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Pallet Factory's Growth Spurs Need for Automated Systems
Long a custom pallet and crate producer, Pallet Factory has gradually moved from on-site management to explore the benefits of automation.

By Jack Petree
Date Posted: 11/1/1998

pallfac1.jpg (66598 bytes)RANCHO CUCAMONGA, Calif—Long a custom pallet and crate producer, Pallet Factory has gradually moved from on-site management to explore the benefits of automation.

With a product mix still incorporating countless custom runs of pallet and crates as well as several on-site sorting and repair operations at customer locations, the company has carved itself a successful niche as an honest, dependable supplier of pallet products and services in the extremely competitive Southern California pallet scene.

Pallet Factory is based about 35 miles east of Los Angeles but has five on-site customer locations scattered across the Los Angeles area.

When asked about Pallet Factory’s approach to the pallet business, general manager Rob Fulcher said it "specializes in specialties" – providing customers with specialty products and services.

Rob, 34, has been employed by Pallet Factory for half of his life. "Rob is one of the finest young men I have met in my life," said company owner Will Bauer, who once was a professional fishing guide, owned a tackle shop in Alaska, and helped set up a fishing resort in Belize. "When he started at 17," Will added, "he didn’t know how to drive a forklift, and now he’s running the place."

Pallet Factory held a contract with the 1.4-million-square-foot Target Stores distribution center for sorting and repairing pallets in Southern California for about seven years before installing a Smetco pallet sorting and repair line about two years ago to provide better service.

The results of the investment were felt quickly. Once it was running, the staff required to run the Target on-site depot dropped from 21 to about a dozen, depending on volume. In addition, since the Smetco system was installed, Pallet Factory has not had a single worker’s compensation claim related to back injuries, according to Will.

When Will and Rob decided to automate their on-site pallet sorting and repair operation at Target, they looked for a vendor who would work with them. With a demanding on-site contract to handle more than 600,000 pallets per year, a system was needed that would improve productivity, reduce injuries and claims, and eliminate any bottlenecks in the operations.

Going into the project, Will had a unique design perspective. "I had dreamt up what I wanted," he recalled. "I was trying to design a system like I used for handling baggage at TWA in San Francisco when I was chief of ramp services in the 1960s."

Will knew there was a lot more than luck involved in hooking up with a supplier to land the right system for his pallet sorting and repair handling needs. One of the reasons he turned to Smetco was the reliable performance of two Smetco stackers he had purchased several years earlier. Another was the vendor’s interest in collaborating on a unique approach to Pallet Factory’s needs. "The guys at Smetco were easy to work with," said Will. "I told them what I wanted, and they explained what they could do."

After several exchanges of schematics, phone calls and faxes, Pallet Factory placed the order. Smetco fabricated the system in about two months. The system stretches about 140 feet, starting with a powered in-feed conveyor and indexable up-ender at one end and stacker and out-feed conveyor lines at the other end. The system allows several stacks to be pre-loaded at both in-bound and out-bound locations to improve forklift utilization.

After up-ending, a control operator pushes a button to direct usable #1 pallets and also Chep pallets to dedicated stackers. Repairable #1s are directed to a repair line that incorporates a Smetco plating machine and a Smetco lead board remover.

Ergonomics is a key consideration in the repair line design. The repair tables are below conveyor height. Workers slide repairable pallets down from the conveyor onto their tables. Once repaired, the pallets then are slid from the table back onto a lower conveyor which runs directly beneath the top conveyor – eliminating the need for lifting during the repair process. A similar line is set up for #2 pallets.

Softwoods, fewer in number, are taken away by a conveyor behind the control operator. Badly damaged pallets are directed to a Clary Sidewinder for disassembly.

Pallet Factory relies on a combination of new and used lumber for its pallet production. Clary Sidewinder and National Pallet units are used for lumber recovery. Combining both new and used components for custom orders is a common practice. A Producto resaw line with three chop saws provides the new pallet components.

As elsewhere in the country, cores have been increasingly difficult to obtain and are highly contested. "It’s hard to put a finger on it," said Rob. He noted that high lumber prices in recent years and the continued growth of recycling have had a negative impact on new pallet sales. "Everybody has a dismantling machine," he said.

The company runs a fleet of two tractors, eight flatbeds, two van trailers, and four 25-foot trucks. Trucking is coordinated with the recent installation of a radio-cellular phone system supplied by Nextel.

Although Rob makes a point of visiting the on-site locations at least once per week, the new communication system has helped the on-site repair depots keep in closer touch with the main plant.

The biggest change over the years has been shorter lead times and smaller inventories required by customers, according to Rob. "The competition on the big runs has been intense."

pallfac2.jpg (61893 bytes)Pallet Factory employs about 65 workers, including the main plant and the on-site customer locations. Most production at the main plant involves small runs of less than 500 units. Pallets are assembled with jigs on up to eight tables, and another eight tables are devoted to recycling.

The company’s customer base is diverse; it makes pallets for a very wide variety of industries and customers. For example, it manufactures custom crates for some aerospace industry companies using blueprints supplied by customers.

Interestingly, Pallet Factory does not have a formal sales program. "We’ve never had a salesman," explained Will. "Most of our business comes from word of mouth. We consider ourselves to be honest and reliable. We try to take care of the customers we have before going after new ones."

As part of its marketing strategy, Pallet Factory has networked with other pallet companies to help fill custom orders and swap material. For several years it purchased nails in volume and sold them at cost to other recyclers.

Pallet Factory has a long tradition of performing on-site sorting and repair services for clients. Aside from the Target contract, which lasted for nine years before ending late this year, Pallet Factory also has maintained long-term relationships with some box manufacturing plants.

Will believes that on-site contracts can be very beneficial to a client, especially for big distribution centers such as the Target facility. A major distribution center, he suggested, can recoup $.5 million annually with the help of a comprehensive on-site management program — earning $250,000 from sales of excess pallets instead of spending $250,000 per year to buy pallets.

"When we first started with Target, they were spending $200,000 to $300,000 each year on pallets," Will recalled. "After the third year, they were $90,000 in the black with the Pallet Factory program."

One of the key benefits of the Smetco system is its ability to process pallets quickly. At the Target distribution center, this quickness provided several benefits, including space freed up from previously storing unsorted and unrepaired pallets and also better use of pallet assets by the client. Pallets could be returned to duty promptly, eliminating the need to purchase additional pallets, and Pallet Factory could quickly sell unwanted ones, generating extra revenue for the client on a timely basis.

"It takes two to work together," Will said, stressing the importance of cooperation between the on-site service provider and the client.

Initially it was not uncommon for Target’s dock workers to receive 20 bad pallets and to send the trucker around the back to pick up 20 freshly sorted #1s. This type of "leak" resulted in a lot of lost value to the distribution center until Pallet Factory’s services were fully implemented. As part of its commitment, Pallet Factory’s staff trained the dock workers to inspect pallets so they wouldn’t trade bad ones for good ones. Training also was provided for weekend crews and off-shifts.

pallfac4.jpg (39003 bytes)Another important consideration for on-site operations is liability insurance. While essential, Will is amazed how much business is done in southern California by marginal pallet suppliers without liability insurance or worker’s compensation insurance. His advice to pallet users is to check out any supplier’s background before doing business in order to limit exposure to liability.

Will learned this lesson about checking out suppliers the hard way a few years ago. He bought a machine from National Pallet not knowing that it was in the process of going out of business. He drove to Ohio only to find the company’s doors had been locked the day before. "I could see that machine right there through the window, but I couldn’t get it," he recalled.

With that lesson firmly entrenched, Will took extra care when he went looking for a supplier for his sorting and repair line. He has been more than pleased with his Smetco system, which he believes will give him a competitive advantage in going after other major on-site contracts in the immediate future.

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