Service and ingenuity are the keys to this pallet manufacturer’s growth.
Entrepreneurs know to always be listening so they’ll hear when opportunity knocks. What about when an opportunity goes “moo”?
Yes, Wade and Susan Kohler of Pioneer Packaging answered that opportunity, too, when they got into the business of livestock bedding. It’s a perfect–but not necessarily obvious–complement to their primary business of making and delivering pallets to manufacturers and others who ship products in bulk. Pallets are made out of wood, and when you make a lot of pallets, you end up with a lot of scrap that can be ground up into animal bedding.
The Kohlers have been adept at adapting their Portland-based business and exploring related opportunities ever since launching Pioneer Packaging in 2003. They’ve had other businesses, such as a custom embroidery and branding company, and also worked for others. Wade Kohler got interested in pallets when he was working sales for a plastics packaging business and heard there was a need for a dependable pallet provider.
Thus was born Pioneer Packaging. It was a spare-time operation at first, as it was initially growing. Several years into the pallet business, it had become successful enough to command the Kohlers’ full attention, and it thrived even during the economic downturn, in part because it had a good stable of food-processing clients that were busy even when times were tough in other industries.
Pioneer Packaging is a roughly $15 million operation now, and about two-thirds of those sales come from its main business of pallet manufacturing and delivery. But a number of ancillary businesses have emerged, Kohler says.
The biggest sideline is the sale of wholesale lumber. Pallet construction requires buying lumber in huge volumes, and Pioneer resells a fair amount of the lumber it acquires to other industrial users. Just under a fifth of the company’s annual revenues come from lumber wholesaling.
Next in line is the animal bedding business. “When you’re really big in the pallet business, you generate a large amount of scrap that you have to do something with,” Kohler says. It’s no secret that Indiana and neighboring states are big in agriculture, including dairy, beef and poultry farming. The Kohlers recognized that there would be a lot of nearby potential customers for animal bedding, so they acquired wood grinding technology and started chopping that scrap into bedding.
“We make a million pounds of livestock bedding a week,” Kohler says. There’s so much demand, in fact, that the company started adding in wood scrap from others. “We acquire a lot of wood waste from other manufacturing plants. We’ll leave trailers sitting at a company and let them fill them with scrap. There are a lot of companies that produce wood waste, so we pick that up and recycle it into animal bedding.”
Other sidelines have emerged as well, as Pioneer has grown. The company does a variety of secondary operations for other manufacturers on a contract basis, and also generates revenues by warehousing various things for other companies, including manufacturers that need to have components handy but don’t have enough of their own warehouse space. And, Kohler adds, semi-trailer rentals bring in additional revenues, too.
Pioneer Packaging has enjoyed such impressive growth–and shown such promising potential–that the company was honored last year among Indiana’s Companies to Watch. It’s an annual recognition program, with honorees chosen by experts convened by the Office of Small Business and Entrepreneurship and its Indiana Small Business Development Center, along with the Indiana Economic Development Corp. and the Edward Lowe Foundation. Those making the list are all beyond startup and all demonstrating strong, sustainable growth.
In the case of Pioneer Packaging, that strong growth certainly has a lot to do with its leaders’ ingenuity in recognizing new opportunities. But there’s more to it than that, and in fact, says Wade Kohler, one of the biggest secrets to success is relatively basic. “Our growth has been because of customer service. We overpromise and over-deliver,” he says. “We have grown because of our service, service, service.”
He points to the services provided by the company’s fleet of pallet delivery drivers as a prime example. “We have built our business because of the professionalism of our drivers. Our drivers are almost borderline suit-and-tie. We try to get the cream of the crop,” he says.
“We hire all of our own drivers. We don’t contract out anything,” Kohler continues. “We have about 10 pallet delivery drivers. We try to have the same drivers go to the same customers every day.”
The thing is, these drivers do a whole lot more than simply drive pallets from the manufacturing plant to client locations. They’re embedded within clients’ supply chain management. “When they’re at a company, they’ll do a lot of checks of our trailers to see how many are full, how many have been used overnight, how many we should bring tomorrow,” Kohler explains.
“Our customers don’t even worry about their pallet inventory because our drivers are managing it for them when they deliver every day. They rely on us and trust us,” he continues. “It’s one less thing they have to worry about. They have bigger fish to fry, bigger things to do every day. They want supplies that are always going to be there on time or ahead of time, every time.”
This logistics operation is further facilitated by the company’s large fleet of 53-foot trailers, more than 300 of them. “That helps us tremendously when we get a new customer. We drop that at their door and we let them use it as their warehouse,” he says. “It’s not uncommon for a customer to have four, five or six of our trailers there.” That’s one more way to produce revenue while becoming an ever-more-valuable part of the customer’s operation.
Pioneer Packaging operates its own 200,000-square-foot manufacturing and warehouse space, with plenty of room for future growth and expansion. At last count, it was handling more than 3 million new and remanufactured pallets a year–clean and chemical-free pallets suitable for food-processing clients, as well as other kinds of manufacturers.
The future is bright, thanks to the company’s blend of ingenuity, entrepreneurialism and, Kohler emphasizes, top-notch service. It’s that service, he says, that “sets us apart from the average pallet company. If we’re at a company and we split the business with somebody, often we eventually get all of the business.”