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Texas Recycling Company Develops Plastic Lumber Product for Pallets
Pallet Outlet: Texas pallet company enters the plastic pallet arena by manufacturing plastic lumber and supplying plastic pre-cut stock to other pallet companies.
By Rick LeBlanc
Date Posted: 2/1/2007
WICHITA FALLS, Texas — David Buckley likes to stress that his business, Pallet Outlet, is a pallet company making a plastic pallet, not a plastic company making a plastic pallet. There is a big difference, he emphasizes.
When a wood pallet company customer wants to buy a plastic pallet, the wood pallet supplier eventually ends up on the outside. The pallet supplier may make an introduction to the plastic company, but eventually the wood pallet company finds itself out of the loop and loses a sale.
“We don’t want wood pallet companies to lose their customers to plastic companies,” said David. “That’s our theme.”
“We’ve been in the pallet industry for 12 years,” David added, “and we feel like we know what pallet people are looking for — versus what plastic companies are trying to produce. The company has positioned itself to supply pre-cut plastic lumber stock to pallet manufacturers, who in turn can assemble the components with regular nailing equipment to make plastic pallets.
Pallet Outlet, like the pallet industry itself, has experienced a lot of change since David started his company 12 years ago. The business began as a wood pallet recycling company, gathering surplus pallets in rural areas outside Wichita Falls, Texas. Wichita Falls is more than 130 miles northwest of Dallas and about the same distance from Oklahoma City, Oklahoma.
“Pallets are cheaper in the rural areas,” David noted. “Most manufacturing is done in the cities. Then they go out to the country, where the pallets tend to die.” Pallet Outlet initially focused on retrieving pallets, recycling them and selling them to users in urban areas, but eventually it found customers closer to home.
As the company grew, it experienced capital problems. “I think there are tons of little pallet companies out there — and maybe big pallet companies — running into the same problem,” David said. “For most small companies, every time you want to go purchase a new piece of equipment, the next thing you know you have debt pulling at your operating capital. That has been our biggest challenge.” Recovering pallets and selling them has never been a problem, he said.
Because of his limited access to pallet cores in a rural region, David began looking at new pallet manufacturing as a way to grow his business. “The margin is higher in recycled pallets than in new pallets,” David acknowledged, “but the volume in the new pallets allows you to make up for it.”
Initially the new pallet segment of the business was very profitable for the small company, but with growth came financial headaches. “In 1999 and 2000 we were riding along on a high,” David recalled. Pallet Outlet landed a $1.4 million contract. “We spent every penny I had to ramp up in order to build these pallets,” he said. “We acquired the money to ramp up, but then we weren’t able to acquire the money to operate on, to carry the wood, and we went into a major cash crisis.” The company had to change gears and return to its recycling roots. It moved to Iowa Park, closer to Wichita Falls, for better access to customers and cores.
Pallet Outlet operates in a 10,000-square-foot building on two acres and has another three-acre site available for use. Pallet recycling and remanufacturing represent 80% of sales while the new pallet business comprises about 20% of its business. The company has 15 full-time employees.
It was during the transition from rapid growth of the new pallet business to reestablishing himself as a recycler that David stumbled upon plastic recycling as an opportunity for his business. He viewed it as an opportunity based in large part on his experience in new pallet manufacturing.
“One year I brought in 65 loads of lumber,” David said. “I realize that is a small number compared to some other pallet companies, which may buy eight or 10 truckloads a day. I looked at my little company and the amount of wood we consumed, and multiplied that by the amount of other pallet companies, which can be 10 or 15 times larger than our company. That’s just an enormous drain on our environment. I became more environmental conscious.”
With this new perspective, David got an idea while scrutinizing a customer’s waste stream.
“For every good pallet man or every good entrepreneur, the goal is to keep your eyes open to the heartbeat of the companies you are working for,” David said. One of the things he looks for is what kind of pallets they discard. At one customer location, he also noticed a sizeable volume of scrap plastic was being discarded. The customer was a plastic product manufacturer.
“I’ve got two daughters growing up that I’m going to have to leave this world to,” David said. “At the same time I was thinking about them, all this plastic started showing up.” He told himself that since he recycled pallets, he would figure out a way to recycle scrap plastic, too.
The plastic manufacturer gave Pallet Outlet a contract to remove its scrap material. Due to confidentiality requirements, the company would not reveal the exact composition of the scrap plastic material.
Pallet Outlet did a lot of testing, but it could not find a market for the recycled plastic material among other plastics companies.
David decided to invest in equipment to process the scrap plastic into extruding plastic profiles to make pallet components. “The scrap they were throwing away was very difficult to work with,” David said. “Its properties didn’t allow it to just melt and flow the way most plastics do, so we had to figure out how to work with it.” Eventually, he combined recycled plastic material from three sources to produce his plastic pallet lumber product.
“It goes back to the mentality that we went into it with,” David said. “We wanted to be a pallet company that made a plastic pallet, not a plastic company that made a plastic pallet.”
Pallet Outlet wanted to build on its 12 years of experience as a pallet supplier. David sought to position the company to be able to offer plastic pallets to customers that want them.
“We went into the plastic business with the concept that we wanted to build a component pallet, cut and put together so it looked just like a wood pallet,” David said, “and we did that.”
Early in the development process, David made an important discovery. The plastic lumber his company produced had a unique property. It could be cut on the same saws that Pallet Outlet used for cutting wood lumber.
“With most plastics, you get melt-back,” David explained. “The speed and friction of the saw blade melt the plastic. When ours cut — by pure luck, and I’m not going to tell you I’m a genius, but because of the formula it was — it cut just like wood.” Sawing did not cause the plastic to melt, nor did it create any plastic sawdust. “So we were pretty excited about that,” said David.
The unique property of the plastic lumber kicked Pallet Outlet into the next phase of its emerging business plan: selling plastic cut stock to pallet manufacturers. “We thought if we can make it and saw it, we want to make it available to other pallet mills,” said David, noting the trend in the wood pallet industry toward using pre-cut stock. “We wanted to bring that same trend to the plastic side.”
Pallet Outlet will supply plastic lumber stock sawn and cut to customer specifications. David envisions that his company will work with wooden pallet suppliers in the following manner. A pallet company receives an inquiry from a customer for a plastic pallet, and the pallet supplier forwards the requirements or specifications to Pallet Outlet. David’s company provides the pallet supplier with a sample plastic pallet for the customer to try.
“If your customer likes it,” David said, “we send you the cut stock, and you build it yourself with your own nailing equipment. You save your customer. I never see your customer, and I don’t even know who your customer is.”
An important factor in the use of plastic pre-cut stock is that the material can be assembled into pallets on automated nailing machines. For example, Pallet Outlet has successfully assembled its plastic pallets on the company’s Viking Champion nailing machines although it normally assembles samples in small numbers by hand with pneumatic nailing tools.
“Nail retention is very good,” David said. “I would say that nail retention is as good or better than pine and probably a little less than oak.” For improved retention, components may be fastened with screws.
A finished pallet made from the plastic lumber “looks like, feels like, and acts like a wooden pallet,” said David, although it is heavier than wood.
Plastic is not as stiff as wood, David acknowledged, but he can compensate for the difference by using material that is slightly thicker. “Whereas as you would normally run a half-inch deck board with wood, we run a three-quarter inch with plastic,” he said. Pallets made of plastic lumber also can be strengthened by using a four-stringer design instead of three stringers, he said.
Although plastic lumber has reduced stiffness and added weight compared to wood, the advantage of the material is that it is more durable, said David. “People need to understand that plastic is more expensive, but it lasts longer,” he said.
There are other benefits, too. Unlike some other plastic pallets, especially those made from molds and featuring one-piece construction, pallets made of plastic lumber are repairable. Another benefit: low cost and flexible customization and design. A machine to mold plastic into one type of pallet design may cost tens of thousands or hundreds of thousands of dollars, depending on the molding process. Plastic lumber, on the other hand, can be sawn and cut for custom pallets and small runs and is very cost effective, according to David.
“It doesn’t matter what your customer’s pallet is,” he said. “If you can build it out of wood, we can build it out of plastic.”
Some plastic or composite lumber manufactures mix glass or wood fiber to the plastic in order to increase stiffness as well as to provide a low-cost filler. However, Pallet Outlet seeks to use only 100% recycled plastic material because of its commitment to recycling and because the all-plastic material holds color better. The company offers its plastic pre-cut pallet stock in black, blue and green as stock colors, and other colors can be provided upon request.
After experiencing the ups and downs of rapid growth and financial pressures, David realized that he needed a new vision to supplement his rural recycling operations. “I recognized that we were going to have to bring in innovative, new ideas to bring in new revenues. That’s where the plastic pallet came in.”
David’s way of doing business with wooden pallet suppliers will allow them to continue to serve and sell to customers that require a plastic shipping platform, and to preserve their business relationship. The wooden pallet supplier can order a prototype plastic pallet, then the plastic cut stock to assemble pallets, all the while maintaining a close relationship with its customer. “We don’t have to know who your customers are,” David said. “You, the pallet company, stay in the loop with your customer.”
“Don’t lose your customers to plastic,” David reiterated, “build it yourself.”
(Editor’s Note: To contact David Buckley at Pallet Outlet, call (940) 636-9912.)