Open For Business

Why Freres Lumber Co. mill prospers while others plummet

by Tim Buckley

Maybe it's as simple as where you put your trust. The Freres family - owners of timberlands, veneer plants and a plywood mill in Lyons, Ore., trusts that the timber industry will continue to have severe business cycles. So they don't get too heady about the good times. Likewise, in bad times, they're reluctant to panic. Financed largely from corporate investments and savings, the company has a history of using bad times to rebuild their plants, reconfigure their product mix and await the next inevitable upturn in the timber economy. 

Freres Lumber Co., Inc. started in 1922, when "T.G ." Freres traded a piece of his family's farm equipment for a small saw mill in the Santiam Canyon area east of Salem. Today, Freres Lumber Co., Inc. employs 425 people and is one of the largest independent manufacturers of veneer on the West Coast. Grandson of the founder, "Rob" Freres says the company has had to scramble to stay on top of what was happening to the industry, both in the woods and in the marketplace.

Decisions made by company leaders - Rob's father, uncle and grandfather - managed to keep the financial pulse of the company steady, if not lively. Perhaps they had an edge, being able to anticipate the coming changes that others didn't see. But then again, maybe it was that family trust factor - trusting that their own judgment, management capabilities and investment strategy were a solid and consistent insulating factor against the furies of timber economics. In 1959, during a time when plywood began competing with sawn lumber, Freres formed a joint venture with Willamette Valley Lumber Co. (later to become Willamette Industries). 

The partners constructed a large log veneer manufacturing plant, selling the "green", eight foot sheets to plywood manufacturers throughout the Pacific Northwest. The success of the veneer plant followed the fortunes of plywood. Within a few years, Freres auctioned off a small log saw mill that had carried the company thus far and invested in a small log veneer plant, wholly owned by Freres Lumber. Rob's father, Bob, succeeded T.G. as president in 1968 and added a stud mill to make better use of the "peeler cores" from the veneer mills. In 1980, Freres purchased Willamette's share in the large log veneer plant, which they immediately upgraded and expanded. 

During the 1980s, while many were devastated by the economic recession, Freres continued to modernize. "We funded early research and development of laser scanning, geometric centering equipment known as an "XY Charger," says executive vice-president Rob, "which significantly increasees the recovery of veneer from every log ." During that time, they also began to immerse veneer blocks in vats of hot water rather than exposed only to heated steam. 

The Oregon Department of Environmental Quality lauded Freres Lumber Co.'s work because it avoids the escape of chemicals and contaminated steam by using recycled water. "Besides being more environmentally friendly," says Freres, "this sort of conditioning helps keep the veneer flat when peeled, and thus increases recovery ." As the industry moved towards second growth resources, Freres Lumber invested about $7 million to modernize their small log veneer plant and log storage yard in the early to mid 1990s. 

A similar amount has been invested in two Freres projects in the past few years. The first was to rehabilitate a decrepit plywood plant purchased from the Young and Morgan company. The second, now being completed, is a renovation and expansion to the large log veneer plant, also known as Plant No. 2. Despite losing public timber resources in the 1990s and the currently depressed market prices for veneer and plywood, Freres remains optimistic about the future of specialty plywood and engineered wood products. Rob's father Bob continued to lead the company as president through much of the 1990s, semi retiring but continuing on as Chairman and CEO. 

He was honored by the Associated Oregon Industries Foundation for his contributions to the state, the only lumberman ever to be so honored by AOI in its 100 years. Likewise, Oregon State University - through its Austin Family Business Program paid tribute to him and the company in 1994, for leadership in the industry and as a model for Oregon's community of family business. Bob's younger brother Ted, a graduate of OSU, assumed the title of president in 1995, at age 45. "Ted oversees the plant operations," says Rob, Ted's nephew but junior in age by only a half dozen years. Among the things he's overseeing is the upgrade to Plant No. 2. "We're spending nearly $3 million to upgrade a plant that cost $300,000 to build in 1959," Freres reflects. 

The company is banking on the idea that adapting the plant to accept up to 10foot peeled veneer blocks will give them new opportunities in the specialty veneer and plywood marketplace. A future project will install a 40 inch debarker to complement the existing 60inch debarker. Presently being renovated is the 8foot lathe and one green chain. "We've adapted the block stops on the saws so we can cut eight, nine and 10foot lengths," Freres explains. "We've widened the lathe pedestals and the new lathe will accept the longer lengths," he adds. 

In place of the older style guillotine clippers, Freres has added a 10foot rotary clipper. And because nine and 10foot veneer is harder to handle manually, an automated Raute Wood vacuum stacker will speed up production and eliminate one green chain. Freres said that the combined upgrades will allow line speeds of over 500 feet through Plant No. 2 stackers per minute! Veneer makes up about 60 percent of Freres' total sales. In some years, the company produces up to 300 million square feet. Numbers fluctuate, but Freres says that green veneer is about one third of their total sold, with dry veneer making up the rest. 

That which is dried travels through 400degree, gas fired dryers (Plants No. 4 and No. 5). It is then sent through a moisture detector and a density meter where it is stress graded. "There aren't many of us making longer veneers," Freres says, and adds that higher walls are becoming more popular in both residential and commercial building and should provide them with new sales opportunities. Among his list of veneer customers are Roseburg Forest Products Co., Willamette Industries, Hardel Mutual, Boise Cascade, Linnton Plywood, GeorgiaPacific, LouisianaPacific and Columbia Plywood. At their renovated plywood mill (Plant No. 3), Freres Lumber may use some of the longer veneers to make 9 and 10 foot specialty plywood. 

Until now, the plant has been producing standard length plywood, in thicknesses ranging from 3/8 to 1 1/8. As oriented strand board gobbled up the residential plywood market in recent years, Freres and others moved their product to manufacturers of laminated and engineered wood products, such as trusses and floor joists used in construction. "That market has virtually evaporated," says Freres, "because the price of 2x10s and 2x12s has fallen way below what it costs to produce the engineered wood products ." 

He expects that the market will return, and points to Roseburg Forest Products' new engineered wood products facility as a good sign. "We've been shipping an average of about 13 million square feet per month, with one month exceeding 20 million," says Freres. He estimates that the plant's output is more than double what the plant was producing in the year before it was purchased by them and rebuilt. More than half the cost to improve the plywood plant were repairs to the wood fired dryers and rebuilding two presses. Freres says they have a single head sander and are looking for a fourhead sander. 

The company plans to add a patch line soon, and expects that sanded plywood products will make up about 15 percent of specialty product sales in the future. Plywood accounts for more than 30 percent of total sales. Most of Freres' customers are wholesale distributors and almost half of their product is shipped by rail, a large portion of which ends up on the East Coast, says Freres. Besides wood products, Freres also relies on its trucking division for about seven percent of company sales. 

Part of the large log veneer plant at Freres Lumber Co., in Lyons, Oregon. More than 50% of the company's process heating needs are met by the burning of bark and chips from the plant.

Their fleet of 35 tractors (mostly Kenworth) haul timber, veneer, plywood, chips and hog fuel. When a lumber company is still standing strong after 78 years in this industry, you tend to take their advice seriously. Freres' strength is tied to its practice of plowing corporate earnings back into the company. Not coincidentally, that practice goes hand in hand with having very little corporate debt. But all of that would be for naught if Freres weren't also paying attention to product quality. "You can move product even in a down market if you provide customers with the quality they expect," Freres concludes.

Tim Buckley is a freelance writer living in Oregon and is one of our regular contributors to TIMBER/WEST. He has written about federal land issues since working for the BLM in Alaska in the early 1970s.