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Making a case for buying components.

Following the European example, more North American wood products companies are leaving some of their manufacturing to specialists.

There are not too many woodworking manufacturers, circa 1993, who can afford to thumb their noses at the idea of buying wood component parts from outsiders to boost their production prowess and become more competitive from both a cost and quality standpoint.

While the general economy remains murky, more furniture, cabinet and other types of wood products manufacturers are turning to component specialists as a means of setting fixed costs for some of their parts. In doing so, they are finding an expanded range of custom, semi-custom and stock wood-based components to choose from including cabinet doors and drawers, laminated and veneered panels, wood turnings and mouldings and curved plywood forms and bent parts. As a result, new converts are being won over on a steady basis.

"It just makes so much sense," said Bill Love, treasurer of CabParts. Located in Grand Junction, Colo., CabParts specializes in standard, thermo-fused melamine 32mm boxes primarily for small cabinet shops. "Component specialists can buy material cheaper on a larger scale. This savings is passed onto customers who know what the costs are going in, which allows them to make more accurate estimates.

"It makes their businesses much more flexible," continued Love. "A guy can install a kitchen with a lot more window dressing, knowing that he's using a box that he probably couldn't make for anywhere near the same cost. It also allows him to get out there and concentrate more on selling his product."

Jeff Pickering, vice president of marketing and sales for Pickering Industries, a Tacoma, Wash-based company whose business is split almost equally among kitchen cabinet, furniture and store fixture manufacturers, said he agrees that the component concept's basic logic is more attractive than ever.

"I don't want to sound too optimistic, but I really see a bright future for the component business," said Pickering. "Components alleviate a lot of problems. We're aware of our customers' overhead. When we sell them a part, they know that it costs $2.50, or whatever. There's no dart throwing. Everything is in black and white."

Yet, while there seems to be no escaping the feasibility of using component service in this day and age, the concept has been far from a soft sell over the years.

"Throughout the history of our business, our biggest competitor has been our potential customer -- the guy who feels he can do for himself what we can do for less money," explained Bob Granum, chairman of Panel Processing Inc., a fabricator-finisher of hardboard and particleboard components located in Alpena, Mich.

"The large store fixture manufacturer, for instance, gets it in his head that he can do his own cutting, painting and perforating and greatly cut his costs. We have to show him that our price is equal to or less than, his direct manufacturing costs. There are still a lot of companies who do everything themselves, but there are not nearly as many as when we started our business."

"Americans were slow to pick up on it (using component manufacturers), but now more of them realize that integrated manufacturing is a thing of the past," said Bill Byrne, vice president of marketing and sales for BHK of America, a manufacturer of drawer systems located in Central Valley, N.Y. "Everyone said we were 10 years behind the Europeans, but the gap is closing."

Consider the case of Valendrawers, an Italian-based wood drawer manufacturer that serves 14 countries, including a U.S. headquarters in Lexington, N.C. "When we came to the U.S. from Italy 10 years ago, our story fell on deaf ears," said Mike Johnsen, Valendrawers' national sales manager. "But we learned the different industry needs, and after five or six years of going to all the major shows and continually dealing with these folks, we developed a 48-hour quick-ship program."

This year, Johnsen said he has seen a significant growth curve coming into effect "For starters, the governmental limits tied into the VOC emission issue began forcing manufacturers to consider what kind of in-house work reductions they could make," Johnsen said. "The drawer department was certainly one area.

"Then, there was the lumber scare that carried through the second quarter, whereby it wasn't just a matter of how much you'd pay for lumber but also where you'd get your materials from."

Johnsen added that while component companies have benefitted by the lumber supply crunch in the short-term, it's the long-term partnering that is of greater importance. "I think the first order of business is to discuss philosophies and find out where potential customers see their company five or 10 years from now, and how they intend to achieve their goals.

With long-term prospects in mind, Valendrawers recently entered into a partnership with Media Profili, a component specialist located just northeast of Venice, Italy. The joint venture has resulted in the birth of a new company, Valentec, which will specialize in intricate profiles.

"We hope to cost-effective provide intricate profiles and, in many cases, entirely new concepts for customers with whom we intend to earn the right to be partners," said Douglas Post, Valentec's vice president.

Establishing partnerships with customers has also been a goal for BHK, which has developed long-term commitments with the WCI group in the cabinet industry, Bush Industries and O'Sullivan in the RTA sector, and SPS, a high-volume marketing firm that develops components for the retail market.

"It's definitely a case of becoming more service-oriented," said Byrne. "For both WCI and Bush we receive monthly projections, but we sometimes need to make special adjustments within a 24-hour notice. A number of our major accounts have necessitated technological advancements like bar coding to keep their business."

In terms of technology, major machinery investments on a regular basis come with the territory. For example, Keystone Wood Specialties, a Lancaster, Pa.-based company that manufactures doors, drawer fronts, drawer boxes, drawer sides and mouldings in 14 different wood species primarily for small (under 10-man) furniture and cabinet shops, recently replaced its 20-year-old Weinig moulder with a Weinig Unimat 23 that features an ATF computerized set-up system. The company, which normally has about 100 job orders in the works on a daily basis, also bought a Weinig profile grinder to increase customized moulding capabilities.

Pickering Industries recently spent over $1 million on a Homag direct postforming machine from Stiles Machinery that operates with both high- and low-pressure laminates and essentially eliminates two edges in the edgebanding process.

In some cases, however, like with Sparta Spoke Factory, a fully-machined chair-part specialist located in Sparta, Tenn., a bigger investment is made in methodology over machinery.

"We're a little bit different," said Les Tubb, owner of Sparta Spoke Factory. "We've invested more of our money the last several years in employee training and learning to apply total quality management concepts to a real old (just short of 100 years) woodworking business.

"The key to a component manufacturer remaining successful lies in the quality of its products and services, which encompasses a lot of things," Tubb continued. "The main thing is to let the customer define what's good and bad, and then carry it on down to the service level with on-time shipments and improved plant quality."

Sam Stoltzfus, president of Keystone Wood Specialties, echoed Tubb's statements. "Quality and service will always be the keys," he said. "Instead of trying to be the lowest-priced manufacturer, we believe on trying to be the best in those two areas. That's what brings in the repeat orders."

Stoltzfus added that keeping an eye out for new potential markets does not hurt, either.

"I think there's still room for continued growth and diversification into new products," Stoltzfus said. "I really can't say in what areas just now, but there's always a niche out there that can give you an edge for a year or two until everyone else jumps on the bandwagon.

"Trends are always changing in the woodworking industry, and you just have to key in on those product parts companies might not like manufacturing themselves."
COPYRIGHT 1993 Vance Publishing Corp.
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Author:Arkush, Dan
Publication:Wood & Wood Products
Date:Sep 1, 1993
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