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Growth spurt sends pallet industry into the '90s.


Annual pallet production in the United States rose roughly 66 percent between 1980 and 1990.

Pallet production in the United States was on a steady climb through the 1980s and increased two-thirds by 1990, according to a survey on "The Pallet Industry in the United States: 1980, 1985 and 1990," conducted by the Southern Illinois University Department of Forestry. The report, which was presented at a summer meeting of the National Wood Pallet and Container Assn., summarizes findings from three surveys conducted of all known pallet firms in 1980, 1985 and 1990. The latest survey was sent to 3,222 firms, with 865 questionnaires returned. The findings are summarized below.

Distribution of manufacturing firms

In 1990, there were approximately 3,222 pallet firms in the United States. However, it is estimated only 2,180 actually produced pallets during 1990. Geographically, Michigan and Pennsylvania had the largest number of firms, with 298 and 251 respectively. Regionally, the North Central region accounted for more than one-third of the total, with 1,253 firms manufacturing about 231 million pallets annually.

Annual production

In 1990, approximately 460 million pallets were produced in the United States, and the average number produced per firm doing business was 211,600. The median number was 100,000 units. The mean of 211,600 units was skewed by several firms producing more than 1 million pallets. Forty percent of the firms produced more than 140,000 pallets annually.

In comparison with 1980 and 1985, which had annual pallet productions of 112,000 and 193,000 per firm respectively, the 1990 figure was up significantly. Total pallet production increased two-thirds during that period.

Daily pallet production capacity

The pallet industry operated at about 70 percent of its production capacity in 1990. When firms were asked the current daily rate of production, the average was 900 pallets per firm, while daily capacity was 1,300 pallets on the average.

Compared to 1980 and 1985, 1990 figures again showed significant increases in daily production rates. Average daily production in 1980 and 1985 were 611 and 835 pallets, while daily production capacity was 1,005 and 1,235 for those years. There was a greater percentage of larger firms in 1990, and more of these were operating at nearer full capacity. The firms produced pallets an average of 230 days in 1990, with only 7 percent of firms producing 100 days or less.

Recycled pallet production

The survey found that in 1990, 41 percent of the firms recycled used pallets in addition to producing "new" pallets. An average of 90,000 used pallets were recycled annually.

Number of employees

According to 1990 figures, the average number of employees per firm was 18, with the median at 12. This was up from an average 17 employees per firm in 1980, but down from an average of 19 in 1985.

In 1990, nearly one-fourth of all firms had no more than five employees. It is estimated that the total pallet industry employed approximately 40,000 people in 1990.

Types of pallets

The most popular type of pallet was a flush stringer, double-faced non-reversible design. This also was the most frequently manufactured pallet in 1980 and 1985. Survey respondents said that 54 percent of their pallets were expendable versus reusable in 1990, which was up from 52 percent in 1985.

The most frequently produced size of pallet in 1980, 1985 and 1990 was the 48-inch by 40-inch module, which was generally used by the grocery industry. This size accounted for one-third of total production.

Nearly 90 percent of all firms produced the 48-inch by 40-inch module, 40 percent the 42-inch by 42-inch module, and 33 percent produced the 40-inch by 48-inch module. The survey also found that the number of different sizes being produced greatly increased during the past 10 years.

Sales methods and markets

When asked what percent were sold through a broker/wholesaler in 1990, 41 percent of the firms reported using a broker. However, only 12 percent of the total pallet production was sold in this manner. Comparatively, 36 percent used a broker in 1985 and 16 percent in 1980.

The following industries purchased pallets from more than 40 percent of the firms in 1990: food, paper/fiber, chemical/fluid, steel/metal and printing. These top five industries in 1990 were also the most popular in 1985.

The average selling price for pallets was $6 in 1990. Only 13 percent of the firms responding reported an average selling price of $8 or more.

Eighty-five percent of the responding firms sold most of their pallets within an average 92-mile radius from their plant in 1990. However, the median distance was only 50 miles -- the average being skewed by a few firms that sold nationwide. The average distance in 1985 was 100 miles, with a median of 50 miles. In 1980, 61 percent responded that they sold pallets only within their home state.

Additional products produced

The survey found that 37 percent of the firms produced wooden containers in addition to pallets, with an average of 5,335 units produced annually. Forty-four percent produced other products during 1990. The most popular were, in order of frequency reported: lumber, pallet cut stock, residue products, wood lath/stakes, blocking, specialty wood frames, ties and reels.

Raw material

In 1990, the firms responding to the survey generally purchased more than one form of raw material (wood). Seventy-three percent purchased some or all of their wood as lumber. Stumpage, logs FOB mill, and cants were the other forms of raw material.

The average prices paid for the raw material per thousand board feet were:
 1985 1990
Stumpage $ 76.00 $ 94.00
Logs, FOB mill 127.00 137.00
Cants 165.00 184.00
Lumber 165.00 184.00

The amount of wood used in manufacturing the pallets was reported to be 17.3 board feet, on the average, in 1990, compared with 17.7 board feet in 1985. Seventy-one percent of the wood used in pallets during 1990 was hardwoods. Only 8 percent of the firms reported using no hardwood species.

Years in business and annual operating expenses

Nearly all of the firms responding in 1990 had been in business more than five years. More than one-third had been in business more than 20 years. The average length of ownership was 19 years, with a median of 18 years.

The major operating expense in 1990 for the pallet firms was the wood, at 46 percent of the total, and labor was the second largest annual expense, accounting for 22 percent. [Table 1 and 2 Omitted]
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Publication:Wood & Wood Products
Date:Sep 1, 1991
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