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Staying Power: Hinchcliff Reaps Benefits of Strategic Decisions that Positioned W. Va. Pallet Maker for Success
Hinchcliff Lumber: Strategic Decisions Positioned W. Va. Pallet Maker for Success
Date Posted: 8/1/2000
PARSONS, West Virginia — Pallet companies, like other businesses, must be willing to adapt to change, and sometimes the adjustments are dramatic.
Hinchcliff Lumber Company has deep roots in the pallet manufacturing industry. They go back to the 1940s, when pallets emerged from World War II as a tool of material handling.
The company operated a pallet mill in Strongsville, Oh. for decades. Hinchcliff opened a second pallet mill in 1967; it purchased a sawmill and flooring plant in Parsons, West Virginia, gutted the facility, and refitted it for pallet manufacturing.
The company enjoyed steady but modest growth until the 1970s, a decade of particularly strong growth. There were some setbacks in the 1980s, however, and members of the Phillips family, who owned the business, decided to consolidate the manufacturing operations in 1985 to the Parsons location.
There were a number of economic factors that prompted the move, explained company president Jacob Phillips, who goes by "Jake." One of the chief reasons was labor. At the time, lumber prices also were a factor. "We could build pallets in Parsons and ship them to Ohio cheaper than we could make them in Ohio," Jake recalled.
With the move, the company sacrificed some small accounts because of the new location, but its strategy was to serve the high-volume customers. "We’ve basically forsaken those kind of accounts and gone after large-volume pallet accounts," said Jake.
The business functions as two units, Hinchcliff Lumber Co. and Hinchcliff Products Co. The company’s sales and corporate offices are under the umbrella of Hinchcliff Products, located in Strongsville, a suburb of Cleveland. Hinchcliff Lumber Co. comprises the manufacturing operations in Parsons. About five employees work in the Strongsville offices; the Parsons mill employs about 120.
Hinchcliff Lumber Co. has a preference for the market where customers buy large volumes of high quality hardwood pallets, pallets that may require special design and components. The company does not target manufacturers that need small, odd lots of pallets, such as 50, 100 or 200 a month. It will make small lots, however, as a service to its large-volume customers.
Some of the machinery suppliers that have contributed heavily to the company’s success are well known in the pallet and sawmill industries: West Plains Resaws Systems, Viking, McDonough, Tipton.
Hinchcliff Lumber Co. has had the fortune to be owned and operated by a family with strong business savvy instilled in both formal education and the experience gained throughout their lengthy careers. The business has produced two men who served as president of the National Wooden Pallet and Container Association.
The business was essentially started by David Phillips and Al Hinchcliff in 1946 in Strongsville. They were 50-50 partners. When Al died in 1960, under the terms of an agreement they had mapped out earlier, control went to David, although the Hinchcliff family still retained an ownership interest in the business. The Phillips family bought the Hinchcliff family’s interest in the early 1970s. Since the Hinchcliff name was so well known and established, however, the Phillipses elected to retain the Hinchcliff name for the business. David, who led the National Wooden Pallet and Container Association (NWPCA) in the early 1960s as president, retired in 1968 and is now 93.
David’s three sons now own and operate the business. Jake, president, also once served as president of the NWPCA. Don is vice president of sales, and Ned, who works in Parsons, is vice president of operations.
Jake and Don joined the family business early in their careers although Ned made a detour into academia. Don began working with Hinchcliff after graduating from Bowling Green College and serving a hitch in the Army. Jake graduated from Case Institute of Technology, worked for a corrugated box business for a year, then earned a master’s degree from Harvard business school before becoming part of Hinchcliff. Ned was a professor at Mount Union College in Ohio and taught economics there for a number of years prior to joining the company.
Two of the men have sons that are working in the business. Jake’s son, Jay, and Don’s son, Scott, both work in Strongsville. Scott works in sales and Jay is involved in both sales and operations.
The Parsons plant is contained in a 90,000-square-foot building on an 88-acre site. Most finished pallets are stored outside, but Hinchcliff is in the process of adding more covered storage space. The company constructed a 15,000-square-foot concrete storage and loading area with docks in the summer of 1999 and this summer added a roof.
The Parsons location originally included a sawmill to manufacture grade lumber, but these operations were discontinued a year before the consolidation. The Parsons site employed about 75 workers at the time of the consolidation of the two pallet plants.
One of the most significant changes to the company’s operation came in 1994 when Hinchcliff invested in a new scragg mill. "It was a major investment," said Jake. The scragg mill has been a profit center for the company, generating substantial revenues from cut stock sales. Hinchcliff uses only about 10% of the production for its own pallet manufacturing operations. The scragg mill, a Tipton system that usually is set up for running large volumes, has been "very profitable," said Jake.
The business strategy behind the decision to invest in the scragg mill was to take advantage of cheap raw material. The company buys what Jake characterized as high-grade pulpwood, hardwood logs 6 inches to 15 inches in diameter, and processes them into pallet parts for high quality pallets.
In making components for its own pallet manufacturing operations, Hinchcliff buys both cants and lumber but relies heavily on lumber as raw material. "Our cut-up line is different than most," said Jake. "We probably use a lot more four-, five-, and six-quarter lumber than cants" compared to other pallet companies. The company has two production lines dedicated to remanufacturing lumber; each is equipped with a pair of McDonough 54-inch resaws, an approach that lets Hinchcliff take advantage of kerf and raw material cost. Visitors who see the company’s resaw operation are "startled" by its running speed, said Jake.
The company has found it more efficient to manufacture pallets for customers and put them in inventory rather than storing cut stock. "If a customer is using a truck-load a week," explained Jake, "we’ll run what he uses in a month. We’ll run four truck-loads at a time, then inventory the finished pallets."
Hinchcliff produces about 10 truck-loads of pallets per day. About 15% to 20% of its production is plywood pallets.
From its plant in West Virginia, Hinchcliff will ship north, east and west, but rarely south. "Going south, it doesn’t work," explained Jake. "You move into the teeth of lower-priced pallets."
The company generally serves customers within a 400-mile radius. It serves customers in Ohio, Maryland, Pennsylvania, New York, Indiana and Michigan. The company ships cut stock to pallet companies on the East Coast and Illinois, Michigan, and Pennsylvania.
One of the company’s most prominent customers is Anheuser-Busch, for whom it has been supplying pallets for 25 years. Other customers include chemical companies, stamping plants, and automotive suppliers.
The scragg mill line begins in the yard, where logs ranging from 10 feet to 30 feet long are cut to bolts on a custom-made machine. The bolts go downstream to a belt conveyor and are diverted by one of two paddle-wheel kickers onto decks and fed into one of two Wood-Mizer Automater debarking machines. The Wood-Mizers remove the bark and also smooth out bumps to produce almost a perfect cylinder of wood.
In the mill, the bolts go to a Tipton four-blade scragg or quad saw. Hinchcliff automated the system with photo sensors so that the scragg can automatically cut three different cant sizes. Depending on the diameter of the bolt, the system will produce either a 3 1/2-inch or 5 1/2-inch cant, or a pair of 3 1/2-inch cants.
The bolt enters a trough with a chain feed on the bottom with ‘dogs’ spaced about 8 feet apart. The dog pushes the bolt through at the rate of about seven or eight per minute. Two slabs are removed from the sides, drop onto a belt conveyor, and go to a Tipton edger equipped with two bays, a 3 1/2-inch bay and a 5 1/2-inch bay. Each bay has a tailing belt. When they exit the edger, the boards are routed to a custom-made, automated Tipton trim saw that cuts them to precise length.
After the two primary slabs are removed, a horizontal circular blade cuts a thin slab off the bottom of the bolt to open up a face 3 or 4 inches wide. Now the bolt has been processed into a three-sided cant. It exits the quad saw, rolls to its side 90 degrees, and travels down a roll case. Two mechanical arms push the three-sided cant so the bottom face is against a fence. The arms release and the wood goes into an automated Tipton linebar saw. The saw has one circular blade that moves back and forth, depending on the width of the cant. As the cant goes through, the linebar saw removes barely enough material to square it up. The fourth, small slab goes into a vibrating conveyor to a chipper. The cant, now four-sided, proceeds to an automated Tipton two-blade trim saw to be cut to length.
Cants produced on the scragg mill are resawn mainly into deck boards; the majority end up as 3 1/2-inch or 5 1/2-inch decking. Sized cant material is resawn on one of two West Plains Resaw Systems 400 series machines; each is a four-head horizontal band saw system.
The four-sided cants move to an intersection where a device measures the cant height and they are routed in one of two directions. One route takes it to one of the two West Plains Resaw Systems lines. The other line goes to a second intersection.
At the second intersection, 7 1/16-inch cants to be double-cut are routed to a Walling single-head band resaw. The two pieces are separated by a custom-made device and eventually drop onto another chain transfer deck, one behind each other. They are fed automatically over a waterfall, are stood up on edge, and then travel along a roll case into the other West Plains Resaw Systems line. The 3 1/2-inch cants travel down a different chain conveyor to be dealt into the first West Plains Resaw Systems line.
The two West Plains Resaw Systems lines are set up to run side-by-side. The West Plains Resaw 400 series machine operates with 4-inch-wide blades. Each line is equipped with a run-around. Finished material goes to a West Plains unscrambler on each line, a feed transfer deck, a narrow belt, and then a wide inspection belt. Workers inspect the material and pull off defects. Some boards are pulled off and stacked by hand into Baker Products turntables, although most boards go to the end of the line and drop into a Pendu board stacker.
The McDonough cut-up lines begin with bundles of material that are set on a deck that can hold several packs. The lumber is lifted on up a break-down hoist, and then layers of material come off one at a time. The first step in the remanufacturing process is a Newman four-head planer that sizes the material into uniform thickness and width. The material comes out on a roll case and is transferred to a Tipton multi-trim saw. The outfeed on the trimmer has two product take-away belts, which gives the company more options. Cut-to-size material exiting the Tipton trimmer is routed to one or both of two resaw lines, each consisting of a pair of McDonough 54-inch band resaws.
Running two McDonoughs in tandem gives the company a number of options depending on the size of the material and the finished product. Sometimes the second mill will be bypassed. A substantial volume of material is center split cants or boards either standing on edge or laying flat. The material must be of uniform width or thickness in order for the rollers to grab it and feed it properly, which is why the company processes it first on the four-head planer.
The McDonough lines resaw a large volume of material. "It goes butt to butt through the saws," said Ned. Finished material exiting the McDonough lines goes to an inspection area and then a Ballenger board stacker.
Another production line, used mainly for manufacturing stringers, begins with a package or bunk deck that drops material into a Brewer Inc. unscrambler that singulates material. Boards feed onto a dealer deck built by Hinchcliff. From there an operator feeds pieces into a Newman KM-16 multi-trim saw. The take-away belt of the multi-trim goes to a feeder table and a Brewer single-arbor gang saw. The gang saw has a planer on the front end for surfacing the material to a uniform thickness before it is ripped. Finished stringers go out onto an inspection belt. Stringers that do not require notching are pulled off and stacked manually. Those that will be notched exit the conveyor into an unscrambler and feed into a West Plains notcher that has a Pendu stacker behind it.
For pallet assembly the company has three Viking nailing machines, two Duomatics and a relatively new Champion. Hinchcliff also has six old Doig nailing machines that are used for specialty nailing.
Anheuser-Busch changed its pallet design two years ago from a slatted block-style pallet to a block-style, plywood-hardwood combination. The blocks are made of laminated plywood. The top connectors are hardwood and the deck is plywood. The bottom deck boards are hardwood. The components are fastened together with nine bolts, one for each block.
The Anheuser-Busch pallets are assembled on a machine designed and built by Hinchcliff personnel; the company has applied for a patent. Ned came up with the concept, and it was built by plant engineer Mike Helmick.
The blocks are made in a process of laminating several layers of plywood. Four to five layers of plywood, each piece about 11 inches by 48 inches, are fastened together with high quality tempered nails, nailed on a Doig. The laminated pieces, about 2 5/8 inches thick, are put through a gang rip saw that saws them into strips about 3 inches wide. Each resulting section is fed vertically into a block saw to be cut to size. The bottom deck boards are nailed to three plywood blocks as a sub-assembly process that is also performed on a Doig.
The final assembly begins with placing three bottom deck boards with blocks attached, three connectors and a plywood panel top into a jig. Nine holes are bored through the entire thickness of the pallet, and the components are immediately fastened together with Dynacast pallet nuts and special bolts. Two workers lift the completed pallet out of the jig and set it on a conveyor that moves it to a custom-made branding machine and the pallet is branded in five places. The process ends with a Pallet Repair Systems stacker.
"That’s typical of what we go for," said Jake, speaking of the Anheuser-Busch pallets. "We like plywood items because it tends to not have as much competition. They’re higher value and have better margins. We’re always looking" for opportunities in plywood pallets.
"We’re basically a high-volume hardwood pallet company," Jake added. "If there’s volume there in specialties, we’re looking for it." The company does not pursue GMA accounts; they may provide a large order, but the margins "are lousy," noted Jake.
The company also is involved in the plastic pallet industry in a unique way. Some plastic pallets contain components made of metal or other material for added strength or reinforcement. Hinchcliff supplies notched hardwood 2x4 or 2x6 components for a plastic pallet manufacturer. The hardwood parts are inserted, and the plastic is formed around them. Although they are not large items the orders can be substantial — in the thousands of pieces. "We’re looking for that kind of business," said Jake.
"If it’s made out of wood, we can do it." The company is equipped with machinery for a variety of lumber remanufacturing processes, including notching, beveling, routering, and so forth. "We like pallets that have those special operations. It eliminates a lot of competition."
There are not many manufacturing businesses that have those kind of requirements for pallets, such as boring holes in deck boards. Hinchcliff seeks those kind of customers, particularly those with high-volume needs.
"But our bread-and-butter is a regular hardwood pallet," Jake added, deck boards ranging from 1/2-inch to 3/4-inch, whatever size stringer the customer wants.
The company’s decision to put all its manufacturing operations in West Virginia in part because of the labor pool has continued to pay off for Hinchcliff. At a time when the country is experiencing extremely low unemployment, the pallet industry seemingly is beset nationwide by a shortage of good labor, Jake noted. "We don’t have that problem." Despite the booming economy, West Virginia remains a high unemployment state, and Tucker County, where Hinchcliff is based, has one of the highest jobless rates within the Mountain State. "We have not had trouble getting people," and employees stay with the company. "They know their jobs and know them well. That helps."
The company’s benefit package helps to retain workers, said Jake. Hinchcliff pays for health insurance for employees. Workers get 10 paid holidays. The company has a retirement plan. "We pay well and have good benefits in relation to other people in the industry," said Jake. The cost to the company in benefits per hour worked may be higher but the result is a good, stable, educated work force, he said.
"We always run a double shift and sometimes a triple shift. Other pallet companies can’t get the labor to do that. It helps on the utilization of machinery if you can run two or three shifts instead of one. That has been a real advantage." The production line dedicated to Anheuser-Busch pallets operates three shifts, around the clock.
Of course, West Virginia also has been a boon in terms of lumber supply. "There’s tremendous lumber production within 60 miles of us," said Jake. "It’s not always the cheapest lumber but it’s good, high quality. It’s a good place to be for raw material." Hinchcliff buys lumber within about a 100-mile radius.
"We’ve always had a reputation for making a high quality pallet and providing excellent service," said Jake. "We’re very customer-oriented, although that might sound like a broken record in the pallet industry."
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