Business Spotlight | Winter 2020

Paltech Enterprises moves the world on pallets

By Anthony Castrovince

Next time you’re watching a cop show set in New York City, says Paltech Enterprises Principal Ray Rodriguez, notice the stack of wooden pallets in the alleyway or the warehouse where the action is taking place.

They’re almost always there because they are an easy prop, a quick visual shorthand for the dynamic industrial environment in which they are a constant and—according to Rodriguez—underappreciated presence.

“The world moves on pallets,” says Rodriguez. “Every time you see a semi-trailer, there are probably pallets inside with goods on top. A forklift truck has only one purpose: to lift pallets. Think of major distribution centers for consumer goods; how did the goods get there? On pallets. We’re the workhorse of the global supply chain.”

In 1999, Rodriguez and co-principal Larry Johnson bought Paltech Enterprises, which was then a small pallet business in Urbana, Iowa, and today they lead it with with shareholder and partner John Swenby. The company provides its industrial and manufacturing customers in five states with recycled, remanufactured, and new pallets, crates, specialty products, and custom-cut hardwood and softwood. However, the wooden pallet, some 2 billion of which circulate in the United States each year, is the company’s primary product.

That makes every day a challenge, says Rodriguez.

“We are a commodity business, so it all comes down to price, quality, and excellent customer service,” he says. “Every day is a new battle—we don’t do anything proprietary, we hold no patents or copyrights, but it’s an in-demand product.”

(Photo courtesy of Paltech Enterprises)

Blossoming from small beginnings

Although Paltech’s products are in demand, the pallet industry is fully mature.

“That means there are no additional uses for pallets other than what we have today, so our industry only grows as much as the economy grows,” says Rodriguez.

Helping the company ride that tide is Huntington. For more than a decade, says Rodriguez, Huntington has supported its acquisitions and other major purchases that keep the company prepared to quickly deliver what its customers need.

“The nature of our industry means we use a tremendous amount of trade equipment,” says Rodriguez. “We’re always in the process of buying new tractors, trailers, or forklift trucks, and Huntington has been consistently efficient and helpful with those needs, turning loans around quickly and at competitive rates.”

Paltech’s relationship with Huntington, which handles all of its cash management needs, grew out of a single real estate loan.

The key to any business is hiring and retaining good people—and then letting them do their jobs. We hire skilled managers and then we stay out of their way.
Ray Rodriguez
Principal, Paltech Enterprises

Attracting employees

Although the industry continues to move toward automation, Paltech still needs employees, and Rodriguez says attracting them is a challenge.

“It’s a very physical work environment, so finding workers that are qualified is difficult,” he says.

To help attract and retain employees, Rodriguez says its critical to avoid the urge to micromanage people.

“The key to any business is hiring and retaining good people—and then letting them do their jobs,” he says. “We hire skilled managers and then we stay out of their way. You have to be to be able to delegate and trust your managers. You hold them accountable but also give them free reign to run the business because that’s what you’ve hired them to do. You want to hire people who are better than you.”

Automation Innovation

And as the company continues to seek qualified people, it is also moving further toward automation. Paltech recently installed a “nail on the fly” pallet repair system that quickly gets pallets back into circulation. This equipment allows it to verify that its recycled pallets will work for an individual company’s automatic pallet handling machinery, and automation ensures quality, turning out recycled pallets with tolerances equal to new wood pallets for the cost of recycled materials.

“Automation is one of the main drivers in our industry right now as we try to meet customer demand cost efficiently,” Rodriguez says.

In addition, to meet customer demand, total pallet management has become a cornerstone of Paltech’s services. That includes a just-in-time delivery program that allows business to reduce the space their facilities need to store pallets, as well as the production of custom-size pallets made from recycled materials.

(Photo courtesy of Paltech Enterprises)

A green industry

About 70 percent of Paltech’s pallets are recycled, says Rodriguez, whose company employs more than 300 people in facilities in Illinois, Indiana, Iowa, Missouri, and Arkansas.

“We’re a carbon-negative business,” he says. “We buy pallets when businesses are done with them, sort them, and send those that are ready right back into circulation. If they’re damaged, we repair them if we can. If we can’t, we recycle the lumber into smaller pallet sizes or turn it into crating material.”

He says if none of those things is possible, they grind them into wood mulch, wood flour, or wood chips for landscaping and other purposes.

“Almost nothing goes into a landfill,” he says.

Wooden pallets are one of the most recycled products in the United States—95 percent are recovered into usable materials—and most of those on docks and in warehouses are 10 to 15 years old, says Rodriguez. “It’s unlikely that anyone cuts down a tree to build a pallet,” he says.

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