Web Articles   Digital Editions
Digital Edition Archives



Looking to the Future
Change Is Inevitable, but Adapting Will Be Key to Survive and Prosper

By Jeff McBee
Date Posted: 12/1/2001

It’s a crisp December morning. You grab a cup of coffee and head for the TV to download the morning news. You think to yourself, ‘Boy, I sure miss the newspaper.’ The new electronic data storage and retrieval systems have just about eliminated paper entirely.

Now that the first decade of the new millennium is almost over...Wait a minute! What about those 10 years?

Okay, flashing back to the present, maybe I got a little carried away, but this is a look into the future for the pallet industry. Since Miss Cleo did not return my calls, I called upon pallet industry leaders to look into the future.

First let me say that looking into the future out of the current malaise is not an easy task. It would be a far easier task to look forward if pallet manufacturers had a two-week order file and were running right at capacity.

I received the following e-mail a while back. It seems to be a very simple approach to viewing the market, but in its simplicity makes a lot of sense. It displays a lot of wisdom for dealing with a tough pallet market.

"When one looks at the future, you have to be careful not to do what I used to do when I was learning how to drive. I'd look at the road just ahead of the hood and swerve all over the road. Somebody (my dad, actually) told me to look way up farther into the distance, and I'd probably keep the car straighter and not kill near as many pedestrians along the way."

Still, the topic foremost in the mind of pallet suppliers today is getting through today and the tough market we face. Pallet company owners whom I interviewed did a great job of looking out beyond today, though.

I started with a list of a dozen industry leaders. The list was designed to cover all topics well. Dr. Mark White from the Virginia Tech pallet lab was an obvious choice. Where would our industry be without Mark’s contributions? In terms of pallet industry knowledge, he is simply off the scale. He is a fascinating guy. He will say things, stating that they are clearly obvious when actually they might not be to everyone. Like I said, he is off the scale.

Bill Luppold of the U.S. Forest Service was chosen for his immense knowledge of raw material. Monte Lowe, the chairman of the board of directors of the National Wooden Pallet and Container Association, was another obvious choice. Aside from his work with the association, Monte manufacturers and recycles pallets and has always been very open with his ideas.

Howe Wallace is in charge of the newly formed PalletOne and was chosen to represent the viewpoint of pallet manufacturing on a national scale. Mark Garnett of Garnett Wood Products is a past chair of the association and has worked in and with many sectors of the forest products industry. Michael Doyle of The Pallet Factory is an NWPCA board member and a progressive recycler. Lanny Williamson, of L. Williamson Pallet is also on the NWPCA board and is an astute businessman who runs a sawmill and pallet operation. Eric Bronstein, of Premium Pallet is another progressive recycler who is outspoken and wise beyond his years. Glenn Atkinson of Southland Manufacturing was surprised and flattered to have made the list, but Glenn is one of the sharpest people I talk with. I always enjoy talking with him because he always seems to be ahead of the curve.

The Pallet of the Future Will Be Wood

The pallet of the future will look quite a bit like the pallet of today. Wood is still wonderful. This is one of the points that all of our polled panelists agreed upon. Howe Wallace summed the matter up well, saying, "Wood is the platform of choice and should remain the platform of choice."

Raw Material Availability

Those who are excited about wood remaining the platform of choice should carefully curb their enthusiasm. Our panelists don’t believe raw material availability will be a bed of roses.

"The resource is changing," said Bill. "The supply of standing timber is inherently lower grade."

This would seem to benefit industrial markets, right? Not necessarily. Sawmills of the future will need to make the same yield strides from lower grade logs that they have from higher grade logs. Engineered wood products, such as OSB and LVL, will compete for the resource.

Bill sees sawmills gravitating toward cutting more dimension in the future. He points to alder production in the West as the model. "The resource of today drives the technology of tomorrow," he said. "Technology is opportunistic. Low-grade material has been undervalued because the forest products industry has not focused on its utilization."

Mark agreed. "The pallet industry will be jerked around by significant trend shifts in raw material."

Mark sees the answer to raw material challenges in offshore markets. "We will have to rely on other outside sources besides Canada." Where are these offshore markets? "South America has large certified plantations with wood readily available. There will always be peaks and valleys."

Pallet Standards

It is no secret that changes in customer base or customer needs drive change in the pallet industry. Technology is making our planet smaller and our economy more global. This will bring increased standardization to pallets. Phytosanitary regulations will be part of the standardization process.

Monte had these observations. "The international market will be more integrated. We will conform more to the world. The block pallet will be more prevalent. The largest change may come in the treatment of pallets. Heat treatment is already a factor. We could see some less expensive chemical treatments, but if the regulations allow for the best methods, irradiation and other techniques could be used."

Mark added, "Globalization is clearly the issue. The growth in palletization in non-industrialized countries will lead to more phytosanitary standards."

Mark also believes the shrinking globe will lead to more standardization of pallet sizes. This will lend itself to global pallet pooling, but tracking systems will have to improve to implement a global pool.

Bigger, Better, Faster

The general consensus within the pallet industry is that large roll-ups haven’t worked in the pallet industry because they cannot work in the pallet industry. So is the era of pallet company consolidation over? Not by a long shot. At least that’s the take from our panelists. Future consolidation in the pallet industry will have a more regional approach. The panel also envisions more coalitions and/or regional alliances.

One of the keys to consolidation or partnering in the pallet industry will be technology. Glenn said, "There will be more consolidation in the future. Smaller companies that are technology challenged will have a difficult time. I believe that wholesalers will find it increasingly difficult, also. Customers are expecting more from suppliers. Purchasers are already leaning more heavily on direct quotes by e-mail and electronic forms for efficiency. The pallet industry cannot afford to fall behind."

Eric had a similar view. "Technology will evolve in the pallet industry. I see a gradual migration toward more sophisticated pallet management systems."

Success in Tough Times

While talking about the current tough markets, several of our contacts mentioned the possibility of companies not making it through these tough times. The natural response to this is to ask: what are the keys to success, not only for today’s tough market, but also for the future?

The answers I received to this question had one recurring answer, but an even more frequent undercurrent was evident in all the answers. Good business is the result of making good business decisions. The recurring answer to how to succeed in the future is the idea of being an agile business — able to react quickly to customer needs. The nimble business will survive.

Eric had this to say. "We need to be smarter, more agile and provide solutions to customers’ problems. It will be more evolution than revolution."

Michael said, "I remember in May of 1991 at the IAPR Minneapolis meeting, Andrew Patterson of Chep said, ‘In five years time I will put 50 percent of you people out of business.’ Well, the jury is still out. Chep made unbelievable inroads, but we’re still here. In fact, recyclers thrived in the 90s. The entrepreneurial spirit of the pallet industry will keep the industry strong for those who survive."

Lanny had these words of wisdom. "Banks don’t save businesses; customers do. You have to guard your customers with your life. Customers will always have problems. They want vendors to provide solutions. We have to become knowledgeable enough to provide the ‘yes’ answers. Entrepreneurs are survivors."

So what have we learned from our peek into the future? Change is inevitable, but the more things change, the more they stay the same. Entrepreneurs adapt and survive.








Do you want reprints or a copyright license for this article?   Click here

Research and connect with suppliers mentioned in this article using our FREE ZIP Online service.