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Indiana Pallet Business Subcontracts with Other Companies to Meet Growth - Trace Equipment Distributes New Woodpecker Automated Nailing Machine
Milroy Pallet: Indiana Pallet manufacturer stays with Woodpecker nailing machine; Milroy Pallet likes quick changeover and other features of new nailing machine distributed by Trace Equipment.

By Diane M. Calabrese
Date Posted: 12/1/2006

MILROY, Indiana — Economy of scale and substance of equipment are two things to which Steve Keim, owner of Milroy Pallet, gives a great deal of thought. A former dairy farmer, Steve turned to a new page in life when he launched a pallet business in 1996.

   Milroy Pallet primarily manufactures new pallets. The company recycles a small volume of pallets for a few customers, mainly removing and replaced damaged deck boards.

   Starting a pallet business meant putting a concrete floor in what had been the dairy barn and choosing equipment with care. “I had no experience, hands-on experience” with pallets, said Steve. However, his father-in-law owned a pallet business in Ohio and gave him help and advice.

   In fact, the most important factor in Steve’s decision to start a pallet business was his family connection to the industry. “Probably the biggest motivation,” said Steve, was that “my father-in-law was in the business for 13 years.”

   Four years after starting Milroy Pallet, the business was doing well, and Steve was ready to make some changes. At the time, pallets were assembled by hand with pneumatic nailing tools. In order to increase production and to save on labor costs, Steve decided to invest in an automated nailing machine.

   Steve purchased a Woodpecker nailing machine, which is now distributed by Trace Equipment. Steve bought the first machine in 2000 directly from the manufacturer, Stutzman Mfg., and the machine, which uses pneumatic nailing tools and collated fasteners, is now known as the Woodpecker. The machine that Steve first bought is still running at another pallet company that subcontracts for Milroy Pallet; earlier this year Steve replaced it with a new Woodpecker nailing machine.

   Steve cited the quick changeover crank, stencil and stacker as some of the features that sold him on buying a second Woodpecker. The nailing machine is available with a wide choice of optional equipment and features, and the options induced Steve to take a close look at the Woodpecker when he bought his first one. The standard Woodpecker builds three-stringer pallets as big as 64x84, but custom versions are readily available.

   The Woodpecker flipper turns over the partly-assembled pallet so the top deck can be nailed, and the finished pallet ahead of it is pushed automatically into the stacker. The cycle time on the standard Woodpecker is three pallets per minute. It has an automated stringer feeder that is enhanced with a slanted design.

   “Most of my pallets are under 50-by-50,” said Steve. “The majority of my pallets are 48-inch or shorter.” He selected a custom four-stringer Woodpecker machine that builds pallets up to 60x60.

   Steve already knew Bert Stutzman, the man who made the Woodpecker, and that meant a lot to him. “I knew Bert real well,” said Steve. “When I first started the business, I bought a notcher from him. Knowing Bert very well, I felt very comfortable buying what was really a prototype machine” more than six years ago.

   Steve sees many features in the Woodpecker that also caught the eye of Mona Tracy, owner of Trace Equipment. The machine has a good performance record and is manufactured and supported by a person with considerable expertise. Twenty-one of the machines were operating at pallet companies when Mona and Bert reached an agreement that Trace Equipment would market and distribute the Woodpecker.

   Bert, whose company is based in Millersburg, Ohio, tapped his extensive experience making equipment for pallet companies and sawmills when he began to design the Woodpecker, said Mona. He was interested in meeting the demand from pallet companies that wanted an automated nailing machine that used compressed air and drove collated fasteners.

   Trace Equipment, now in its 10th year of business, offers the Woodpecker in a basic model that assembles three-stringer or four-stringer pallets up to 64x84. It has an automatic stacker with outfeed roll table. Trace Equipment has been quick to supply custom Woodpecker machines. “He will make one to fit your needs,” said Mona, whose business serves the pallet industry nationwide and in Canada and Mexico.

   Not only can the Woodpecker be modified, the machine is durable enough to work long and hard and can be refurbished. The Woodpecker that Steve bought in early 2000 went back to Stutzman Mfg. for rebuilding before going to a Milroy Pallet subcontractor.

   Steve has a variety of arrangements with subcontractors. “One third of my gross sales comes form subcontract” work, he explained. “We’ve got four people building for me and three other people cutting.” Three of the subcontractors assemble pallets by hand; the fourth company uses the refurbished Woodpecker.

   Milroy Pallet is situated on 38 acres in Milroy, a town of 18,000 people about 40 miles southeast of Indianapolis. The company has plenty of space and three buildings for storing raw material and finished pallets. “We have a 60-by-80 building for cut parts, a 40-by-60 for nailing, and a 30-by-52 for storing parts,” said Steve.

   The site is well suited for a pallet heat-treating system that was expected to be installed in December. “We’re looking at putting up a Kiln-Direct,” said Steve, the company’s standard high efficiency model that can heat-treat 600 GMA pallets per charge. The heat-treating chamber will be fueled by propane. Milroy Pallet currently subcontracts with another company for pallet heat-treating services.

   Milroy Pallet has eight employees. They remanufacture cants and rough lumber into pallet stock and assemble new pallets on the machine. A team of three women operates the Woodpecker. “I very seldom have men on the machine,” he said. The women normally produce about 1,200 pallets in seven hours.

   “I get collated fasteners from Stanley-Bostitch and Fry Fastener in Cincinnati,” said Steve. “I get good service from both.”

   “We buy cants – mixed hardwoods – and I also buy a lot of 2x4 and 1x4 pine,” said Steve. “I also buy quite a bit of cut parts. We also buy two loads a week of poplar – 3 inches thick and 4 inches wide.” The poplar raw material is similar to landscape timbers.

   Milroy Pallet suffered a fire in 2005 that destroyed equipment in the cut-up shop. An old Coe gang saw was salvaged and rebuilt but so far has not been used again. The company also had some Brewco machines that were irreversibly damaged.

   The cut-up shop now is equipped with a Baker Products three-head band resaw system that works in conjunction with a Quality unscrambler. “We’ve been getting along real well with Baker,” said Steve. The company also has a single-head notcher and a double-head notcher made by Stutzman Mfg.

   Steve’s customers include companies that manufacture fluorescent light bulbs and other businesses that manufacture or supply building materials, such as pavers, stone, and roofing shingles.

   Setting up the new Woodpecker went quickly and easily, Steve noted. “It was delivered on Saturday,” he explained. “They were here Monday morning. By noon – in three and one-half or four hours — they had us in full production. That’s kind of amazing to me, how fast it set up.”

   The Woodpecker is very important to the company’s operations because all pallets assembled at Milroy’s facility are nailed on the machine. “It’s an important machine,” said Steve.

   The company manufactures some products that are assembled by hand with pneumatic nailing tools, such as wooden containers. “If it’s built out of wood — if it’s a crate, if it’s a pallet — we take a look at it,” said Steve. “I look at anything.” The company has manufactured pallets as small as 18x24 and as large as 12 feet by 5 feet.

   The company has several markets for waste material. “We sell blocking for firewood, sawdust to farmers,” said Steve. He uses a local trucking company for picking up pallets or lumber and making deliveries.

   Steve’s family is deeply involved in the business. His son, Dale, is the foreman in charge of the cut-up line. A daughter, Donna, is on the team that operates the Woodpecker. (Another daughter, Diana, worked in the business for several years before moving to Florida.). Steve’s wife, Dorothy, does the books and runs the office.

   In addition, Steve has a brother nearby who owns a pallet business as well as three brothers-in-law in Ohio who own pallet businesses. He enjoys comparing ideas with all of them.

   Milroy Pallet is doing well. “In 2005, we had $3 million in sales,” said Steve. “In 2006, our sales are up 10 percent.” Most of the sales obviously come from pallets, but the company also sells some cut stock to other pallet companies and sells wholesale lumber. Steve’s company relies on brokers to sell most production.

   Steve has been pleased with the service provided by Trace Equipment and Stutzman Mfg. “If you see a need, they will perform that service,” he said.

   Bert is very responsive, added Mona. “I just give him a call,” she said.

   Over the years, Bert has been quick to respond to and incorporate suggestions from pallet manufacturers. The first Woodpecker machine, for example, had no quick changeover feature and no stencil, Steve noted.

   As for what Steve learned as a dairy farmer that applied to operating a pallet business, flexibility stands out. “It’s two different kinds of businesses,” he acknowledged. His willingness to adapt and be flexible – and work long hours — was important to getting Milroy Pallet going strong.

   Steve invested about $150,000 in equipment to begin Milroy Pallet in 1996. “My dad helped me quite a bit,” he said. Steve was determined not to borrow so much that he would not be able to recover financially if the business did not succeed.

   The thing that I emphasize the most is on-time delivery,” said Steve. “Make sure they get it” when they need it.

   In his spare time, Steve raises some standard bred horses and colts. “I enjoy hunting and fishing,” he said. The family has a cabin in Redford, Mont. that it relishes as a getaway spot.

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