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Southeast Pallet Recycling Keeps Focus on GMA Pallet
Southeast Pallet: Kentucky pallet recycler keeps focus on GMA market; AmeriMulch system allows company to expand into colored mulch production.
By Diane Calabrese
Date Posted: 2/1/2001
LOUISVILLE, Kentucky — Southeast Pallet Recycling Inc. got its start from someone who picked up some information from listening to the radio and watching television and put it together. Long before the Internet shuttled information at light speed, a couple of items mentioned in a radio broadcast and a television newscast made an impression on Kenneth Krebs.
His nephew, Kevin Krebs, explained. "He was listening to a radio show [in 1980] and the host was talking about market indicators...saying pallets are a good one," Kevin recalled. At about the same time, his uncle gleaned another piece of information from the tv. "A news anchor — I think it was Walter Cronkite — was saying we had to recycle."
Kevin’s uncle decided to get going. He recruited his brother, Leonard Krebs, Kevin’s father, to join him. Today co-owners Kenneth and Leonard serve respectively as president and vice president of the company.
The focus of the 19-year-old company today is the same as it was in 1981. "We take existing pallet cores in the shipping world, refurbish them and put them back into use," said Kevin. Southeast uses both reclaimed pallet parts and new precut material, both hardwoods and softwoods.
The company has always concentrated heavily on the GMA market, which has been at the root of its growth. "We got our first account with Kroger," said Kevin. "Kroger has been with us all years except one. They tried out another pallet recycler but came back to us within one and one-half years." Today about 95% of Southeast’s refurbished pallets are GMA.
Louisville straddles the Ohio River. The city of 1 million people is a manufacturing center. Three important Interstates highways — 65, 71 and 74 — intersect there. Most of the Southeast customer base lies within a 50-mile radius of the city.
Southeast’s facilities consist of a five-acre lot with three buildings — about 20,000 square feet under roof. One 4,800-square-foot building provides storage space for about 2,500 pallets. Many more are stored outside. "We maintain a heavy inventory," said Kevin "about 40,000 pallets. We stay on top of it."
Seventeen full-time employees, including the three Krebs family members, provide the energy for the company. "We have never laid anyone off in all our years of business," Kevin said proudly.
To keep up with the dynamic marketplace, Southeast has sharpened its approach over the years. For example, since 1986 the company has had a Williams hammermill in place to grind waste wood; the output was sold for years to a company in Indiana that used it for boiler fuel. In 1996 Southeast started grinding to make mulch and added an AmeriMulch Junior coloring system. Southeast also made additional machinery investments in the mid-1990s, adding several pieces of Smart Products pallet recycling equipment that improved the quality of Southeast’s refurbished pallets.
Southeast built its own screens for the hammermill to grind to mulch consistency. (The conveyors the company uses in its pallet recycling operations are all shop-built, too). It sells colored mulch to nursery businesses and landscapers, primarily by word-of-mouth.
Kevin likes the AmeriMulch coloring system. "I’m real satisfied," he said. "The colorants perform well." The AmeriMulch system colors 30 cubic yards of mulch per hour, he said.
Experience with customer color preferences has led to some changes. "We started with gold, brown, black and red," said Kevin. The company learned that red was preferred "10 to one." The company sells about 2,000 cubic yards of colored mulch annually, and it is "all red or black, 90 percent red," said Kevin.
Southeast has the capacity to produce more colored mulch. However, Kevin does not see the demand to justify an increase because the market is relatively flat.
For its pallet recycling operations, the company has seven repair tables. Three of them are equipped with Minick Enterprises lead-board removers. "I really like [the Minicks]," said Kevin. "They can pop off those lead boards. They run 50 hours per week."
At the other four repair tables, worker remove damaged lead boards with hand tools, but it is their choice. Some of his veteran employees simply prefer doing it manually, and Kevin allows them to do it that way.
Workers staffing the repair tables make the decisions about what happens to a pallet — whether to repair it, dismantle it for good lumber, or — in the rare case — send it directly to the hammermill for grinding. In most cases, even if a pallet is badly damaged, there still is good wood that can be reclaimed and recycled for pallet repairs.
Pallets are dismantled on a Smart Products bandsaw machine. The Smart Products bandsaw dismantler is a genuine star, according to Kevin. "The Smart bandsaw is a really good machine," he said. "We replaced a few bearings [over time]. That’s about it." The company also has a Woodthorn Trio dismantler.
Southeast is equipped with an MSI Trim-Trac saw, which Kevin called "the only way to go in my book. We run 5,000 cuts per day. It’s capable of [cutting] 8,000 to 9,000 boards. The MSI Trim-Trac is an excellent performer."
Southeast recovers so much used lumber that Kevin would like to find some markets for it beyond his own company. About 90% of the wood in incoming pallets is reclaimed, Kevin estimated, and Southeast has 700 storage bins filled with recycled stock.
When Kevin added the Smart Products bandsaw dismantler, he got even more welcome results than he expected. The company previously had been using a Pallet Repair Systems unstubber to eliminate nail stubble on used stringers. "The bandsaw [produces] clean, stubble-free boards," Kevin said, so the unstubber is not needed very often, which makes the company more efficient because it eliminates a step and saves time.
Reclaimed boards head to a 12-foot turntable. They are sorted by thickness to 1/2-inch, 5/8-inch, and 3/4-inch. All 5/8-inch deck boards are trimmed to 40 inches. The 1/2-inch and 3/4-inch boards are sorted by length, and long ones are trimmed to 40 inches.
Competition among pallet recyclers has Southeast Pallet paying close attention to quality when making repairs, especially uniform thickness in deck boards. "We ran for years with just repairing with whatever board we had," said Kevin, "just 40-inches." Now the company ensures that replacement deck boards are the correct thickness.
The company is equipped with a Pallet Repair Systems GAP automated nailing machine that builds about one pallet per minute and is used for assembling pallets made of used parts. Company workers also build pallets manually. For pallet repairs and pallets assembled by hand, Southeast uses both Duo-Fast and Bostitch power nailing tools. Kevin likes both brands.
Southeast buys an average of 2-3,000 used pallet cores each week and obtains about another 1,000 per week through various exchange agreements. Eighty percent of incoming pallets are repaired.
"I don’t turn pallets away," said Kevin. He believes it is important to service good customers by removing their excess pallets even when Southeast has more cores than it needs. For some large volume customers, Southeast leaves empty trailer vans at their facilities to be filled with excess pallets, swapping out the trailers when they are full.
Southeast, which is a member of the National Wooden Pallet & Container Association, grades its pallets by two categories. Number 1-A pallets are unweathered. Grade B pallets are "like new, but weathered," said Kevin. Grade B pallets are subdivided according to how many "blocks" they have — double stringers or half-stringers that have been added to strengthen a defective stringer.
To even out the swings in pallet availability and need, Southeast belongs to the national consolidator Recovery Logistics, a network of 10-15 over-the-road trucking lines that provides both a source and an outlet for pallets. Membership in Recovery Logistics helps Southeast even out the ups and downs of available pallet cores; Southeast provides depot services for Recovery Logistics. "Long-haul truckers like [the pallet bank system]," said Kevin; it gives haulers a way to top off loads, he noted.
Southeast does all its own delivering and driving, as well as equipment maintenance. The company has four Volvo tractors pulling 48-foot trailers and a 28-foot gooseneck trailer. Some 40-foot vans also are used.
As for his own path into the pallet business, Kevin took a slight detour. He was 13 years old when his father and uncle launched the company. "By the time I got to high school, I knew what I’d be doing, [going into the business]," he said. After graduating from high school, the Louisville native joined Southeast. At first he divided his time between the company and college. He attended the University of Louisville and then transferred to the University of Kentucky, where he earned a degree in graphic arts. He held two other full-time jobs before committing to a full-time role as operations manager at Southeast. "I got the entrepreneur bug," said Kevin, "[because] I was able to see the night and day difference between working for [your]self and working for others."
Kevin spends his spare time with his wife, Ingra, and their 2-year-old daughter, Sophie. He buys and refurbishes Jeeps and enjoys driving them off-road on trails; he belongs to a club of off-roaders and enjoys off-road driving with the group about once a month.
Kevin has a lot of confidence in the workers at Southeast. Although the employees do not have to cross over among tasks, they may if they want to. Five employees are certified to drive the three Yale forklifts. Yale is another brand that gets high marks from Kevin. "They have been real good to us," he said.
The work schedule at Southeast is 6 a.m. to 4:30 p.m. Monday through Friday, and the work environment is bilingual. Several years ago when Southeast was facing a shortage of workers, Kevin hired seven people who had emigrated from Guatemala.
He credits the strong work ethic of the new hires to making his company more efficient than ever. "Attendance increased 50 percent across the board," he said.