Hay Creek Pallet Relies Upon Rotochopper Grinder

Pittsville, Wisconsin - Located in rural central Wisconsin, Hay Creek Pallet mixes the standard sights of a pallet shop—neat stacks of pallet stringers, columns of finished pallets, trucks and van trailers, pallet truck traffic in and out of the manufacturing shop—alongside the less familiar—piles of colored landscape mulch, a hoop shed covering wood fiber animal bedding, and a multitude of wood waste sources, from slabs to fiber board scrap.

Although wood waste recycling is certainly not new to the pallet industry, the degree to which it has been integrated into Hay Creek’s business model is noteworthy. The raw wood waste and wood fiber commodities seem to take up as much space as the pallet manufacturing and storage. Yet to a first time visitor, the most unusual feature of Hay Creek Pallet lies beyond the concrete on which the pallet manufacturing and wood waste recycling operations are situated. Cranberry fields and water reservoirs surround the facility on three sides. Tom Gardner, owner and president of Hay Creek Pallet, is one of the biggest players in Wisconsin's cranberry industry, the largest cranberry state in the union.

Hay Creek Pallet is not simply surrounded by cranberry fields; the pallet shop, wood waste recycling operation, and cranberry fields are all part of a seemingly incongruous business. To Gardner, owner and operator of Hay Creek Pallet, however, the distinguishing characteristic of his company is an unwavering focus on customer needs. For Tom, his diverse business is centered on what he suggests is the key to the pallet industry. He said, “You can always find somebody who will do it cheaper by focusing on volume, no matter what industry you're in. What's important is quality and service—keeping your customers happy.”

Tom's philosophy in life comes out in a conversation with him. He is very conscientious about his products and their value to his customers. He was quick to stated, “We serve a great God. I am not in charge because Hay Creek serves the King.”

This attention to customer needs, in fact, helped create and foster each of Tom's three distinct but complementary businesses: Hay Creek Pallet, Hay Creek Enterprises, and Hay Creek Cranberry. After high school, Tom started with a single Peterbuilt truck, which he grew into a trucking firm of 23 trucks that hauled cheese, paper, and a variety of other products for local companies. Then in the late 1990s, Tom became interested in pallet repair, sensing an opportunity within the regional markets he served.

A friend opened a pallet shop, and Tom began regularly picking up junk pallets from one customer and hauling them to his friend’s shop a few miles away. After a short time in business, however, his friend decided to get out of the pallet repair business, and Tom purchased the company that laid the foundation for the current Hay Creek Pallet. When Hay Creek Pallet began to expand in both pallet manufacturing and pallet repair, Tom saw another opportunity with the steady stream of wood waste his company generated. Hay Creek Pallet diversified into pallet recycling when Tom began to analyze the profit potential of the wood waste that he was paying other companies to take. “The best I could hope for was to get rid of it cheaply,” he said, “while other companies profited from it.”

After researching equipment online and through industry contacts, Tom purchased a refurbished Rotochopper MC-166 horizontal wood grinder in 2005 and began grinding and coloring his pallet scrap to produce colored landscape mulch. Demand for the colored mulch quickly surpassed the amount of wood waste produced from the pallet operation, and he began taking in various forms of wood waste from other pallet manufacturers, sawmills, and wood products companies.

For many pallet professionals, pallet recycling is a divisive term. Although it is firmly entrenched in the business models of many pallet manufacturers and re-manufacturers, the practice of grinding pallets to produce boiler fuel, colored landscape mulch, and animal bedding remains a polarizing issue. Many pallet professionals approach pallet recycling as an either/or issue: either you focus on pallet repair or you grind pallets, with a relatively small percentage of companies actively involved in both. But to Tom, rebuilding pallets and grinding unusable pallet scrap are simply two approaches to the same goal: maximizing the value of resources available.

Tom also stresses the importance of market diversity to his business, which has had significant payoff with current economic conditions. “I wouldn’t necessarily say that colored mulch is ‘recession-proof’, but it has continued to expand every year I have been in the mulch market. When people buy mulch, they want the fresh, vibrant look, so they often buy more each year, and the demand continues to grow.”

Today less than ten percent of the wood waste Hay Creek grinds is generated by the pallet operation; most of it comes directly through customers - pallet component suppliers, sawmills, and other companies that are connected to the pallet industry in various ways.

As the pallet business grew, Gardner focused on maintaining a lean operation, keeping equipment updated and efficient but choosing to outsource much of the equipment intensive work rather than investing in additional equipment. For instance, Hay Creek Pallet's Up Country Go-Fast re-saw is used only occasionally for special jobs, while the majority of the re-saw work is outsourced.

“We’ve got our resources invested in people and relationships,” Tom stated, “not in equipment. We’ve got good people, and we work hard to service our customers.” By outsourcing much of the work like re-sawing, Hay Creek Pallet remains flexible, fulfilling specialty orders while keeping costs low and limiting turnaround time.

A large percentage of its pallet production is specialty orders. Tom notes that Central Wisconsin’s mix of forestry and agriculture drives demand for specialty pallets, where Hay Creek has found its niche.

Operating a trucking fleet during the start of his pallet and mulch businesses allowed Gardner to build an extensive contact list and immediate outlets for his products. Working with a diverse range of companies allowed Hay Creek to expand into additional wood fiber markets, including boiler fuel and animal bedding. Tom notes that, while colored mulch is more profitable, animal bedding and boiler fuel provide year-round markets and do not require space to stockpile wood waste over the fall and winter.

Offering multiple wood fiber products helps to prevent lulls in demand. For instance, Gardner observes that this year’s late spring in the Midwest delayed demand for landscape mulch, while extending the demand for animal bedding, which typically tapers off in the spring and summer, as livestock spends more time outdoors.

With steady growth in mulch, fuel, and bedding sales, Hay Creek upgraded its wood grinder in 2007 to a newer Rotochopper MC-266, then again in 2010 to a larger Rotochopper B-66 with a 700 horsepower diesel engine. With the B-66, which has an integrated mulch coloring system, Hay Creek Enterprises (the wood fiber branch of the business) is producing approximately 15,000 yards of colored mulch a year, along with smaller quantities of natural mulch, animal bedding, and boiler fuel.

Throughout the growth of the wood waste recycling portion of his business, Gardner focused on keeping a stable customer base and minimizing waste across the boards. In 2007, Tom sold off the trucking business to focus more on pallets, wood fiber markets, and cranberries, while also significantly cutting his overhead. Hay Creek now maintains a smaller fleet strictly for its own hauling needs.

The addition of a boiler from Decton in 2010 slashed heating costs. The boiler heats the entire facility by burning the same kiln-dried fine-texture wood fiber that is sold as animal bedding. Hay Creek Pallet operates a Converta Kiln heat treating chamber kiln for heat treating pallets, and Gardner hopes to integrate the kiln with his boiler heating system within the next two years.

Tom has kept his pallet company strong and has grown a considerable wood waste recycling operation, all while developing a cranberry business. Hay Creek Pallet offers a study in contradictions. The Wisconsin pallet manufacturer is one of the most diversified operations in the industry and probably the only company that specializes in new pallets, rebuilt pallets, colored mulch, animal bedding, boiler fuel, and cranberry farming.

Tom is quick to dismiss any questions about the compatibility of the three branches of his company, pointing to the business model of the pallet industry as the key to each of his operations: customer service.

Tom said, “At the end of the day, it’s not what I want; it’s what the customer wants and our ability to deliver, whether you’re talking about pallets or boiler fuel or any product.”

Seen in this light, pallets, colored mulch, and cranberries seem like a natural combination.

Today Hay Creek's pallet business is about 25% recycled and 75% new. Its recycling business is all 48x40 GMA oriented but its core supply is down from what it once was which has moved its mix away from the 50%/50% it once had. Hay Creek's wood fiber/pallet business has grown to be about a 50/50 mix as well; wood fiber is growing more now.

Hay Creek builds 3500 to 4000 pallets in a typical week. It manufactures about 600 pallets a day on its Viking Champion nailer and another 500 to 800 a week of odd sizes by hand on tables. Hay Creek uses an assortment of pneumatic nailers and buys bulk nails from Viking. Tom relies on AMS's software program to help in pallet design.

As mentioned earlier, Hay Creek generally does not operate its own cut-up operation. Instead, it buys mostly precut lumber from local Amish mills. However, the company does some resawing as needed on its Go Fast resaw. A Sweed band chopper is used every day to cut strapping into short pieces.

In the recycling side of the operation, two Smetco dismantlers are used for prepping pallets, but Hay Creek does very little pallet dismantling. It has de-emphasized this part of the business as core supplies have become tighter. Hay Creek uses pallet stackers from BC Marketing Solutions in its pallet operation.

One supplier, Tom highlighted was Niels Jorgensen of Kiln-Direct. He said that Niels goes out of his way to help him with questions even though he does not have one of Niels' heat treating units. Stafford Inspection and Consulting Services, LLC handles heat treating certification for Hay Creek. Tom said, “Stafford has really great people.”

In addition to pallets, Hay Creek manufactures and markets wooden boxes. Tom focuses on working cooperatively with others. The cranberry box market became a natural because of its connection to cranberries. Boxes are seasonal. A lot of work and effort goes into a wooden crate. Hay Creek used to sell all of its cranberries as round fruit but is now processing some of it and is selling concentrate.

Tom planted his first cranberry bed in 1992 and now has 80 acres; he got into pallets in the late 90s. He stayed in pallets to make a living while he paid off the debt on his cranberry beds. Since it takes three years to get a cranberry crop, it requires some significant investment before you see any return. Tom is not aware of any other pallet company in the cranberry business. Basically he handles most of the cranberry responsibilities himself; it makes for long days in the spring and fall. His four boys, who are home schooled, help him on the marsh, running forklifts, loaders, and skid steers.