No one in the pallet business needs to be reminded how important the recycling industry has become. At the same time, those in the fiber business know that pallet scrap is an important source of raw product. Considering the value of both, it is surprising that few businesses have made efforts to fully integrate the two industries.

One exception is the Wood Exchange Inc., a pallet repair and fiber producing manufacturing firm operating in Portland. Oregon. The Wood Exchange is an important pallet repair facility with more than 600,000 pallets per year passing through the plant. The company also produces about 35,000,000 pounds of fiber each year and is anticipating a significant increase in these levels in coming years.

General Manager Richard Cramer is well known in the Northwest pallet industry as an innovator which is one of the reasons he was selected to operate the firm three years ago. The company started with only two people and has been in operation for a total of five years. "Bill Blakeslee the owner of Bilet Products, a new pallet manufacturer, was interested in broadening his scope with recycling of used pallets, and the Evanite Corporation, of Corvallis, was interested in a steady source of fiber." Cramer explains.

SMETCO upender helps relieve physical strain in pallet repair and sorting.

Pallets come to the Exchange from a variety of sources. Some firms bring in excess pallets to get rid of them or Wood Exchange will pick them up. It is also the CHEP repair facility for the Northwest, with CHEP pallets being brought in from Washington, Oregon, Idaho, Montana, Utah and parts of California.

Non-pallet fiber comes from an equally wide variety of sources. Drop boxes are filled at construction sites then brought to the firm. Companies bring wood in for disposal or vendors can contract with firms for disposal.

When loads of scrap are deposited they go directly to the firm's 500 HP Montgomery hog for grinding. As the scrap is hogged workers will pull valuable material before grinding (a spiff system is in place to encourage vigilance in this area).

Loads that primarily consist of' pallets, especially 48 x 40s, are delivered to a dismantling area to be processed into boards for use in repair or they are sorted and delivered to the repair area. "Some odd-sized pallets are ground up," Cramer says, "but most are stripped for usable wood. All repairable 48 x 40s are saved and repaired."

Pass through improves material flow.

Because of' the high volume the firm accommodates, and because it is considered both a true pallet repair facility and a fiber production plant, it is not necessary to grind up good pallets to reach chip production goals. Nor do they try to repair poor quality pallets to have sufficient product for customers.

CHEP's pallets, and pallets destined for repair and sale as Wood Exchange products, are handled separately. This is done to maintain CHEP's high standards, although Cramer says, the firm routinely utilizes these standards anyway, with one exception. "CHEP requires new lumber in their repair," he says, "while all repair lumber used for our pallets is salvage. Other than that there is really no difference between the way CHEP pallets are repaired and the way we repair our own pallets. CHEP is the Cadillac of the business, so if you stick to their standards you know you're doing the best job that can be done."

Pallets headed to repair stations on roller table.

The Wood Exchange's CHEP repair line is fully automated with equipment designed by the company and constructed by SMETCO, a well known pallet repair equipment manufacturer operating out of Portland. Non-CHEP pallets are repaired by hand, though the company is considering automating this aspect of the plant in the near future.

Sorting of CHEP pallets is done prior to their shipment to Wood Exchange's plant so all CHEPs coming into the plant need repair. The stacked pallets are placed on an upender, removed, and then examined on an inspection table for damage. Pallets requiring stringer repair are routed off to the side where the stringers are removed and replaced. Then the pallet is sent back, as needed, into the line for top and bottom boards. Pallets needing only top or bottom boards are routed onto repair stations where the necessary lumber is nailed onto them. The tables have a slight crown so the pallet can be spun with almost no effort. A clamping device holds the pallet steady while boards are removed. All movement is by roller or conveyor, requiring minimal labor.

Reducing the labor necessary to effectively repair pallets is an important factor in profitability, Cramer says. "It's hard to put a total dollar figure on it," he comments, "but we know the SMETCO system has substantially reduced our Workmen's Compensation. It reduces worker fatigue and results in fewer injuries."

While many pallet plants, especially repair facilities, have been reluctant to automate, Cramer says, he expects lines like his SMETCO system are the wave of the future. "We will be doing more mechanization," he says. "If you don't modernize, you're a fool. The way labor is today, you've got to change. It's necessary to keep up with the times."

Wood Exchange pallets go through a different process than CHEP pallets. When the pallets come into the system, they are sorted according to the extent of repair needed. Pallets that need no repair are immediately placed into the system for sale. Pallets with recoverable lumber go to break down and pallets that are beyond repair are sent to the hog.

Break down is accomplished by means of a Woodthorn Trio disassembler which takes the pallets apart. Stringers are passed through a PSI hammer which presses the nails into the wood, assuring a smooth surface. Recycled stringers and boards are taken to the repair center for use in repairing pallets.

At the hog, wood is chipped and the metal removed by a series of magnets, over which the wood passes. This assures complete removal, with recovered metal being sold to a scrap metal dealer.

Currently, about two-thirds of the fiber handled by Wood Exchange comes from pallets, and about one-third comes from construction debris. Construction debris is handled by means of drop boxes. Cramer contracts for them on behalf of the contractors who need disposal, then charges through in association with his own bill. Wood Exchange does not charge freight but does require a tipping fee for the material.

CHEP pallets repaired and ready to be delivered.

In the future, Cramer believes that construction debris will become a much larger part of his product stream. This expectation is driven by the passage of legislation in Portland, that took effect on January I, 1996. It requires that the material from any building permit over $25,000 in the Portland area, must he recycled. "We're looking at $21 billion worth of new construction on the drawing boards in Portland right now," he says. "That means there will be a tremendous amount of material to recycle."

While he expects the amount of fiber coming into his mill to dramatically increase, Cramer says he won't have to expand very much. Currently he is only running one shift, yet adding a second shift would double his capacity without increased machinery cost.

The entire mill is operated by 34 employees. As general manager, Cramer supervises two foremen who run the grinding operation and the pallet operation. There is little overlap. A grinding employee works only on grinding and a pallet employee works only on pallets.

By running two separate but complimentary manufacturing operations in a single plant, the Wood Exchange is truly a full recycling operation that traditional recyclers would do well to examine. Pallets that would be ground up in a typical grinding operation are retrieved and put to use, therefore, contributing both socially and economically. Because the grinding operation is steps away, the waste disposal problems that many pallet operations have are eliminated. A liability becomes a profit center. Society wins by achieving greater recyclability. The customers win by having access to a more cost effective disposal method. And the Wood Exchange wins through enhanced profitability.

Creating win-win situations is at the core of Cramer's management philosophy. "We work hard at what we're doing." he says. "We want the customer to do well and we want to do well. We provide an important service. It costs people $75 per ton to dispose of material elsewhere. But here, the costs are either lower or eliminated, depending on the use we can make of the wood. By doing business with integrity and creating win-win situations, we benefit both our customer: and ourselves. This is the way I like to do business."

Repaired pallets at Wood Exchange on delivery truck.

Reprinted with permission from April, 1996 issue of PALLET ENTERPRISE.