Talking Wood with a Lion – Part I
Over a virtual cup of green tea (remember I found a substitute for the expensive coffee) I was discussing the challenges that woodworkers have in the current environment with Chuck D. Ray, Ph.D., Associate Professor, Wood Operations Research, The Pennsylvania State University and Contributor to Wood Pro and Go Wood. Since Chuck is fortunate to visit different wood production companies and different types of wood operations I thought he could help provide some insight on how to handle these challenges.
First I asked Chuck his thoughts on 2 of the biggest issues faced by professional woodworkers like us:
- Quality wood source availability (how hard it’s become to get consistently good wood products)
- Rising wood costs hurting business profits
Patrick Kennedy: Chuck, we are seeing that the availability of quality wood is becoming a challenge for the industry. How long do you expect this problem to persist and while we wait for the situation to change what are your suggestions to overcome this challenge?
Chuck D. Ray:
- It depends on what you make: I guess it depends on your perspective and what products you’re making. Some species are in short supply because of a variety of issues. For instance, quality ash, beech, white oak, and hard (sugar) maple are declining as an overall component of the Northeastern forest. I don’t expect these species to rebound anytime soon, because they are largely being replaced in the forest make-up by soft (red) maple, red oak, birch, and “mixed white oak” species like chestnut oak, swamp white oak, etc. This is an evolutionary process, and our markets and products will necessarily evolve with it. My suggestions would be to look for innovative ways to incorporate these “lower quality” species into your product designs while reserving the high-value pieces where they are most valuable to the design.
- Another issue with quality is that lumber grades have been evolving as companies develop proprietary grades and marketing schemes. This means that lumber is increasingly being differentiated for different markets, and that the small-volume buyer who purchases industry standard FAS (for instance) may be getting an FAS product in which a certain percentage has been creamed off for a proprietary product. This is a trend that can’t be fought, since those customers who pay more for the proprietary grade lumber will always get the cream of the crop.
P.K.: My profits have been suffering because clients aren’t willing to pay higher prices, but my material costs keep rising. How can I halt this profit erosion?
- Rising raw material costs have to be offset by improvements in efficiency. The most effective operations I’ve seen are those in which employees are constantly involved in evaluating plant performance and improving it. This goes as far as having daily meetings with supervisors and weekly meetings with crews to first, explain raw material cost increases, and then, to solicit ideas from the floor on how to reduce costs to offset those increases. Continuous cost monitoring and efficiency improvements aren’t the fun part of millworking, but they’re the part that makes it pay.
- For the small-shop owner who works by himself or with a partner, efficiency is even more critical. You must find a way to off-load all those chores that keep you away from the bench. Investments in temps, answering services or book-keeping services can appear too expensive at first look, but might easily improve the bottom line of the business if they keep the woodworking in process. And a shop helper to help keep inventory and materials organized and the shop clean can impact the productivity of a shop tremendously.
Patrick Kennedy of Superior Woodcraft is a CustomMade.com affiliated maker and a frequent contributor to the Pro Shop blog. Chuck D. Ray, Ph.D., is an Associate Professor specializing in Wood Operations Research at Pennsylvania State University – if you’re wondering, that’s why he’s a lion. Both of us are interested in hearing your views. WHAT DO YOU THINK ABOUT THE RISING COSTS OF DOING BUSINESS AND WHAT MEASURES HAVE YOU TAKEN TO FACE THIS CHALLENGE IN YOUR OWN BUSINESS?