Beating the Asian Flu
By Paul MacDonald
When the main market for his customers lumber products in Japan fell like a stone in 1998, Vancouver Island sawmiller Paul Beltgens knew he had to react quickly to keep his own mill operation from getting hit by the Asian Flu.
As a custom lumber remanfacturer, Beltgens knows all about being resourceful and flexible with his company Paulcan Enterprises, but the sudden drop in Asian markets certainly tested those attributes. "No one really anticipated that the Japanese market for softwood lumber would fall so far or so fast," says Beltgens. "It left a lot of people scrambling."
Beltgens had to do some scrambling of his own, but he also made a strategic move and got into an entirely new market hard-wood in the form of alder and maple lumber. Not only is the hardwood product relatively new to Beltgens operation, so is the process, since it involves managing all of the production, from the whole log to finished product, rather than just the reman end. He has set up a separate sawmill, Jemico Enterprises, to handle the hardwood side of the business. And business has been relatively good, with steady demand for alder product in the US, Taiwan and China.
The hardwood business evolved, rather than started up overnight. Paulcans involvement started several years ago when the company started doing custom remanning of alder for MacMillan Bloedels nearby Chemainus operation. "Weve built it up from there," explains Beltgens. "We used to just reman the hardwood, but now we manage the entire production spectrum. We saw the log, dry it, sand it, grade it and package it. The key is handling the entire manufacturing spectrum, from the log to the finished product, so we can supply exactly what the customer is looking for. Doing only one part of the process, such as the finishing of the product, makes it very difficult. You need to have control from start to finish."
Hardwood logs arrive at the Jemico mill by truck and are scaled and sorted to species. From there on in, it s all about recovery. They pass through a headrig and are cut to achieve maximum grade recovery. The edger has a positioning fence system on the infeed, also to achieve maximum recovery. The pieces are then graded and sent to the trimmer or back to the resaw for further grade recovery. The lumber is stacked and ready for the dry kilns, which is where the Paulcan mill enters the picture. The lumber is taken to Paulcan to be dried, abrasive-planed and graded.
Forestry giant MacBlo has been a key part of the success of Jemico and reman operation Paulcan Enterprises. Paulcan started out in 1985 as a resaw operation producing six million board feet a year and now turns out 60 million board feet a year.
The margins run pretty thin for reman operations, so upgrades at Paulcan have been done via equipment auctions and purchases of used equipment. A major expansion came in 1990, when a second Stetson-Ross line was added. Three years later, they installed three Lignomat kilns which take 100,000 board feet at a go. In 1995, they retro fitted their trim line with an Irvington-Moore trimmer and added a Forestline grade reader to make, as Beltgens puts it, "the quantum leap into computerization". The most recent addition came in 1998, with the installation of Timesaver sanding equipment to handle the hardwood.
The move into producing hardwood has involved more than a bit of a learning curve, says Beltgens. "Anything you know about softwood, you can throw it right out the window when it comes to hardwood. Its a totally different mindset. I mean with alder, youre talking about taking timber that was being used to produce firewood and turning it into lumber. Its totally different. "
Theres a cliché that "business is all about relationships " and nowhere is this truer than in the forest industry. Hardwood operation Jemico has no access to timber, their only source of supply for logs are the majors on Vancouver Island MB, TimberWest and other local suppliers.
The large companies have their large production - oriented softwood operations, but they rely on reman operations such as Paulcan to help them fill the gaps; for example, with smaller runs of a specific size or species.
While MB is the mills largest customer Paulcan planes about 35 per cent of the production at MBs Chemainus mill all of their customers represent key relationships, says Beltgens. "MacMillan Bloedel is a big customer and a very important customer to us, but they are not our only customer. Weve got to be able to accommodate the guy down the street who has a small program going and he might give you four or five shifts a month."
To make a go of things, the mill has to run on a steady basis, and that means having small and large customers, and maintaining good communications with customers. At the end of the month, ideally there should be few, if any, blanks in the production schedule. The only downtime should be when the mill is shifting between production runs.
"On the custom reman end of the business, you build on long-term relationships, big and small. Were not here for one-shot deals, we re here for a continuous flow of business. Were always trying to give the customer precisely the wood that they are looking for, whether in hardwood or softwood."
Paulcan and Jemico are always sourcing information on what products their customers are looking for and when they are looking to need it. Meeting production deadlines, and sometimes beating the original deadlines, are key capabilities from their customers perspective. Paulcan might have an order to fill for a boat destined for Australia on the 15th of the month. All of a sudden, the boat is coming into Chemainus on the 12th due to a scheduling change in Vancouver.
"A very important part of our system is saying, yes, we can move things around and deliver the wood for that boat, and be able to meet the needs of our customer," says Ray Carroll, manager of both Jemico and Paulcan.
"If it means fitting an additional order into our schedule, well do what ever we can to accommodate that because we know that order means extra revenue to our customer," says Carroll. "Sure, it means extra revenue to us, too but that is just part of the overall equation."
It may sound simple, but reman operations have to focus on being value-added, not cost-added, says Carroll. "Everything were doing should be adding value, right from remanufacturing the wood to trying to get the customer a deal on getting their lumber on an empty truck doing a backhaul to Vancouver."
Scheduling production and staffing is the big challenge for all reman operations, says Carroll, and it all comes down to effectively managing the operation and being flexible. With a crew of anywhere from seven to 14 people, juggling resources as production changes over the course of the day is the big trick. They could go from "sticks to roof beams," from producing 1X3 alder in the morning to turning out 5X14 Douglas fir after lunch.
This also means flexibility on the part of employees, who move around to accommodate the changes in production. Their graders, unlike the graders at MBs Chemainus operation down the highway, have to be able to grade a wider variety of species and sizes, since they have a large customer base.
"Whether its management, production or maintenance, the key to a successful reman operation is flexibility," says Carroll. "That can be an interesting challenge when you are working with a unionized workforce."
Both Carroll and Beltgens praised their employees and their union, IWA - Canada, for working with management in terms of handling the changes at the mill. "Without that flexibility, some operations are just not viable," says Carroll. "Unions are starting to come to the realization that they have to work with the industry and the mills or they are not going to be working at all. More than ever, we are competing in a global market and against lower-cost nations, such as Taiwan and China."
As both Beltgens and Carroll point out, the person building a house doesnt care if the wood comes from BC or Belarussia. If the wood is $50 a thousand cheaper, thats the wood they want.
If scheduling production is a challenge, so too is scheduling maintenance. Outside of preventive maintenance, which is done on the weekends, maintenance during the week is managed carefully and work is prioritized. All of the maintenance people at the mill are multi-trade, which again adds to the flexibility of the overall operation.
Both Beltgens and Carroll subscribe to the theory that there are the quick and the dead in the sawmill and reman business, meaning you have to be quick to adapt or youll be out of business. "The change weve seen in this business in the last five years has been amazing," says Beltgens. "Well see the same amount of change over the next several years as the pace quickens. The last thing you want to do is stand still. The day you stop changing is the day you shut your doors."
Beltgens sees a key part of his job as "looking down the road", seeing where their customers want to go with their production and making sure Paulcan and Jemico can meet their needs with new equipment or changes in production flow. He remains very involved with the day-to-day operations, but now relies a great deal on Ray Carroll and other management and hourly employees. "The success of the operation is due to the people that you work with. Weve got a lot of iron in our operations, but you need good people if youre going to get the most out of it."
In an operation where the millwrights might come up with an idea over lunch, sketch it out on a napkin over their sandwiches and translate it into reality in the afternoon, "the last thing they need is some micro-manager looking over their shoulder," says Beltgens.
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