SMIco Named CIDC Business of the Year

CRESCO - SMIco has been building wood pallets for 50 years. They also make specialized wood crating and safety fiber, the wood chips that are used on playgrounds surfacing and other recreational areas. 

As one might imagine, things have changed a little throughout the years, but one thing that hasn’t changed is SMIco’s devotion to customer service. With core values that include integrity, accountability and stability, SMIco’s determination to anticipate and meet growing customer needs has led them to become the Midwest’s leading pallet manufacturer.

The kudos were a little more personal and closer to home, however, when SMIco was named Business of the Year at the CIDC (Cresco Industrial Development Corporation) Banquet.

“The decision to choose SMIco as Business of the Year and highlight their 50 years of service in our community was an easy and long overdue tribute,” said Jason Passmore, Executive Director of Howard County Business and Tourism. “Unique to Northeast Iowa, SMIco in Cresco is one of our larger employers, and they assist most of our regional companies with quality wood pallets.”

“It was nice to be recognized,” SMIco President Chuck Burke said. “And those guys do a great job there. We had a fire in Cresco back in 2011, where it took out our warehouse. Jason and the members of the chamber were here that morning with coolers of water and stuff for the fire department. And they were very helpful. Kept telling us, anything they could do to help us, just let them know.”

It was, in fact, an earlier fire that led SMIco to relocate to Cresco in the first place. In 1989, after 17  years in Chester, a devastating fire destroyed SMIco’s pallet plant. Rather than rebuild in Chester, they moved production to Cresco for a couple of reasons. 

“We were landlocked in Chester,” Burke said, “so we couldn’t grow. This building was already here in Cresco, and it was going to suit our needs to get ourselves up and going really quick again. And a lot of our workforce is from around this area.”

And the change wasn’t just locational. Automation began to take on a bigger role in the business, too.

“Back then, it was all manual hand nailing tools,” Burke explained. “We were doing maybe around 5-6 thousand pallets a week. Then in 1989, after the fire, we moved from Chester to Cresco. We’ve automated a lot of our equipment since and now we’re doing 25-30 thousand pallets a week.”

The first automated nailing machine was purchased in 2000. A year later, SMIco bought another local pallet plant and converted it into a sawmill division. 

 

Of the 62 people SMIco employs, 22 of them work at the sawmill facility, and it provides more than half of the lumber they use in pallet production.

At their current production level, SMICo uses approximately 15-18 semi loads of wood a week. That’s a lot of wood. And where does that wood come from? “Locally, we’ve got a lot of Amish sawmills cutting for us,” Burke said.  Around 50% of the wood itself comes from southern Wisconsin. Another 30% comes from southern Minnesota, and the rest is from Iowa.

“We use pretty much any wood except green pine,” Burke said. But more expensive woods like walnut don’t make it into pallet production. In this area, most of the wood is oak and cottonwood.

Automation and the sawmill division were not the only changes at the turn of the millennium. “Back in 2000, all the countries started requiring some kind of a treatment of wood pallets shipping between countries,” Burke said. “So we added a heat chamber. It kills all insects and living organisms in the wood. So we get the pallets up to 140 degrees and hold that for a minimum of 30 minutes.”

While SMIco doesn’t do much business internationally, many of their larger customers do, so it is essential for the pallets on which those customers ship their product be compliant with international shipping requirements. 

“Seventy-five percent of what we make, we heat treat, whereas only about 2% of those products go out of the country,” Burke explained. “But places like John Deere don’t want to keep two different inventories, so they need it all heat-treated as if it was all going out of the country.”

In addition to the heat treating to meet international shipping regulations,  SMIco offers a pallet drying option. This takes much longer to do, as the pallets must stay at heat in the kiln for 22-24 hours to fully dry them. Counter-intuitively, the heat treating for international shipping actually makes the pallets wetter, as it forces internal moisture out to the surface of the wood. In the process of drying, the kiln goes through several cycles of heating and cooling in order to force all the moisture out of the pallets, then dry it off the surface.

In response to the increasing demand for kiln-dried pallets, SMIco built a new 18,000 square foot warehouse in 2012 to provide an environmentally-controlled storage space. 

While the building is filled near to the rafters with stacks of pallets, that inventory wouldn’t last long without continually being renewed with fresh pallets coming from the production plant. According to Burke, if production stopped on a Tuesday, the warehouse would be empty by the following Tuesday.

“On average, there are 8-10 semis coming in and out, picking up pallets,” Burke said. At approximately 600 pallets per semi load, that’s … a whole lot of pallets being shipped out every day!

One of the biggest changes in 50 years of operation is also one of the most consistent changes: automation, automation, automation. In addition to their original automated nailing machine, they added another in 2007, and also added automated stitching machines for specialized wood crating.

Then, in 2018, with the company expanding, SMIco added a state-of-the-art Turbo automated nailing machine. One of the major differences between the older automated nailing machines and the new Turbo machine is what moves and what doesn’t. In the older machines, the nailheads move around while the pallets stay stationary. In the new Turbo machine, the nailheads stay stationary, and it is the pallets that move through the machine as it nails them together.

“Automation has come quite a ways.” Burke said, and he knows of what he speaks. Burke, himself, started out on the production floor of the pallet plant in 1988. He was named President in 2003, so of the 50 years SMIco’s been in business, Burke has been there for 34 years of it. 

“Keeping up with the lumber market and keeping up with trying to find employees,” Burke said, citing two of the biggest long-term challenges SMIco faces. “It’s not easy work. Even with all the automation, you’re handling a lot of lumber, and lumber’s not light. Definitely a lot of work to it, so finding the type of employees who are capable and willing to do that type of work is getting harder and harder.”

Burke believes part of the worker shortage was indirectly caused by COVID. “I think a lot of the baby boomers who went off during COVID just never came back to the workforce,” he said. “They either decided to take an early retirement or just decided it was time to retire.”

Other than the shortage of employees, COVID didn’t have a big effect on SMIco. “COVID didn’t slow us down any,” Burke said. “We were busy all the way through. We didn’t have to shut down because it is an essential business to keep other industries moving. They needed the pallets to keep shipping their products.”

With all this talk of “pallets,” it’s tempting to think that pallets are all one size, but that couldn’t be farther from the truth. SMIco has almost 2,500 different designs in their system. Usually, a customer will come in with a size in mind, then SMIco’s PDS design system will assist them with design specs and how much the pallet will hold per weight.

All this means different set-ups for each machine for each customer. Usually, customers come in with the need of at least a semi’s worth of pallets, but occasionally someone will need a smaller number. “If somebody orders, say, just 50 pallets, we still just hand nail,” Burke said. 

With their 50th anniversary one for the books, SMIco still looks to the future. Focused on the vision of continuing to be their customers’ number one choice for wood-shipping products and using that goal as the driving impetus behind every expansion and update of existing automation, SMIco will strive to continue to lead the Midwest in pallet production for the next 50 years and beyond.