Keeping Up with the Pallet Market

Manuel Tavárez just can’t slow down—but he’s not complaining.

From its humble launch in 1997, when Tavárez leased his former employer’s 10,000-square-foot space in Harvey, Illinois, Harvey Pallets, Inc. has grown exponentially—from $100,000 in sales in its first year to $3 million in its second and over $20 million in its 17th—despite a warehouse fire that destroyed nearly everything.

After the 1998 fire, Harvey Pallets relocated a number of times before settling into a 250,000-square-foot building in Blue Island, Illinois, in 2005. That seemed like enough space to manufacture, repair, and store all the pallets Tavárez could handle, but in both 2009 and 2013, the company needed to add even more space, buying additional 100,000-square-foot and 300,000-square-foot facilities, respectively, in Blue Island.

In 2009, Harvey Pallets was among the largest pallet businesses in the Chicago area, with $12 to $13 million in annual revenue. One of Tavárez’s goals at that time was to cut back his 12-hour days to create a better work-life balance. That hasn’t happened yet, thanks to the still-booming business. “We’ve grown another 50 percent in the past three years, to $24 million in sales, and are anticipating growing an additional 10 to 20 percent in annual revenue for 2015,” he says.

Much of that growth is the result of meeting changing demand from customers that include corporate giants such as International Paper, Kimberly-Clark, CDW, Whole Foods, and Morton Salt. In its early days, the company focused on recycled pallets, but when customers began asking for new pallets, Tavárez couldn’t meet the demand for lumber. That’s when he acquired a sawmill.

“Orders would be placed, but it would take one or two weeks for the new lumber to arrive at our factory,” says Tavárez, who eventually noticed that most of the company’s lumber was coming from Missouri. That gave him the idea to acquire a Missouri sawmill, which he did in 2004. By 2012, the mill was producing 400,000 to 500,000 board feet of lumber each week. Today, that number has increased to 800,000.

Just as Tavárez has invested in making his supply chain lean, he also examines his customers’ continuous cost-improvement goals and is using his ownership mentality to develop and implement a nationwide pallet recycling management program. The program will further develop Harvey Pallets’ capabilities as a unit-load expert and will look at trucking lanes to further reduce its customer carbon footprints.

“Companies are more and more concerned about being environmentally friendly and driving cost out of the supply chain, so we’re recycling everything from plastic to cardboard, as well as performing asset-based trucking services and packaging solutions,” he says.

At the same time, Harvey Pallets has increased revenues by working directly with customers. In the past, it relied heavily on customer referrals, branding found on its trailers and employee T-shirts, and wholesalers. While Harvey Pallets still relies heavily on those keys, since 2012, Tavárez has invested in a growing sales force, and the company has effectively minimized the middleman from its previous business model. Tavárez is now finding success working directly with the customer. “In working with customers directly, the Harvey Pallets team controls its own destiny and can creatively leverage its resources to assist our customers in meeting the pressures of streamlining supply and reducing spend,” he says.

Looking ahead, the company hopes to gain an even larger share of the Chicago-area pallet market, which is among the largest in the country, with close to three hundred independent-business pallet recyclers and manufacturers. It’s also looking to expand in other states, either acquiring other pallet businesses or setting up its own operation. “We already supply pallet and packaging consumables in a lot of states across the country and are taking a strategic approach to growing the business with our customers’ needs,” Tavárez says.

All businesses, of course, face challenges, but for Harvey Pallets, there’s only been one major one in recent years: “With the business moving so fast, the big challenge has simply been keeping up,” says Tavárez, who has hired thirty to forty employees since 2012. With Harvey Pallets’ own in-house expertise, from operations to support, training those employees has been easy.

On his part, Tavárez has not yet been able to keep his promise of someday taking it easy. “I had this idea that I would slow down, and I’m still thinking one day I’ll do it, but at this point, I still enjoy working with the customers and my employees so much that I don’t see slowing down happening anytime soon,” he says. “Plus, I had a new baby two years ago, and as much as I have tried to keep my pallet costs down, diapers and food are expensive,” he adds with a chuckle.