Operator: We’ll now take our next question from [Robert Littlehale].
Unidentified Analyst: I have a couple of questions. People are anxious to get away from wooden pallets. Is it primarily the fire hazard or what is the impetus? Is that the main reason?
Warren Kruger: Well, Robert — and I will tell you, for those who don’t know. Robert has been — I’ve talked to Robert for the last probably 15 plus years.
Unidentified Analyst: I think it’s more like 20. Yes. It’s been a long time, Warren.
Warren Kruger: All right. The hardest two things are, number one, it’s sometimes people just look at price and they still want that, oh, I remember the old days when I paid $11 for a wooden pallet or $9 for a wooden pallet. I can’t believe that I — and so it’s a price thing. And if they’re going out of the loop, I can see it. So if you’re going to spend $45 to $65 on one of our products, you want to hold onto it. So that’s one is just figuring out who to maintain in your own closed loop. That’s hard. The second thing that really — if we get this fire retardancy hammered down, and it’s not — pricing wise, it doesn’t put our product out of touch, that will open up the doors to really get more involved with — on the Costco supplier side.
And so we’re working hard on that. We’ve worked on it for years, but there’s a renewed emphasis within our organization. We’ve got some creative solutions that we’re testing. And I’m excited in that regard. Those are the two things. The fire retardancy limits us in some big opportunities. We’ve lost some things with some big companies that they say, well, our risk manager says we have to have a UL or an FM approved plastic pallet. A lot of that is forced down the throat of — by the wooden pallet industry, the Wooden Pallet Association. Because if you’re building 800 million wooden pallets a year, you don’t want these little ankle biters taking some of your business away and they have a pretty good lobby. And I mean, how is it — in my mind and anyone else’s out there, how is it different for a plastic pallet versus a wooden pallet?
Wooden pallet, it lights on fire to lower temperature, burns, and even when it burns and is put out, it could reignite later. And what they always come back with is, well, if there’s a plastic pallet fire, it can melt and move from place to place. So I think we’re facing a lot of those types of hurdles. But what I hear in the marketplace now, I can’t even tell. People say, we’ve got to get away from wood. It’s just continue we hear it now more so than ever before.
Unidentified Analyst: Why would any competitor use virgin resin and not try to recycle like you guys do?
Warren Kruger: It’s easier.
Unidentified Analyst: It’s easier. Okay.
Warren Kruger: It’s really nice to buy that. But right now, if you’re buying virgin resin, it’s $0.50 a pound. It’s not really out of line. It’s just easy. You can put color in there and say, we can make a blue palette for you, or a green or a yellow and people do like the color coating. And you can look — we’re kind of like Henry Ford, you can have any color you want as long as it’s black. Because when you start — I described it the other day to someone, he said, well, why can’t you just change that color? I said, well, when you make — when you have milk that you pour in a glass, if you put just a drop of chocolate in there, it turns a different color. And the more chocolate you put, the darker it gets. It’s just that’s what happens in our industry.
