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Integrity, Building Mutual Trust Help Minnesota Pallet Supplier to Prosper
Recycling Operations Begin with Industrial Resources Sorting System

By Rick LeBlanc
Date Posted: 10/1/2003

LAKE ELMO, Minnesota -- It wasn’t long after Gruber Pallets won a contract to repair pallets for 3M that the diversified technology company was amazed at how many and how fast good quality pallets were being returned. Pallet recovery was notably better than the manufacturing giant had experienced with its previous pallet supplier.

            For Dale Gruber, owner of Gruber Pallets, the experience helped underscore a basic tenet of his approach to business and life: integrity is important.

            It is an approach that has spurred his business to grow and prosper the past 15 years. It also proved helpful when Dale found himself struggling to stay in business during a financial crisis.

            Personal integrity leads to building mutual trust with customers, suppliers and employees, according to Dale. Pallet recyclers have suffered from a bad reputation in the past due to such unethical practices as skimming pallets on repair contracts or false pallet recovery tallies. In short, as an emerging industry, recycling has had its share of growing pains with respect to professionalism. A new generation of recyclers like Dale is bringing a level of professionalism and respect to the recycling segment of the pallet industry that will help ensure its success in the future.

            Gruber Pallets has grown steadily and was on course to hit $4.1 million in sales in 2001 until the terrorist attacks on the U.S. on Sept. 11 that year helped derail the economy. The company finished the year at about $3.5 million in sales. From Dale’s perspective, the economy has been extremely slow to recover from the most recent recession. This year Gruber Pallets is on course to reach about $3.5 million in sales, which includes about $300,000 from contract pallet repairs.

            When Dale first started collecting stray pallets in his 20-year-old pick-up truck and fixing them to sell to truckers over 15 years ago, he had no plans for a long-term business. He simply was trying to earn some extra money to save up for a down payment on a house.

            He had lost a house earlier following 10 years of alcohol abuse and two potentially fatal accidents as a long haul truck driver. Dale wrecked two semi-trailer trucks. He entered three treatment programs for alcoholism between the ages of 18 and 28. Because of the accidents and the resulting financial difficulties, he lost his house in a foreclosure and filed for bankruptcy.

            He was determined to persevere, however. Dale began to make the rounds of St. Paul businesses to collect unwanted pallets. He fixed them in the garage of the apartment building where he lived and sold them to truckers. By 1986 he had saved enough money to buy another house. He was a sales representative for RC Cola, and he was ready to give up his part-time pallet recycling business.

            About that time, however, Dale’s cousin, Charlie Kuhl, was laid off from his job. In a gesture that speaks a lot about Dale’s big-hearted approach to life, he offered Charlie a room in his home and put him to work, repairing and delivering pallets. Dale also continued to work in the pallet recycling business at night after coming home from work. By 1988 sales doubled to more than $100,000, and Dale decided to devote his full time to the enterprise. “That’s where a lot of faith came in,” said Dale, who is a born-again Christian. The unwavering support of his wife, Diane, was also critical. “She supported me throughout it all,” he said.

            In the mid-1990s, however, Gruber Pallets found itself in a tough spot. After Dale hired a pair of ‘professional’ managers to take Gruber Pallets to higher levels of growth, he found himself boxed in with $250,000 worth of debt. He was only two days away from selling out.

            That’s when one of Dale’s employees came to him and said his father wanted to talk to Dale. The young man was a recovering drug addict when Dale gave him a job and a place to live. His father, a successful businessman, was appreciative of the help that Dale had given his son, and he offered Dale an interest-free loan to help him through the financial crisis. Dale accepted an $80,000 loan, but not the interest-free terms; he would repay it with interest. The funds helped Gruber Pallets stay in business. Dale subsequently borrowed another $45,000 from the young man’s father over the next five years as the business grew. He repaid both loans with interest. The young man whose father helped Dale is now a successful building contractor in Florida.

            When they began working in the business full time, Dale and Charlie rented 2,500 square feet of a 20,000-square-foot building. Today, Gruber Pallets rents the entire building in Elmo Lake, a suburb of St. Paul. The property also includes a 25,000-square-foot paved, fenced yard for finished pallet storage and several acres for storage of semi-trailers.

            Gruber Pallets has continued to diversify its products and services over the years.  The company supplies refurbished pallets, ‘new’ pallets made from 100% recycled material, ‘combo’ pallets made of new and recycled lumber, and pallets made of all new lumber. The company also recycles cardboard and Gaylord containers for customers. Gruber Pallets’ customers include manufacturers of steel, concrete, boxes and containers, and other industries.

            Although the company’s most common pallet size is the 48x40, Dale strives to keep the business diversified enough so that it is not tied too much to the GMA market.

            The company’s marketing approach with potential customers is to offer them strong value – not to compete on price. “I’m not selling a cheap price,” said Dale. “Our focus is on value.”

            An Industrial Resources sorting system is integral to Gruber Pallets’ recycling operations. Inbound stacks of pallets are indexed forward and then tipped. A worker then sorts and grades each pallet and sends them to one of four stackers. After sorting and stacking, pallets are moved to one of seven repair benches or the Industrial Resources plater. (The company uses plates supplied by Pallet Repair Systems.)

            Sorting pallets before they are processed or repaired – instead of grading and sorting the finished pallets -- provides a number of benefits. It enables an accurate accounting of each pallet that is recovered and how it is processed. It also places decision-making in the hands of the sorter and removes it from the repair workers; this allows the repair workers to concentrate on rebuilding a No. 1 or No. 2 pallet without having to make a lot of decisions.

            “I think it is an area where we excel,” observed Louie Smothers, operations manager. “Fewer mistakes are made. It really makes it a ‘no-brainer’ for the repair worker.” It eliminates the likelihood that a 48x42 pallet will be mixed in with 48x40 pallets, Louie added. Pre-sorting helped Gruber Pallets to improve productivity and pallet quality.

            The pallet recycling operations are also equipped with a Smart Products bandsaw dismantler and a Pallet Cat (from defunct National Pallet) bandsaw dismantler. A Pallet Repair Systems trim saw is used to cut new lumber to length for new custom pallets. The company also has a Samuel Kent Baker Inc. chop saw and a Visionary Machine Concepts notcher.

            Pallets are assembled and repaired with Stanley-Bostitch power nailing tools and Magnum collated nails. Gruber Pallets buys disposable saw blades from Saw Service & Supply Inc.

            Gruber Pallet grinds scrap wood into mulch and also produces colored mulch; mulch sales generate about $500,000 in annual revenues. The company has a Rotochopper MC-166XLT to grind and color mulch, and Dale is looking at adding a Rotochopper Go-Bagger Jr. to package bulk mulch in plastic bags.

            The Rotochopper machine is the second that Dale has bought from the company; the first one, in 1995, was a demonstrator model. He is a big fan of the Rotochopper line and the supplier’s strong service. “Anyone can sell you a machine, but what they do afterwards is the difference,” said Dale.

            Gruber Pallets produces both natural and colored mulch, and it is sold wholesale to landscape nursery businesses. Some grindings also are sold to stables for livestock bedding. One of the services that Gruber Pallets provides to 3M is recycling scrap wood into colored mulch; 3M buys the mulch and uses it for landscaping around its plant.

            Gruber Pallets, which does business in five states, is equipped with a fleet of about 85 trailers and six tractors to recover used pallets from customer sites and deliver new and used pallets. The company uses trucks and trailers with ‘walking floors’ to deliver bulk loads of mulch.

            Three mechanics look after the plant and transportation equipment. Two are certified by the state Department of Transportation (DOT). Gruber trucks are kept washed and maintained to state standards. “I’m not worried one iota about DOT inspections,” Dale said. As a former interstate driver, Dale still holds a Class 1 license, so he can get behind the wheel if he needs to. Gruber Pallets uses its trucks to deliver grocery products for customers and pick up empty pallets on the backhaul.

            In order to help his pallet company establish mutual trust with customers, Dale developed a comprehensive tracking system to monitor pallet recovery from incoming cores. The system helps guarantee that customers get full credit for pallets.

            “Our tracking system quickly separated us from the competition,” said Dale. “Tracking starts with a pallet receipt form, and that number is carried all the way through to billing. It breaks down the recovery by quality, including strippers, grinders, and different size.” Gruber Pallets provides core suppliers with individual load reports as well as monthly and annual summaries.

            “Trust is earned,” Dale emphasized. “And as a result, I don’t lose customers.”

            Gruber Pallets has about 40 employees. Good pay and a benefit package that includes paid holidays, bonuses and hospitalization have helped the company retain workers; many have five to 10 years of service.

            While the pay and benefits are good, Dale has high expectations of his staff as well as of himself. “The standard needs to be higher than anyone else, and fair as well as honest,” he said.  The high standards permeate through every facet of the business.  Gruber Pallets truck drivers, for example, wear uniforms, must be clean-shaven, and may not wear ear rings. “It’s an image,” Dale explained. “If they represent Gruber Pallets, they have to look good.  The drivers, supervisors and mechanics all wear uniforms. They are totally committed.”

            Dale’s cousin, Charlie, who was instrumental in keeping Dale in the pallet industry, today is one of three sales personnel at Gruber Pallets along with Charlie’s brother, Rick, and Victor Finizio.

            Dale’s wife, Diane, helps oversee the administrative functions of the company, typically working at the office on Fridays; she also home-schools their younger children. A daughter, Heather, handles administrative duties in the office.

            “They work well as a team,” Dale said of his workers and managers. “In all honesty, I have just had good help. That’s got me where I am today in sales, operations and transportation.”

            “I expect the best from my employees,” said Dale, “and I want to be at the forefront. Pallet recyclers have generally had a bad reputation for cheating customers and not paying. We wanted to be honest and make some money. Our focus is how we can work as a team with the customer to reduce costs.”

            Dale remains enthusiastic about being an entrepreneur. “I’ve never liked working for anyone else,” he explained.

            Since the terrorist attacks of Sept. 11, 2001, the economy has faltered, although the most recent indicators signal a recovery is underway. The sluggish economy took a toll on sales.

            “Growing the business from $3 million to $4 million, it’s harder to make the jump,” Dale observed. “After 9-11, the economy just slowed down. That’s what slowed us down. We would have been $4 or $4.1 million. That’s what I believe.”

            Competition is intense, but Dale is confident his company can withstand it. “There is always going to be competition,” he noted. “But many aren’t going to persevere. It takes perseverance.  It’s easy to get into (the pallet business), but it’s not a piece of cake to keep going.”

            “We’ve become a lazy society,” Dale concluded. “We need to look at our forefathers and how hard they worked. Competition is good. That’s what makes you sharp and keep on the cutting edge. That’s what is fun.”

            Dale Gruber has demonstrated through Gruber Pallets how an emphasis on integrity in life and business can result in a productive, prosperous enterprise.

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