In the manufacturing world, pallets are like paper towels. They're items that everybody uses, though few people give them much thought.
The pallet-producing sector of the timber industry long benefited from that serendipity. But plastic pallets slowly are chipping away at wood's hefty market share.
Plastic now accounts for 1.3 percent of the U.S. pallet market, with 6 million produced annually, compared with more than 450 million wood pallets, according to a recent study by Plastics Custom Research Services.
Peter Mooney, founder of the Advance, N.C.-based consulting company, said plastic pallets are more expensive than their wood counterparts but are gaining acceptance because of their durability, reusability and easy sterilizable surfaces.
Plastic pallets are made using a variety of processes, with structural foam molding and twin-sheet thermoforming leading the way.
TriEnda Corp. of Portage, Wis., was an early proponent of twin-sheet thermoformed pallets. The company got a big boost in the mid-1990s, when the U.S. Postal Service released the results of an in-depth study on the performance of pallets made of different materials and processes, according to Henry Brown, new-product development manager at TriEnda.
"Their conclusion was twin-sheet thermoformed pallets outperformed all other types of pallets to such a degree they stopped buying any other type of pallet," he said.
Other key beneficiaries included Cadillac Plastics Inc. of Troy, Mich.; Menasha Material Handling Corp. of Oconomowoc, Wis.; and TransPak-USA of Charlotte, N.C.
In addition to the Postal Service, other top markets for thermoformed pallets include grocery, automotive and pharmaceutical customers, Mooney said.
The wood hurdle
Mooney said plastic pallets have environmental, ergonomic, performance and even aesthetic advantages over wood. The ease with which they can be produced, incorporating some post-industrial high density polyethylene and in a variety of colors, gives the products points for appearance, safety and conservation.
But most industries have been slow to absorb the added upfront cost of plastics.
Twin-sheet pallets, Mooney found, range in price from $12.75-$20. Structural foam and injection molded pallets cost $40-$60 each. When buyers compare that to the $5-$10 range associated with wood, the latter usually wins out — depending on markets served.
"From talking to a lot of people, they're still frustrated they can't get the cost of those pallets down," Mooney said. "To the extent that these plastic pallets have really done what people promised they would do, there hasn't been the replacement sales they anticipated."
In fact, plastics' durability has been a double-edged sword. TriEnda once lost some anticipated Postal Service business not because of dissatisfaction with the products but because the pallets were so durable that reorders were not necessary.
Brown said the company since has adapted by creating custom products for niche markets.
"The advantage that twin-sheet thermoforming has over other processes is we can make our mold relatively cheap," Brown said. "And they can be shaped to come up with very efficient engineered structures."
In addition, pallet making is just about 20 percent of TriEnda's business, with the majority of its production focused on dunnage, portable sanitation and outdoor play equipment.
TriEnda's parent company, Alltrista Corp., placed ninth this year in Plastics News' ranking of North American thermoformers, with $128.8 million in thermoforming sales.
TransPak, on the other hand, has specialized in thermoformed pallets since its founding in 1998. The company makes single- and twin-sheet vacuum formed items for textile and apparel, automotive, electronics and agricultural industries from facilities in Charlotte; St. Paul, Minn.; and Little Hocking, Ohio.
TransPak was purchased by St. Paul-based Thermoform Plastics Inc. in 1999.
Mark Ward, TransPak's vice president of sales and marketing, said all indications at the time of the acquisition suggested a profitable environment for thermoformed pallets.
"Not wanting to miss those opportunities, we formed TransPak," Ward said. "We ended up selling the company to Thermoform Plastics to keep promoting their manufacturing capabilities, and their support is behind us to continue to grow the company.
"Our opinion of the market is exceptionally high. It's nothing but monumental growth as an industry as a whole."
Thermoform Plastics is tied for 20th in this year's ranking of thermoformers with $60 million in sales. Ward would not break out TransPak sales, but he said the company is seeing "significant growth."
Everything's not been all roses for all thermoformers in the pallet arena.
Piper Plastics Inc. of Orlando, Fla., briefly entered into agreements with a handful of companies in the food-service industry to produce single-sheet pallets.
Technical and design barriers cut short Piper's opportunities to get its piece of the pallet business pie.
"For the market we were going after, we were very limited competing with injection molded and structural foam molded aesthetics," said Blain McCormack, vice president of sales and marketing at Piper Plastics.
"Getting to where our customers wanted designwise, with the process we used, we could give them the pallet with the fit, form and function, but they weren't real impressed with aesthetics."
McCormack said the single-sheet pallet required reinforcing components that made constructing an acceptable product too cumbersome.
"In a rackable application, what you end up with is piecing things together — we don't have any way to encapsulate reinforcements," he explained. "You end up having to do two different parts: either weld them together or screw them together to get the aesthetics you're looking for."
McCormack said many of Piper's pallet customers eventually switched to competitors for a sturdier, better-looking product. But Piper did not abandon pallets altogether. McCormack said the company has sold products for specific overseas shipping applications. Single-sheet pallets do have a place on the field, he said.
For instance, he said, tooling requirements for single sheet are easily attainable for most thermoformers, at one-third the cost of twin-sheet.
"You just have to find a niche market and right application for single-sheet, such as overseas shipping in countries not accepting wood pallets," he said. "But the typical nestable distribution pallet, twin-sheet thermoformers have that market wrapped up."
A question of cost
Mooney agrees that the overseas shipping restrictions on wooden pallets is a real threat to wood and could be a practical silver platter to plastic pallet formers. Wooden pallets have been associated with concerns over infestations and contamination.
Still, cost issues must be addressed for plastic to move beyond the plateau Mooney said the industry has reached.
"If you look at the growth pattern of plastic pallets, they started off in the 1970s, and they grew with innovative programs into the '80s and '90s," he said. "Here in the latter '90s and 2000, they are definitely plateauing.
"From talking to a lot of people, there's a certain pause in the marketplace."
All things considered, Mooney expects the market share for thermoformed pallets to increase steadily by 4 or 5 percent during the next five years.
"It's not zero but not double-digit," he said. "I would still contend that's a good number."