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Tough Times Require Business Grit: Southern Packaging Combats Recessionary Environment through Expansion, Launching New Services
: Despite the recent recessionary environment, Southern Packaging demonstrates business grit through expansion, launching new services.
By Tim Cox
Date Posted: 12/1/2010
PORT ALLEN, Louisiana — No doubt you’ve heard the saying, ‘When the going gets tough, the tough get going.’
Well, when the tough got going, the Tuminello’s got going. Yes, they took a big hit in sales. Yes, they had to lay off employees.
But Brad Tuminello and his brother Ken, owners of Southern Packaging, did not simply fight a rear guard action against last year’s recession. They went out and added new operations to their business and, in response to customer demand, expanded into new services.
And now, the worst seems to be over, so it seems. In fact, the company already has made up considerable lost ground.
A few years before the nation’s economy went into a tailspin in late 2008, the Tuminellos already had taken a step that would help them weather the storm by opening a second plant a little more than 50 miles north in Woodville, Mississippi. That plant, located in a virtual breadbasket region for hardwood and pine logs, began operations in 2005.
The company’s headquarters and main plant are in Port Allen, La., just across the Mississippi River from Baton Rouge, which the brothers call home.
Brad and Ken started their business in 1992. They have worked hard and smart to make it a success, and they also credit the company’s prosperity to quality employees, suppliers and customers.
They began with a small handful of employees and a few pieces of equipment. Now they have plants in two states. In Port Allen, they operate a sawmill, scragg mill and pallet plant. The Woodville plant consists of a scragg mill and a second pallet plant. Between the two of them, the company has extensive cut-up operations, automated pallet assembly capacity, heat-treating chambers, dry kilns for pallets, dip tanks and spray booths to treat pallets with mold-preventing chemicals, pallet recycling services, and mulch production operations.
Getting Started in Pallets
Both Brad and Ken graduated from Louisiana State University. Brad majored in finance and after graduating went to work for Mobil for several years in the Northeast. He quickly determined he wanted to have his own business, eventually returning to LSU to earn a Master’s in Business Administration. As part of the work for his MBA degree, Brad did research into the pallet industry. He discovered that most pallets used in Louisiana were being manufactured by pallet companies in other states. He developed a business plan for pallet manufacturing as part of his degree requirements.
Ken majored in forestry as an undergraduate at LSU and then followed that up with a master’s degree in wildlife management. He went into the construction industry and for about 17 years worked as a contractor providing sandblasting, painting, and drywall for commercial buildings.
When they began Southern Packaging, both men continued other jobs for a while. After a few years of putting ‘sweat equity’ into the new company, they could begin working for themselves full-time.
Now, Brad oversees the company’s finances and handles sales — the company also uses two manufacturer’s representatives to sell its pallets — and Ken oversees all round wood procurement and construction projects.
The business covers 75 acres in two states and has about 10-15 warehouse buildings and sheds with 120,000 square feet under roof. The company specializes in hardwood and pine pallets and uses every form of raw material – saw logs, scragg logs, cants, boards, and cut stock. The company’s operations employ about 90 workers. They produce 15-20,000 new pallets weekly and about 10,000 recycled pallets. About 80% of revenues come from sales of new pallets, the remaining 20%, from recycled pallets.
In the new pallet market, the company manufactures 100-200 pallet sizes and specifications. However, it does not compete in the market for new GMA pallets. Common sizes the company manufactures are 42x42, 48x42, 44x44, 62x45 and 45x45. It also produces pallets in the same size as the GMA (48x40) although they are a different specification. The company does strong business with customers in the petro-chemical industry.
In 2009, sales declined for the first time in 17 years, said Brad. Like so many businesses, and not just those in the forest products industry, the decline was precipitous. Production hours were cut. About 25 employees were laid off.
However, sales already have returned to the level the company enjoyed two to three years ago. “It’s picking back up,” Brad acknowledged. Nearly all the employees who were laid off have been hired back.
The year 2009 was tough for another reason. “Last year was the first time we ever ran out of hardwood logs,” said Brad – ran out despite having the biggest winter inventory it had ever put in. The company had to substitute with pine for a month or two.
The lack of hardwood material coincided with a new high-volume customer that wanted softwood pallets, prompting the company’s move into that new market.
The hardwood market has been “dry” the past 60 days, said Brad. “We still don’t have the inventory we would like to have put in,” he added, and are continuing to add inventory to get through the rainy months of January-March, when logging slows. In fact, this year the company added another four acres for log yard storage.
In the region where the company operates, Southern Packaging must compete with other sectors of the forest products industry for low-grade logs. One is the tie industry, noted Brad, which can pay about $15 more per ton. Another sector, timber mats, has slowed somewhat, he said.
“My biggest concern in the lumber industry is we’re seeing an ever-increasing reduction in the number of loggers,” said Brad.
The newest plant, Woodville, is set up for processing scragg logs and lumber only. “All we process in Mississippi are boards and round wood,” explained Brad, no cants.
The Woodville plant employs about 25 workers. The facilities include one warehouse building for the cut-up operations, another for assembling pallets, and another for storing finished pallets, plus several drying sheds.
Pallet logs are bucked to length by a Prentice loader and slasher. A Big Jake scragg mill is integrated with a Big Jake edger to process a block into a three-sided slab. The slabs are trimmed to length on a Big Jake double-end trim saw. Finally, the material is resawn on either a Baker Products five-head or four-head horizontal bandsaw line; the resaw lines also are used for processing lumber bolts. The finished boards are cleaned by Baker Sidewinder de-dusters and graded before entering two Pendu stackers.
The cut-up shop also has a Pendu five-head multi-trimmer for trimming lumber. The resulting pieces feed into a Baker two-head splitter to make either deck boards or stringers. The shop also is equipped with a Brewer notching machine for making notched stringers.
Pallet assembly operations in Mississippi generally are more high-volume, production-oriented, said Brad. The plant is equipped with a Viking Duo-Matic that was updated by Macon Machine. The Louisiana plant does more varied pallet sizes and consequently does more changeovers to set up the nailing machines for a different pallet.
Having pallet production capacity at both plants has been a plus with some customers, Brad noted. “They can function independently.” Customers have the assurance of knowing that if one plant is out of service because of some catastrophe, such as a hurricane, Southern Packaging has a second plant to keep them supplied with pallets.
The company has certain customers who want pallets treated to prevent mold; so it added the service about a year ago at both its Woodville and Port Allen plants. Green pine is particularly susceptible to mold, noted Brad. “Anything we cut green for pine pallets is dipped,” he said.
The dip chambers and spray booths are set up to treat pallets with PQ80 to prevent mold. They treat both hardwood and softwood pallets although most pine pallets are kiln-dried.
Another customer wanted kiln-dried pallets. The company now has operations at Woodville to supply these as well as heat-treated pallets. They company bought facilities with a kiln. The kiln can hold two or three truckloads of pallets at a time and dry them in 18 hours.
The Tuminellos also started a new mulch division at Port Allen last year, purchasing an adjoining eight acres of land for the operations. They buy cypress pulp logs and process them into mulch with a Continental Biomass Industries horizontal grinder. The machine, with a 1,200 hp engine, can grind whole trees, pallets or waste wood material. The mulch can be 100% cypress or a blend of cypress and hardwood material. The company sells the mulch in its natural color and also has an Amerimulch coloring system and produces mulch in red, brown and black. In addition, the business is equipped with two automated Amadus bagging lines to package the finished mulch in plastic bags.
Port Allen Facility
Southern Packaging added sawmill and scragg operations to Port Allen in 1999. The sawmill has a Helle head rig with three-knee carriage for cutting logs larger than 13-14 inches in diameter. Smaller logs are processed on an older Tipton scragg mill.
The company buys tree-length hardwood logs. They are merchandised and bucked in the yard and debarked. The Helle circular mill breaks the log down into a 4x6 or 4x8 cant or takes the log all the way to finished cut stock; a Helle three-saw vertical edger is integrated with the head rig. As slabs are removed, they are edged to a 3-3/4-inch dimension.
Lumber is recovered from slabs in an in-line slab recovery system supplied by Cornell/Pendu. The edged slabs go to a Cornell five-head multi-trimmer to be cut to length, and the three-sided pieces then are fed to a Cornell Circular Line Bar (CLB) to be sawn into as many as two or three boards.
The Tipton scragg mill is a quad-arbor mill running four circular blades, two top-and-bottom on both sides. It normally is fed 48-inch bolts that are cut into two-sided bolts, and then the piece is under-trimmed to produce a four-sided block. The block is trimmed on a Tipton double-end trimmer and then is resawn on one of several Baker bandsaw lines.
Cants produced in the company’s mill or purchased from other sawmills are processed in one of two ways. One line begins with a Cornell five-head multi-trimmer to cut the cants to length. The sized cant material then goes through a Baker sizer to cut them to a uniform height, then they are resawn on either a Baker two-head, three-head, five-head or six-head horizontal band resaw line. Behind the Baker five-head and six-head resaws are Baker Sidewinder de-dusters and Pendu board stackers.
In another building, a Baker cut-up system also processes cants. This line remanufactures the cants primarily into stringers. A Baker two-head cut-off saw cuts the cants to length, and then they pass through a Baker sizer. The material then runs through a Baker five-head resaw line and continues in-line to a double-head notcher equipped with Econotool notching heads. For odd or culled material, another small line is set up to recover a board. It consists of a Morgan double-end trim saw followed by a Baker single-head bandsaw.
Over the years the Tuminellos have added Pendu stackers, Cornell CLBs, and, at Woodville, the Big Jake Scragg Mill. They recently ordered a new Brewer infeed deck and unscambler along with a new Brewer Super Twin cut-off saw.
“We look forward to putting the Brewer equipment to the test and feel very confident we have made a good choice in adding Brewer to our list of manufacturers,” said Brad.
“We’re very pleased with the manufacturers we have worked with over the years,” he added, and noted their repeat purchases when updating equipment.
The sawmill cuts 20,000 board feet per day; 30% of that volume is finished cut stock and the remainder is in the form of cants. In addition, the cut-up operations process about another 30-40,000 board feet daily.
Southern Packaging added pallet heat-treating capacity 10 years ago. It has a Brunner-Hildebrand system with a Hurst boiler capable of heat-treating two truck-loads of pallets at a time. It is heat-treating six to eight truck-loads daily for customers. Currently, the company is doubling the capacity of the heat treating chamber at the Port Allen location to provide better service and greater efficiency.
The company relies on local suppliers for sawmill blades, blade service and industrial components. The company buys Wood-Mizer band blades from Smith Sawmill Supply for its Baker resaws. Circular blades are purchased from Poole’s Sawmill Supply and resharpened by Byrnes Sawmill Sharpening. Bearings and other parts are purchased from Ruston Mill Supply.
Pallet Assembly, Heat Treating
In its pallet assembly operations, Southern Packaging is equipped with five Viking nailing machines. It has four Duo-Matics that have been completely upgraded by Macon Machine, including new computerization, and a Viking 504.
Small quantities of pallets, particularly specialty and custom pallets, continue to be assembled by hand with pneumatic nailing tools; the company uses Paslode tools.
“We have a lot of very good and dedicated employees,” said Brad, “and an excellent office staff that takes care of our customers. We’re a very service-oriented company. We treat employees, suppliers and customers the way we want to be treated.”
The office staff is comprised of manager Kaki Scott, who provides customer service and dispatching, Betty Reed, who is responsible for accounts payable, and administrative assistant Rita Sumas.
Key employees include plant manager Blaine Bergeron, another LSU graduate; Blaine earned his way through college by working at Southern Packaging and continued to work for the company after earning his degree. Other key members of the Port Allen staff include Aaron Williams, Sean Sullivan, and Tim Vavasseur, who manages the pallet assembly operations. Dale Beaubouef operates the sawmill, Greg Albarez and Bradford Fabre over see cut-up operations, and Bruce McClemens oversees the pallet recycling plant. Kenny Saucier and Lance Newman take care of maintenance and the log yard.
The Woodville plant is under the control of Ken. Key employees include Patrick Ford, who manages all cut-up operations, Jimmy Ashley, millwright, Lamar Coulter, assembly foreman, Greg Brengettsy, scragg mill operator, and Walter Williams and Steve Byrd, who oversee the log and lumber yard. Ramona Hall takes care of the office.
Both locations are fortunate to have a great crew of truck drivers who represent the company.
The company started pallet recycling operations mainly as a service to customers to remove excess pallets and provide pallet repair services, but they have grown to become a significant player among pallet recyclers in the region. In the pallet recycling arena, the company’s primary focus is the GMA market.
The company produces a considerable volume of ‘combo’ pallets — constructed from a combination of new lumber and recycled lumber — in its pallet recycling department, which is focused heavily on the GMA market. The company supplies its recycling plant with No. 2 lumber that is cut into new 48-inch stringers that are combined with recycled deck boards. The recycling department, with about 20 workers and using Paslode pneumatic nailing tools, also has pallet repair operations.
The recycling plant is equipped with Smart Products bandsaw dismantlers and Smart trim saws for cutting recycled material to length.
As for residuals, Fulghum and Precision chippers process scrap material into chips that are sold to a paper mill. Bark is sold for boiler fuel. In the recycling department, a tub grinder is used to grind scrap pallets and other wood waste into boiler fuel material.
Southern Packaging employs a number of Hispanic workers. The company, which is a member of the National Wooden Pallet and Container Association, has workers watch safety and training videos that are bi-lingual. Forklift training is provided by a local company to enable Southern Packaging employees to become OSHA certified. Workers are required to use safety glasses, hearing protection, steel toe work boots, and to wear pants with shirts tucked in. Prospective employees must submit to a drug test, and additional drug tests are performed as a standard procedure after an accident and also on a random basis.
Southern Packaging offers its employees a 401-K savings plan, and the company matches worker contributions. The company also pays bonuses – based mainly on overall plant safety performance and efficiency – annually or semi-annually.