K & S Pallets: Indiana pallet recycling company takes off after moving into market for custom pallets, skids; Smart Products, Smetco machines get the job done.

FORT WAYNE, Indiana — When it comes to business, sometimes everything fits just right.  Steve Lefebvre, owner of K&S Pallets & IndianaPallet.com prides himself on a 25-year-old business that shines because of its ability to provide great service.

Most orders for pallets are shipped within 24 hours and in some cases can be shipped same day.  That kind of prompt delivery is a great way to stay ahead of the competition, according to Steve, and has helped the company grow.

“Also, other companies couldn’t provide skids and we could,” said Steve. “That’s been one of the biggest factors as far as I’m concerned.”

K & S has annual sales of about $2 million.  About 90% of the company’s pallets are made from recycled materials and the other 10% from new lumber. With a fleet of four trucks and over 40 trailers, K & S is able to offer ‘drop and hook’ services to customers – leaving empty trailers stationed at a customer site to be filled with scrap or surplus pallets.

Steve started out working in the construction industry in Florida after graduating from high school. He also worked at a truck engineering company, building booms on aerial lift trucks, and then went into restaurant and bar management.

He learned an employee’s brother-in-law owned a trucking business and was always looking for 48×40 pallets. “Seventeen years ago, pallets were strewn all over the place at many business operations,” he recalled. “People simply went around and picked them up.”

Steve began doing the same thing, picking up discarded pallets and selling them. He dealt strictly with standard, 48×40 pallets for the first two to three years. After five years, he purchased his first semi-tractor for hauling pallets.

Steve purchased some bandsaw pallet dismantlers and trim saws from Smart Products about 10 years ago. Smart Products is located in Muncie, about a 90-minute drive south of Fort Wayne.

Equipment

“We’ve always had a good relationship with Steve,” said Brad Kirkaldy, sales manager for Smart Products. Steve leased his first piece of equipment from Smart Products. “The first trim saw we sold to him was back in 1996,” said Brad, “and he’s still running that machine.

“Our bandsaws will tear apart any size pallet, so they’re a good fit for the diverse work that Steve’s company does with block pallets and stringer pallets,” said Brad. “He runs the two-man pallet dismantlers…and that’s what’s worked well over all these years for him.”

Steve has done an amazing job of building his business up. He started out literally with a pick-up truck and a trim saw.  I consider Steve’s story that of the small guy who’s made good,” said Brad.  “He started out from scratch and does very well now.  He’s a hard worker, there’s no doubt about it.”

About six years ago Steve noticed a classified advertisement in Pallet Enterprise for some used Smetco equipment – stackers, a tipper and a repair table. He bought it from a company in Arizona and paid $5-8,000. “That was an incredible deal for us,” he said. In addition to the Smetco equipment, the company is equipped with three Smart bandsaw dismantlers and four Smart chop saws.

A few years ago Steve began focusing more on custom pallets and skids. Custom pallets now represent about 85% of the company’s business, and GMA pallets account for the other 15%. “Over the years, the profit margin for the 48×40 pallets dropped significantly for us,” said Steve. “We felt that there was simply a lot more opportunity for us in the custom pallet sector.”

Stacks of incoming pallets are taken to the Smetco tipper, where a worker singulates the pallets and sorts them into two categories – food pallets and ordinary shipping pallets. They are also sorted by grade, A and B. Ready-to-go pallets are immediately pushed to the two Smetco stackers set up at the tipper.

GMA and other pallets needing to be repaired are moved by forklift to the appropriate repair station, and scrap pallets are sorted out to be dismantled for recycled lumber.

One worker is dedicated to repairing GMA pallets and produces 300-400 per day. “This is basically a repair table with two stackers,” said Steve.

Internet Sales Leads

Moving into custom pallets and skids in recent years has helped the company grow. “We’ve had a tremendous amount of growth over the last two to three years,” said Steve, and he has increased the number of employees from 8-12 to 24.

K & S does some business in Fort Wayne but most customers are within a 150-mile radius. The company serves a number of diverse industries, including grocery manufacturers.

The company gets plenty of business by word-of-mouth and through the Internet, according to Steve, who has had a Web site for eight years.

“When you go into offices these days, everyone’s ‘Googling’ for information,” he said, referring to the popular Google Web site search engine. “This has allowed us to do without a sales staff. I’ve done all the sales myself and through the Internet virtually during the entire history of our business.

K & S Facilities

When Steve started K & S, the company worked out of a 6,000-square-foot building on about a three-quarter acre site. The company now uses a portion of a 200,000-square foot building that is located on seven acres. It is an old meatpacking plant, built in 1935.

When the plant came up for sale, several groups looked at it, but no one bought it. “I think the utilities and maintenance on a building this size scared people,” said Steve. “Those things are huge for a space this size, but we bought it four years ago, started rehabbing it, moved our company in, and started bringing tenants in.” The building now is about 80% occupied.

K & S Pallets also provides cold storage services; the building came with a cooler and freezer and warehouse space.

Fuel from Scrap

Steve is especially proud of the fact that he installed a wood-burning boiler system to heat the plant. It provides heat for about 65-75% of the building. The wood fuel comes from scrap wood generated by the K&S pallet recycling operations. The annual heating cost is about $12,000. Steve saves about $50,000 annually with the wood-burning heat system, he estimated.

Over the years Steve has bought pallet machinery from Kent Noble of Noble Machinery.  “Kent is third generation in the woodworking industry,” said Steve. “All of our equipment has been purchased through Kent, including our Smart and Smetco equipment. He’s right here in Fort Wayne and deals in all types of wood manufacturing, from the pallet industry to the woodworking industry.  He sells throughout the U.S.  I can’t say enough about how excellent a job Kent has done to keep equipment up and running and to maintain it properly.”

Plant Maintenance

Steve employs a full-time maintenance worker, Fred Gordon. Fred is a jack-of-all-trades who maintains the plant and the equipment.

“Fred has been instrumental in the maintenance of all of our pallet equipment but also does all the other maintenance for the entire K&S Pallet plant,” said Steve. “That includes welding, electrical, plumbing and anything else which might arise.” Fred works on the company’s trucks and trailers, too.

Employing a full-time maintenance technician probably saves the company $40-50,000 annually, Steve estimated. “For anyone planning on getting into this industry and running a substantial fleet of trucks, I would suggest that you hire your own maintenance person. We’ve dropped at least 75 percent of hiring outside contractors to service our equipment with this move to a full-time maintenance mechanic.”

Heat-Treating

The company buys new lumber from mills in Upper Michigan and Canada. It has recently begun buying some material from Amish sawmills. K&S buys both hardwood and softwood lumber.

K & S is equipped with a pallet heat-treating system in order to supply export pallets. The heat-treating system was supplied by Kiln-Direct.

The heat-treating system is in a separate building on the back of the lot; the building is 2,000 square feet and is used strictly for heat-treating. “Everything being shipped overseas must now be heat-treated in an effort to keep wood-eating insects from spreading to other countries,” Steve noted.

Over the years Steve has avoided borrowing money to support the business, and it has very little debt. He usually pays cash for supplies, including equipment.

K & S experiences little employee turnover. Workers stay with the company because they earn good wages and receive a good benefit package, said Steve. Benefits include company-paid group health insurance, a 401(k) savings plan, paid holiday and vacations.

“A few years ago we found none of our employees wanted to participate in our insurance program,” says Steve. “I wanted to keep it, so I told them I would provide them full medical coverage in lieu of a few raises. This has worked out fine.” The company has group health insurance with United Health Care.

“All of these choices…have provided us with better quality employees,” said Steve. “We don’t have to advertise for employees, as we have very low turnover and a lot of word-of-mouth action.  At present we have some 50-75 applications from people trying to get on with us.  We’ve gotten a good reputation over the years as being a good place to work, one that takes care of their employees.  In our pallet business, we do one thing and we do it well — build good quality pallets with timely service and quality.”

Steve and his wife, Stephanie, have another business that began as a hobby. They began collecting fine wines. Now they have a wine importing and wholesale distribution business, Vino Lefebvre, that supplies restaurants and retail stores in Indiana and other states. They deal in rare and back-vintage, investment-grade Bordeaux wines.

“The huge demand for fine wine, globally, has really sparked interest in this industry,” said Steve. “I deal right in Bordeaux, France with negotiators representing the major chateaux wineries.” The wine business is marketed via the Internet and direct mail.