A Regional Comparison of The Pallet Industry

by Dwight R. McCurdy and John E. Phelps
Professors at Department of Forestry, Southern Illinois University at Carbondale
In conjunction with the Illinois Wood Products Association


The pallet industry is one of the major forest product industries in the United States. The industry is also the largest consumer of domestic hardwood lumber. In addition, the demand for wooden pallets in the United States is constantly increasing. Therefore, information about the pallet industry is useful to persons involved in both the demand for pallets and the supply of wood being used to make pallets.
In 1995, the Department of Forestry at Southern Illinois University at Carbondale surveyed all known pallet firms (3,793) in the United States. Addresses were obtained from a Dun & Bradstreet list, a Harris list, and from individual state directories. Seven hundred eighteen (718) questionnaires were returned.

FINDINGS

Distribution of Firms
In 1995, as mentioned, there were approximately 3,793 pallet firms in the United States. The number of firms by state are presented in Table 1. California and Ohio had the largest number of firms, with more than 300. By Bureau of Census Regions, more than one-fourth of the firms were in the East North Central regions (Figure 1, Table 2). The Mountain Region had the fewest number of pallet firms.

Pallet Production
In 1995, the average number of pallets produced per firm was 254,000 units. The average annual production per firm varied considerably by Bureau of Census Region. The highest average annual production per firm was in the West South Central Region and the lowest in the Mountain Region (Table 2).

Daily Production
When the firms were asked the current daily rate of production, the average was 1,131 pallets per firm. Again, the highest production per firm was in the West South Central Region and the lowest in the Mountain Region.

Number of Employees
The number of employees averaged 23 people per firm with the median of 12. Nearly one-fourth of the firms had no more than five employees. As per the other findings, the average number of people per firm also varied by Census Region (Table 2).

Types of Pallets
The most popular type of pallet was of a flush stringer, double-faced, non-reversible design (Table 3). This pallet was the most popular in all regions. The second most popular design was the single-faced, non-reversible skid. Firm spokesmen said, on average, 62 percent of their pallets were expendable versus reusable. This ratio varied significantly by Census Region, with the East South Central Region having the highest percentage of expendable pallets and the Pacific Region the lowest (Table 2).

Markets
The following industries purchased pallets from more than 40 percent of the firms in 1995: (Table 4) Food, Chemical/Fluid, Steel/Metal, Printing, Paper/Fiber. These purchases by industries varied widely by Census Region.
The food industry was of major importance in the Pacific Region. The chemical and petroleum industries were popular in the West South Central Region and the printing industry was popular in the Pacific Region.

Raw Material
The firms, in 1995, generally purchased more than one form of raw material (wood). Seventy-two percent purchased some or all of their wood as lumber. Stumpage, logs, f.o.b. mill, and cants were the other forms of raw material. The percent of firms purchasing the different forms of wood varied considerably by Region (Table 5).
The amount of wood used in manufacturing the pallets was reported to be 17.9 board feet, on average, in 1995. This average varied by Census Region and represented both wood used in the pallets and residues (Table 2).
Sixty-two percent of the wood used in pallets during 1995 were hardwoods (Table 2). Only 14 percent of the firms reported using no hardwood species. Again, results varied by Bureau of Census Region. The Pacific and Mountain Regions are the only areas where hardwoods did not dominate.