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Best of 2008 – Short Highlights From The Best Articles, Innovations and Ideas of 2008 Best of 2008 – Short Highlights From The Best Articles, Innovations and Ideas of 2008 By Staff Date Posted: 1/1/2009 NWPCA Eyes Block Pallet Pool Program By Pallet management has been the next big thing for wood pallets for the last 10-plus years. It has yet to materialize, however, because of the fragmentation of the white wood pallet industry. That may be about to change. The National Wooden Pallet and Container Association (NWPCA) assigned a blue-ribbon task group to explore the concept of an industry-wide pallet management system uniquely tailored for the The group has worked closely with grocery industry representatives to gauge customer interest and to iron out a few specifics. A lot of details are still in the draft stage. Here is what we know so far. The system would be coordinated by a nonprofit organization governed by both pallet companies and pallet users. The pool would utilize a block pallet that is tracked with secure software on an individual pallet basis. The NWPCA would operate the tracking system in cooperation with pallet suppliers and owners. Similar to the EPAL and CPC pools, pallets would be manufactured and repaired to a specific quality standard and be compliant with ISPM-15. Pallet quality would be ensured by third-party inspections. “This will be a guaranteed buy-back system, so once it’s up and running, it will be a nominal cost program funded by its participants,” NWPCA president Bruce Scholnick told Modern Materials Handling. “We’ll repair the pallets, and the pallets will belong to the system. The participants will own a fraction of the system.” Lawsuit Against CHEP Winds Through Courts An antitrust lawsuit against CHEP is winding its way through federal court. The lawsuit, brought by a coalition of pallet recyclers, cleared a big hurdle recently when a federal judge in The pallet recyclers are seeking fair compensation for the services they provide to CHEP as well as protection against CHEP in the future. The outcome could have major ramifications for CHEP and the entire pallet industry. The recyclers allege that CHEP has used monopolistic practices to unlawfully transfer a portion of its business operating costs onto them. They also contend that CHEP’s actions have created an unfair market that lowers its costs while increasing costs of its rivals. The plaintiffs further claim this has developed a barrier to entry for new companies, which has stifled free market competition. Best Pallets in Best Pallets brought the lawsuit along with ITNOLAP Pallet & Crating Inc. of Pallet The Pallet Enterprise is now available for While other magazines publish content online, this is the first online publication in the More than just a PDF or posting articles on a Web site, the digital edition uses Adobe Flash technology, which allows the user to have a reading experience similar to a print magazine with the benefits of a Web-based version. It is really the best of both worlds wrapped up into one. Benefits of the digital version include: • Readers will get the issue much faster than the traditional print publication. In some cases, up to three weeks faster. • Content becomes truly interactive where readers can go directly from the magazine to related content on the Web. • Sign up as many employees as you would like. You no longer have to fight over a copy with other people in the office. • Readers can search the articles using the keyword feature. • Issues will be archived allowing readers to conveniently search multiple issues for information. • Ability to forward articles or entire issues to friends. • The digital edition offers a completely new experience that provides for video, audio and animation possibilities. • Available for free worldwide to qualified readers. First By Rick LeBlanc Contributing Author First Alliance Logistics Management sees a business opportunity in the rising fuel prices that have strained transportation spending. The company has launched a new freight brokerage service to provide better value to companies in the pallet and forest products industries. “We hope to offer the industry attractive pricing to move pallets greater distances at the same or lower prices,” said Glenn The core competency of most pallet companies relates to pallet manufacturing or recycling, Glenn noted, rather than transporting raw materials and finished pallets. “To those companies, we would like to say, ‘Hey, let us help you out on the freight side,’ ” he said. Glenn is a 20-year veteran of logistics. He knows the importance of keeping trucks full and rolling. Trucks that are stopped or traveling empty for excessive time create unnecessary costs. Glenn indicated that the new freight brokerage service is not just for large pallet companies. Competitive freight rates will be offered, regardless of company size. The service also allows an attractive two hours each for loading and unloading as opposed to the standard allowance of one hour before extra charges apply. Governments Seek to End ISPM-15 Exemption; EAB Discoveries Mount Canadian and To allow sufficient time to adjust, the CFIA and APHIS are developing a strategy that involves a gradual multi-year phase-in period. Complete implementation of the ISPM No. 15 is expected by 2011. Wood packaging moving between Requiring ISPM-15 treatment of all wood packaging material within the This past summer government officials have discovered emerald ash borer (EAB) infestations in The EAB, a metallic-green insect about a half-inch long, is native to Forward Logistics Offers New Opportunities By Rick LeBlanc Contributing Author When it comes to looking at new opportunities outside of the traditional scope of pallet sales and services, logistics experts stress a few key points, including the importance of customer relationships and confidence, and doing your homework before offering a logistics service. One area where customers might be interested in outsourcing to a trusted service provider – such as their pallet supplier – is forward logistics. Forward logistics opportunities include such activities as handling, shipping and storing at various links in the supply chain toward the ultimate point of sale. There has long been a natural synergy between the pallet business and the logistics business, observed Ken Ackerman, publisher of a monthly newsletter for the warehousing industry. Ken suggested that a pallet company that does a good job in the pallet business probably has or could acquire the capability to do a good job in logistics. There is a catch, though. Logistics services are very competitive. It is also a high stakes arena; pallet companies may find their customers are reluctant to give them this type of business without a successful track record. Unless a company has a great deal of confidence that its pallet supplier can provide new logistics services, decision makers will be reluctant to change to an unproven partner. Navigating State Immigration Laws By Elizabeth Grey Morrison While Congress refuses to address illegal immigration, state and local governments continue to be active in passing state and local laws dealing with the issue. The trend is creating interesting dilemmas for companies in the forest products industry, especially those that operate in multiple jurisdictions. According to the National Conference of State Legislatures, 175 laws and resolutions have been enacted in 39 state legislatures. Generally, these laws cover changes to enforcement, employment, or identification document policies. Law enforcement bills include sanctions that would authorize the state attorney to negotiate enforcement of federal immigration laws. Several bills would penalize the transportation or harboring of unauthorized immigrants. A number of bills also require law enforcement personnel to determine the immigration status of arrested or jailed non-citizens. Other bills relate to “sanctuary cities” for unauthorized immigrants and affect bail regulations for unauthorized aliens. While many bills have been passed concerning immigration, there are 43 state laws and resolutions that relate to the forest products industry or general hiring practices. For a complete list of recent state laws and resolutions dealing with immigration or for more information about the laws listed on the chart, visit http://www.ncsl.org/print/press/immigration legislationreport.pdf. Take Advantage of Industry Changes By From new competitors to regulatory changes and shifting customer demands, the pallet industry faces an unprecedented level of both opportunities and challenges. Smart companies will take advantage of them. Others will be rolled over by them or even pushed out of business. One of the biggest pieces of news to come along in a while was the unofficial announcement that Costco Wholesale wants to move to block pallets in 2009. Products arriving on pallets that do not meet standards will be refused or in some cases repalletized, which would result in a charge back to the supplier. Nobody knows if the market will tip in the block pallet direction, but this is at least something that companies should prepare for and be able to supply. The last few years have seen the rise of new players and increased competition from alternative materials. The Pallet Enterprise has already covered the developing of iGPS, the first all-plastic pallet pool serving the general Steel is getting in on the pooling act, too. One of the largest steel pallet and racking companies in the country, Worthington Steelpac (www.steelpacpallets.com), has built a new highly automated facility in iGPS Signs National Account, Eyes Partners By Assistant Publisher It’s a sweet deal for Intelligent Global Pooling Systems (iGPS). The RFID-tagged, all-plastic pallet pool has attracted its first national customer. Imperial Sugar, one of the nation’s largest processors and marketers of sugar, is switching from wood pallets, primarily CHEP, for all its shipments across the country. The expansion of iGPS could generate some new business opportunities for pallet recyclers and other third-party logistics companies that are capable of operating depots. “Imperial Sugar’s adoption of iGPS’s pallet pool is an important development in the steady growth of our company,” said Bob Moore, CEO of iGPS. Sugar is especially vulnerable to damage from broken boards and protruding nails on wood pallets. The proven strength and durability of our plastic pallet, along with its full-top-deck coverage, is an ideal match for Imperial Sugar.” Sugar is extremely absorbent, which raises a risk of cross contamination for whatever else has been on the pallet. Imperial Sugar liked the fact that radio frequency identification (RFID) technology allowed it to know exactly what had been on the pallet. Initially, iGPS went after high margin products, such as electronics or pharmaceuticals. However, it switched to the fast moving consumer goods arena when major corporations expressed interest in developing alternatives to CHEP. Bob said, “There is room for all of us in this industry because one solution doesn’t work for everybody. There will always be a need for a large amount of one-way pallets. The size of that business is so much bigger than the rental business.” Pallet Industry Leader Passings in 2008 A number of pallet industry leaders passed away in 2008. Most recently, Charles Larson and Bruce Yelland died. Charlie, 82, grew up in a family business that manufactured ladders in Bruce, 77, was president of J.F. Rohrbaugh Co. in Carroll Edwards, founder of Edwards Wood Products in Carroll started his business in a hen house, building pallets with one full-time employee. He went on to build one of the most successful wood products businesses in the country and a leader in the pallet industry. Edwards Wood Products comprises a scragg mill, sawmill, chipping operations and extensive pallet manufacturing operations. Earlier, Jack Thornton, a former supplier to the pallet industry, died at age 88. Like Charlie and Bruce, Jack was active in the NWPCA. Jack was a sales and marketing manager for E.T. Hazledine Co., a business founded by his grandfather, when he designed and built the first semi-automatic commercial machine to notch stringers. This entry into the design, manufacture, and marketing of pallet equipment led to a long succession of pallet machinery developments and a lifetime of growing along with the industry. Jack launched and became president of Hazlethorn Machine Co. and eventually established Woodthorn Corporation, which was on the leading edge of offering machinery and systems for pallet recycling and recovery. Also, Betty Garnett died earlier this year at age 82. She was one of the most outstanding and respected women in the pallet industry. Betty and her husband, Jess, who predeceased her, were affiliated with two businesses – Garnett Wood Products, a pallet manufacturing company in Betty had a penchant for hard work. Whether it was keeping the company books or managing a plant full of men from a forklift, Betty did it all. She had an amazing ability to take charge and make decisions but did so with compassion for and understanding of her subordinates. Lee Sherman also died in 2008. Lee was president of Timber Industries, a pallet wholesale business in the The U.S. Trade Commission determined that nails imported from For all practical purposes, pallet nails from An attorney representing “The domestic industry plans to aggressively pursue importer schemes to evade or circumvent the antidumping duties that rightfully should be paid,” added the attorney, Paul Rosenthal. Nail prices started edging higher in 2007 and began spiking in early 2008. The main reason for the higher prices has been higher costs of raw material. Bulk pallet nail prices increased at least 60-70% by the summer. Prices began to drop in the fall as rod became more available and the world economies started to slow down. Nail prices have dropped $10 per box since the high mark this summer – giving back at least half of the price run up over the past year. Which Is ‘Greener’ — Wood or Plastic Pallets? By Elizabeth Grey Morrison If your company has not been asked whether or not your products are ‘green,’ it may be coming. Increasingly, packaging users want suppliers to reflect an environmental consciousness even though they may not want to pay extra for it. Smart companies are developing answers before customers ask questions. It can be hard to separate truth from spin when it comes to environmental claims about pallets. Both wood and plastic pallet advocates tout their green benefits. One thing is for certain – there are no easy answers because transport scenarios vary widely. Dr. Peter Mooney, founder and president of Plastics Custom Research Services, said that comparing wood and plastic pallets is like comparing apples and oranges given the many different types of plastic pallets. Despite variations, however, Mooney said there are still advantages and disadvantages of both types, but the single most important factor is whether or not the pallets can be reused. John Clarke, director of technical sales for the Nelson Company, added, “I think you have to evaluate the application,” not just the pallet itself. Researchers Propose Cant Grade Rule By Hal L. Mitchell, Marshall White, Philip Araman and Peter Hamner In “price taker” markets, successful businesses are the low cost producers, and pallet manufacturers are no exception. The single largest cost component of pallet manufacturing is raw material costs. Cants and lumber typically account for over 60% of operating costs. In the last three decades, cants have replaced lumber as the primary raw material for hardwood pallet manufacturers. As stumpage prices and competition for wood-based raw materials increase, pallet cant prices will continue to rise as well. The value of cants to pallet manufacturers is a function of pallet part yield and sawing costs. A previous U.S. Forest Service study examined the percentage of unsound volume in hardwood pallet cants. This research showed that 90% of hardwood cants have less than 10% unsound volume, and that only 2% of cants have more than 30% unsound volume. This study, as well as the others, supports the justification that cant quality can and should be assessed in order to predict pallet part yields and to better control raw material costs. Virginia Tech researchers earlier developed cant grade rules representing a three-level partitioning of the range of cant quality observed during previous mill studies. Using these preliminary grade rules, researchers at Virginia Tech recently studied the relationship between cant quality and pallet part yields. As a result of this study a revised cant grading procedure was proposed. Surviving and Thriving During a Recession By Dr. Publisher One of the most common themes in discussions with pallet people has been how to deal with the slowing economy. It might seem trite to remind my friends that we have been here before because anyone who has been around for a while knows this to be true. Remember the recession of the early 1980s? It was the worst recession our country has experienced since the depression of the 1930s. Many of the things that helped good pallet suppliers survive those days are equally true today. Some of the operational details may be different, but the basic principles are similar. The biggest difference between companies that survive and even thrive and those that don’t is their long range business plan and its execution. Smart companies have to figure out how to provide service to customers and how to efficiently manufacture products that their customers need. Much of this requires planning, knowing your costs, adjusting successfully to customer changes, and knowing when to take business at cheaper prices. Asher Tourison of Acme Pallet in Researchers Consider Extending ISPM-15 Rule International leaders are discussing extending the application of the ISPM-15 standard, which requires treating solid wood packaging for export in order to kill wood-borne insects, to raw logs and lumber. IFQRG is studying how to develop a framework that harmonizes various international laws while providing countries room to enforce the voluntary standard as they see fit. The researchers are considering a number of issues, such as the risk associated to specific pests, suitable phytosanitary measures, the impact of bark, the dangers of post-harvest infestation, and ways to avoid confusing any new requirements with the existing ISPM-15 standard. Dr Eric Allen of Pacific Forestry Centre in IFQRG has looked at a number of contentious issues over the last few years. The most notable one was the debate over bark removal. In the end, the Europeans got some of what they wanted and the Pallet Scammer Apprehended in Police in Larry Alvin Harris has been accused of scamming companies out of pallets and transportation services all across the country. Harris had been arrested earlier but jumped bail. A tip by a pallet recycling company in Harris is accused of buying pallets under false pretences and not paying for them. Authorities want help to build a case against him. Pallet companies that think they may have been victimized by Harris should contact According to numerous sources, Larry Alvin Harris has used the following aliases: Al Harris, Bo Harris, L.B. Harris, Al Harnis, and Bob Harris. He has also done business under the names North Star Distribution, Pallet companies in Harris was apprehended based on information provided by Combustible Dust Becomes National Target By Elizabeth Grey Morrison Combustible dust, a hazard that has historically received little attention from employers and government agencies alike, is a hidden danger that every company operating a saw should address. Sawdust often goes unnoticed in all manners of nooks and crannies although it poses a major hazard if a secondary explosion occurs. According to the Occupational Safety and Health Administration (OSHA), dust has accumulated in many factories and triggered secondary explosions that have killed and injured hundreds of employees and caused hundreds of thousands of dollars in facility damage. Five elements must be present for a dust explosion to occur. Known as the “Dust Explosion Pentagon,” these elements include oxygen, heat, fuel, dispersion and confinement. Without all five elements, an explosion cannot occur. An initial explosion in processing equipment or in an area where dust has accumulated may dislodge more piled dust into the air. If ignited, the additional dust dispersed into the air has the potential to cause one or more secondary explosions. These can be far more destructive than an initial explosion because of the increased amount and concentration of dispersed combustible dust. David Dick, an attorney who handles OSHA-related cases, said the main issue regarding worker safety really has to do with sufficient education in the work place. How Will Obama Impact Your Pocketbook? Small businesses are wondering what impact the Obama administration will have on their companies. It appears that Obama will be a mixed bag for the forest products industry. He was an original co-sponsor of the Lacey Amendment, which aimed to crack down on foreign lumber imports. However, he also was favored by the major preservationist groups in the election. Without a doubt, Obama is expected to be less favorable to the forest products industry than President Bush. At the same time, Obama may take strong measures to help the slumbering housing market, which has put a damper on lumber demand the past year. A lot will be learned by Obama’s appointments to major cabinet positions. President-elect Barack Obama favors renewable and clean energy sources over domestic drilling. He has called for an 80% reduction in greenhouse gas emissions by 2050 via a cap-and-trade system. Carbon credits may become a bigger deal for forest products companies. Obama will require employers, excluding small businesses, to offer “meaningful” coverage or contribute percentage of payroll toward costs of public health care plans for workers. He will likely offer a refundable tax credit up to 50% of the cost associated with new health care expenses. Obama has offered little on specifics as far as the costs and who qualifies as a small business. Obama also wants to eliminate capital gains taxes for small businesses and startups. Are Your Hardwood Pallet Prices in Line? By Market Analyst According to an old adage, it only takes two bidding parties to make a competitive market. That is mainly true. The complete truth is that it only takes one bidding party with the perception of the second. I talk with pallet companies constantly. As a market analyst for Pallet Profile Weekly, I call pallet companies every week to gather information about raw material prices, pallet prices and other market conditions. One person whom I talk with regularly (we’ll call him ‘xyz pallet’) always seems to be under the gun for pallet prices. He’s an astute businessman and runs a tight ship. He understands his costing structure like the back of his hand, yet he seems to constantly struggle with customers just to keep his pallet prices out of the red. I talked with someone from another pallet company in the same state. He had been asked to bid on some business. He sharpened his pencil and went in with a price he felt was very competitive but a price he could live with. Well, ‘xyz pallet’ won the bid, and from this person’s point of view, the ‘xyz pallet’ bid was 50 cents too low. ‘Xyz’ had been hammered on by his customers, and fear of competition drove his prices far below where they should be. In this situation, ‘xyz pallet’ had been victimized by the pallet price ‘boogeyman.’ PECO Makes Inroads, Touts Quality By While you can still see a lot more blue and white pallets across Red, of course, is the distinctive color of PECO Pallet, Inc. (www.pecopallets.com), a pallet rental company that was originally started by a number of wood pallet companies. Since its inception in the late 1990s, PECO has followed a strategy of measured growth and has now managed to bring a reasonable rate of return for private investors. PECO has quietly grown from a regional player to a viable rental option for major companies, including Kimberly Clarke, “We don’t consider ourselves a regional or niche player any more,” said Joe Bongiovanni, vice president of operations for PECO. PECO now has 120 depots and 2.3 million pallets in its pool making nearly 12 million issues this year. The company is close to completing deals with some major retailers according to Joe. It already has strong relationships with Costco and BJ’s Wholesale Club. PECO has been steadily increasing its pool by 50,000 pallets per month. Its latest round of financing is for anticipated growth over the next 18 months. Joe said that PECO expects to grow the business next year, and therefore double the pool size. Quality has been a major selling point for PECO, which utilizes strict repair standards in all of its depots and has a third-party firm inspect to make sure that quality is being maintained. Vacuum Treatment Kills Insects in Wood By Zhangjing Chen, Marshall S. White and Jon Eisenback Treatment options for solid wood packing under the International Standards for Phytosanitary Researchers at Virginia Tech are investigating the use of vacuum technology as an alternative treatment method, and their test results look promising. For years vacuum technology has been used in wood processing operations as either a method of drying wood or to pressure treat wood with preservative chemicals. Existing methods have some drawbacks. Virginia Tech researchers believe there is a need for a globally acceptable treatment method that provides the assurance of eliminating the risk of infested wood materials with the benefits of reduced costs and being environmentally benign. They believe vacuum technology may be a viable solution to meet these challenges. The faculty and staff at the
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