Whenever my grandfather, who was in the grocery industry, wanted to know what was in store for the economy, he would call my father, who was in the pallet industry, and ask how business was. If business was down, that usually meant that slow times were ahead. When business was up, then he could expect grocery sales to follow suit. He would use the pallet industry as an economic indicator, a function that it still serves today. Pallet manufacturing is among the forward indicators of the economy. As consumer demand increases, the number of pallets ordered increases as well, because more product must be shipped and vice versa.
The Pallet Industry and the Housing Market
The housing market is an excellent example of how pallet production acts as an economic indicator. When the U.S. economy took a turn for the worse, the housing market was hit very hard. Fewer houses were being built, so there were fewer loads of building materials, such as concrete and shingles, being shipped. One of the first places this became evident was the pallet industry, as contractors drastically reduced the number of pallets they ordered. The housing market has started its slow recovery, and with it, the number of pallets ordered by construction contractors has increased as well. Much of the initial recovery, however, has been the sale of existing inventory; new houses are not yet being built at any great rate. As the housing market continues to pick up speed and existing houses are sold, then new houses will once again need to be built. One of the first places this will become evident is the pallet industry. The foundation of new houses cannot be laid without first ordering the concrete, and that concrete is shipped on pallets.
Along with the shipping and packaging industries, pallet manufacturing can indicate economic trends.As the demand for goods increase, materials and products must be packed and shipped and thus the demand for the pallets, packaging and shipping will increase before retail goods even hit the shelves.
