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Location,Location,LOCATION

SWP Industries of New Brunswick is proving once again that a company's location can be crucial to its success. 

By Harold Hatheway


Marketing experts stress that location- ready access to both raw material and a major market-is a vital factor in developing a successful manufacturing business, and SWP Industries Inc, of St Stephen, New Brunswick, is proof positive of the maxim. St Stephen, in the southwestern corner of New Brunswick, has road, water and rail connections to areas throughout the region producing white cedar, SWP Industries' primary raw material. And it is just across the bridge from major eastern markets in the United States. Since the company was formed in January 1995, annual sales increases have consistently been in the 40 per cent range, a remarkable growth record. SWP recently received a New Brunswick government award for excellence in the under $25 million sales category. 

SWP may only be five years old, but its staff can boast of some 500 years of collective experience in harvesting, manufacturing, marketing and sales. Also, a unique philosophy has the company's major customers as partners at the boardroom table, providing retail expertise and a distribution system that normally takes years to build. Practically, if not formally, the company is integrated from the stump to the retail shelf. Not only has the original objective of providing key customers with guaranteed supply and the company with guaranteed sales been achieved, but another major benefit has been the building of a highly effective consumer oriented corporate culture. 

Since the 1960s, the southwest corner of New Brunswick has supported a series of cedar based US subsidiaries, useful primarily as sources of low-cost product, with limited attention to local growth and profit. However, when Stephen Crabbe, now SWP's president and CEO, was hired by one of these US owners-the Eastern Fence Co of Long Island, New York-as general manager of the St Stephen Fence Company, things changed. The nine-year period of growth and modernization under his management included a new sawmill in Arthurette, New Brunswick, a kiln drying and finger jointing plant at Bear Island and investments of over $2 million in capital acquisitions and improvements.  

Fence blanks are lined up for moulding at the SWP plant. At the heart of the operation is the Hydromat 23C moulding unit. 

St Stephen Fence was consistently successful, so when the US parent was forced into insolvency in mid1994, Stephen Crabbe was able to assemble the necessary partners and financing to buy out the Canadian subsidiary. The new company, SWP Industries Inc, created in January 1995, was 70 per cent Canadian and 30 per cent American owned, the latter largely by two major US customers (Reeves Southeastern of Tampa, Florida and Lumbermans' Associates of Philadelphia). The established markets, distribution systems and extensive marketing expertise contributed by the US partners, combined with the harvesting, sawmilling and production know-how of the Crabbe family and its associates, meant that the new company was able to "hit the ground running". The fortunate timing of the North American Free Trade Agreement, which eliminated a number of the irritants and restrictions involved in moving into the US markets, was yet another advantage.

However, SWP's success appears fundamentally the result of a detailed management philosophy based on what the company terms "customer focus" and "positioning for maximized sales and profits". President and CEO Stephen Crabbe spells it out this way: To add the maximum value possible to the wood fibre they process To tailor their production and output to specific end user needs To expand their export markets and enlarge the company's international client base To continually seek new products and processes, distinguishing SWP from its competitors The new company's physical assets when the doors opened in 1995 included the Arthurette mill, the Bear Island kiln and finger jointing plant, two St Stephen facilities, a moulding and remanufacturing plant and an assembly, packaging and distribution facility. In 1996, SWP acquired a second sawmill facility, North Shore Cedar in Blissfield, New Brunswick, and in 1999 added a third sawmill, Goldsmith Lumber in St Stephen. Also in 1998, the Arthurette mill underwent a major refit with the most modern equipment specifically selected to deal with the sometimes challenging job of cedar processing, with the result that the three mills now process 115,000 cubic metres annually. 

The biggest change came about with the 1998 purchase of an 110,000 square foot building on a 65acre site in St Stephen, formerly owned by Texas Steel. This acquisition allowed the company to do a major consolidation: the relocation and upgrading of three freestanding facilities-the Bear Island kiln drying and finger jointing plant and the two installations in St Stephen-together with an expanded and modernized head office. However, after only two years of constant growth, space is already at a premium in the huge building. SWP's raw material comes from two major sources: 17 per cent from sub licensee allocations in the northeast and southeast areas of the province, under the Crown Lands & Forests Act, with the balance purchased logs from private woodlots or sawn lumber from sources in New Brunswick, Nova Scotia and Maine. The bulk of this is cedar, largely to be processed for producing fencing and associated items, with some spruce, aspen and white pine used for specialty products. These sources of supply are relatively secure, especially in the light of the government's policy of directing wood fibre to value added production. 

SWP is also participating in the Wood Products Group/University of New Brunswick research project to assess the potential of underutilized species such as tamarack. In markets where there are strong efforts being made to persuade consumers to insist on "green" products, SWP can point to strict adherence to provincial and state standards on selective cutting, silviculture, watercourse protection, wildlife habitat and other environmental requirements, and to its own decision to avoid wood obtained from clear cutting. Northern white cedar, SWP's primary material, has a long and proud history in this part of the world, dating from its use by the pioneers in the northeastern part of the continent. They utilized its high resistance to decay in the shingles, clapboards and fencing, much of which is still serving homeowners today after a century of use. A native New Brunswick species, it grows in wet areas, which are well suited to winter logging, and it also produces the brightest and lightest sawn lumber. 

Fencing, in an amazing variety of designs, is the mainstay of SWP, and the line is continually being expanded, with a specialty division being one of the more recent additions. Other products are always under consideration, as well, and a recent example is a line of finger jointed, laminated fence posts. These posts, after testing at UNB's Wood Science and Technology Centre, have proved superior to equivalent size natural posts, and are made from wood fibre which would otherwise be scrap. A wide variety of specialty products is also produced, some utilizing pine, aspen and spruce, as well as the ubiquitous cedar. Along with the broad range of fencing products, SWP produces paneling, moulding blanks, siding stock and finger jointed items. A consistent and expanding market share in Canada, the Mid Atlantic States and the US southeast is the result of an experienced and strong marketing organization. This is teamed with innovative and consumer oriented product development which-combined with strong overall management-adds up to a company on the move to bigger and better things. 

SWP is always considering adding other products to its broad line of fencing, such as finger jointed, laminated fence posts. 


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