Due to the increased lifecycle and interchangeability of the RST-PAL pallets with existing wooden pallets, ATP's customers derive value from utilizing these innovative products in a number of ways. First and foremost, using and replacing the user's wooden pallet inventory with RST-PAL pallets eliminates ongoing maintenance and replacement costs.
Another value is the longevity RST-PAL pallets offer. RST-PAL pallets have the longest life-cycle regardless of hot, cold, or wet climates or in environments where maintenance is difficult. RST-PAL Pallets will not rot, which is a common problem for wooden pallets.
RST-PAL pallets are manufactured from recycled materials mainly scrap automotive tires. Each 1,000 pallets use 25 tons of scrap tires from landfills, (31,000 tons or 62,000 pounds per plant per year).
RST-PAL pallets will help save hardwood forests currently used to manufacture wooden pallets, reduce greenhouse gases, use significant amounts of waste plastics and scrap tires from landfills and storage facilities, and reduce pallet users costs while increasing profits.
ATP's most important competitive edge is based on the unique and patented material used to manufacture the RST-PAL pallets. The process, the unique material, and the use of the material to manufacture pallets are protected by the issued utility patent that will prevent duplication or "copycat" competition.
RST-PAL pallets are manufactured from recycled scrap tires. Federal law and most State Governments require agencies and contractors to purchase recycled products first, as mandated by "buy recycled products first". ATP has already presented RST-PAL pallets to the Army, Air Force Exchange System, (AAFES) located in Texas and throughout the Pacific Rim, and AAFES is interested in purchasing pallets, which will increase their pallet lifecycle, which in the long run is less costly than wooden pallets. We will focus on different government agencies including the Department of Defense and Department of Transportation to introduce and market RST-PAL pallets.
RST-PAL pallets can be power washed or steam cleaned which is a critical factor in the food industry, such as in poultry and meat processing plants, which must maintain sanitized production areas. RST-PAL pallets do not absorb liquids as wooden pallets and they can be stored outside without occupying expensive indoor space.
The RST-PAL pallets are a "triple green" product. They are manufactured from recycled materials, and can be recycled in the event they ever wear out, and they will help conserve our nation's forests while helping clean up America's scrap tire problems.
The RST-PAL pallets will be the best cost/performance pallets in the market. The summary of advantages that our pallets have in comparison to existing material pallets such as hardwood, plastic, corrugated cardboard, and aluminum, are:
The RST-PAL pallet is positioned uniquely as all industries and manufacturers use pallets to transport everything from commodities to equipment and parts. The main segmentation among the users is found in how they use pallets. The Power industry uses in excess of twenty million pallets annually, government owned poultry processing plants use more than ten million pallets annually, 3M Corporation purchased seven million pallets in one year alone, and the beverage industry uses in excess of fifty million pallets annually. There are also thousands of companies using anywhere from hundreds of thousands to millions of pallets annually including, chemical companies, bag cement, building materials, grocery, paint companies, and many others.
Our first targeted customers are those that use a "closed loop" distribution system, where they manufacture and/or distribute products using their own fleet, where loaded pallets can be dropped and returned when unloaded, to be utilized over and over again. We also will target government entities, agencies, and contractors both Federal and State.
Our marketing strategy is based on informing and introducing the RST-PAL pallet to pallet buyers across the country and in different industries. We can accomplish this at a rapid pace by showcasing the pallets at selected trade shows and conventions. Samples will be available as well as brochures and videotapes explaining the benefits of the RST-PAL pallet. Our first targeted marketing territory will be the Dallas/Ft.Worth Metroplex, concentrating on those companies using a "closed loop" system for distribution.
The marketing will convey the advantages, benefits and the quality of our product in every picture, every promotion, and every publication. Pallet users have been screaming for years for the wooden pallet industry to make a longer lasting more durable pallet, but their request has fallen on deaf ears, as the pallet builders would rather build a less sturdy pallet so that it will fail after only a few trips, requiring the customer to purchase more pallets. The RST-PAL pallet is a solution to the high cost of purchasing, maintaining and discarding wooden pallets. Our marketing efforts will not only focus on educating purchasing agents of companies, but also in making presentations to company board of directors, demonstrating the cost savings and benefits of using RST-PAL pallets. As was shown in a previous example, a company purchasing 100,000 pallets per year when converting to RST-PAL pallets will save in excess of $3 million over five years. With such convincing statistics, we anticipate universal acceptance of RST-PAL pallets.
As stated, ATP will sell pallets as they are manufactured. Pre-production marketing efforts have been on going for the last year. We have established a sales plan, however our production will dictate how quickly our sales team will expand. One company we have contacted expects to purchase 22 million pallets during the next two years. If we were to capture a large contract, our production schedule would be sold out for a number of years. Another sales company that markets products exclusively to the power industry, would like to have an exclusive to sell our pallets to power companies, and they estimate they can sell a minimum of 1.2 million pallets annually. We have approached many companies on the benefits of using RST-PAL pallets, including; 3-M Corporation, Coca-Cola, Pepsi, Snapple, Anhauser Busch, Hunts Wesson, Kraft Foods, S.E. Rycoff, Albertsons, Kroger Foods, Associated Foods, H.E.B. Foods, Purina Pet Foods, manufacturers of charcoal briquettes, flour and cereal mills, salt processors, building materials, including bagged sand and cement, plaster and even chemical companies.
Our concept is to introduce the RST-PAL pallets to many industries, and ATP will do that from our National Marketing Headquarters in Las Vegas, Nevada. The Las Vegas Visitors and Convention Authority will provide a great arena in which to showcase and demonstrate the RST-PAL pallets, as virtually every important convention and trade show now meets in Las Vegas.
This business plan calls for the company to grow itself. The Texas plant will be the first, and we expect new plants to be opened in years two, three, four and five. Some future plant site work has been completed, however we will locate the plants in States with positive scrap tire programs, some of which may provide subsidies for using scrap tire rubber to manufacture new products. In addition, our company policy will be to establish plants near massive scrap tire piles, and in rural communities where a good labor force exists but jobs are not plentiful and economic development will benefit the community.
ATP Corp. is the worldwide licensee to manufacture and market pallets. We have already had several foreign entities show interest in either becoming distributors or manufacturers through a foreign license arrangement. We have held discussions with a group from China, Japan, Taiwan and South Africa and are in contact with a group in Spain that is interested in our technology.
It is our intent to move our Stamford, TX plant into full production, and utilize the same team of key employees and consultants to open new plants over the next five years. Whereas our Business Plan provides for future plants being financed internally from company profits, additional capital can be raised through the licensing of foreign companies wishing to manufacture and market pallets in those countries.
Our sales forecast is based on the following assumptions. We expect our production will be sold as soon as it is ready, as the forecasted production is much less than the anticipated demand. Our product is not seasonal and will be continually manufactured throughout the year. We will operate in three shifts (except during training in first two months).
Our sales force will start taking orders sixty days prior to production. The initial selling price is low in order to introduce the pallets to many different manufacturers and industries. However we expect to raise prices at the rate of 5% per year (which is less than the rate of increase of the wooden pallets).
Regarding the "direct cost of sales" (COG), we assume the costs of materials will remain the same for us, due to discounts we will receive for the quantities of materials that we consume which should offset rising costs. We can also reduce our costs by doing some manufacturing processes ourselves, such as mixing and batching the binders at our plant, and by cutting the scrap tire rubber from chips to our required specifications.
We've calculated production labor costs, including salaries, taxes, and benefits to be $1.31 per pallet. The break down of production personnel is presented in the Personnel table, Production Personnel category, and the resultant figures appear in the Profit and Loss table under Sales, Production Payroll.
The Sales Forecast table for the first 12 months appears in the appendix.
PALLET USERS, Dallas / FT. Worth Area
ANNUAL PALLET USAGE.
The following list of pallet users was contacted and the new RST-PAL Pallet was introduced to each user, receiving excellent interest. Another 22 users were also visited. The Total yearly estimated usage of pallets in the DFW area is 60 million.
|American Home Food||185,000||Paris Business Forms||25,000|
|Purina Mills Inc.||180,000||Texas Ready Mix||55,000|
|S.E. Raycoff & Co.||130,000||Dr. Pepper||300,000|
|Winn-Dixie||130,000||Miller Brewing Co.||95,000|
|Dannon Yogurt||45,000||Ardmore Food||20,000|
|Mrs. Crocketts||15,000||Champion Dairy Pack||25,000|
|Bunge Foods||60,000||DAP Inc.||9,000|
|K-Klean Chemicals Co.||22,000||HPC Lab.||40,000|
|First Food Inc.||11,000||Featherlite Build Prod.||55,000|
|DSC Inc||10,000||Dal-Tile Corp||20,000|
|Dallas City Packing||8,000||Borden Inc.||30,000|
|Athena Products||16,000||Ashland Chemical||39,000|
|Americana Inc.||45,000||Texas Instruments||130,000|
|Speaco Foods||17,000||State Fair Foods||78,000|
|Pilgrims Pride||35,000||Oakfarm Dairies||30,000|
|Builders Concrete||15,000||Hardros Chemicals||50,000|
|GAF Corp.||60,000||Alpine Frozen||50,000|
PALLET USERS, HOUSTON Area
|General Foods Mfg||91,000||Gardner Asphalt Corp.||60,000|
|Fastner Mfg. Co.||30,000||Erie Mfg.Corp.||70,000|
|Ella Crew Production||40,000||Distribution Int'l||100,000|
|Diamond-Kuhn Paint||40,000||L&H Packing||60,000|
|Lone Star Brewing||435,000||CSA Ltd. Inc||90,000|
|Uncle Ben's||325,000||Vaneco Products||20,000|
|Cal-Tex Citrus||20,000||Corev America||10,000|
|Cordell Brick||50,000||Champion Coating||40,000|
|Colorex Co.||130,000||Celotex Corp.||260,000|
|Cellcote Co.||10,000||BTL Speciality Resins||40,000|
|BJ Industrial||20,000||Baby's Natural||20,000|
|Amy's Foods||30,000||American Rice||110,000|
|Advetech Int.||20,000||Adams Valves||30,000|
The following table lists important project milestones during the pre-production start-up period, with dates and managers in charge, and budgets for each milestone. The milestone schedule indicates our emphasis on planning for implementation.
The production schedule is based on three shifts. During the first month only one shift will be in operation, in the second month, two shifts, and from the third month, a full three shifts of production. During the start-up period, the employees will be located and trained.
The municipality of Stamford, Texas will assist us in recruiting about seventy employees. There is an adequate work force within the surrounding communities, which will enable us to choose quality people.