The Wiens brothers are looking to increase sales and add to operations, with some new marketing relationships for Ivis Wood Products.
By Paul MacDonald
A Fraser Valley logging family's initiative to diversify and get into the value-added market has been a challenge. But there are indications that Ivis Wood Products may be ramping up to a new level of production and markets thanks to new marketing relationships and a timber sale under British Columbia's Small Business Program. While the logging and value-added operations are not tightly connected, the Wiens family-four brothers-have taken their forest industry knowledge and business skills from the logging side and leveraged them into producing a vast variety of fencing and related products for Canadian and American customers.
The quartet of Wiens-Jim, Robert, Alvin and Reg took over Ivis Wood in 1990 in an effort to diversify their logging company based in Chilliwack, about an hour east of Vancouver. "The company had been around since 1976 and was started by two German businessmen," explains Alvin. "They sold mostly into the German market where they had business connections. But the company was at a point where they would have had to do some major improvements themselves or sell to someone who would do the improvements." Enter the Wiens brothers. Once they purchased the company, they changed its direction in terms of markets.
While the company had been doing steady sales to niche markets in Germany, they were looking at increasingly long lead shipping times to Germany, as well as competition from the Scandinavians and the Russians. Shipping time might be a month versus a shipping time of only a few days almost anywhere in North America. Ivis Wood was basically selling into someone else's backyard and decided instead to sell in its own backyard-North America. "Germany is a good market, and it pays well and they like quality, but it has its limitations in terms of market growth," says Alvin.
In recent years, the Wiens brothers have put some new machinery in and improved the chop lines. But their basic approach to date has been low capital-that is, work as much as possible with the existing equipment and add to it when the sales start to increase. The current equipment lineup includes a Doucet chop saw, CTD double cutoff/chopsaw, Doledene band resaw, Balestrini template shaper, a TWS shaper, three Wigo template shapers and, to help finish things off, an EME planer and Cantek 24" belt sander. The most recent addition came in 2000, a Cantek five head moulder.
"That has made a real difference to our operation," says Alvin. "We started out running about 30 per cent of production through the moulder and we've since increased that to 50 per cent." They've also increased the work and storage area under cover, to 17,000 square feet. The present equipment set up gives Ivis Wood the capability to consume up to 1.7 million board feet of lumber annually, and in an average year they will use 1.4 million board feet. But if things go as planned, they will be looking to add more chop saws to the operation and to reconfigure the plant to increase production.
Ivis Wood produces an extremely wide variety of fencing and fencing related products, from the traditional well recognized fence pickets, to post caps, balusters and palings for the home and garden market. This marked a change from the production under the previous owners, who specialized in more detailed-and labour intensive -items, like carved cedar numbering and lettering. "We made the decision to move more towards production items like palings and balusters and less towards detailed product like the carved numbers."
The company also produces shelving and shelf supports. Of their total production, 60 per cent is in western red cedar and 40 per cent in spruce/pine. Since taking over Ivis Wood, the Wiens have expanded operations and are looking to grow it further through a new distribution arrangement that will get more of their product into smaller hardware stores across Canada. The American home improvement market is where they would like to see a lot of future growth and they believe the potential is there.
The economic incentive is certainly there. Prices don't translate exactly dollar for dollar in the US market versus Canada-for example, a fence paling selling for $1.00 in Canada does not automatically sell for $1.00 US in the American market. "A piece will sell for a bit less than it would in the Canadian market, but you have to keep in mind that those dollars are worth almost $1.50 Canadian," Wiens notes. They presently do some sales to the American market through wholesalers, but are looking to increase their efforts there, most notably in the MidWest. With Ivis Wood being a small producer and shipper, the cost of transporting product is a real problem.
They had been shipping into small hardware stores in the past and they could get good rates to major centres such as Edmonton or Winnipeg, but shipping costs beyond those destinations were exorbitant. "If we were shipping our product on its own, the cost of shipping would be more than what we would get paid for the product ." They tried doing some "piggybacking" on larger loads going to secondary cities, but there was no consistency in the shipping.
A couple of pallets of material destined for Flin Flon, Manitoba or Brooks, Alberta may be trucked out the afternoon it arrives in Winnipeg or Edmonton, or it may wait a week in the warehouse. But through a new Canadian distribution arrangement they hope to cover more of the small hardware market. While this market may not be huge on an individual basis, with each store perhaps ordering $500 or $1,000 worth of fencing at a time, this business collectively is large. They also hope to get into more of the markets in central and eastern Canada with this new business development partnership.
To date, their products have been sold primarily in western Canada and to a small extent in Ontario. Hitting the smaller market, as well as adding to sales to the US, will allow Ivis Wood to grow. Currently at a plateau in terms of market penetration, the company needs to move to the next level in sales. They hope to do that with these new business relationships. Interestingly enough, they also may decide to re-enter the German market once things start to grow with the company. "We may look to get involved there as part of a diversification."
A big plus in their push to move the company forward came recently when they were awarded a five-year, 50,000 cubic metre timber sale under the Small Business Program. The timber is near Boston Bar, basically 60 minutes up the Trans-Canada Highway from the plant in Chilliwack. While they may end up using lumber produced from some of the wood from this timber sale in their operation, they are looking to use the revenue to invest in Ivis Wood and help it grow. They could expand steadily like they have in the past, but the feeling is that the revenue from the timber licence, along with the new business partnerships, can help the company achieve a critical mass. It will give the company more revenue.
They can purchase more equipment, hire more people and, at the same time, achieve more sales. "The whole idea of the government program is to get more value added out of the timber resource and create jobs and that's what we hope to do," adds Wiens. The harvesting will be done by the family logging company, Freeline Equipment Co Ltd. Lumber is purchased through local mills and reman operations and they will use wood manufactured from their own harvested timber only incidentally. "We are not set up to produce lumber.
We buy from a number of local producers ." Essentially, they know their strength is in valueadded- rather than primary-production, and they intend to continue to focus on that market. Regardless of what wood they purchase, a guiding principle is no waste-their waste bins contain literally only small scraps of wood. Many of their fence caps are manufactured from the shorts left over from producing balusters and palings. "Once we get the wood, we chop it up to get the highest value, looking for the clears for example. Our approach is to buy low and medium grade wood and turn it into a higher value product ."
While production of fence related products and shelving products do lend themselves to high production methods, many of Ivis Wood's customers are looking for smaller quantities. With the exception of some fast-moving product such as 2x2 balusters, they operate production on an order basis, keeping only the raw spruce/pine/cedar in inventory, rather than finished product. Keeping a stock of finished inventory would be kind of mind boggling considering the large variety of product sizes, species and grades. "Our 1x6 product is available in the two species, a choice of clear and knotty, treated and untreated, and in six different profiles. We would have an awful lot of capital, and labour, tied up in wood if we carried an inventory of all the products."
Changes down the road for the company will include some new equipment and perhaps a further reconfiguration of equipment so it flows better. If things go according to plan with the timber sale, they'd like to make a few improvements within the company in the future, says Wiens.
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