World views of Dr. L. Allan Austin

Plastic Products, Inc.
September 17, 2012

Plastic Products, Inc.
Company History
Plastic Products, Inc. (PPI) involvement with Plastic Pallets began when Mr. William DeGironemo, the companies current president, conducted extensive market research of the pallet industry. The research reveled both the vastness of the market and the demand for a strong, reusable, lightweight pallet to replace the traditional wood pallet.

Following-up on the initial research, Mr. DeGironemo designed and built a molded plastic pallet to meet industrial standards. Test marketing was conducted using an initial run of 2,000 pallets. Results confirmed high levels of acceptance and the demand for a plastic pallet that could compete with wood on strength and cost.

Eventually, the manufacturing method was changed from a vacuum formed process to a structural molded design. This change produced stronger pallets with longer life-cycles, less production time and cost and more price competitive product.

PPI was founded in 1989 under the name of Plastic Pallets, Inc. In January 1993 the company’s name was changed to Plastic Products, Inc. The new name reflects the companies intent to manufacture and sell pallets as well as other plastic products from recycled resins. PPI currently uses a molding process to manufacture its pallets and it has identified a revolutionary extrusion process to more economically produce pallets and a wide variety of other products including plastic lumber, fence posts, car stops and driveway reflectors.

Overview of Pallet Market
Pallets are an essential component of industrial operations worldwide. As moveable platforms, pallets are used to transport and store materials and goods in virtually every commercial sector. Pallets are an integral part of industrial material handling systems from production line, to shipping, storage and to the customer.

The pallet industry is almost unique in that it does not depend on any single industry or group of industries for revenue. Moving products, inventory and equipment is an essential part of every business; pallets make the process easy and efficient.

The largest users of pallets are the grocery and food industries. However, pallets are used as an essential element of material handling systems in such diverse industries as home appliances, construction materials, furniture, light machinery, airlines, automotive, paper, glass, printing, pharmaceutical and cosmetics, petrochemical, beverages, cans and housewives.

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Bug Problems
Until recently, virtually all pallets were made of wood. Two factors contributed to the use of wood; 1) the low cost and plentiful supply of lumber, and 2) the ease of manufacturing.

Many small producers entered the market since the only manufacturing equipment was a power saw and nailing machine. As a result the wood pallet market has been very competitive with small profits.
Now, lumber is becoming more scarce and expensive and is pricing many smaller manufactures out of the business. Even larger manufacturers have had to reduce production, sometimes by as much as 50%. Meanwhile, large users are protecting their sources of supply and looking for acceptable alternatives such as plastic.

There are several other forces beginning to impact on the shipping and warehousing industry which are in turn effecting the pallet industry. First as in many industries there’s a newfound awareness of the importance of using environmentally-friendly products. In the case of plastic pallets not only does their use reduce the need for lumber but since they’re also recyclable they vastly reduce the environmental impact of wooden pallets. Furthermore, the fact that plastic pallets can be sterilized reduces the chances of infestation of contamination of sensitive products such as food and pharmaceuticals thus making them more attractive to those industries.

Second, every segment of US industry is looking for ways to reduce costs and maintain quality. The fact that plastic pallets last longer, have lower life-cycle cost, are nestable and weigh less creates powerful incentives for industries looking to reduce freight and handling costs.

Splintering is a major problem with wood pallets especially for the food and to a lesser extent airlines. Food processors have found that wood splinters have pierced plastic bags of raw materials during shipping and have been discovered in the end products. Airlines have had problems with wood splinters jamming the tracking devices used to load planes. Plastic pallets don’t splinter and thus avoid these problems.

Also, the fact that plastic pallets create far less opportunities for industrial accidents and resultant worker compensation claims provides another competitive edge to industries that use plastic instead of wood.

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Advantages of Plastic Pallets
The use of plastic pallets provides a wide array of benefits to industry.

  1. Life-Cycle Costs – Government studies indicate that a wood pallet averages five (5) trips before major repairs or disposal occurs. PPI’s pallets average 50 trips and the company offers credit allowances toward repurchase when its utility ends. On a per trip basis, plastic pallets cost an average of 50% less than wood. A sample cost comparison:

    Plastic Pallets
    Wood Pallets
    Average Cost
    Average Trips
    Avg. Cost/Trips

    $19 – 26
    $0.38 – 0.52

    $5 – 14
    5 – 12
    $1.00 – 1.17

  2. Weight – PPI’s pallets weigh anywhere from 50% to 75% less than comparable wooden pallets. In addition PPI’s pallets are “nestable”, reduce storage space and cost less to ship. Lower pallet weight allows companies to ship more product per trip with lower freight costs and faster handling and turnaround times.

  3. Durability - Tests have demonstrated that PPI’s pallets have superior impact resistance compared to wooden pallets. The increase durability means longer life and lower life-cycle costs.

  4. Moisture Resistance – Wooden pallets absorb moisture and must be stored in an enclosed area. When exposed to moisture, wooden pallets gain weight and lose strength thus increasing shipping costs and potential liability from breakage. Plastic pallets DO NOT absorb moisture and can be stored in less expensive outdoor storage facilities.

  5. Sanitation – The food and drug industry have high standards for pallet cleanliness. Contaminated pallets can destroy entire shipments of foods and other products. Unlike wooden pallets, plastic pallets can be cleaned and sterilized without adverse effects.

  6. Safety – Handling wooden pallets results in many accidents, worker compensation payments, damaged goods and product losses. Plastic pallets have proven strength and safety, resulting in significantly fewer losses.

  7. Design Flexibility – Plastic pallets can be molded to accommodate specific industrial requirements and if desired, can be color coordinated for easy identification.

  8. Environmental Benefits and Low Maintenance – Without nails, splinters and broken planks, plastic pallets require little maintenance. At the end of its life-cycle, plastic pallets can be recycled through grinding and reusing resin. Environmentally, the use of plastic products minimizes the use of lumber while reusing a renewable resource.

  9. Savings from Reduced Breakage and Loading Delays – Broken Wood pallets result in both product losses and increased freight costs. The superior strength of plastic pallets results in less breakage, less product losses and lower shipping costs.

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