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O’Malley Lumber Keeps Eye on Efficiency Gains, Curbing Costs: New Pendu Board Line, Pallet Machinery Group Stackers Provide Boost
O’Malley Lumber: Virginia-based pallet company expands, relies on automation to become more efficient. The company has developed a strong reputation for its food grade pallets treated with mold inhibitors. O’Malley utilizes wood waste in its pellet operations.

By Tim Cox
Date Posted: 7/1/2018

TAPPAHANNOCK, Virginia — Matt O’Malley is focused on strategic planning for his widespread pallet company, P.T. O’Malley Lumber Co. Inc., looking for ways to improve efficiency and take out costs as he continues to grow the business.

In recent years the company has added a third manufacturing facility and put in a new Pendu cut-up line at its plant in Tappahannock, Virginia. The company also has automated some operations with the help of Pallet Machinery Group.

O’Malley actually has four locations. Besides the Tappahannock plant, it has two facilities in Pennsylvania, and it also has corporate offices in Baltimore, where the company had its pallet manufacturing operations for many years in the past.

Another major change the company has experienced: a transition in leadership. Matt’s father, Mike, who grew the company from 25 to 200-plus employees since taking over from his father in 1977, died at the age of 65 in 2016. Matt took the helm as company president.

O’Malley has developed a strong name in the food sector and uses special chemical treatments to reduce mold on pallets. Also, the company has invested in pellet operations to utilize wood waste.


Moving Operations to Virginia

P.T. O’Malley Lumber originally was founded as a portable sawmill business by Matt’s grandfather in Gloucester, Virginia, in the 1940s. He moved to Baltimore in the 1950s and became a lumber broker. Then he began making pallets and crates in the 1960s. The business eventually transferred to Mike and his brother Pat.

At its facilities in Tappahannock, which is located on the Virginia middle peninsula adjacent to the Rappahannock River, the company has a sawmill, scragg mill, multiple cut-up operations and extensive pallet assembly operations. It also has a Pellet mill that turns residual wood material into wood fuel pellets for residential heating.

O’Malley has two plants in south-central Pennsylvania. One is in Gardners, roughly 30 miles southwest of Harrisburg, which the company opened in the mid-1980s. It opened a second plant in New Oxford, only about 15 miles southeast of Gardners, in 2016.

The two Pennsylvania plants are dedicated mainly to manufacturing large custom crates and boxes and unusually large pallets. The company buys Southern Yellow Pine lumber and remanufactures it into components on Baker Products bandsaws and cut up lines. All assembly work is done by hand with pneumatic nailing tools.

The company expanded into Virginia when it bought the sawmill in Tappahannock in 2004, and Matt, who holds a bachelor’s degree in wood products, with a minor in business management from Penn State University, began overseeing the plant. A scragg mill was added the same year. The expansion into Virginia was to become more vertically integrated, by supplying pallet cut stock to its Maryland and Pennsylvania operations.

In 2010 the company bought a 164,000 sq. ft. building on 94 acres of land adjacent to its sawmill and relocated its Baltimore operation to the new site.

“We wanted to maximize our efficiencies,” said Matt, 37.

Eventually, relocating the Maryland pallet assembly operations to Virginia made more sense. The labor force in the Tappahannock region is more favorable, noted Matt. “Virginia is very business-friendly,” he said.


Upgrading the Tappahannock Facility

The Tappahannock building, with 164,000 square feet, was used for manufacturing textiles decades ago. The spacious facility provides plenty of room for the company’s pallet assembly operations as well as storing cut stock and finished pallets. “It’s very nice for pallet manufacturing,” acknowledged Matt. “We can keep the lumber inside or out, and we have plenty of room.”

The company is currently planning on the design and installation of a new scragg mill to take the place of its Fastline Scragg and Corley circle mills. This project is planned to be completed by early 2019.

The company added a new Pendu HD gang saw and cut-up line in 2016. It is the largest, most heavy-duty gang saw offered by Pendu, and the first of its type manufactured by the equipment maker. The line begins with a Pendu deck and unscrambler that feeds cants automatically to a multi-head undercut trim saw to be cut to length, and the blocks of material feed directly into the HD gang saw. Lumber exiting the saw is routed onto a green chain where a worker pulls off low-grade boards. Boards then feed up to an Automated Industrial Technologies TS300 stacker supplied by Pallet Machinery Group.

The new Pendu gang saw replaced a West Plains nine-head bandsaw system. “We lost a lot of kerf by going to the gang,” said Matt, “but we more than made up for it in production.” The bandsaw line would cut around 30-40 bundles of finished lumber a shift; the new Pendu line cuts 70-80 hardwood bundles per shift with 4 fewer people.

The new Pendu gang, which the manufacturer has since sold to other customers, can cut hardwood cants at a feed rate of up to 200 feet per minute. It has a cutting capacity of 7.5" inches high and 12 inches wide with arbors powered by 125 hp and 150 hp motors. It features Pendu’s innovative feed system with 27 powered rolls.

Another cut-up line is equipped to produce boards and stringers; it splits or resaws 1x and 2x material. “It’s a pretty versatile line,” said Matt. It begins with a Neuman KM-16 multi-trim saw to cut the material to length, then it is fed either to a Pendu gang saw or a Storti R16 gang saw supplied by Pallet Machinery Group. The finished stock feeds into a Pallet Machinery Group M2L stacker.

Another Pendu line, a Pendu cut-off saw and gang saw, is used to cut material for small orders — partial loads and half-truckloads. Another Pallet Machinery Group M2L stacker completes that line.

The Tappahannock plant has four Viking automated pallet assembly systems — two Champions and two 504 models — and a Rayco Edge nailing machine. When the company relocated pallet assembly operations to Virginia, it added a Viking 504 to its nailing capacity, supplied by Pallet Machinery Group, which refurbished and upgraded the machine.

The pallet assembly operations are currently running on two shifts. Viking machines are operated with “all female” crews.

About 20-25% of pallet production is assembled by hand with pneumatic nailing tools. About eight to 10 workers stay busy nailing up over-size pallets, pallet tops, and skids, some as long as 8 or 10 feet and even 16 feet.


Lean Operations Focus to Reduce Cost

Matt’s role in the company is strategic. “I am always looking for ways to get better every day,” he said. “That’s the biggest thing,” trying to control or reduce labor and improve efficiency in any aspect of the business.

He has focused increasingly on making the company leaner. With four locations, the company at one point had nearly 200-plus employees. Matt has been able to reduce that to around 150. “We’re doing a lot more in sales with a lot less employees,” he added.

In order to gain efficiencies, Matt explained, “We looked at everything we do, from the handling of raw

materials, to where machines are strategically located, to the loading of finished products.”

In addition to adding the new Pendu line, the company automated stacking operations with the two M2L stacking machines and the new TS300 machine from Pallet Machinery Group.

Another move was having Pallet Machinery Group refurbish a Viking 504 nailing machine. The improvements to the machine and its computer system made the 504 operate faster, said Matt, increasing production.

The company buys Viking brand bulk nails for the Viking nailing systems. Collated nails are purchased from Southern Carlson. The company uses Alderman Saw Shop, which is located nearby, to do all saw work.

The Virginia plant has a Kiln-Direct heat-treating kiln for customers that need pallets for export shipments.

O’Malley Lumber focuses on odd-size and custom pallets — like large pallets, low-profile pallets, quarter and half pallets. The company produces about 70-80 different pallets, Matt estimated. He tries to avoid the market for GMA pallets.

With the rise in hardwood prices, the company has been converting some customers to softwood lumber in order to keep prices down. The company’s pallet production currently is about half hardwood and half softwood, both green pine and kiln-dried pine. Most material used in the plants in Pennsylvania is kiln-dried pine.


Offering Food Grade Pallets with Mold Treatment

O’Malley ships pallets to customers on the West Coast on a regular basis and also brokers some business from reputable pallet companies in that region to supply those customers. “We have a reputation for quality and service throughout the food industry,” explained Matt.

For food-grade pallets, the company has automated equipment to spray cut stock with a mold-inhibiting agent when it comes off the production line before stacking. The system applies Woodlock Bio-Shield to the top and bottom of each board. Matt says the product provided by Pallet Machinery Group has been preforming very well for them. The capability to provide mold-free pallets has allowed O’Malley to serve numerous customers in the food industry.

One customer on the West Coast previously relied on a different pallet supplier and received pallets that were contaminated with mold. The mold contaminated food products that were stored on the pallets, ruining several million dollars’ worth of goods.


Pellet Operations Utilize Wood Waste

The fuel pellet plant, which generates about 10% of the company’s revenues, enables the company to make use of its residual wood material without having to pay to dispose of it. Virtually all residual material — sawdust, trim ends, and other scrap — is used for raw material in the pellet mill.

The company added a second pellet mill machine in 2010 that essentially doubled production. Matt added a robot to the pellet mill the same year. “It’s the best thing I ever bought,” he declared. “It shows up every day,” he said, and requires “very, very minimal maintenance.” The Motoman robot is used to pick up bags of pellets from the production line and palletize them. It puts a slip sheet on an empty pallet, and stacks and layers the bags.

The robot helped control labor costs significantly. When the company added the second machine to produce fuel pellets, it would have had to conduct bagging operations on three shifts and employ seven or eight people, including a forklift driver, bagging and palletizing. With the robot, only two forklift drivers are required.

The pellet mill is still running strong although the market has been down somewhat in the past three years because of warmer winters. It currently operates six days a week, producing pellets 24 hours a day; it had been operating seven days a week.

Lumber markets have tightened, noted Matt, with prices for both softwood and hardwood escalating in the past 8-12 months. “Hardwood prices are way up, and softwood prices have almost doubled,” he said.

When asked about what it’s been like to talk to customers about passing along price increases for lumber, Matt noted that, “it’s all about educating your customers and keeping them up to date on market conditions on a regular basis.”

With the move to Tappahannock, over time the company also has developed more customers in Virginia. Just as recently as a few years ago, not even one out of 10 truckloads of finished goods were shipped to customers in Virginia. Now the ratio is about 50-50, Virginia and Maryland. “We see it as a growing market for us,” said Matt.

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