Volume 46, Issue 7 - September 2007
It's a Wrap
Contact Industries Wraps its way into a Unique Niche
by Drew Vass, assistant editor of Shelter magazine.
“I bet you didn’t think I knew how to do that, did you?” asked Frank Pearson, president and chief executive officer (CEO) of Contact Industries. He was joking with Jim Snodgrass, vice president of export sales, as he activated a piece of equipment on the custom-designed UV (ultraviolet) finishing station. The company’s 525,000-square-foot manufacturing facility in Prineville, Ore., is literally filled with equipment. And we’re not talking basic equipment either. Contact produces what you might call “high-tech mouldings” and these mouldings are offering distributors and dealers the option of developing niche markets.
This isn’t your grandpa’s workshop. These guys are taking premium lumber, cutting it down to a veneer thickness and wrapping it around every imaginable substrate. Furthermore, the Portland, Ore.-based company has the ability to fingerjoint its veneers, so every imperfection is cut out and only the best-of-the-best is joined back together. The end product is long lengths of defect-free mouldings.
The company’s ability to produce one-of-a-kind products and the look of solid wood mouldings at a reasonable price, has created new opportunities. Peter McKibbin, the company’s vice president, says he thinks Contact has actually created a new market for distributors.
“We’ve not only done many new one-time, custom products for domestic dealers’ projects, but I think we’ve also assisted in the birth and development of a new distributor business segment that may continue to evolve,” he explains.
“Our organization’s goal is to give design teams endless creative options and then challenge us to find a way to make it reality,” he explains. “Having an organization like Contact Industries willing to work with them to offer new and unique products allows them to differentiate themselves in their particular areas. That can be a competitive advantage for distributors and dealers.”
To expand its reach, the company exhibits at various national trade shows. But such a unique product offering means, for Contact, these events are more show-and-tell than actual sales. “We find we sell little at these events, but spend more time expanding the knowledge base for profile-wrapped and laminated products,” McKibbin says.
“We’ve had strong success putting on distributor and dealer clinics and orienting those, regionally, who want to become involved in this segment niche,” he says, “but we believe more opportunities exist.”
“Just a few short years ago, we had the pleasure of meeting and working with Chad Blecker and Dan Dynan at Complete Millwork in Hudson, Wis., who had periodically used a small volume of our profile-wrapped materials,” McKibbin says. “On their initiative, they came to develop what I would characterize as a new business model that was to include both solid hardwoods and profile-wrapped hardwood materials, in complementary uses in finished projects and products.”
“They envisioned the complementary advantages of marketing a combination of hardwood solids and profile-wrapped components, building a unique showroom to show their clients the opportunities available,” he explains.
Charlie Hoehne is a salesperson for Complete Millwork. He says every customer that visits the showroom is blown away by the look and price of these products. As a result, he says Contact’s mouldings are easy to sell, but Hoehne hasn’t always seen it this way.
“Chad [Blecker] discovered Contact’s mouldings and realized the product’s potential. No one else was offering this sort of product, so he knew this was a golden opportunity,” Hoehne explains. “I was working for another millwork company at that time and Chad brought by a box of sample mouldings from Contact. I’m telling you, we took one look at that stuff and said, ‘Why would anybody want to try and sell this crap?’ Boy, was I wrong.”
“We sell false beams for ceilings that would cost you anywhere from $4,000 to $5,000 in solid wood. The wrapped product Contact produces looks even better than its solid wood counterpart and we can offer it for around $1,500 to $2,000,” Hoehne says. “When you’re offering a product that looks this good, at that price, it kind of sells itself.”
Hoehne says while the product’s price point appeals to customers in every price range, the look appeals to high-end customers as well. He says the product also holds up. “This stuff is solid,” he assures.
“We’ve taken a piece of it, just for kicks, and soaked it in water for more than eight hours, then tried to peel the veneer off. Nope. There’s no way. You can’t even lift a corner.”
It All Started With Wood
Contact was founded as a lumber wholesale operation in 1946, by Leo Donnelly. In 1953 the company purchased a lumber re-manufacturing facility called Clear Pine Mouldings in Prineville, Ore. The Donnelly family pioneered a number of process innovations; among them were: thin veneer profile wrapping, flat-lamination technology and proprietary pre-finishing capabilities. These innovations eventually became the core of Contact’s business and, in July 2002, the Donnelly family sold Contact Lumber to the current owners, who have pushed the same technologies even further.
Eventually the company’s focus expanded beyond just wood products. Using other substrates makes all-wood aesthetics possible where solid wood isn’t permitted. For this reason, the company gets frequent requests from architects and designers who insist on the look of solid wood where code will not allow. In this way, Contact’s products are making the impossible possible and the company says it thrives on these challenges.
“We’ve been at this long enough to where we can supply a wrapped or painted component to meet almost any need,” Snodgrass explains. “If we’re not already making the product an original equipment manufacturer needs, we’ll develop one to meet their specs.”
“About 60 percent of the products we make are one-of-a-kind products that are uniquely engineered,” McKibbin says. “Our Prineville Manufacturing Group introduced 68 unique products in 2006, which is a new record for our organization.”
When the University of California Berkeley constructed Stanley Hall, its new bio science building, Zimmer Gunsul Frasca Architects LLP, in Portland, Ore., wanted to use cedar but couldn’t use solid wood and meet fire codes. Contact provided a Western red cedar-wrapped aluminum metal soffit—providing the look of natural cedar with a higher fire rating.
“Stanley Hall’s soffits are a perfect example of where our company is headed,” McKibbin says. These sorts of products are what led the company to make a name change January 1, 2007, from Contact Lumber to Contact Industries.
“Our organizational focus, investment and products have changed so much over the years that the name Contact Lumber no longer truly reflects who we are and what we produce as a company,” Pearson says.
Choosing to produce one-of-a-kind products makes the profitability equation more complex, but McKibbin attributes choosing this lesser-worn path not only to the company’s success, but its survival. “Profitability, regardless of niche, in our industry can be a challenge. But frankly, had our organization stayed in the traditional segment of our then millwork and mouldings business, it is very likely we might not have survived financially,” he says. “There is little doubt that more research and development and small-lot prototyping is required. But we have the good fortune and advantage in that the ownership of our organization is committed to this direction and is willing to invest in employee training and equipment infrastructure.”
It Ain’t Easy Going Green
Nothing goes to waste with this company. In fact, 95 percent of the wood entering its facility leaves as usable product. The same block of 5/4-inch wood that would produce a single moulding profile, through the standard milling process, produces up to 50 identical products using Contact’s methods. Fall-off pieces don’t end up in a dumpster either; they end up in bins for mechanical sorting and reuse as core material. You might expect a company of this nature to be green by default, but Contact struggles to identify itself as such.
McKibbin says he is periodically frustrated by foundation certification programs that narrowly define green material and specifications, but considers it less of a struggle and more of a reason to continue campaigning about the advantages the company’s technologies offer. “The way we choose to do this publicly is through peer education and commonsense marketing,” he says. “Rather than ‘green,’ we have adopted the ‘extending the resource’ marketing message that offers what we think is a commonsense approach. Who can’t see the benefit of a 50-to-one ratio?” McKibbin asks.
That doesn’t mean the company isn’t ready to meet the requirements of a green order. It’s all part of the customization process. Contact has developed relationships with suppliers that offer environmentally certified woods and veneers, including solid and composite substrates and imported or domestic veneers. If a customer wants a certified product, Contact will source certified materials and maintain a paper trail to ensure the certification follows through its manufacturing process.
When the owners and developers of a Marin County, Calif., film studio insisted on certified products, Contact supplied approximately 100,000 lineal feet of base and case mouldings for the project—all from certified recycled content MDF (medium-density fiberboard) substrate, wrapped in Forest Stewardship Council-certified red oak.
“Right now, it’s a fairly small percentage of our customers who request certified products,” Snodgrass says, “but we’re ready for any who do.”
McKibbin says he expects the green movement to encompass Contact’s approach and methods eventually. He is encouraged by the prospect of expanding the view and definition of green to include a total carbon footprint and says the concept supports Contact’s commonsense message of extending resources domestically.
Contact Industries At a Glance
If Contact’s advanced slice-and-dice methodology makes you think of cheap, imitation wood products, that idea couldn’t be further from the truth. After premium wood pieces are sorted and imperfections are removed, they get sliced into veneer. Several veneers can be fingerjointed together, minus the knots and color imperfections, to produce what looks like an aesthetically perfect, solid-wood product.
Call this company’s methods a new version of gilding, if you will, but the bottom line with building products often comes down to look and price. Aside from biting into one of them, homeowners know one thing—their mouldings look just like solid wood and feel like it, too. Add a reasonable price range to that equation and what this could equal is greater sales. Instead of turning away disappointed shoppers who flinch at the cost of solid wood mouldings, you could introduce them to a new option.
Match Making: Its Still About the People
Contact knows the key to succeeding in its line of business isn’t just about advanced equipment, but the right people.
“The most significant change this company has been able to achieve is in the way our employees have embraced the complexity of new product requirements, including the use of non-wood materials to meet customers’ needs,” McKibbin says.
But keeping the right people in the right places can be challenging at times. Contact says its surrounding job market is less than stellar, requiring the company to take a proactive approach to staffing. Running an ad in the local newspaper isn’t enough to keep the company’s 470 hourly positions filled.
“Attracting individuals to our new business niche segment with an understanding for process and product qualification does remain a difficult proposition,” McKibbin admits. The company’s solution to this challenge is a rigorous offering of educational opportunities, keeping employees engaged in the full process and showing them the fruit of their unique labors.
“Our manufacturing management team has developed a number of training and educational classes to engage our current and new employees in the process and the requirements—from leadership classes to ISO training, to ESL (English as a second language),” McKibbin explains. “As a side benefit, we have actually discovered many of our employees have come to enjoy and welcome this new approach to our business. Many have mentioned this new segment is more interesting and they have an opportunity to identify and engage in where the products they produce go.”
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