. When asked what he attributed his success to, he replied, "Probably aggressiveness...I’ve got an I’ll-put-it-on-the-line kind of an attitude. I’m not afraid to stick my neck out."

Smart Develops Lumber Recovery System

Smart Products has developed a new lumber recovery system for pallet recyclers that is designed to speed the production of used material and at the same time reduce material handling and labor.

From start to finish, the system dismantles pallets and produces finished, trimmed used pallet components without additional handling — the first system of its type.

The Smart Products pallet lumber recovery system contains a bandsaw pallet dismantling machine in-line with an unscrambler and chain-fed trim saw.

Production would vary depending on the size of the crew and peripheral machinery. For example, the system as described above could be operated by three workers: one at the dismantler, one at the trim saw, and one moving material. Estimated production would be about 600 pallets daily, according to Smart.

Adding additional components, such as a second dismantling machine and manually-operated trim saw or a notcher, and increasing the crew to five workers would result in a system that could process about 1,000 pallets daily, according to Smart — recovering and sizing 10,000 boards that are ready to go to nailing stations.

The system’s dismantler machine is a new model developed by Smart specifically for the entire system. The unscrambler is on the back side of the dismantler. As the operator disassembles the pallet, lumber will fall directly into the unscrambler. A belt conveyor even-ends each board by moving it against a common fence. The lumber is then chain-fed to a Smart Auto-Trim Saw at the end of the line. At the Auto-Trim, an operator can place material against one of three color-coded stops. Trimmed material exits off the back, falling into bins.

The dismantler is operated by one man who drops the pallet over the blade between deck boards. Boards are removed as the operator pulls the pallet to him and through the blade. The operator spins the pallet to dismantle the other side, then flips the pallet over and repeats the process.

At the Auto-Trim, boards are fed up-hill, and gravity keeps them against the stop. The blade cuts from the top downward, which keeps material to the table top and eliminates the need for additional hold-downs.

The dismantler is powered by a 15 hp motor and has a 64-inch capacity. The Auto-Trim is powered by a 10 hp motor and runs an 18-inch blade.

"We’re hearing from our customers, ‘We need material handling and we need to reduce operators,’ " explained Brad Kirkaldy of Smart Products. Smart’s research has shown that one worker can recover about 1,000 boards, including dismantling and trimming. By that measure, it would take 10 workers to achieve the same level of production as the new Smart system.

Smart Products is a leading manufacturer of bandsaw dismantlers and also manufactures lead board removers and trim saws. For more information, call Smart Products at (800) 401-0099.