Volume 13, Issue 4 - May 2012


Moulding & Millwork News
Moulding The Future

For Mouldings, Business is Picking Up
The Moulding and Millwork Producers Association (MMPA) met in March and many member companies reported they are seeing increasing order files. When members of the foreign and domestic committee gathered during the association’s meeting, members went around the room and reported on business activity. While some may see order files stretch six weeks out and others a few weeks out, one thing is for sure: the moulding market.

John Morrison, committee chair, said order files at his company, Sunset Moulding are “creeping up” and if some expected international business comes through, “we will need more good, qualified employees.”

In the Southwest Frank DeMott, Best Moulding Corp., based in Albuquerque, N.M., said his order files are six-eight weeks out.

“We have made some new hires and we would like more if we could find them,” he said. “It’s amazing. It feels like it did four years ago,” adding however, that some of the increase could be due to the fact that as many as seven moulding plants in his area closed in the past several years.

In the Midwest, Morrison reported that Sunset’s order file for the MDF plant in that region extends six weeks out.

“It has been spectacular,” he said. “We have been on overtime and we project that to continue.”

Alexis Boulanger, Roland Boulanger and Co., based in Warwick, QC, reported that sales have been pretty even.

“We’re not sure if that is due to the weather,” he said. “That’s the beauty of being in a market driven by weather.”

The climate definitely played a role in many markets this year and Al Delbridge, East Coast Mouldings, reported that, “12 weeks doesn’t make a year, but it’s nice to have the nice weather.”

Pacific MDF Products sells throughout the United States and its president, Cliff Stokes, reported that order files are stronger on the East Coast than the West.

Ted Smith, Smith Millwork, based in Lexington, N.C., reported that last year was the worst in company history but “December was unusually busy and we have been up every month since then.”

Craig Young, TLC Mouldings, said his company’s moulders aren’t running at full capacity but they have been busy all year and “we don’t see it slowing down.”

Are You Exporting?
Perhaps you Should Be

“Sometimes opportunities are right in front of you and you don’t see them,” said Bernie Weiss, of the Northern California and Sacramento Regional Center for International Trade Development, when addressing MMPA members. He advised attendees how to take advantage of exporting opportunities by beginning with an example of a door and window manufacturer that had an opportunity right in front of it, but didn’t see it. He told of this San Diego window company that had a company from nearby Mexico come every few days to make window purchases.

“This company found out that an architect in Mexico really liked their windows and was specing them in lots of jobs,” said Weiss. “So the company put in an 800 number for customers in this area, hired someone who spoke Spanish and sales exploded.”

He then pointed out that a whopping two-thirds of the world’s purchasing power is outside the United States proving this is an area many companies should look into. He admits there is a lot involved, but that’s not a reason to not do it.

“It can be intimidating but that factor should not stop you,” he said. “There is nothing involved that you cannot overcome.”

On the flip side, companies should not start exporting for the wrong reasons.

“It’s not a place to get rid of your excess inventory,” said Weiss.

Myths regarding exporting include thinking: I’m too small; I can’t afford it; I can’t compete; It’s too risky; It’s too complicated.

“Every part of business has a risk,” said Weiss. “Once you learn the steps and have the right resources, it’s not complicated.”

Making money, however, doesn’t come without costs.

“It takes more money to develop a foreign relationship,” said Weiss. Other costs include hiring and training staff, development of export marketing materials, market research and planning, advertising and sales promotion and export transaction costs, to name a few.

Companies that want to get started will want to take advantage of available resources, namely the U.S. Commerce Department.

“Ask to talk to their foreign commerce service,” said Weiss. “Their entire mission is to help you make the sale. Their job is to help you find a buyer. They will even set up appointments for you and go with you on international visits with an interpreter. It doesn’t get easier than that.”

He also suggested talking to the Small Business Administration as there are loans for exports that are easier to get than those for domestic business. The U.S. Department of Agriculture can also provide assistance as MMPA companies offer wood products. Others include the Foreign Agriculture Service (FAS).

What’s the easiest way to explore exporting to international markets? Weiss said the answer is international trade shows and the Department of Commerce can help with that as well.

“They can take the 10,000 international trade shows per year and help you determine the best one for your needs,” said Weiss. “Their job is dependent on exports and they can pair you up with potential buyers at trade shows.”

Countries to consider for trade shows include Germany, China and Japan, and he pointed out that Germany is known for its large international trade shows.

He also encouraged attendees to check out the Department of Commerce website at www.export.gov.

“It is so deep and so detailed,” he said. “They have a step-by-step for everything so utilize it.”

Once companies have done their research they have to determine the best market to export and Weiss said companies should consider Europe as this is still a great market and the way they do business is similar to that of the United States.

Ones to avoid? “A lot of the developing countries have protective tariffs including Brazil,” said Weiss.

Weiss added that companies shouldn’t do all this work then forget to project to potential customers that they welcome foreign buyers.

“Your website has to welcome foreign buyers,” he said. “Find a student at a local college and let them have at it.” He added that this person should also make sure that the website is listed with google search engines for the countries in which they hope to attract business.

There are many factors to take into consideration, but Weiss reminded attendees, “It does take time, money and patience” but there is nothing that can’t be overcome.

Alexandria Moulding Acquires Royal Woodworking
Alexandria Moulding, based in Alexandria, Ontario, announced it has acquired Royal Woodworking Co. Ltd. of Bradford, Ontario, founded by the Rowe and Gerrits families and specializing in the manufacturing of hardwood solid and custom mouldings, boards and stair components.

According to the announcement, Royal Woodworking will operate as a standalone business unit providing customers with a large selection of quality millwork products as well as leveraging Alexandria’s logistics and sales network to grow geographical coverage, while providing unparalleled support and service. Donna Gerrits, Rick Gerrits and Tom Hayes will join the Alexandria management team and support the integration and combined businesses over the long term.

The announcement notes that the integration of both companies will take place over the upcoming months.

In addition, Aurora Timberland, an Ontario-based wholesale lumber distributer, is also part of the acquisition. Timberland will continue to operate as a standalone business with the founder, Ted Rowe, staying on board.

Likewise, the Royal Wood Shop, a retail outlet owned by Frank Gerrits, is not a party to this transaction. Royal Woodshop will continue to operate independently out of Aurora, Ontario.

Snapshot of the Millwork Market
Mark Young, national sales and marketing manager, Arauco Wood Products, offered an overview of the moulding and millwork market to MMPA members, and pointed out that global economics are definitely affecting the millwork industry.

“People say, ‘How can you be raising prices for millwork?’ Global economics are reflecting moulding prices here,” said Young. Yet despite those economic pressures, there are several markets to which U.S.-based companies can look for growth.

“The fall of 2011 was worse than 2010,” he said. “But prices held through that period then increased in January and February of this year.”

Ivan Eastin, professor/director, CINTRAFOR, gave an update on global markets during the meeting and talked about China and Japan as high growth areas in terms of future building (http://ow.ly/a6IQJ for that story). But Young said the Russian housing stock is even older than that of China and Japan, and the country will need to address that issue so there could be future growth opportunities there as well.

South American countries, including Chile, Brazil and Argentina, are also growing at a very high rate, but Young pointed out that Arauco recently closed a millwork plant in Argentina.

“This shows it is not profitable at today’s prices to bring mouldings there,” he said, and added that the plant’s location 800 miles from the Port accounted for high transportation costs.

Young also noted that while there is excess capacity in the market, Arauco is continually pressured to increase capacity.

“We can’t hire a shift and then let the workers go when times get slow,” he said. “It has to be sustainable. We need to be a good neighbor in the communities where we have plants.”

Young echoed the reports from other analysts who say that in the United States, the repair and remodeling market remains strong, and that housing starts are mainly attributable to the growth in multi-family units.

“Repair and remodeling moulding consumption will outpace new construction until 2014,” he said.

He also noted the preference of builders and contractors toward pre-finished products as a value-added benefit.

Sunset Installs New Line Due to Increasing Demand
Sunset Moulding Company announced that due to the high demand for its Suntrim MDF mouldings, the company has begun installation of a new moulding and finishing line at its Idabel, Ok., plant with completion set for the first week of May. Capacity output on the new line will be up to an additional 10 loads per shift of primed mouldings and primed boards per week. 

The company also manufactures Suntrim MDF mouldings at its headquarters in Live Oak, Calif., and wood mouldings in Chico, Calif.

Anniversary Profile: Pacific MDF Products
At first glance, 20 years may not be such a big milestone when it comes to a company anniversary. But in this housing market, and in the moulding space, where many suppliers are closing their doors, it is an event to be celebrated—especially for a family-owned business. DWM/Shelter talked to Cliff Stokes, president of Pacific MDF Products, based in Rocklin, Calif., and his wife Cheryl, promotions coordinator, recently about the challenges facing the company and what they envision for the future.

Cheryl has only worked for the company for just shy of one year but this business is in her blood—literally. Cheryl’s dad Doug Hanzlick, started the family-owned business in 1992, and passed away unexpectedly at the age of 69 in February 2011. He was diagnosed with cancer and died within three weeks, recalls Cheryl.

“It’s been quite a year for us,” she says. “Good employees helped us get through that time. That’s a tribute to everyone and to Dad.”

When her dad passed away, she decided to join the company, and says she loves working in the family business, which includes her husband, Cliff, who has worked at the company since 1999, their son Jake Hendricks, 26, a brother-in-law and two nephews.

Pacific MDF Products has four plants—Rocklin, Calif., El Dorado, Ark., Clio, S.C., and Edmonton, Alberta. The company produces MDF mouldings and sells into the United States and Canada. Cliff says he is pleased the company has not been forced to close any of its plants throughout the downturn.

“With the economy, not just in lumber, a lot of companies have come and gone and we are fortunate that we are still here, he says.

Both Cliff and Cheryl firmly believe this is due, in large part, to its 275 employees who care immensely about the company. In fact, a main priority has been to save these employees throughout the downturn. “We have had to lay off a few at different times when we had to scale back but we were able to bring many back,” says Cliff. “Any time you get an employee who loves where they work that is a great benefit,” he adds. “Sometimes you luck into the right people but sometimes an employee grows into the business when they see what you are trying to accomplish.”

“When you walk in you can tell that everyone really cares,” adds Cheryl.

Both Stokes’ say the company offers a good product and good service at an attractive price.

“But you have to start with a good product and good people,” says Cliff. “From our plant managers to our sales staff we have excellent people. “

Cheryl points out that the company has a lot of longevity when it comes to its employees.

“All plant managers started working in lower positions,” Cliff says. “They made the investment in learning and that is extremely important.”

“We hope that’s true that the worst is over. With the contractors we talk to, people are feeling more confident and less squeezed than a year ago,” says Cliff.

While the moulding market has been a challenging one in recent years, the market may be looking up.

“We have seen growth in the last six months, and our order file is increasing,” he adds. Another benefit is that U.S. distributors are looking more favorably at the United States. “We are trying to utilize that to our advantage.”

He adds that the company can produce a product and deliver it quicker than product coming from another country. “Because distributors don’t know what will happen in the market it is easier for them to order a month out than two months out,” he says.

Challenges still remain however, and many of these simply have to do with the cost of doing business. The Canadian market faces some challenges as well but they are different from those of the United States and are related to oil production in Edmonton.

“The cost of labor has gone up there so we have to compete with that,” says Cliff.

So challenges still remain, but the company is proud of its 20-year mark and looks forward to future milestones.


Correction
Portions of the information provided to DWM for inclusion in the March Guide to Moulding and Millwork was incorrect. The correct listing is below:
TLC Mouldings
1554 Springhead Church Rd.
Willacoochee, GA 31650
912-534-6363 (P)
866-653-4852 (toll free)
912-534-5010 (F)
Harmony ™ industrial and light-weight MDF primed casings, bases, chair rails, crown, window stool and primed MDF boards. EPP Downstream Program certified third party through Composite Panel Association (CPA).


DWM

© Copyright 2012 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.