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|Industry Forecast and Wishes|
Pallet Experts Speak About 2014
As we conclude 2013 and are looking ahead to the New Year, PalletCentral asked some of our members to give us their most realistic forecast and their hopes for the industry. Specifically, we asked the following questions: What do you foresee in the coming year regarding business ahead? What challenges do you foresee for 2014? If you could have one wish granted for your business or the entire industry, what would it be? The following industry experts participated in the annual Industry Forecasts & Wishes article that appeared in the November-December 2013 edition of PalletCentral magazine.
Mia Allen, Vice President/Owner, Rose Pallet
We are currently just starting high shipping season when many companies begin to increase production and shipments. This generally runs from October through the Christmas season. Traditionally, this creates an increased pallet demand in Q4 and many companies will purchase up to 50% or more of the pallets during this season than in other quarters. While this annual trend is mostly predictable, the market is also currently experiencing an extreme lack of inventory of used pallets. In conjunction with this decreased availability, a significant decline in quality has also been created. Companies are holding onto used pallets for 3-4 more times their previous life-cycle and repair/recycle facilities are pressured to get more and more “creative” to resuscitate these pallets in order to keep the already shrinking pool from completely collapsing. This starkly diverging trend of ever-decreasing available material combined with the predicted upturn of demand is causing much concern, and we are strongly encouraging companies to prepare for alternate solutions such as buying new pallets in case this shortage runs even deeper.
The good news looking forward to next year is that it appears the economy is starting to show some encouraging signs of recovery. In general, many of our customers are predicting increased production for 2014. This should be a positive for the pallet industry, and hopefully a stronger economy will help companies become less dependent on used material than in the past few years. One interesting trend to follow related to the pallet industry is the increase in the housing market. With an increase in home building, lumberyards are now selling more wood that will be dedicated for floors, cabinets, and other construction items. This inevitably drives up pallet prices since our industry also purchases from these lumberyards. While it is not necessarily a direct correlation, it is definitely a trend that will be paid attention to as we attempt for an increase in our overall pallet production while looking to remain as cost competitive as possible.
The top of our (and probably many pallet manufacturers’) wish list would be for a large company (similar to a Costco or Walmart) to commit to purchase a significant amount of new pallets for their operations. New pallets are the fuel for the used pallet market and help replenish the pool. When Costco changed their specification requirements to go to a pallet rental system, it negatively affected many manufacturers across the country. It would be amazing if a company could pick up that torch again and help restore some stability to the market. Another more realistic version of this scenario would be for companies countrywide to have increased purchasing power and take it upon themselves to purchase new pallets. Not only would it help replenish the used material market, it would alleviate many of the pains that are plaguing Warehouse and Plant Managers in terms of on-time deliveries, quality control and overall production planning. Any significant action that results in higher production and purchase of new pallets is at the top of everyone’s wish list for 2014 and would be warmly welcomed!
Stephen Grimes, Sales Manager, Pallet Resource of NC, Inc.
Coming out of the worst years of the recession, we have seen a very slow but steady improvement in the last two years in our volume of business. Profit margins are not very robust and customers are still taking longer and longer to pay. I am hoping for another year of steady improvement, but the recovery has not been as strong as advertised.
All the challenges of next year have the health care cloud hanging over them. A year’s reprieve from the Employer Mandate is appreciated but I live in a state where the Affordable Care Act has already doubled many peoples’ insurance premiums for 2014 – including my wife’s. We just got the letter from Blue Cross Blue Shield, who is the only provider available to us, so we can’t even shop for a better price.
Insuring every person in the U.S. is an admirable goal, but there seems to be a lot of wishful thinking concerning how it’s going to be paid for. American manufacturers already have too many economic disadvantages heaped upon them without also being asked to bear the burden of financing the nation’s health care system, which is already almost 20% of GDP.
I would love for once to see more than lip service from our elected officials and regulators to support small and family-owned businesses. We are praised as job creators and engines of the economy but legislatively, Republicans seem beholden only to giant multinational conglomerates and Democrats seem to be completely anti-business.
Araceli Rodriguez, Vice President, Chicago Pallet Service
I think 2014 will be a challenging year, but not a bad year. As long as you remain consistent, continue to work at it and know your financial capability, you will survive – just as we did in 2009.
We do not have any particular plans in mind, but we are always open to try different products or programs. I believe that it is essential to do something different in order to set yourself apart from your competitors.
I think the challenges we will face are the same we have for the past decades, but now we have to keep in mind the Government Shutdown, Health Care/Obama care. We still can't figure out the right cost and program; not to mention that it is definitely a task trying to attract qualified workers that want to work and are able to legally work in the U. S., especially in our industry.
I would like for the pallet industry to be looked at as an important and valued commodity. The pallet industry is like a homemaker – they are neither acknowledged, nor given the value and importance that they deserve.
Al Longman, President of Sales, Pallet Central Enterprises
We believe next year will be full of challenges as our economy is currently in a flux. The astute will do well as they will anticipate changes, identify growth opportunities and then adapt their business model. We anticipate 2014 will be a good year as we are preparing and loading our 4th quarter to set the stage for a banner year.
Our challenges for 2014 are to improve the training and education of our office and sales staff to the highest standards. Thus by improving our current work force and then hiring only the best new employees/sales contractors who will fit our business model, will we be able to do more with fewer people (using better technology and a well-trained staff). This will allow us to set higher production standards and sales goals to offset health care coast and to keep our business model lean and team focused.
I would wish for more involvement and attention towards better methods of wood recycling and waste stream management, and of course, improved availability of pallet cores.