Western Pallet Magazine July 2021 - Page 21

JULY 2021

Possible core glut?

There was concern expressed by some participants about a potential core glut as availability improves in parts of the country, while others anticipate a continued tight market.

"We're getting ready to head into our peak, which is traditionally our busiest time of year, for 48x40 recycled pallets, and I just don't see much changing. Even if there's an influx today, I think it will get worse, you know, depending on the cores that are coming out and how fast people could turn them around.”

Even if more cores become available, one participant questioned whether the industry could handle them, given labor challenges Another participant said that his company was running under capacity at present due to lack of core availability.

Labor and automation

One attendee observed that it is a balancing act in acquiring the right amount of cores to match with their company’s processing capabilities, given the manpower shortage.“The last thing I want is a bunch of expensive cores getting stuck in our yard. It is definitely a balancing act.”

Advanced automation is improving, which can help ease the labor problem. One attendee commented that robotic pallet teardown has improved significantly in the last few years. As more automation is adopted, pallet companies will be hiring more technically skilled workers.

Many companies have been forced to raise their wage rates to attract workers. One company is offering starting wages of $18 or $19 per hour. There is some agreement that higher wages are here to stay. “Truthfully, wages aren't going to go back the other way they're going to, you know, they may stagnate, but they're not going back the other way.”

One company that previously relied heavily on refugees saw that particular conduit dry up due to immigration restrictions under the last administration. It has subsequently explored other opportunities, such as giving previously incarcerated people a second chance.

Industry consolidation and the opportunity for small companies

Some participants believe that it will be increasingly challenging for smaller companies to survive as bigger players with deeper pockets can bid higher for cores and carry higher value inventory. Independent companies can find themselves stretched thin, spending a lot of time on the phone with brokers versus benefitting from an in-house national

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sales force. There was a sentiment, however, that smaller companies will continue to have an important role to play in the industry.