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Industry Thought Leaders Share their Vision for 2020 and Beyond
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Each year, our industry thought leaders, our members from NWPCA, are asked to predict the future of the wood packaging sector. They brainstormed and predicted supply, markets, labor challenges, technologies, or other global forces that will define the next year, and beyond to 2025, for the wood packaging industry.

With labor and the workforce, and automation, on the top of our minds, PalletCentral specifically asked our members for comments in these two areas. In addition, each provided an interesting perspective on where they see the industry in 2025. We thank the following members for providing feedback for this article:

  • Tom Andrew, Vice President, Henry Poor Lumber Company
  • Martin de la Rosa, CEO, Recipak
  • Kathleen Dietrich, Operations Manager, Commercial Lumber & Pallet
  • Mike Hachtman, President & CEO, Relogistics Services
  • Rene Harpin, SPEC Wood & Marketing Solutions
  • John Lieber, President, Profile Technology
  • Todd Mazur, President, Viper Industrial Products
  • Randy Panko, Blade Saws Manager, Wood-Mizer
  • Daniel Withrow, President, CSS Distribution Group

Daniel Withrow, President, CSS Distribution Group (Louisville, Kentucky)

We see our customers becoming more astute to market movements in lumber and therefore are more demanding when movements show a downward trend. They are also more open to ideas that we bring for combo pallets and/or asset recovery programs to help insulate them from lumber shortages or upward market movements. Our fastest growing market segment is our asset recovery programs. We see a real opportunity for our partner mills who join us in our efforts to recover non-GMA pallets from our customers.

We feel that the labor market will continue to be a pinch point due to the low national unemployment rate and hourly labor rates will continue to see upward pressure in order to maintain a good workforce. This influence will force overall pallet pricing upward over the next several years unless the economic outlook changes toward a recession.

John Lieber, President, Profile Technology (Fenton, Missouri)

Looking back from 2025 to today, I would expect to see two major differences from today.

First, continued development of USDA-Forest Service programs as regards to growth and harvesting of hardwood and softwood stands to help balance supply and demand. The Forest Service has taken a very aggressive approach in research and testing models to improve yield of both hard and softwood forests. Their forward-looking efforts will continue to enable both public and private harvesting of timber to continue to be both profitable and sustainable for the nations timber/lumber industries and for the forests habitat.

Second, continued diversification of our exports from primarily China to other overseas markets will expand for both offensive and defensive reasons. It’s no secret that the political and philosophical differences between the U.S. and China are 180 degrees apart. What started in the 60’s under Nixon in opening U.S. markets for expansion into a huge new market for the U.S. economy has now become a tug of war as regards supply and demand and who controls the reigns of supply and demand regarding imports and exports (not only in the U.S. but around the world).

Mike Hachtman, President and CEO, Relogistics Services (Houston, Texas)

Pallets and Politics in 2020

We will enter 2020 coming off a strong retail holiday season. Retail sales have been the primary force driving us to a time that I am calling “Peak Pallet” with robust demand for pallets and near record high prices for recycled pallets. Unfortunately, we will soon see an end to Peak Pallet as recycled pallet prices and demand begin to soften in the 2nd quarter due to slower economic growth – particularly in manufacturing – and weakened consumer sentiment as the elections and continued trade battles erode confidence. However, GDP will still grow by over 1% in 2020.

Politics

Without seeing a single vote yet cast, I predict Michael Bloomberg will be the Democrat nominee for President. Biden will fall due to a lack of an excited base and fundraising. Bernie Sanders and Elizabeth Warren will continue to split the far-left vote. And, while Pete Buttigieg continues to attract some moderates and young voters, he will fade as he is unable to gain any traction with minority voters. Ultimately, I have to believe there is a plurality of moderate, Democrat voters who will seek a candidate they think can win in November. Bloomberg will spend well over one hundred million dollars of his own money to convince them he is that candidate.

Despite Bloomberg presenting himself as a moderate, get things done candidate in the Democrat primary, he will be forced to accept many left-leaning Democrat policies that will ultimately make him unpalatable to the middle of the country and, he will lose to Trump in November.

Rene Harpin, Spec Wood and Marketing Solutions (Quebec, Canada)

The lumber situation is all over the place. Hardwood cants are plentiful in some areas and tight supply in others. In many areas pallet demand is strong but manpower limits what pallet manufacturers can produce. The solution: precut material.

Availability of precut hardwood, aspen and softwood is steady and can help many manufacturers meet their customers’ needs. Price is one variable. But cost is actually the result of price and waste factor. For many pallet manufacturers, the extra number of pallets, the capacity to meet requirements and use the full potential of nailing equipment justify buying precut material.

Martin De la Rosa, CEO, Recipak Pallets (San Luis Pitosi, Mexico)

In Mexico, in the last two years I have seen more supply of softwood and hardwood domestically but also more imports, especially from Brazil. A steady exchange rate, peso vs U.S. dollar, makes buying abroad more attractive. I think the demand of pallets might decrease a little next year according to the economic trends and the automotive industry predictions, and this will make even more lumber available. Regarding recycled lumber, the supply available has always been the same.

For labor, it is hard to get more people to work, mainly in the central part of Mexico called Bajio, and this is because some automotive plants have started operations in this area, so we are facing competition from this sector. Salaries have been going up and, I think, will continue going up for next year.

Looking ahead to 2025, I see more pallet companies buying automatic nailing machines, so there will be more automation and less labor. And I expect a better economic growth for Mexico, especially if the T-MEC trade deal is signed. [Note: The trade deal is also known as the United States-Mexico-Canada Agreement, or USMCA or T-MEC (Tratado Mexico, Estados Unidos, Canada.)]

Todd Mazur, President, Viper Industrial Products (Greenbriar, Arkansas)

The perfect storm is hovering over the U.S. labor market with no signs of clearing in sight. With low unemployment, higher wages and tightening of the immigration processes, quality labor has become a precious commodity for the U.S. pallet industry. Turnover is at all-time highs, while the stack of job applications has dwindled. The lack of experience is adding to the demand for labor. In some cases, it takes two people to do the same job that one person once did, that is, assuming they show up.

As a result, the demand for automation has surged the past few years. Automation condenses the learning curve/training process from years to weeks. Placing material in a machine and hitting a button requires less experience and physicality than a manual process. Automation will increase production and reduce workers comp claims. Over the past 5 years, 90% of our machines sales were justified by offering a solution to one or more of these labor problems. The labor epidemic is creating survival tactics for many.

It's essential that pallet companies start looking at automation to offer a solution to the labor problem. In pursuit of automation, be aware it could take two years to get a pallet machine. Many companies have said "we may not be in business in two years if we can't automate."

Kathleen Dietrich, Operations Manager, Commercial Lumber and Pallet Company (City of Industry, California)

I would venture to say that labor, or lack of it, will continue to be the #1 problem for most pallet employers. As a result of that, I do believe that more and more people will turn to forms of automation and the domino effect will obviously be that equipment manufacturers will continue to create machinery that will work in the pallet industry domestically in the United States. I also believe that this will be a major factor in companies being acquired by larger companies as we are already seeing trending across the nation.

Production employees will continue to be a necessity for pallet companies and the competition for that type of labor pool will become more and more competitive. I do believe that as a result you will see employee benefits changes, such as higher wages, incentives, vacation times, more affordable healthcare benefits, and an overall better work environment. Our continued appreciation of current employees helps attract new ones, but more importantly, we retain our workers. I even wonder, when I’m thinking really far ahead, if someday we’ll see trade schools for the pallet industry. That would really be awesome!

Regardless, it is sure to be a very interesting and exciting future for our industry.

Tom Andrew, Vice President, Henry Poor Lumber Company (Lafayette, Indiana)

Lumber Supply & Trends

Price trends will remain seasonally cyclical and still be easily influenced by mills and railroads. Spruce will prominently come from Canada. We will see more Canadian companies producing SYP in the states. I predict softwood will increase its market share in the wood packaging industry.

Lumber, either hardwood or softwood, will improve its standing as the original and best sustainable material for wood packaging.

Labor Market

We have partnered with learning institutions to help with labor. We provide a classroom on site where students can complete their state diploma. They split half day in class and half day in the shop. We have also relied on temporary employment agencies during spikes in demand.

Looking Back in 2025, Top 2 Differences

We expect to see more women in the work force. There will be more automation in warehousing that will require tighter specifications on wood packaging material. Suppliers will be located closer to the customers.

Randy Panko, Blade Sales Manager, Wood-Mizer (Indianapolis, Indiana)

The Importance of Tariff Relief in the Hardwood Industry

With the dedicated efforts of the Hardwood Federation and members in the forest products industry, our government leaders understand the negative impact of tariffs on hardwood log and lumber exports. In addition, these tariffs have slowed the markets for woodlot owners selling timber, logging operations, hardwood mills, pallet mills, and everyone involved in these markets. While this decrease in international demand of hardwoods has affected the industry, the pallet manufacturing and recycling sector has also experienced a negative impact with the extra lumber supply going towards the domestic demand for railroad ties and crane mats. There are millions of board feet of potential lumber standing in the forest and ready to be sustainably harvested, however woodlot owners are reluctant to manage their timber with this recent economic uncertainty.

As we enter into the 2020 election year and beyond, recovering the demand for our valuable hardwoods in China is critical. As you know, U.S. hardwoods are preferred by China due to the high quality of product and our well-managed business practices. By reducing these tariffs, the increase in demand will motivate woodlot owners to manage their forests, activate logging crews to harvest hardwood logs and low grade tree length material, which will in turn fill log yards, open markets for hardwood mills, and provide lumber to pallet mills to grow our businesses and the economy. I encourage you to continue speaking with your local and state representatives about how these tariffs have impacted your businesses. Recovering our hardwood relationship with China is an important step to positively influence the future and success of our forest products industry.

(Article published in PalletCentral Magazine, November-December 2019)