The Pallet Factory-Leading Tennessee Recycler Seized Occasions to Expand Strategically; MSI Systems Helped Double Production
MEMPHIS, Tennessee — Mike Doyle was in the juice business when he first recognized the pallet problems of two different companies. The problems complemented each other, however, and Mike seized on a market opportunity 22 years ago.
Hello, pallet recycling; good-bye, juice business.
Under Mike’s leadership, The Pallet Factory (TPF) went on to become one of the leading pallet recycling companies in the Tennessee-Kentucky region and the entire pallet industry.
Mike bought six acres of land in Memphis in 1997 and moved the company’s main operations into a new, 50,000-square-foot building in 1998. He is planning to buy five more acres to accommodate future expansion. The main plant employs over 60 workers in two shifts. About 10,000 pallets a day go through the plant. In addition to 4,000 Chep pallets, the company builds around 1,500 new pallets, repairs another 800 odd-sized pallets, and repairs about 4,000 GMAs a day. TPF also has three other locations and a total of about 120 workers in its four plants.
TPF started like many recyclers. An entrepreneur saw a need and turned a problem into an opportunity.
More than two decades ago, Mike owned a fruit juice franchise for Home Juice Company, based in Chicago. His distribution area covered Arkansas, Mississippi, and Tennessee.
While visiting a distribution center in Jackson, Miss. that bought his company’s juice products, he was given a tour of the facility. “I was taken past an area that must have held 25,000 stored pallets,” Mike recalled. “The owner told me that he was probably going to take them to the landfill.”
Mike had learned about a week or two earlier that the franchising company owed its glass supplier 40,000 pallets. “For every pallet load of fruit juice I ordered, I was paying a $5 charge to cover the cost of the pallet,” he said. “So I was keenly aware of the value of pallets.”
Mike solved the problems of both. He bought the surplus pallets from the distribution center. Then he turned around and sold them to the Home Juice Company, which benefitted by saving money in moving from new pallets to used ones.
Mike was active in both businesses briefly before selling his interest in the franchise in 1982 and focusing his efforts full-time on the family-run pallet recycling business.
Mike started with hammers, nails, and dreams. TPF was launched in a simple but functional location. Few places could have been better than Memphis to start a pallet recycling company, though; the city is a major distribution hub.
Over the years, Mike moved and expanded the main Memphis facility in order to improve TPF’s level of service, and he constantly seized on other opportunities to expand his business into other locations. TPF also is a model example of the growing number of pallet recycling companies that are expanding into multiple locations. Whenever Mike finds a potential customer that would be a catalyst for more growth, he gives it serious consideration.
For example, Mike entered into an arrangement with IBM in 1987 to handle 25 truck-loads of pallets a week, enough volume to open a second TPF location in Lexington, Ky. The new site was profitable in its first month. It prospered and grew so that it had enough business to remain open after IBM no longer needed pallet services in Lexington.
Located strategically half-way between Memphis and Lexington, Nashville became the location for TPF’s third plant in 1989. TPF opened a fourth plant in Jackson, Tenn. in 1991 to serve Martha White Foods. Martha White later was sold to Pillsbury, which chose Chep as a pallet supplier. TPF adapted by operating a depot for Chep and expanding into other accounts.
TPF also opened locations in New Albany, Miss. and New London, Ky., to service Wal-Mart distribution centers. However, the company recently closed those facilities in the wake of Wal-Mart’s decision to team with Chep.
Everybody who knows Mike says the same thing: he is a good businessman and a great person. He has shown that an individual can achieve success and be respected for his business accomplishments yet still remain someone who is admired as a person.
Mike helped to form the International Association of Pallet Recyclers as an organization dedicated to providing networking and benchmarking opportunities for recyclers. This organization was absorbed a few years ago by the National Wooden Pallet and Container Association (NWPCA). TPF has been active in the NWPCA since 1994, and Mike, currently secretary-treasurer of the association, is one of its most active recyclers. The NWPCA held its annual pallet recycling meeting in Memphis a year ago, and Mike opened TPF’s doors for a plant tour and a barbecue; the tour and social event were big hits in what proved to be one of the most memorable and historic pallet meetings ever.
The pallet industry, particularly on the recycling side, is consolidating although networks are expanding. PRANA was formed to establish a network of established, quality-oriented pallet recyclers that would serve pallet users, whether the customers had a single plant or nationwide operations. Mike sold TPF to PRANA in 1995, but he was astute enough to put his company in an escrow account, retaining control in case PRANA failed. After a year he realized that PRANA was not going to survive. He withdrew TPF, regrouped his business, and continued full speed ahead.
“We attempt to work with customer management from the top to the bottom,” said Mike. “Becoming involved in solving customers’ pallet supply problems makes TPF an important part of their businesses.”
The TPF pallet management program is a good example of the company’s professionalism. It tracks pallet location and condition in order to reduce customer costs. In serving Wal-Mart, for example, TPF kept an accurate daily activity report on four pallet categories: pallets ready for delivery, pallets to be repaired, Chep pallets, and trash pallets. The service enabled Wal-Mart to effectively compare distribution centers to help manage its pallet program.
TPF provides all phases of pallet recycling and repair and supplies both new and used pallets. The company designs custom pallet management programs to count, retrieve, repair, and return pallets. Pallet management programs can be set up and managed on-site for large volume customers. TPF also provides conventional pallet repairs and specialized pallet management off-site at its own plants. TPF is moving more toward building remanufactured pallets out of recycled lumber and combination pallets from new and recycled lumber. Mike and his company have a strong relationship with other pallet companies so TPF can supply products and services beyond its own capabilities.
Automation is a hot topic in pallet recycling, even more so recently because of the low unemployment rate and the shortage of labor. A lack of good workers can be a significant stumbling block to a labor-intensive business like pallet recycling. Because of the labor-intensive nature of their business, recyclers have not been accustomed to making large capital investments required for automated sorting and repair operations. They have examined options and moved carefully.
Mike has a ringside seat in the realm of pallet machinery suppliers. His brother, Jim Doyle, owns Machine Specialists, Inc. (MSI), a manufacturer of pallet sortation and repair machinery and systems that also is based in Memphis. Jim was a leading pallet recycler before deciding to go into the machinery business, so he is thoroughly knowledgeable of the pallet recycling industry.
TPF’s first major steps to automate were implemented at its main plant in Memphis; MSI supplied the machinery.
Like many progressive recyclers, Mike views automation as the key to increasing productivity. Experience has proven him right. The MSI systems at TPF more than doubled the number of pallets going through the plant while reducing the need for workers.
One of the main benefits of automating certainly is reducing labor costs, but automated systems also ease some of the hard work involved in pallet recycling tasks. Mike found this to be true at TPF. “One of the benefits of automation is the flexibility of using women to do more functions,” he said. “It reduces the work strain that is so common in the pallet recycling business.” Pallet stackers “are worth their weight in gold” for improving productivity and reducing the physical exertion for workers, he added.
“Another benefit of automation is an improvement in quality,” Mike continued. “Stackers and other machines often require a minimum quality level in order for pallets to flow through the system. This is similar to the automation sensitivity our customers often experience.”
While TPF’s business initially was built on pallet sortation and repair, the company supplies new and remanufactured pallets, too. Last year it bought a Pallet Chief machine for its Memphis plant; it functions as a nailing jig with a stacker, and two workers can build about 350 to 400 new pallets a day on the system. TPF manufactures new pallets on two nailing tables and builds either remanufactured or combination pallets at five other nailing stations. TPF uses Stanley-Bostitch nailing tools for both pallet assembly work and repairs. “Bostitch backs up its excellent service with good tools,” said Mike.
TPF recently invested in a new Viking Champion nailing machine for its Memphis operations. “That’s been real good,” said Mike. “It gives us another dimension. We can give customers a little better service and a better pallet.” The machine, operating about 12 hours a day, “has worked out real well for us,” he said.
TPF has decided to turn to a new pallet industry supplier, Rock Fasteners, for nails. The principal owners of Rock Fasteners are Hal Looney and Ian Carter, who both have long ties to the pallet industry.
One thing a recycler needs to be successful is a reliable supply of pallet cores, noted Mike. TPF obtains pallet cores from a large number of customer locations and has over 130 trailers at company docks and a fleet of 18 tractors to haul them.
TPF reclaims lumber from used pallets for making repairs, remanufactured pallets, and combination pallets. For years TPF used an MSI Tres disc-type dismantling machine in its lumber recovery operations. The company recently added a pair of MSI bandsaw dismantling machines in order to increase production. “I had never been a bandsaw advocate,” said Mike, “but these are unbelievably good. They provide cleaner lumber and are versatile enough to disassemble block pallets and any kind of odd-ball pallet.”
A bi-directional change-over senses the used decking and carries it to one of two MSI Trim-Tracs. TPF recently installed a new MSI Autosort that automatically sorts lumber according to length on the outfeed side. “It works wonderfully,” said Mike. Recycled stringers go through an MSI Hammer that depresses any nail stubble.
In Memphis, TPF functions as a Chep depot for a Kroger distribution center. Robert Cage handles the Chep line, sorting about 4,000 blue pallets a day. He inspects each pallet when it comes out of an MSI destacker and sorts it. Pallets are sorted according to whether they are block or stringer pallets and whether or not they need repairs.
In the white pallet operations, where about 11 employees work, odd-sized pallets are dispensed from an MSI tipper to a Viking board remover-repair table. GMA pallets are processed on MSI’s Automated Sort and Repair System. An MSI destacker feeds GMAs to an inspector. The inspector diverts good pallets to one stacker and those that will be dismantled to another stacker. Pallets that will be repaired go down one of two other lines, one for #1 and the other for #2. Pallets with damaged stringers are pulled off the main repair line to be plated first. On each repair line, workers use an MSI Deckmaster to prep each pallet, removing bad boards and depressing nail stubble. Replacement deck boards and companion stringers are nailed ‘on the fly’ as the pallets move along a conveyor. TPF adjusts the conveyor speed of each repair line according to the grade of pallets; the #2 line usually runs slower since #2 pallets typically require more repairs.
Mike met Naomi, his Australian wife, during his last two years at Memphis State when she was in chiropractic school. She worked in the TPF office until just a few years ago. They have three sons, and one, Josh, helps Mike to manage TPF. Josh is currently helping to manage operations in the main Memphis plant.
Other TPF key management staff include Randy Averesch, controller, and Emily Brasher, office manager and sales coordinator. The plant managers are Tony Ausbrooks in Nashville, Bill Knight in Jackson, and Vern Norris in Lexington.
Since TPF moved to its new location in 1997, it has employed a significant number of inmates on work-release from the Shelby County Correctional Facility. The inmates are nonviolent offenders. “The correctional facility transports them in a van,” said Mike. “They are on time and dependable. The negative side is having to retrain because of relatively high turnover.” Paychecks of inmates that participate in the program go to the state; some earnings go to pay incarceration costs, fines, and court costs, and a portion goes into an escrow account the inmate will receive upon release.
TPF offers employees a 401k retirement plan and medical insurance. Drug tests are required for drivers.
People often wonder why some people seem to be able to make their companies grow and become successful when others struggle with less success. Some of it may be location. A little of it may be luck. But a lot of it is just plain good management and a vision to do better, and Mike and Josh have a big dose of these necessary ingredients. Enthusiasm helps, too. If you just talk to Mike for a while you will feel better because his enthusiasm is contagious.
There is every reason to believe that TPF will continue to grow and succeed. Our industry has its share of challenges, but TPF is one pallet business that seems to be determined to turn challenges into opportunities.