RIDGETOWN, Ontario — You might not think it possible in a mature industry for a couple of young newcomers to buy into a start-up business in a highly competitive market and build it within a few short years into a multi-million dollar company that is still growing.

That Wayne and Christina Reinhart have accomplished as much with their business, Challenger Pallet, is both a tribute to their imagination, business sense, and hard work as well as a cautionary tale for older, established pallet companies that may take their customers for granted.

Wayne and Christina are a young couple just four years out of college. Wayne, 38, decided to go back to college after working as a truck driver while Christina, 26, went following high school. They met at the University of Western Ontario, where each studied chemistry. Wayne had no firm plans how he would use a chemistry degree although Christina intended to go into dentistry. Apparently the chemistry was mainly between Wayne and Christina. They graduated in 1996 and married the following year.

Challenger Pallet was started by Lorne Corvaglia, Wayne’s nephew, and Lorne’s parents, Sebastian and Elizabeth Corvaglia. Wayne worked with them for several months when an opportunity arose to buy shares in the company. Sebastian and Elizabeth moved back to Cambridge although Lorne operates a sister company in nearby Blenheim.

Wayne and Christina decided to put careers in science on hold and seized the chance to go into the pallet business. "It was an opportunity that just materialized," Wayne said, explaining the couple’s decision. "It seemed to be something we could devote our time to as a young couple and build something solid for the future, so we decided to do it." At the time they bought the company, shortly after their graduation from college, Challenger was producing about 7,000 pallets per week and had approximately 30 employees.

Wayne and Christina have done a lot of hard work since then and paid attention to details. Under their leadership, Challenger has grown to a company that now produces about 15,000 to 20,000 new pallets per week and has about 70 people on the payroll. The company also manufactures specialty items, such as crates and other shipping platforms. About 90% of Challenger’s production consists of hardwood and softwood pallets; the rest is specialty products. Production is carried out 24 hours per day, five days per week. With orders on the increase, the company also is running some Saturday mornings.

Challenger serves customers mainly within a range of 500 miles. A substantial volume of its business is with the automotive industry in nearby Detroit. Other accounts take the company throughout Michigan and to Indiana and Ohio. About 70% of the company’s sales are to the U.S. with the remainder in Ontario and southwest Quebec.

While owning their own pallet company is a new experience for Wayne and Christina, Wayne is not entirely new to the pallet industry. His father, Lorne, managed a pallet plant in Cambridge, Ont. from 1969 until the early 1980s, when he retired, so Wayne grew up in the business and was familiar with it. He has done everything from hand nailing to truck driving, and he believed the pallet industry, though mature, still offered opportunity. When the chance came to go into the business, he and his wife decided to go for the brass ring.

When asked the secret to his early success, Wayne said he was struck by something he read in an article in Pallet Enterprise some years ago. What he read shaped his approach to the business. As he recalled, the article said: "Some people only dream of success. Others work hard at it." Wayne and Christina have followed that philosophy. They have worked hard and dedicated themselves to focusing on what the customer needs and supplying it. That approach, Wayne said, has caused Challenger Pallet to prosper.

Customers are mainly concerned about two things in a pallet supplier, according to Wayne: price and service. Most of Challenger’s customers were not pleased with the level of service from their previous pallet supplier or prices, or both.

Wayne approaches a potential customer by asking if they would consider changing suppliers if the price was right and Challenger could significantly improve service. That enables Challenger to get a foot in the door. "Once you’ve got the foot in the door, then you have to do what you said you could do," he said. "If you are able to follow through, the customer will work with you as long as you make sure you continue to do what you said you would do when the customer was signed on." If you take the customer for granted, Wayne believes, you open the door for a competitor.

The Pallet Design System (PDS) has been an important tool that has allowed Challenger to offer price differentials compared to competitors. Many pallets are over-built for their specific application, Wayne said. With the PDS system, Challenger can design pallets for many customers that will meet their shipping platform requirements but can be manufactured at reduced cost. "It’s been a real factor in allowing us to be competitive up front, and that is enough to get our foot into the door," he said. Challenger has used PDS about three years. Wayne and an employee, Robert Ballantyne, use the program to design pallets for customers.

(Editor’s Note: The Pallet Design System is a computer software program that was developed by the Virginia Tech pallet and container research laboratory and the National Wooden Pallet and Container Association (NWPCA). It is available from the NWPCA.)

Challenger makes few standard pallets. The company has a database over more than 2,000 pallet sizes and configurations, each requiring a unique lumber package.

The pallet shop and storage areas comprise about three acres and another seven acres are available for expansion. The company ships just-in-time, which allows it to keep a smaller inventory; it keeps about 5,000 finished pallets in inventory.

Challenger buys both cants and dimensional lumber for raw material, depending on price and other factors. It buys raw material from northern Ontario and Quebec and sometimes even the maritime provinces. Raw material is stored in the company’s yard; Challenger has 1 to 1.5 million board feet in inventory at any given time. About 80% of the lumber it buys is SPF and the remaining 20% is mixed hardwoods.

In terms of Challenger’s manufacturing operations, of equal importance to the company’s success has been a resaw line supplied by Baker Products, according to Wayne.

The care that Wayne and Christina took in selecting Baker to equip the integral resaw line is an example of the thoughtful, sometimes painstaking approach they have brought to researching important business decisions. "We have always, from the beginning, believed in research," said Wayne. "We learned in school that anyone with a brain can learn to operate something, but if you really want to know what makes something work, you have to take it apart, examine it, and put it back together."

Adding machinery to fuel intermediate and long-term growth was a big priority when the couple bought the company. Instead of just casually picking a supplier, however, and ordering machinery, Wayne and Christina researched the companies that manufactured resaws and narrowed them down. They even made a trip to Baker’s manufacturing facilities in Missouri. "We went to Baker’s plant and looked at how they worked their own lines," Wayne recalled. "Then we talked with them about our needs and worked with them to develop a system that would not only do what we need it to do today but can also fit into our future."

The careful research paid off. The Baker resaw line is the linchpin in the cut-up line. Its reliable, fast production of high quality pallet parts has enabled Wayne to back up his promise to customers that he would supply them with pallets that would save them money and provide them with top-notch service.

Both cants and dimensional lumber first are cut to exact size on a Nelson Atkinson five-blade multiple trimmer. Sized cant material is sawn into pallet parts on a Baker model C three-head horizontal band resaw. Sized dimensional material is processed on a Baker model A single-head resaw with return line. Challenger also is equipped with a Morgan single-head band resaw.

A particularly important feature of the cut-up and lumber prep line is a specially built Baker notching machine. Many of Challenger’s customers need large, over-size shipping platforms, so Challenger turned to Baker to build a notcher capable of handling a 96-inch piece of lumber. "We’ve found that to be invaluable," said Wayne.

Long runs of pallets are assembled on a Viking Champion nailing machine. Short runs or odd sizes are assembled by hand at one of eight work benches that were specifically designed for Challenger. The company uses both Stanley-Bostitch and Shur-Fast nailing tools.

Production workers assembling pallets by hand with nailing tools are put on a salary while they are learning to do the work. Within a few weeks or months, once they get the hang of it, they are paid a piece rate and usually earn more than their initial salary. Those workers who are not able to work fast enough at the piece rate to exceed their starting salary usually are moved to other positions.

As important as the company’s manufacturing operations are, organizing and managing various aspects of the business with the use of computers has been equally critical to delivering on their commitment to customer service, according to Wayne and Christina. The computer operations are Christina’s bailiwick.

Challenger uses a software program called Business Visions to handle a wide range of business tasks. The program not only keeps the company’s books but also is used to track and manage inventory of raw material and finished pallets, orders and pallet specifications, and more.

Wayne relies on the information each day in order to schedule activities in the mill. The software tool provides a snapshot of Challenger’s operations that is used to control inventory, ensure that orders are produced and shipped on time, and that customer requirements are met. "Using the computer to track every aspect of the business is one of the most important things we brought to this company from our education," said Christina. "We learned how systems work and how to track activities using the computer. That’s been a real benefit to us here."

The couple sees continued growth in Challenger Pallet’s future although Wayne does not expect the kind of rapid growth the company has enjoyed in recent years. They set out to jumpstart the business quickly in order to establish it and create an income base, but now they will focus on improving efficiency and fine tuning the company. Many of Challenger’s customers were dissatisfied with their previous pallet supplier; Wayne wants to make sure that they have a high level of satisfaction with Challenger and have no reason to look elsewhere again. "I see us expanding our warehousing capabilities and expanding the sawing operation," he said. "Those are things that will allow us to better service the customer. A few years from now we want to be known as the best in the business, so we are always looking forward to see what we can do to accomplish that."

There is an old saying that if you build a better mousetrap, customers will flock to your door. Wayne and Christina Reinhart have demonstrated that even in an established and mature industry, better mousetraps still may be built. By researching an industry, discovering new ways to meet customer requirements, and then applying themselves, the couple built a small start-up operation into a substantial, profitable company in a very short space of time. Their experience is both an example of the opportunity for entrepreneurs that still exists in the pallet industry and a warning to established players that may take customers for granted.