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Ontario hardwood sawmiller R J Dungey & Sons finds success with US furniture producers

By By Paul MacDonald

As the saying goes, adversity often challenges people and companies to tough things out-to work hard and be creative at searching out new business opportunities. Brothers Bill and John Dungey of R J Dungey & Sons Ltd of Mitchell, Ontario can certainly attest to that. A few years back, this southwestern Ontario hardwood lumber and pallet producer, along with other mills in the area, saw a good portion of its business disappear almost overnight. In the early 1990s, the Ontario furniture industry-a big customer for sawmills in the area-went through a restructuring, and more than a few companies didn't survive. They were hit by a double whammy-a recession and the free trade agreement. "The mills in this region, including our company, were hurt by the closures of a few furniture companies and the downturn in that industry," recalls Bill Dungey, talking over a coffee in the company's lunchroom. But being a small independent mill, with no ties to a corporate parent with deep pockets, just means they have to be that much more resourceful, he adds. Their strategy has come in two forms-increasing their sales to the United States and becoming more efficient. Dungey moved into selling more wood to the American market, most notably to the furniture industry there, which is booming thanks to a buoyant economy.

The healthy US economy and the good number of housing starts certainly help Canadian companies that produce softwood lumber and ship to the US. But there are also spinoff benefits for hardwood producers. Those new homebuyers are buying lots of new furniture, driving up the demand for hardwood stock from furniture manufacturers. "Some companies have started up again locally and are doing well," says Bill, "but the big operations are really in the US and that's where the business is." While the Dungey brothers say they have done well selling into the American market thanks in part to an exchange rate that works in their favour, they good-naturedly jibe that they're not quite so keen about the exchange rate when it comes to buying their equipment in the US. That aside, however, they made a major equipment investment earlier this year, purchasing a new Cleereman carriage and Silvatech scanning system. They had been running a McRae carriage, which Bill says they more than got their money's worth out of. "It was a good carriage. We cut a tremendous amount of lumber with it over the years." Initially, they were looking at just replacing the drive on the McRae unit. But in the end, they felt it was time for a completely new carriage. It was also a good opportunity to look at incorporating some more efficient equipment. "The timber we are working with is worth a heck of a lot more now than it was a few years ago and we're trying to get a little more out of it," explains Bill. "That's why we went into scanners. And in terms of the Cleereman, we got more production right off the bat simply because it's a new carriage and downtime
is minimal."

 

mill_1.jpg (23860 bytes)
Bill Dungey (right) and brother John run the mill founded by their
father and uncle in the 1950s. The mill recently underwent a significant
upgrade, with a new Cleereman carriage, which represents a solid
investment in the future of the operation. The mill produces random
length hardwood from one inch up to five inches, and widths up to
24 inches. It produces about two million board feet annually.

 

They were originally looking at a smaller carriage, but after Bill and company sawyer Don Horn toured a number of recently-updated sawmills, they decided to go for something a bit more heavy duty. It was really a matter of having the right tool for the job. "The smaller carriage was doing fine for the operations we toured, but we are work ing with larger logs, up to a diameter of 40 inches, so the heavy duty carriage made sense. Over time, we felt that we would have just beat a smaller carriage to death in our operation." The unit they installed is a fourbunk standard weight linear carriage with a 38-inch opening. Bill notes that the new carriage represents a major investment for a medium-sized, family operated sawmill. "It's the only carriage my brother and I will ever have to put in for the mill." It also rep resents a solid investment in the future of the operation. And so far, the new carriage has delivered. "The thing's a tank," says Bill. "It's a super carriage." He also has praise for the Silvatech system, which he describes as being user friendly and reliable. That, he says, seems to have a lot to do with the Silvatech people having a solid sawmill background.

The Cleereman/ Silvatech combination seems to work well. Local equipment supplier Advantage Mechanical worked with Dungey in installing the new machinery in what Bill recalls was one of the coldest periods of this past winter. At minus 20 Celsius, the Advantage Mechanical and Dungey employees working on the project had an extra incentive to get the job done quickly, but done right. Bill says they are working with a somewhat fixed amount of timber in the area, and the idea behind these improvements is to do more with that timber. "There are only so many trees around here, so there's no point in getting too big in the mill. You'll just outstrip your raw material supply. But if we can have a system that will yield us an additional few percentage points here and there, it will add to the bottom line." Although Dungey added some equipment to their greenchain and an automatic slab saw in the early 1990s, this latest equipment represents the biggest upgrade for the mill in recent years. It's complemented by some other improvements. A new sawfiling room is equipped with two new Wright W-358 grinders and the pallet operation took delivery of a new Brewer 9108 double arbor single bay gang saw this year. In terms of mobile equipment, they purchased three lift trucks in the last two years, two Liftking 12,000-pound machines and an 8,000- pound Liftking unit. On the production side of the sawmill, they try to presell as much as possible before cutting, essentially resulting in cut-to-order lumber.

All of their product on the sawmill side, which is a mix of hardwood species, is random length, ranging in thickness from one inch up to four or five inches for a specialty cut, such as basswood, and widths up to 24 inches. They are producing about 11,000 board feet a day, or about two million board feet a year. "We try to make the most of our operating hours and our logs considering that we are running with a circular saw headrig." The company's long-established pallet division was initially set up by Robert Dungey, Bill and John's father, to handle the lower grade wood turned out by the sawmill. It's a demanding industry, with tight profit margins and one in which you live or die on service. "With the pallets we supply to the automotive companies, they know what they need in advance and it's very organized," says Bill. "But with other companies, it can be a matter of them running out and then ordering more pallets. They may use their last pallet this morning and then give us a call saying they need more pallets this afternoon. That's the reality of this business." The Toronto area is the biggest market for pallets and it's very competitive.

Dungey serves a variety of industries in southern Ontario, but Bill notes that the automotive industry really drives this region. And with the automotive industry presently doing quite well, suppliers such as Dungey find themselves busy. R J Dungey & Sons was actually started by Bill and John's dad, Robert, and Robert's uncle, Arnold Gloor, back in the 1950s. The two briefly operated a rented mill in a small town called Hensall before moving to their five-acre site in Mitchell, where the operation has been ever since. Robert Dungey was an electrical engineer, which you would think would be more than handy in running a sawmill. But he faced some challenges of his own. He was visually impaired and had lost the vision in the centre of his eyes, though he retained perimeter vision. "But he had a very sharp mind and a very good memory," says Bill. Robert Dungey bought out his uncle in the late 1960s and Dungey and Gloor became R J Dungey & Sons. It wasn't too long before the brothers were working at the operation. Both started working at the mill during their summer holidays from school, even if it was just piling boards.

Over the years, the two brothers have developed their niches within the business. Bill handles more of the pallet operation and the overall mechanical side of things, while John-who actually has a degree in mathematics-handles the financial side of the business and the sawmill. "I think we complement each other fairly well," says Bill. The management team also includes facilities manager Sandy McLean, who deals with all areas of the business, but concentrates on employee issues, health and safety and purchasing. A wide variety of wood grows in the rich farmland in this mostly rural region of Ontario, including hard and soft maple, ash, oak, cherry, beech, hickory and basswood. "It's a bit of this and a bit of that," says Bill. Like all Ontario forestry-related industries, Dungey witnessed significant changes in how the forest is managed in the last five years, even in southern Ontario. Most of the woodlots, the source of supply for the sawmills, are on farmland in the region. Ontario Ministry of Natural Resources foresters used to come out to the woodlots and mark the trees that should be harvested, effectively helping the farmers manage their forests. "That worked out pretty well," recalls Bill. "The end result is they would help the farmers work towards achieving a sustainable yield and often gave them advice on timber pricing.

" This forest management assistance came to an end with government cutbacks. But Bill notes that many of the same MNR foresters who were providing the farmers with assistance have now set up shop as consultants, offering the same service on a fee-basis. "Some of the woodlot owners are using the services, and some are not because they have to pay for it now." The saving grace for forest management in the area, and it turns out for the sawmills, have been county bylaws limiting what can be cut. In Perth county, where Dungey is located, trees have to be 18 inches in diameter before they can be cut. "Without that, there would be a lot fewer trees around here. If you go down southwest of here, in Kent and Essex counties around Windsor, it's very flat farmland and there isn't a lot of forest cover because there weren't regulations governing tree removal." It has still become tougher to source wood in recent years. A number of new mills have started up in the area and existing mills, like Dungey, have expanded their operations, so the demand for wood has increased. Dungey has a full-time timber buyer on staff, Brian Walden, who knows the farmers and the woodlots of the area. That knowledge is key to sourcing timber successfully, according to Bill. "It's a very contact-oriented business".

mill_2.jpg (16120 bytes) In Perth county, where the R J Dungey & Sons
mill is located, there are bylaw limits on what size
of trees can be cut-they have to be 18 inches in
diameter or larger. There is increasing competition
for timber in this area of southwestern Ontario.
A number of new mills have started up and others,
like Dungey, have upgraded their operations.

 


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