Companies Taking Closer Look At Managing Residuals
Pallet and sawmill operations are exploring ways to lower waste disposal costs and to improve revenue by grinding for by-products.
By Rick LeBlanc
Date Posted: 5/1/2003
No matter how you slice it, the pallet business is more competitive than ever. Many companies have developed effective strategies for dealing with waste wood, whether the name of the game is to reduce hauling costs and tipping fees associated with disposing of the material or take advantage of revenue-generating opportunities.
Many of these strategies involve some sort of grinding or chipping by the business or a third party. The trend toward reducing wood waste by grinding or chipping has expanded as landfills become increasingly reluctant to accept solid wood. Pallet Enterprise contacted many readers in various parts of the U.S. to find out what their strategies and concerns are with respect to residuals.
To Grind or Not
Most companies do some kind of grinding to reduce solid waste disposal costs. "If you are filling up a dumpster full of pallets, you are going to fill it up pretty fast," said John Connor of Cresswood, which makes grinding equipment. "You are getting a lot of air in there. You are going to get three times as much material in if itís ground."
Grinding may be a requirement for waste wood headed for a landfill. Scott Harrington of Rotochopper, another supplier of grinding equipment, noted that landfills are increasingly refusing solid wood because it takes longer to decompose than grindings. "North Carolina is saying it is not going to accept any pallets into landfills anymore," he said.
Beyond cost-cutting, there are opportunities to generate revenue from waste wood, including scrap pallets. About 6.8 million pallets ó 100 million board feet of material ó were processed into colored mulch in 1999, according to researchers of the U. S. Forest Service and Virginia Tech. Around 4.4 million pallets (65 million board feet) were made into uncolored mulch and some 4.7 million pallets (69 million board feet) were marketed as fuel.
Pallet suppliers who do not have their own grinding operations often deal with contract grinders who provide the service on-site or at their site. D&J Pallet in Colorado Springs, Col. elected an off-site waste management solution. "We donít grind them," explained Dennis Hammitt of D&J. "Thereís a company here in town which grinds them." The third-party grinder supplies a roll-off bin and charges $75 to dump; the wood waste is converted into colored mulch and other products.
"My dad (Dale Hammitt) has never been a fan of grinding," Dennis explained. "Heíd heard that it was too high maintenance. It was high dollar, and this other company was around" to provide contract grinding. "At the time we didnít have the facilities and space, so we never really got into it. They made it a price we could afford, so we never looked into it anymore."
Woodbridge Pallet in Woodbridge, Ontario is another pallet company that has elected to use an off-site grinding provider. In the case of Woodbridge, one key consideration is the adverse effects that noise or dust associated with grinding would have on neighbors.
"We are located in the city in an industrial area that has kept its zoning, and around us is residential," explained Lino De Poci of Woodbridge. "We have not yet found grinding equipment that is suitable for us in this environment." Another concern for Lino is maintaining material flow. "If your grinder breaks down for three or four days," he asked, "what do you do then?
Woodbridge contracts with a sophisticated company located north of Toronto. Woodbridge fills up containers that are trucked away. "What we are seeing is that the value of the wood is slowly, slowly increasing," Lino said. "Because we work on high volume orders for specific accounts, we can fill bins with just hardwood ó no garbage in there whatsoever. Right from the beginning, we have always been clean and organized in order to compete." Local markets have reached the point where Woodbridge may soon be able to sell its clean wood waste instead of having to pay to remove it.
Another strategy for reducing wood waste is to recover more used pallet lumber or find alternate outlets. D&J has diverted a considerable amount of waste ó through more aggressive recovery of used pallet lumber as well as giving away scrap wood for firewood. Increasing recovery of pallet components was mentioned by many pallet people as aiding in the reduction of waste wood, although it tends to depend on the condition of pallets that are dismantled. Pallet suppliers with successful strategies, such as B&B Pallet in Compton Calif., may be best suited to intensive recovery programs. The pallet recycler and urban wood grinding depot is recovering pallet parts from broken or odd-size pallets that previously would have been discarded or relegated to the grinder. "We never used to do that," explained Bruce Iverson of B&B. The company operates four bandsaw dismantling machines along with a crew that cuts material to length, sorts to thickness and removes nails. Recovered deck boards and inside stringers are combined with new outside stringers on Bruceís FMC nailing machines to make hybrid or combo pallets.
Because B&B has on-site grinding capability, employees can focus on recycling the best pallet components and sending the rest to the grinder. Other recyclers without grinders or other solutions may be forced to work harder to recover marginal material in order to reduce their solid wood waste. "The problem that a lot of people have is getting rid of their trash," said Bruce. "It is one thing to bring in 20 truck-loads of junk pallets and say you are going to tear them up, but when you finish you are still going to have 10 truck-loads of trash. If the stringers are good, we take them and throw the rest away. We donít expend a lot of labor to take it completely apart because we can easily get rid of it."
Wood Fiber Quality
One factor that seems to have a large bearing on a companyís ability to sell excess wood fiber is quality. While some regions are tougher than others with respect to fiber markets, quality can make the difference. "If you have a good product, you can move it ó there are no ands, ifs or buts about it," said Scott.
Various pallet people agreed, especially Bruce. In addition to its pallet recycling operations, B&B has a high volume urban waste wood processing facility that grinds 300 tons of wood material daily to make soil amendments and other products.
"There are guys out here grinding like a house on fire, but when you look at their pile after they deliver, it looks like a bunch of diamonds out there," Bruce said. "Itís full of glass. Itís full of every sort of thing. They donít pick the stuff out. They donít spend the money to clean it before they grind it, so they have to keep lowering and lowering their price. Before you know it, they canít lower it enough ó people donít want it because it is full of glass."
Quality is critical to success in wood fiber markets in southern California, according to Bruce. His company removes contaminants before grinding. "There are numerous guys trying to do it (grinding)," Bruce said. "Theyíve been sold a bill of goods, and they are not having much luck. Theyíve got a tub grinder and they are in business." The issue is quality, he said, not necessarily scale of production. "If a guy made a decent product, he would sell it," he said, "but it wonít pencil when you take a tub grinder with urban waste and try to make it into something you can market. It is more than a one step process."
Established businesses are doing well when it comes to grinding, but new entrants are having trouble, Bruce added. "The guys coming in green are trying to kill us, but they canít. They send in one or two loads, and then they hurt themselves and they canít ship any. They make the mistake of shipping what they can and hoping for the best." Customers for wood fiber are more quality conscious than ever. "They donít care whether you deliver it or not," said Bruce, because there are many sources that can supply wood fiber, including increasing quantities from lumber mills.
Regional Market Variations
Markets for wood fiber vary around the country. In the Southwest, "chips are impossible to get rid of," said Bill Snow of Satterwhite Log Homes in Utah.
"Iím just looking for a home for chips," Bill added, but so is everyone else. He has found a market for them ó a large turkey farm. "And of course there are turkey houses all over this country that take it for bedding," he noted.
The log home company processes wood waste ó shavings, sawdust and chips mixed together ó in a Morbark chipper and then back through a hog to create a fine particle product required for the turkeys. The company will be expanding to New Mexico, where there is little market for wood fiber.
Dave St. John of New Mexico Products, a new pallet manufacturer located in Albuquerque, agreed the wood fiber market is down in his state. It took a turn for the worse when a particleboard plant in the region closed. "I liked it when we could sell it, but after they went belly up there just wasnít a market for it," he said. "Weíve tried and tried to find markets over the years but it has never worked out."
Daveís company makes specialty one-way pallets, generating a modest amount of trim ends and other scrap that fills up a 30-yard container in a week. "We pay through the nose to get rid of it," he said.
Pallet companies in other regions, such as the Northeast, are facing increased competition as demand shrinks for pulp chips, according to Scott, while urban centers can face a glut of urban wood. Such is the case faced by S&B Pallet in Plainfield, N.J., which finds itself in a competitive market for urban waste wood. "You have to think of New Jersey as a freight inbound state," explained S&Bís Steve Mazza. "It is not a manufacturing state anymore. We send our scrap wood to a third-party facility that grinds it." Steve has set up a recycling shop employing more bandsaw dismantlers to recover what he what can, but ultimately he has to pay for waste wood taken away. "A lot of guys are doing the same thing because the mulch market in this area is basically non-existent. There is just so much scrap wood here that there is just not a market for it all."
"But believe me," Steve added, "these guys who run grinders go out of business every two weeks. There are some guys who are able to sustain the business and make money, but theyíve been around forever, and whatever markets there are, they have them locked up. The rest of the guys keep on trying to get in there, but they canít."
In other parts of the country, wood fiber markets are stronger ó especially for mulch. "Grinding pallets and making it into colored mulch started in Ohio," Scott said. The practice moved from there to the Northeast, and then to Florida. "It took off in Florida, and now we are getting a lot of interest out of North Carolina, Virginia, Tennessee and the Mid-Atlantic states."
American Wood Products in Ashland, Ohio, which makes mulch, has continued to grow every year, according to Randy Emmons. He is not certain what impact the war with Iraq will have on his business in the future. "The last thing people need is mulch around their house," he suggested. "You can live without it." American Wood Products uses third-party contractors to grind and color mulch on its premises; the company produces brown, black and red colored mulch.
Colored mulch has not made much impact yet on the West Coast, according to Scott, although this will probably change with time. Mulch is not a factor in wood fiber markets in other parts of the West either, according to Bill. "I thought in that desert country they would use a lot of mulch, but no oneís doing it," he reported. "Some of them have tried it, but it just doesnít sell."
A Matter of Focus
Direct Wood Products in West Point, Va. has positioned itself as a wood waste disposal company as well as a pallet company. "We do it all," explained John Britt. "We have a whole division set up for nothing but disposal." Using in-house fabricated grinding equipment, the company processes anywhere from 100 to150 tons per day of wood waste, and the grindings are marketed for fuel. The company does not sell to mulch or animal bedding markets because of the mixture of wood that it processes."We do handle a few pallet companies, but we handle everything from telephone poles on down ó pallets, dunnage, river ties, reels, you name it. We even have America On Line as one of our scrap disposal accounts."
"We run many different types of material and donít feed it by hand," said John. "Weíve got a D-6 Caterpillar that pushes up with a three-quarter yard grapple machine. We probably grind up 10,000 pallets a day."
Direct Wood Products is experiencing a steady increase in incoming scrap pallets. "We have 60 or 70 customers that are strictly trash disposal accounts for pallets," said John. "Basically, they are end users. Landfill costs are so expensive. It our area it is $50 per ton." Through its grinding service, Direct Wood Products can cut the waste disposal costs of its customers in half, he indicated.
"Not too many people around here do what we do," John said. "Our competition in disposal is BFI and Waste Management. Thatís the way we treat it. We are a competitor of theirs and not a pallet company. There is a lot more money in that than pallets. It is completely ridiculous what the pallet industry is doing to itself. The prices out here now are lower than they were 20 years ago. Anybody who can sell pallets for $3 or $3.50 and think they are making money ó there is something wrong with them."
No matter how you shave, grind or slice it, the pallet industry is more competitive than ever. And one way to cut costs and perhaps increase revenues is to take a thoughtful approach to managing wood residuals. There are a lot of ways to get it done, depending on the market opportunities in a given region.
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.