Twin City Pallet Changes, Adapts as It Deals with Sluggish Economy: Minnesota Company Benefits from Pallet Repair Systems Automated Repair Line
Twin City Pallet: Minnesota company benefits from automated repair line supplied by Pallet Repair Systems, adapts to deal with sluggish economy.
By Tim Cox
Date Posted: 8/1/2009
ST. PAUL, Minnesota – Brian Laumeyer knows full well the benefits of automating pallet recycling operations. Since adding an automated pallet repair line that was supplied by Pallet Repair Systems, production increased significantly, and Twin City Pallet has accrued other benefits.
Twin City Pallet was started by Brian’s father, Merle. He had been a truck driver for 15 years until he was laid off in the mid-1970s. As a truck driver, Merle had some familiarity with pallets, and he decided to start a pallet company. He began working out of a garage with a pick-up truck.
Brian began working in the business full-time after graduating from high school. He worked for his father as a teen, and they continued to grow the business as a father-and-son team.
Brian and his wife, Jennifer, have been running the company since they bought Merle’s share of the business when he decided to retire eight years ago. Jennifer holds the company title of president and Brian, vice president.
The couple has grown the business at the rate of about 35% annually, according to Brian, 34. “When we went to the bank” to obtain a loan for the buy-out, “that motivates you real fast,” said Brian.
Jennifer oversees the financial aspects of the business, such as projections, accounts receivable and accounts payable, as well as compliance with OSHA regulations and sales and quotes for new and existing customers. She previously owned a tanning salon after earning a degree in psychology.
Brian oversees day-to-day operations as well as business relations with large vendors. He has a brother in the business, Dean, 41, a truck driver.
Twin City is a full spectrum wood packaging and recycling business. The company recycles 100% of the material that enters its facility. Twin City operates from a 13,000-square-foot building on a 5 acre site and currently employs 44 people.
Twin City produces about 25,000 pallets per week as well as crates. GMA pallets account for about 60% of the company’s pallet production, but Twin City stocks 34 different sizes in inventory for its customers.
The sluggish economy has driven some customers to buy cheaper, recycled pallets instead of new pallets, noted Brian. In times when the economy has been good, about 40% of pallet sales are new pallets. This year, new pallets will account for about 20% of pallet sales, he estimated.
The companies that switch from new pallets change to ‘combo’ pallets made of a combination of new and recycled wood or to recycled pallets, he said. “Anything they can do to save a dime – that’s what we’re seeing a lot of.”
Pallet repair operations are a key to Twin City’s overall recycling efforts. The company added the PRS automated pallet repair line in 2007.
Before investing in the PRS system, Twin City had been running two shifts “and still couldn’t keep up,” recalled Brian. In addition, the repair workers did a lot of manually lifting and handling of pallets, and there were “stacks of pallets everywhere.”
With the addition of the PRS line, the workers don’t have to move, and they don’t have to lift pallets; they simply pull pallets off the conveyor line and push them back on after repairs are completed.
Brian takes this approach to sorting incoming pallets. If a stack of pallets contains more than four odd pallets, it is moved to a shed in the yard, and the stack is sorted by hand. Otherwise, stacks of pallets are taken to the tipper station at the start of the repair line.
The PRS automated pallet repair line is about 64 feet long from tipper to stackers. Work stations are set up on both sides of the line – five on one side and four on the other. The repair line ends with three PRS stackers.
The line consists of three tiers of conveyors. Finished or ‘ready-to-go’ pallets move along the bottom line; pallets to be repaired travel on the middle conveyor, and scrap material is conveyed along the top tier, which is within reach of a worker who is standing up.
At the tipper, a worker uses the machine to put the pallets into place at the start of the repair line. The worker operating the tipper pulls off ‘ready-to-go’ pallets and pallets that will be dismantled. For a pallet that will be dismantled, he pulls it out and slides it onto a conveyor that goes directly to the dismantling area. For ‘ready-to-go’ pallets, he uses a foot-activated button to drop the table down to send the pallet to the bottom tier of the repair line, which goes directly to the stackers.
One worker is stationed at the end of the line, grading the finished pallets and directing them to the appropriate stacker.
The main reason for putting in the PRS line, Brian reiterated, was to increase production. After the PRS line began operating, production increased by about 1,200-1,500 pallets to about 3,000 pallets per shift. The automation also reduced worker fatigue by eliminating lifting and handling of pallets and cutting down the time workers spent walking around.
In the area for dismantling pallets, Twin City is equipped with three Smart Products bandsaw dismantlers, including one Smart Products Pallet Prep Plus machine. For cutting recycled pallet parts to length, the company uses two PRS Optimax trim saws, a Heartland Fabrication chop saw and a Smart Products chop saw.
Most recycled deck boards and stringers are used for repair stock, but the company also uses recycled lumber to make complete pallets and ‘combo’ pallets.
“At first, none of the guys liked it,” said Brian of the automated repair line, but the reason had mainly to do with a change he made in compensation for the repair workers. Previously, Brian paid them a piece rate, and each worker received a certain number of pallets each day to repair.
With the addition of the PRS automated repair line, he went to a team concept for compensation. “Everyone on the line gets paid off the total count,” explained Brian. In other words, their pay is based on what the entire group produces for the day, divided by the number of workers — not what they produce individually. “It keeps them involved as a team,” said Brian.
The team concept also helped reduce quality issues, he said. Previously, some workers were very fast, but their pallet quality was not as strong. “Because they get paid as a team, they keep other guys in check,” said Brian.
The workers have grown to accept the new pay system, he said. Another advantage of the team pay concept is that if a new worker comes on, the others are quick to teach him and help him get up to speed because they reap the benefit. “Before, they didn’t want to help each other,” said Brian.
In the new pallet division, about 70% of new pallets are assembled on a Viking Champion nailing machine with Viking bulk pallet nails. The company also has about five benches or tables for assembling pallets by hand with Senco pneumatic nailing tools and collated fasteners.
When buying new lumber, the company buys about 50% hardwood and 50% softwood. It buys pre-cut aspen and hardwood from suppliers in Wisconsin and kiln-dried pine from mills in Canada, Montana and other states.
The company has no resaw operations but uses the chop saws to cut material to length. Brian found he could not remanufacture lumber as efficiently as mills that specialize in those operations.
For manufacturing crates and containers, Twin City buys pre-cut material and also buys some 8-foot lumber and panels and cuts the material to size.
Most of Brian’s customers for recycled pallets want a No. 1 pallet – a recycled pallet with no ‘plug’ or extra stringers used to repair a damaged stringer. That reflects the industry trend in Minnesota, he said. A recycled pallet containing a ‘plug’ fastened to a stringer is a No. 2 or B pallet and gets less money for the recycler than a No. 1.
When Twin City gets a pallet that only has a broken outside stringer, it is upgraded to a No. 1 instead of adding a ‘plug,’ which would make it a No. 2. The worker running the tipper sends the pallet to the Pallet Prep Plus machine, removes the damaged outside stringer and attaches a replacement stringer, and returns the pallet to the repair line.
Brian added operations to produce mulch in 2001, and about three years ago he added the capability to recycle plastic and cardboard. He began by offering the added recycling service to certain vendor accounts. The company collects stretch wrap, shrink wrap and other plastic packaging material as well as plastic pallets.
Twin City bought a new Rotochopper machine in the fall of 2008, a model MC266. “It’s a super machine,” said Brian. Rotochoppers grind wood and color it in one pass through the machine. Most of the company’s mulch is colored. Dark brown is currently the most popular color, according to Brian, although colors change in popularity; before dark brown it was gold, and earlier it was red.
About 15% of the grindings produced by the Rotochopper are sold for boiler fuel to biomass plants or to fuel a wood-burning heating system for Twin City, and some grindings are sold for animal bedding. Around January or February, the company begins stockpiling grindings for the mulch season. Twin City produces one to three truck-loads of wood scrap per day.
Mulch, which is sold wholesale, represent abut 10% of the company’s revenues while pallets and containers account for 90%.
The company relies on Saw Service and Supply for most bandsaw blades; a local company provides retipping service for circular saw blades for chop saws. The company has a Hazlethorne single-head notching machine and buys inserts or cutting tools from Econotool.
Twin City is equipped with a Temp Air pallet heat-treating system although heat-treated pallets only account for about 2-3% of the company’s pallet production.
Twin City uses the Innovative Data Systems Inc. Pallet Track software system for generating quotes and performing other information technology tasks. Brian also has been considering adding bar codes to the pallet repair operations, mainly because of the time spent manually counting pallets.
The company has a baler for forming recycled cardboard into bales, five forklifts and fleet of five semi-tractors and 65 trailers.
Safety meetings are conducted monthly. Some Hispanic workers only speak Spanish, but others are bilingual and translate.
“We look at our team of employees as our family,” said Brian. “We know most of their children, spouses, and so on. They are our friends.”
The company employs two full-time salesmen. They work with existing accounts to ensure that customers get the service they require as well as soliciting new customers and sales.
“We pay very close attention to each customer’s special needs,” said Brian.
The last 12 months have been difficult because of the sluggish economy, Brian acknowledged. “It’s tough. There’s no question about it. You kind of change a little bit. You watch every nickel and dime that goes out. You get creative with some of your customers. You keep better track of your receivables.”
The company lost money earlier this year when a customer that owed money to Twin City filed for bankruptcy. Brian and Jennifer learned from that to watch their receivables more closely and changed billing for some customers to net 15 days.
“We’re keeping lower lumber inventory,” added Brian. “We’re trying to cut corners where we can and make sure we’re still standing.”
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