Top Employer

Alberta’s Spruceland Millworks is the first forest products company to be named among Canada’s Top 100 Employers, and with benefits like prosperity bonuses and trips toMexico, it’s easy to see why its workforce
is happy.

Spruceland Millworks owner Ben Sawatzky (above): In a very competitive labour market in Alberta, “We want to be an employer of first choice.”
By Tony Kryzanowski

Alberta businesses are suffering through an unprecedented labour shortage, with the province’s forest industry complaining of losing skilled workers to the oil patch in significant numbers. Yet, secondary manufacturer Spruceland Millworks Inc has only had one person quit in the past three months. How has one of Canada’s largest independent producers of value-added wood products, with $80 million in annual sales, managed to survive and prosper in this cutthroat labour market? Owner Ben Sawatzky started to build the foundation for the company's successful approach 20 years ago when he developed a “Purpose Statement” long before corporate Mission Statements became popular. “We want to be an employer of first choice to our staff and their families,” says the company’s Purpose Statement. The “Sawatzky Way” has resulted in a business culture and work environment that is unique, particularly in the wood products manufacturing industry. Recently, the company was named one of Canada’s Top 100 Employers by Maclean’s/Mediacorp. It is the only forest products company to ever earn this honour. “To be recognized as a top employer after so many years is a confirmation that we are on the right track,” says Sawatzky.

The company is currently focused on producing lumber for big box stores in Canada and the US, supplying the prefabricated housing industry in Asia and on selling lumber to wood treatment plants that turn out product for the garden sector.

on years of service, and the company plans to spend a similar amount on prosperity bonuses in 2008, in the form of tickets to Mexico. To qualify for the minimum, employees only needed to have between one and two years’ of service.

These perks are literally only the tip of the iceberg. In all, each employee receives an additional $7 per hour in benefits that the company does not have to offer, yet it does. The company also provided low cost loans so employees could purchase a 20 per cent stake in the business. Spruceland Millworks now has 50 shareholders.

“My motivating factor in offering employees the opportunity to purchase shares was to be able to offer them more than a job—I wanted to offer them an ownership opportunity,” says Sawatzky. “I also saw it as a way of possibly creating that next generation of shareholders.”

With such a generous employment package, it begs the question of how this approach has impacted company profitability.

“Perhaps more than that, it gives us a profile that makes people curious to see what we are all about. So they check us out, and in many cases, that leads to an application for employment.”

Spruceland Millworks employs 130 workers at its secondary manufacturing facility west of Edmonton, and another 30 workers at Timeu Forest Products, a sawmill located near Fort Assiniboine, Alberta. The company offers a competitive salary combined with a variety of incentives, bonuses, and perks, topped off with a clear understanding among employees of what is expected of employees and the level of productivity on the shop floor is obvious. No one is hanging around or just gabbing. They are sweating—by choice—to meet their production quotas.

However, that alone does not paint an adequate picture of the actual working environment at the company. For example, the lunchroom has a fully equipped cafeteria where employees can purchase hot meals at cost. Each employee is entitled to two free massages each year, conducted by an in-house licensed massage therapist. Employees all received prosperity bonuses of between $2,500 and $5,000 this year depending them every day.

Production workers are given a daily target. If that target is achieved, without any reduction in quality, before their nine-hour shift is complete, they are free to go home early—while being paid for a full nine hours. Or they can put in the full nine hours, bank the time and take a day off, or get paid for the extra production they achieve. They also earn an extra $20 per day for every day they reach their production target.

That said, production quality is monitored on an hourly basis and if it does not meet company requirements, employees must put in extra time on their own to correct the problem. That fosters an extremely high level of loyalty among employees and the level of productivity on the shop floor is obvious. No one is hanging around or just gabbing. They are sweating—by choice—to meet their production quotas.

However, that alone does not paint an adequate picture of the actual working environment at the company. For example, the lunchroom has a fully equipped cafeteria where employees can purchase hot meals at cost. Each employee is entitled to two free massages each year, conducted by an in-house licensed massage therapist. Employees all received prosperity bonuses of between $2,500 and $5,000 this year depending on years of service, and the company plans to spend a similar amount on prosperity bonuses in 2008, in the form of tickets to Mexico. To qualify for the minimum, employees only needed to have between one and two years’ of service.

These perks are literally only the tip of the iceberg. In all, each employee receives an additional $7 per hour in benefits that the company does not have to offer, yet it does. The company also provided low cost loans so employees could purchase a 20 per cent stake in the business. Spruceland Millworks now has 50 shareholders. “My motivating factor in offering employees the opportunity to purchase shares was to be able to offer them more than a job—I wanted to offer them an ownership opportunity,” says Sawatzky. “I also saw it as a way of possibly creating that next generation of shareholders.” With such a generous employment package, it begs the question of how this approach has impacted company profitability.

Flexibility is key for Spruceland Millworks, says Ben Sawatzky. “We have to be able to switch from producing 2x10s in 20-foot lengths to producing 1x2s in two-foot lengths in a matter of minutes.”

Sawatzky was recently quoted as saying that the company’s revenue is growing by about 10 per cent per year, and despite a couple of tough years for secondary manufacturing in 2005 and 2006, Spruceland Millworks was profitable in both those years.

Sawatzky says the share purchase plan was a contributing factor. “There is a degree of dedication and commitment that goes further when you are an owner, rather than when you are simply an employee. That has been very noticeable to us.”

The company produces only value-added wood products from spruce and pine. About a quarter of its raw material comes from its own sawmill, while it purchases the remaining raw material from other sawmills particularly in northern Alberta. Sawatzky says the way he has approached those agreements is to require each sawmill to provide a narrow range of rough, green raw products, so that each mill can focus on meeting superior quality standards for just a few, high volume products.

Overall, Spruceland Millworks produces 150 million board feet annually. It is currently focused on producing lumber for big box stores in Canada and the US, supplying the prefabricated housing industry in Asia, and on lumber sold to wood treatment plants that turn out products for the garden sector. That is today’s market emphasis.

The company has changed its geographic focus, product mix, and customer base three times in the past six years to maintain its profitability. Six years ago, 70 per cent of company production was exported to Japan, with lumber produced in metric sizes, according to Japanese specifications. Four years ago, 70 per cent of its lumber was exported to wholesale distributors in the United States. Today, 70 per cent of its lumber is sold to Canadian customers.

While many other independent secondary manufacturers may have buckled under the strain of these high-speed U-turns, Sawatzky has tapped into the power of the flexibility that is built into his dedicated workforce.

“We are aware of automation possibilities,” says Sawatzky, “but my experience has taught me that while automation brings cost reductions, in most cases it either requires a lot more space than we can afford to have or it reduces the flexibility of the types of products that we can manufacture.”

He says he has learned that flexibility is absolutely critical to the company’s continued growth. “Our production lines have to be able to switch from manufacturing 2x10s in 20-foot lengths to 1x2s in two-foot lengths in a matter of minutes,” he says. “If we want to maintain that type of flexibility, it prevents us from engaging in a process to automate our manufacturing.”

small or large log line. The small log line is equipped with a HewSaw 200 breakdown unit, processing logs between four and 10 inches. The large log line is equipped with a canter, followed by a McDonough quad that has been converted into a quad circular saw.

Presently, the lumber sorting and stacking is still done with manual labour, although the company intends to rebuild the entire back end of the sawmill later this year to include an optimized trimming system and a J-bar sorter.

About 85 per cent of the lumber produced at Timeu Forest Products meets Spruceland Millworks’ higher grade requirements. The remaining 15 per cent is sold to customers in Alberta looking for lower grade material. The sawmill also

The Timeu Forest Products sawmill produces about 35 million board feet of green, rough lumber per year, from 130,000 cubic metres of wood harvested from its own timber quota. Through timber exchanges arranged with other mills, the majority of the sawmill’s diet is about an equal mix of spruce and pine, between 10 and 20 inches in diameter.

Tree-length logs are cut to length and then sorted by diameter, species, and quality in a separate facility before being processed at the sawmill. With the knowledge of the company’s end user requirements in hand, the logs are broken down for recovery with the goal of capturing as much high value material as possible. The logs are sawn on either the markets all of its bark, sawdust, and wood chips, and was the first sawmill in Alberta to operate without a beehive burner.

The rough, green lumber produced by Timeu Forest Products is transported from Fort Assiniboine to Spruceland Millworks where it is stickered and kiln dried. The drying process is considerably longer than is typical for commodity lumber—50 hours for two-inch thick lumber and 40 hours for 1.5-inch thick lumber. The kilns are direct heat kilns, supplemented with a steam cycle at the beginning and end of the drying process. Sawatzky says the drying is done this way because a lot of the company’s end products are very small, making stability critical.

Once dried, the material is processed through one of six production lines. Each line is equipped with a Weinig moulder, which produces the finished product. Then it is stacked, packaged and loaded into containers for transport by truck to North American markets or transported to the West Coast where it is loaded on ships for overseas markets.

Spruceland Millworks plans to introduce new products each year and achieve 200 million board feet of annual production by 2010.

Sawatzky concludes that any businessperson or primary producer contemplating a move into secondary wood product manufacturing has to be prepared to employ a lot of people. That philosophy often runs contrary to prevailing business management trends. “I often hear of primary sawmills interested in doing more value-added and at the same time I hear them interested in reducing the number of their employees,” says Sawatzky. “Those two views are polarized.”

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