Right Truck Allowed Skid Company to Get Foot-Hold, Expand to Pallets
Right truck allowed skid company in Wisconsin to get a foot-hold in the market and expand to pallets.
By Tim Cox
Date Posted: 11/1/2000
HORTONVILLE, Wis. — Sometimes something as simple as the right kind of truck can help a young pallet business get a foot-hold in the market.
Bob Luedtke and Bill Reffke, long-time employees of Fox River Paper Co., started a skid-making business in their spare time in 1994. At the time they launched the business, there was only one other local company that made skids, and that supplier had the market cornered.
Bob and Bill were able to get a foot-hold in the market, however, because of the competing company’s pricing strategy. Their competitor transported orders on tractor-trailer trucks and charged an additional 20% for less-than-truck-load deliveries.
"Most companies don’t buy a truck-load of skids at a time," Bob noted. He and Bill bought smaller trucks — 26 feet long — to make deliveries and were able to set their prices more competitively. Their first customer was their employer, Fox River Paper Co.
Their company, Skids, Crates and Pallets (SCP), quickly expanded its foot-hold in the market. SCP added more customers rapidly. Customers began asking SCP to supply them with pallets, too, and specialty items. The company doubled in sales for the first couple of years and still enjoys booming growth. "We average about 40 percent growth per year," said Bob. "This year we probably are going to do about $5.5 million." SCP relocated several times to keep pace with growth and now is settled in a new plant that employs 35 people.
The two men started the business with a third partner in 1994, but Bob and Bill bought out the other owner after a few years. They began working full-time in their business in 1995.
Hortonville is located in central Wisconsin, about 30 miles southwest of Green Bay. SCP’s customers are located mainly in the Fox River Valley within a radius of only about 45 miles. The company has targeted printing and paper manufacturing industries, and the economy has been good to their customers. "They’ve had pretty steady growth in the last five or six years,"said Bob, "so they’ve contributed to our growth."
There was more to getting SCP off the ground besides the right trucks, of course. Fox River Paper Company also had concerns about the quality of the skids in addition to price, Bob indicated. The company was using skids to ship high-grade papers and wanted to ensure that shipments would arrive at customers’ destinations intact.
SCP started out by renting a 900-square-foot building in nearby Appleton. Bob and Bill hired a salesman to market the company and built skids after working at the paper mill. "We did everything by hand," Bob recalled, nailing skid components together with hammers. "We didn’t even have any heat." They made 36x30 and 36x47 skids of poplar stringers (two) and kiln-dried pine boards, the standard design in their market. They bought 1 1/2-inch pine and 10/4 poplar and cut the lumber to size with a radial arm saw and a chop saw. Their initial investment was about $6,000. SCP had sales of about $350,000 the first year. As sales volume grew, the men hired a few workers and purchased power nailing tools and a semi-automatic nailing machine for making skids.
Both men spent lengthy careers at Fox River Paper Company before leaving to work full-time at SCP. Bob, 53, had worked for Fox for 25 years before leaving and was in management — a shift team leader — when he resigned. Bill’s background was in plant maintenance; he had been a millwright at Fox for 40 years before taking early retirement.
The machine for making skids was manufactured by a local machine company that since has discontinued offering them. In fact, after buying one in 1996, SCP bought the last two, made in 1998. The machine, called the White Tail, is equipped with two or three power nailing tools on a gantry that is moved manually.
SCP added its first automated nailing machine in 1997, a new Rayco Pro. "We were making 300 to 400 skids a day," said Bob, and customers began asking them to make pallets, too. The investment in the Rayco was made possible by a customer that signed a three-year contract for pallets. Rayco helped to finance the machinery purchase. "It was about what we could afford," said Bob. "It’s reliable. We still have it and use it."
"When you first start," he added, "you don’t have a lot of money."
SCP began making block pallets for a customer in 1998 and bought a second machine from Rayco to assemble them. The Rayco staff took its Buck model nailing machine and made engineering and design changes to modify it for assembling block pallets. "It’s worked out good," said Bob.
This year SCP invested $700,000 in additional equipment. The company acquired a used Viking Champion that was modified to make four-stringer pallets. SCP also added a stitching machine from Stapling Machines Company that is used to assemble mats for block pallets. The third piece of equipment the company added in 2000 was a Pacific Trail package saw system.
SCP is equipped with a number of other pieces of ancillary equipment. The company has several Delta table saws and Dewalt cut-off saws and a Dewalt planer. A panel saw that once was converted to cut stringers now is used to cut plywood components for panel-deck skids. SCP has a Kent Corp. notcher for notching stringers and a Kent Corp. block cutter for cutting blocks for block pallets.
SCP operates two shifts. The first shift is 7 a.m. to 3 p.m. The second shift works four 10-hour days, from 3 p.m. to 1 a.m. Monday through Thursday.
The company is averaging about 12 truck-loads of deliveries daily. The product mix breaks down to about 20% skids, 35% block pallets, and the remainder is four-stringer and three-stringer pallets.
For pallets, SCP buys precut material. All pallet lumber is bought already cut-to-size and resawn for stringers or deck boards. For pallets of odd sizes, SCP employees will cut the components. The company buys about three truck-loads per week of hardwood material and four of softwood.
SCP has moved a number of times since its inception. Before moving to its current locations, operations were divided among two sites. The move in July to a 63,000-square-foot building allowed SCP to consolidate its operations under one roof. The building is located on 5.5 acres of land, and the company has options on four adjacent acres. All raw material and finished products are stored inside. "You wouldn’t know it’s a pallet mill from the outside," said Bob.
SCP gives away its waste wood and sawdust. "We want to be good neighbors," explained Bob. "We’re not interested in making a couple of bucks off the local economy here." Wood scraps are given away free for firewood while farmers and ranches pick up the sawdust for animal bedding.
When Bob and Bill decided to invest in a package saw, they called each machinery company that manufactures them and asked for specifications. "When we talked to the Pacific Trail people, they tended to be more interested" in what SCP required, said Bob.
Bob and Bill wanted a package saw system with several features that were not readily available, and Pacific Trail worked with them to design and build a machine to match their requirements. "We wanted a turn-key system with a conveyor that would take away all the scrap wood and remove all the sawdust," said Bob. They also wanted a system that could run either automatically or semi-automatically. "Some of our customers will order 20 skids," Bob explained. "We wanted a system...that could cut enough to fill their order without cutting up whole packages of lumber. They designed a system that would do that." Pacific Trail also supplied a "bump" or "slammer" to make a bundle of lumber flush on one end prior to cutting.
The Pacific Trail machine has been running "great," said Bob. "They did a nice job on it." Pacific Trail installed the machine and trained SCP employees how to operate it.
SCP uses the Pacific Trail package saw for cutting material for skids: kiln-dried 10/4, 3x8 and 4x8 for runners and 3/4 for boards. The machine runs throughout the day shift and is cutting about 17,000 board feet daily.
"It replaced six employees," Bob said. "It took six people on each shift just to keep up." The company previously relied on its assortment of cut-up saws for cutting boards one at a time.
"You only need one person to cut wood," said Bob.
A bundle of material is "bumped" and then loaded onto the conveyor to be fed into the saw. The operator programs the saw. While the saw makes the cut and moves the bundle to make the next cut, the operator is putting another package of lumber on the "bump."
Bob and Bill are not considering any plans at this time to integrate their operations with a sawmill or scragg mill to process logs or a cut-up line and resaw line for processing cants. "We’re growing so fast that we can only do so much," said Bob. "Our suppliers...are just-in-time suppliers, and as long as that continues to work, we see no reason why we should start cutting (logs or cants) ourselves."
SCP is a privately-held company. Bob’s wife, Pat, and Bill’s wife, Jane, are the office managers. The partners hope to pass the business to members of their families.
Bob attributed much of the young company’s success to product quality. "I think it’s because of the quality of our work and dedication of our employees," he said.
SCP also has made it a practice never to alter a pallet specification without informing the customer. "We’ve never changed a customer spec," said Bob. "We walk our new customers through what we do here and help them figure out what they need. Once we agree on a customer’s specification, we never modify the spec without the customer’s consent." If SCP comes up with a new spec that costs less, the savings are passed along to the customer. The company is supplying some customers with pallets or skids that cost less than they did in 1994.
"We do some things for our customers that I don’t know if a lot of other people do," said Bob. SCP is set up to be a one-source provider of wood products. "We provide just-in-time delivery, thereby reducing their inventory costs, which in turn provides additional production space. Most of our customers rely on us to be their only wood provider." SCP makes skids and pallets ahead of time for customers and inventories the stock. Orders called in during the morning — sometimes as many as 30 or 40 — may require same-day delivery. "Our normal inventory consists of one week’s supply of a customer’s usage. We maintain this inventory level to ensure our customers have an uninterrupted supply of wood products."
Most orders for established accounts come in over the fax machine. When SCP staff and customers need to confer by phone, "the conversations are never about quality," said Bob.
Pacific Trail Mfg. Supplies Cross-Cut Unit Saw Systems for Pallet Industry, Reman
Pacific Trail Manufacturing Inc. has enjoyed significant growth in supplying cross-cut unit saws to the pallet industry and lumber remanufacturers across North America since 1996.
Much of the company’s success has to do with the flexible approach it takes to serving customers, said Thomas Langton, Pacific Trail’s sales manager.
"Every customer is different," said Tom. "One may want only a saw head to fit to an existing feed system. Another may want every option possible to drive up the production per man hour."
Pacific Trail offers three basic models that provide a range of cutting tolerances and production.
Entry level models, where cutting tolerances are not an issue, include the inexpensive Mobil-Cut yard saws. These saws are available in both electric and gasoline versions.
The Exacta-Cut 116-22™ has been Pacific Trail’s most popular model servicing the pallet industry. Offering a cutting tolerance of ±1/16-inch, custom frame length, digital length measuring and cut stroke power assist, the
The Accu-Cut 132-20C is the vertical cutting saw of choice for true precision end trimming, offering a tolerance of ±1/32-inch. Stock features include digital length measuring, off-load staging, electronic inverter controls and much more. Options include fully automatic one-employee production cutting.
Complete turnkey installations can include hydraulic unit aligners that
For more information on Pacific Trail Manufacturing or its products, contact the company at (888) 910-SAWS (7297), fax (503) 233-0767 or e-mail at firstname.lastname@example.org.
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