Rehrig Pacific Launches New Business, Looks to the Future
Leading manufacturer of plastic pallets and containers enters the pallet services arena; Rehrig Pacific acquires portion of Penn Pallet and its interest in Penn-Alliance.
By Chaille Brindley
Date Posted: 11/1/2005
Rehrig Pacific Co., Los Angeles, Calif, is positioning itself for the future by returning to its roots — wood packaging. The company started as a manufacturer of wooden milk crates in 1913 and transitioned into metal and plastic packaging as new technology developed over the years. This summer, Rehrig Pacific launched Rehrig Penn Inc., a new subsidiary designed to provide pallet management services.
Rehrig Penn began by acquiring the services-related business of Penn Pallet, Inc. of St. Mary’s, Pa. This includes all activities involving asset recovery, pallet management, dock sweeps, and wood pallet resale. Penn Pallet retained its two wood pallet manufacturing facilities in Pennsylvania.
Penn Pallet has made a name for itself serving Wal-Mart and others in the general consumable goods supply chain. Its expertise in managing complex retail and general supply chain networks is part of what attracted Rehrig Pacific’s interest as it sought to launch a new company.
"Penn Pallet has been an acknowledged expert in wood pallets and in pallet management in the Northeast for over 30 years – providing outstanding service to clear returnable assets out of distribution centers, as well as offering a variety of service options to retailers," said Matt Dannenfeldt, General Manager of Rehrig Penn.
Rehrig Penn has also purchased 50% of Penn Pallet’s equity in Penn-Alliance of Charlotte, N.C. Penn-Alliance is a national pallet sales & reclamation cooperative servicing the retail sector. First Alliance Logistics Management is the other member of the new Penn-Alliance trio of companies.
First Alliance brings to the deal software and logistics management tools that Rehrig Penn will have access to use on a case by case basis. Depending on the scope of the retrieval network, Rehrig Penn may or may not utilize First Alliance’s network or infrastructure. While each company is independent, the alliance structure allows each member to work together on projects that make sense.
Extending beyond its core business as a manufacturer of plastic totes and pallets, Rehrig Pacific plans to offer a greater suite of services and products through Rehrig Penn. These programs include wood pallet services.
Historically, Rehrig Pacific has served the beverage, dairy, fruit and retail industries. It has primarily focused on customers with direct store delivery models, which simplifies the packaging retrieval process. By launching Rehrig Penn, the company hopes to expand into more complex retrieval networks.
Rehrig Pacific is simply doing what other packaging manufacturers have done in recent years by acquiring or launching their own management/services division. Orbis Corporation did the same thing a year ago when it bought Hays Container Services. One major difference is that Orbis bought a plastic tote management business, not a wood pallet recycling and retail dock sweep business.
Rehrig’s move more resembles what IFCO Systems did a number of years ago when it bought PalEx. Because Penn Pallet and Penn-Alliance has had a strong presence in the North East and Mid-Atlantic markets, these will remain the backbone of Rehrig Penn’s business, but the company is looking to expand nationwide. Matt said, "This business is really in its infancy. We are getting in when it is the growth mode."
Traditionally, the wood and plastic companies have been somewhat at odds with each other, but the lines are starting to blur. Packaging providers and logistics companies are realizing the importance of offering what works best for the customer and not just what you manufacture. If plastic companies want to make greater inroads into the retail market, they need to have the services to go along with the product.
When you sell a product that is not where it ends any more. By acquiring Penn’s pallet services division, Rehrig Penn will have the expertise to manage networks and retrieve assets no matter the material involved.
Rehrig Pacific remains committed to its plastic packaging business, which includes a large stable of pallets and containers. The company uses injection molded technology because it allows for the molding of complex shapes and is easier to maintain precise tolerances than other manufacturing methods. Injection molding provides the ability to vary wall thickness strategically throughout the same part, adding strength to critical wear and load-bearing points. According to Rehrig Pacific, injection molding allows the company to engineer premium product quality, performance and dependability into every product it makes.
Rehrig Pacific has developed a strong presence in the beverage industry and curbside recycling/waste collection market by developing unique plastic packaging.
Today, Rehrig Pacific has numerous locations worldwide: Los Angeles, CA (headquarters); Erie, PA; Lawrenceville, GA; Dallas, TX; Kenosha, WI; Raymond, NH; Mexico; Brazil; Chile; Hong Kong and Belgium.
When it comes to pallets, Rehrig Pacific offers a wide variety of options. More importantly to Enterprise readers, Rehrig Pacific has been willing to work with wood pallet suppliers to meet customer demands. This is not necessarily true of all plastic pallet providers. Some have viewed wood pallet guys as the enemy. But Rehrig Pacific has taken a more collaborative approach in many cases. While there will always be a bit of competition between wood and plastic, Rehrig Pacific appears to be one company that has found ways to bridge that gap in the past.
Rehrig Pacific offers the following plastic pallet options:
• Heavy-duty pallets
• Multi-use pallets
• Nestable pallets
• Bulk pallets and top frames
• Dairy pallets
• Fire-retardant pallets with a fire safety factor equal or better than wood
• Wide variety of sizes and colors
• Custom designs
Some wood pallet suppliers may find applications where customers demand plastic. Sanitation and food safety concerns may be a reason why a customer would choose plastic over wood. Plastic pallets will not rot. Because there are no protruding nails or boards, plastic pallets tend to work better in highly automated warehousing equipment and systems and can cause less product damage.
The bottom line is that plastic packaging costs more than wood. If you don’t have a closed loop system and tight controls over the packaging, it is difficult to make the economics of the higher upfront cost work. Effective asset management is critical for the long-term success of plastic packaging in the mainstream distribution environment. That is why Rehrig Pacific’s move to launch its new division makes sense. It is definitely a business strategy that deserves keeping an eye on.
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