Economic Feasibility Analyses 



3503 



28-3 $223,500— SMALL-SCALE MANUFACTURE OF 



PALLETS^ 



A small independent hardwood pallet plant is a marginal investment if pallets 

 are sold at prices competitive with larger production facilities manufacturing 

 large orders of "standard" pallets. To be viable a small pallet plant, located 

 adjacent to an urban center, may enter a more lucrative market for small-order, 

 quick-delivery, specialized pallets. A key to its success is the versatility to 

 produce small orders of many different pallet or container designs with minimal 

 change-over costs. 



To supply a hand-nailed pallet operation, the enterprise purchases green rough 

 pallet lumber of standard stock dimensions and cants for block pallets and 

 produces about 275 pallets per day at an average of 40 to 60 units per order. 

 Besides two radial-arm cutoff saws, its equipment would include a handsaw or a 

 single-head notcher, a table router, two hydraulic floor trucks, a fork lift, and 

 one or more assembly tables adjustable for a range of pallet sizes. Nailing or 

 stapling requires up to six pneumatic tools and an air compressor. 



Key statistics of the enterprise are as follows: 



Capital investment $223,500 



Operating cost, annual $391 , 140 



Sales, annual $422,812 



Net profit, annual (before income taxes) $ 3 1 ,672 



Return on sales 7.5 percent 



Return on investment 14.2 percent 



Employees 10 



Energy requirement, annual 



Electrical 30,000 kWh 



Diesel fuel and gasoline for fork lift and delivery truck 5,350 gallons 



Wood residue, for plant heat 1 billion Btu 



With a total staff of 10 employees, the pallet plant should produce about 275 

 pallets per day for 250 days per year, and consume about 1 .6 million board feet 

 of lumber annually. About 0.92 ton of pallets is produced per ton of lumber 

 purchased (fig. 28-2). 



FASTENERS 

 .02 \ 

 '0 TON \ PALLETS 



PALLET LUMBER 1 r r « ► Q2 



(O.D. WT.) \ \o U ^2 



^^ ^^ V* SAWDUST WASTE 



T :oi .01 



» ►FUEL 



END-J^IM ^ 09 



» 



TOTAL L02 TONS 



Figure 28-2. — Materials balance (ovendry-weight basis) for the manufacture of pallets. 

 Annual wood requirement is about 1.6 million board feet purchased in standard sizes 

 for pallet fabrication. (Drawing after White et al. 1981.) 



^Abstracted from White et al. (1981). 



