Knoxville, Arkansas—

NuLyne Background

            In 1978, Hank Paladino formed NuLyne Forest Products to build pallets and supply pallet lumber to the industry. For a period during the later 80s, NuLyne had a sawmill and in 1985 opened a scragg mill for cutting pallet lumber. The scragg mills at NuLyne evolved from three Evans pole mills (a popular scragg at that time) to two Tipton scraggs, and more recently Big Jake mills.

            In 2002, Hank sold NuLyne to CGF Industries Inc., a privately held holding company headquartered in Wichita, Kansas. So, NuLyne went from a family owned entrepreneurial company to one owned by a holding company that has a diversity of interests. CGF is invested in a variety of industries, including farming, grain storage, oil and gas, commercial and residential real estate and building, photography and photo processes, hotels, publications, and manufacturing.

            NuLyne had two locations and just consolidated them into one at Knoxville, Arkansas. The facilities were 13 miles apart before they closed the separate log yard.

            Hank passed away in June, 2005. His son Steve, executive vice president and sales manager, and Wes Southerland, president and CFO, are now the two top managers. Steve said, “CGF has allowed us to keep much of the family business environment, an important element in the pallet and lumber business.”

            NuLyne’s primary business is the production of pallets and pallet cut stock. At one time it was heavier in cut stock. It shipped large quantities of Midwestern oak pallet stock to California before CHEP took control of so much of the western agri business. Rail rates made it difficult to sell into that market, and the western cut stock from the Midwest degenerated to a fraction of its former stature. NuLyne’s West coast business is down from 300 rail cars to about 20 cars. The company expanded its pallet manufacturing business; today it is close to 85% of NuLyne’s business.

            Most business is now more local. At one time very few pallet companies operated scragg mills. Now quite a few in the Ozark region operate scraggs, so the cut stock market has diminished locally as well. NuLyne trucks most products to customers in the south central part of the country within about a 700 mile radius ranging from southern Texas and Louisiana all over the south central part of the U.S.

Pallet Lumber the Ozark Way

            In 2009, NuLyne installed a new Big Jake scragg mill to cut pallet lumber and a new Meadows #3 sawmill for cutting both pallet lumber and railroad ties. NuLyne had been selling saw logs off its tracks of land but decided that a sawmill would integrate well with a scragg mill to more fully utilize the timber coming off company timber tracts both private and through the forestry service.

            NuLyne has several contract loggers and two timber procurement woodlands managers. The company buys tracks of timber and engages loggers to do the harvesting. It has worked pretty well in the heavily wooden Ozark region of Arkansas. NuLyne works with regional pine mills by selling them pine logs off its tracks and buying hardwood logs from them.

            The paper industry is very active in western Arkansas. Loggers may sometimes play the paper companies against the sawmills, but Wesley Southerland said “The mix usually works fairly well. We keep our loggers busy year around; we don’t lay them off in the summer as paper companies sometimes do. They are pretty loyal.”

            NuLyne decided to buy another Big Jake scragg mill because of its production capability. Steve said he likes the sharp chain feeding concept. The machine is quite a bit more advanced as to what it can do when compared to some of the alternatives. A sharp chain pulls each log through a set of two blades, which cut slabs from two sides. The Big Jake uses a bandsaw blade to optimize the second cutting station. It will adjust to the specific flitch, either resawing it into two three-sided cants or cutting off a minimal slab to maximize the remaining three-sided cant. Each resulting cant is then directed to a three-head trim saw where it can be cut into two different lengths when necessary. These shorter cants are directed to either NuLyne’s Pendu double bay gang saw or its Brewco bandsaw line. All the lumber ends up on two long conveyor belts that direct the cut material to two Pendu stackers. Steve indicated that the Pendu stackers have been an economical choice in their system.

            Wes indicates that their Big Jake has a capacity to cut 50,000 to 60,000 bd.ft. a day, but they are struggling to find enough material for the system. They are happy with their Big Jake scragg, which can handle logs from 30” to 10’ long.

            Steve said, “Putting in a sawmill was a good decision for us. Meadows Mills has three models of sawmills. Our #3 mill is the heaviest duty mill they make. It can saw logs that are up to 24 feet long. We can now process sawlogs as well as pallet lumber from our tracks of timber” At the time of this article, logs are very hard to get. NuLyne expects to be able to cut 20,000 to 30,000 bd.ft. a day when log supplies permit. At this time about half of the Meadows production is pallet cants and lumber; the other half is railroad crossties. NuLyne doesn’t try to buy sawlogs, but some will come along with the scragg or pulp logs on their tracks of timber. Today it is difficult to maintain log inventories. Tomorrow conditions may change and the company may be looking toward grade recovery if prices continue to increase.

            NuLyne’s cutup operation is centered around a Pendu double bay gang saw line and a Brewco bandmill line, both of which cut cants into pallet lumber. Versatility is important at NuLyne which has the ability to cut three different thicknesses and two difference lengths at the same time. The company doesn’t make many GMAs; so it cuts a wide variety of sizes and lengths to supply its variable production requirements. They indicate that probably 97% of their pallets are custom sizes and specifications instead of the usual 48x40 size.

            NuLyne manufactures both hardwood and softwood pallets. Most logs and lumber come from Arkansas, which has an abundant supply of both types of trees. While pine prices go up and down quite a bit, hardwood prices are typically more stable. Today’s market is an exception to that hardwood trend. NuLyne prefers hardwood pallets, but some customers require softwood. Weight is the principle reason that many of Nulyne’s customers want pine. Softwood pallets are lighter, thus easier to handle. Softwood pallets offer good uniformity, and they adjust well to automatic stacking applications.

            They buy #3 pine or a #3/#4 mix. Pine material already conforms to phytosanitary requirements. A Holtec package saw is used to cut bundles of softwood lumber to the desired lengths. NuLyne buys much of its softwood as random length, pulled and bundled to length. While you may pay a little more for this benefit, you gain from efficiency in crosscutting. The company rips its softwood material on a Brewer three-head resaw.

            Since NuLyne specializes in a wide variation of pallet sizes and types, it manufacturers block pallets as well as stringer pallets. It uses a carousel style block cutter that rotates a number of bays to cut material into blocks.

            Because the company is not active in the GMA market, although it has the capability it doesn’t do much chamfering, but it notches many of its pallets. It uses a Bob Hanna notcher, which it has altered somewhat to fit its specific needs. A shop-built automated notcher will notch stringers up to 12’ long. They notch a high volume of 100” stringers for one customer.

            Maintenance capability is an example of NuLyne’s flexibility. Elmer Davis, one of NuLyne’s maintenance specialists grew up at the company. He started out as a lumber stacker and rose through the ranks to become a certified electrician. At one time the company even ventured into the machinery world. Between their own band resaws and those sold to the industry under the Boen Bandsaw name, NuLyne made about 50 resaw heads. Steve said, “We found that the equipment business is as competitive as the pallet business.” The Enterprise has worked with the pallet equipment business as closely as anybody; we agree with this conclusion.

            Every pallet plant and sawmill has to handle wood fiber residue in some way. NuLyne has chosen to sell its saw dust, and bark residue mostly for fuel. NuLyne processes its wood scrap residue through a 75” Precision whole tree chipper, which is capable of handling a whole log if necessary. NuLyne installed a 27” Nicholson Debarker that serves to increase value of both lumber and wood chips produced. Most chips are sold to the paper industry, a major industry in Arkansas. It has a long term relationship with Custom Wood Recycling, which picks up its dust and bark.

Pallet Production

            Before the recession, NuLyne was building about 60,000+ pallets a month. During these difficult times, it has not lost many customers, but volume is down considerably. They have been running a single shift since 2005, although they ran two shifts earlier in the decade. At its peak, NuLyne employed about 125 people, but it currently employs about 71. Since late January, lumber prices have gone sharply higher. Pallet orders have picked up. The pickup in pallet orders has centered more around the decrease in lumber supplies than it has a real pickup in demand. Unfortunately the economy continues to be weak. Steve says he can sell all he can make today. When inventories start moving, pallets start going out the door. Customers are less hesitant to place an order today. Until things seriously pick up, pallet people indicate they will hesitate to expand their number of employees. In the short run, most pallet people handle sudden increases in demand by working more overtime.

            NuLyne does its higher volume orders on three Rayco Pallet Pro automatic nailers. They like their Raycos because they are easy to change over. NuLyne modified its Pallet Pros, which they affectionately call Pro Customs, to handle the wide variety of pallet sizes and specifications it produces. Making modifications in machinery to fit unique needs is a common practice in the pallet industry. They change over so many times that a high speed tandem bulk nail fastening system doesn’t fit NuLyne like it does so many pallet companies. Steve says that they typically nail 900 to 1000 pallets a day with two men on a Rayco Pallet Pro.

            NuLyne also has seven nailing table stations. They use Stanley Bostitch pneumatic tools and fasteners on both the nailing tables and Rayco machines. Specialty jigs help provide needed flexibility. Bostitch has been a dependable supplier. NuLyne has tried other suppliers but does not like having money tied up in container load inventories. Bostitch has always provided a valuable supplier service.

            The company ships a lot of mixed size loads. Stringer sizes vary from 4x4s down to light, very small skids.

            In addition to its #1 material, NuLyne makes a product called “mill run” lumber, these are boards that do not fit the traditional #1 requirements; and may have more wane, etc. This product is an economical alternative for customers who do not require a number one pallet but have trouble with number two pallets.

            Several customers require as many as ten to fifteen different pallet specifications. Over the years NuLyne has watched common decking thicknesses go down from 13/16” to 5/8” or less, stringers dropping from 1-3/4” down to 1-1/4” or even 1-1/8”. If a customer wants it, they will find a way to cut it.

            NuLyne installed a Unitemp heat treating chamber, one of the first in Arkansas, a few years before heat treating started to gain popularity. They indicate that their Unitemp does a good job and will treat about 1200 48x40s per charge. TPI handles NuLyne’s heat treating certification.

            NuLyne uses mostly Nissan forklifts in its factory and a mixture of different loaders and large lifts on the yard. It has a freight contract with Propel Trucking, Inc. (PTI) with a per mile agreement on vehicles used to service customers. When it cannot go out and come back empty, it uses third part shippers. A mixture of freight options matches well the versatility and flexibility of its products and services.

            NuLyne does very little pallet recycling. They do some as a service to customers, bringing back broken pallets for repair. They are not directly involved in pallet recycling, such as the 48x40 market. This service focuses on repairing a particular pallet for the customer.

            In addition to more traditional pallets, NuLyne is able to manufacture a variety of related wood products. They make raggle sticks, a materials handling product that holds round items, such as pipe and graphite rods, for trucking. Cants are shaped in a kind of scalloped shape before resawing into raggle sticks. These sticks allow round items to be more easily loaded, unloaded, and shipped without using pallets. Raggle sticks typically include band grooves so items can be secured with strapping.

Management Attitude

            NuLyne tries to offer a full range of human resource needs for its employees. While medical insurance is expensive, the company offers medical savings accounts, health insurance, 401Ks, and group life insurance. The company pays a portion of an employee’s health insurance; they will have to pay the rest, as well as any for their dependents. Since most of its employees are fairly young, their health insurance rates are reasonable from a comparison perspective.

            Most employees are paid an hourly wage with some board footage incentive goals. Today it is difficult to hit the goals because of lumber resources issues. Employees involved in pallet assembly are on piece work. The pallet industry has found that pallet assembly is one department where piece work often makes sense.

            When asked if he has any words of wisdom for our readers, Wes said, “It is unfortunate that so many of our peers have or are going out of business. Depressed pricing and fierce competition over the past several years pushed many out of business and we expect to see this trend continue. Nulyne and CGF made a substantial investment to diversify our product offerings by expanding our mill to help ensure our long term survival. Our peers, that do not do so, will certainly be in a vulnerable position going forward.”

            Steve added, “Too many loggers are going out of business. They are not breeding any more loggers.” This same sentiment is repeated throughout the sawmill industry.

            In the past about the only time that the pallet industry has been able to increase its margins is in rapidly rising lumber market. When the time comes for a necessary price adjustment, pallet suppliers strive to raise prices enough to cover higher direct lumber prices with a little extra to cover long neglected overhead increases. A fair price is needed just to stay in business.