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September 2006 - The Logging and Sawmilling Journal

sMALL SAWMILLING

high-end custom cutting

Vancouver Island’s Longhouse Trading is finding there’s plenty of business doing custom cutting of western red cedar and Douglas fir for high-end building projects.

By Paul MacDonald

Brian Jenkins financed the start-up of his new added-value forest products business in typical entrepreneurial fashion: by mortgaging the family house. “It was kind of a scary thing to do, but you do what you need to do to get things going with a business.”

Six years on, however, Longhouse Trading Company has seen very untypical growth rates—upwards of a 30 per cent increase in sales each year. “We’ve managed to surpass our revenue target every year,” says Jenkins. Although starting from a low revenue base, these numbers are still impressive. And there’s more to come for this Vancouver Island company, Jenkins adds.

Before setting up Longhouse Trading, which specializes in custom cutting of western red cedar and coastal Douglas fir, Jenkins was purchasing wood from coastal mills, remanning it, and selling the product direct to end users, such as building contractors and home owners.

By design, Longhouse Trading stays well clear of producing anything commodity-related. “We’re not into framing lumber or anything you could pick up at the building supply stores,” says company owner Brian Jenkins (above).

“We liked the margins we were seeing and we decided to go further, to get into our own sawmill and buy the logs directly and mill it ourselves,” he explains. “We got a couple of good contracts to get things going at the start.”

This year finds the Longhouse operations extremely busy, producing specialized products for a wide variety of high-end building projects. They range from multi-million dollar homes on the Sea-To-Sky Corridor between Vancouver and Whistler to, interestingly, being a supplier for a $19 million longhouse project for the Qay’llnagaay Heritage Centre Society in the Queen Charlotte Islands. They supplied everything from post and beams to soffit and fascia for the longhouse project.

The company supplied materials for the First Nations’ Nisga’a Government House in New Aiyansh, BC. “We’re also involved in supplying wood products to just about every ski resort going in British Columbia right now.” And on the giving back side, they are supplying wood to build an orphanage in Nicaragua.

Their product range is wide, from posts and beams, siding (including prestained siding), board and batten, decking and flooring, to name a few.

“If it’s a specialty item, we’ll make it,” says Jenkins. “There are not too many items we haven’t made over the last six years.”

Considering the nature of this specialized work, price sensitivity is usually not an issue for customers. By design, Longhouse is as far away as possible from producing anything commodity-related. “We’re not into framing lumber or anything that you could pick up at the building supply store.”

At the core of the Longhouse Trading manufacturing operation is a dieselpowered Heartwood 310 band saw, with supporting edgers and chop saws. The saw features a thin-kerf double cut blade.

The raw material for these products starts out at a six-acre site near Qualicum Beach, where logs are bucked, sorted and stored. On this site is the core of their manufacturing operations, a Heartwood model 310 band saw, with supporting edgers and chop saws. The saw features computerized set works, with a thinkerf double-cut blade. Diesel or electric models are available—Longhouse opted for a diesel model. Although the 310 is said to be capable of production rates of up to 8,000 board feet in an eight-hour shift, the company is as interested in value as they are in volume.

“We find with these horizontal type of bandmills that we get a lot better quality cut and a lot more out of the log than with other types of sawmills. We do pretty well on value.” Although Jenkins declined to say what their recovery rate is per cubic metre, “it’s something we’ve very happy with.”

In addition to the Heartwood, Longhouse uses the services of several Wood-Mizer operators in the immediate region on a contract basis.

Since they cut everything to order, manufacturing is well planned before a log even comes near a saw blade. All orders go to mill operations manager Tom Yates, who manages how and when the wood will be cut, and whether it will be done in-house by the Heartwood or one of the contract mill operators.

Taking the contracted milling approach gives the company flexibility. If they are busy, which can be quite often these days, the extra work is contracted out. And if things are less busy, the Heartwood can handle the milling.

Longhouse will be bringing on planer capabilities of its own in the near future. Planing has been contracted out, as has some of the remanufacturing, and that is expected to continue, says Jenkins. “We don’t think it’s going to have any impact on the outside suppliers we’ve been using because of the rate of growth we’re seeing. We did not want to step on anybody’s toes after they’ve helped us build the business in the last six years.”

They’ve thought of expanding things on the primary milling side, and on processing in general, but Jenkins notes they are trying to stay focused on what they do best. “We’re always trying to keep in mind the core concept of keeping our investment in the logs—that’s how we make our money.”

The product range at Longhouse Trading is broad, from flooring and decking, posts and beams, to siding and board and batten. “There are not too many items we haven’t made over the last six years,” says Brian Jenkins.

Key to the whole operation, of course, is the timber supply. Jenkins worked on establishing supply relationships from the start with local forest companies such as Weyerhaeuser—whose coastal BC operations are now part of Western Forest Products—and TimberWest. They also belong to the South Island Woodlot Association, another source of supply. “We try to buy our logs from woodlots as much as possible because of their sustainable approach,” says Jenkins.

Purchasing timber from sustainable woodlots is more an issue for Jenkins, a fourth generation Vancouver Islander, than for his customers. “It just makes sense for the future.” Plans call for purchasing about 10,000 cubic metres over the coming year.

Things have developed to the point that many log suppliers are now pulling a sort specifically for Longhouse, whether it be western red cedar or Douglas fir. “That solves any quality control problem right there,” explains Jenkins. “What comes out of the logs we get is good.” However with a wide variety of requirements, and products, the company purchases some milled wood, both cedar and pine, from BC mills.

With the high cost of this quality timber, they work to get the most out of the log as possible, leaving little in residuals. Slabs are burned in a woodfired hot water Heatmor boiler that heats their dry room. A grinder is brought in once a year to deal with other residual wood.

Along with its vertical integration— manufacturing specialty products directly from the log for the most part—another of the company’s strengths is that they deal directly with building contractors or homeowners, says Jenkins, without anyone in the middle. Most of their business is regional. The company has a fleet of four five-ton trucks, all equipped with Hiab cranes, to transport product. “That is important,” says Jenkins. “We need to deliver to our customers on time.” For larger projects, they contract Super-Bs. Whenever possible, they go after larger projects with some scale, that involve at least a truckload of product.

An interesting project the company has been working on lately, and which is starting to get some traction, is utility pole cross-arms.

These mostly four-by-five inch pieces sit at the top of utility poles and hold conductors and other related equipment. They must be pre-drilled to exacting tolerances—within a 1/16th of an inch— and Longhouse was fortunate enough to find a Simco boring machine in the BC Interior which, with some alterations, now does this exacting work. Longhouse currently supplies BC Hydro, Hydro One in Ontario and other utility companies across Canada.

They were recently negotiating with an American company to supply a small portion of the cross-arms that will be required as part of the massive infrasructure rebuild as a result of the damage caused by Hurricane Katrina. A bonus is that the pre-drilled cross-arms may go across the border without any countervail.

Using a Simco boring machine they were able to find in the BC Interior (at left), Longhouse Trading has entered the utility pole cross arm market. The cross arms must be pre-drilled to exacting tolerances, within 1/16th of an inch.

When drawing up business plans for the company six years ago, the US would have normally been considered part of the market area. “We would have been knocking on doors in the US long ago. But we did not even put it into our marketing plan.” The reason is simple: the countervail. Longhouse does some sales to the US, and they have been able to sometimes get around the countervail by selling complete home packages or by selling directly to home owners, who personally travel back to the US with the wood.

With its 30 per cent plus growth rate, the biggest challenge of late for Longhouse has been finding people. They have 15 employees, but Jenkins notes they should have 20 employees. “I’d hire five people today if I could find the right ones. We have a good core of people that have started with us or joined the company along the way, but we’re recruiting all the time because of our growth.”

Young people who are trained in industrial settings—who are safety conscious and used to working around equipment—seem to be in short supply on Vancouver Island. Trained labour is often drawn away by the big money offered in the Alberta oil fields.

That challenge is likely to be there for the foreseeable future for Longhouse, as Jenkins prepares the next five-year plan for the company. With their current setup, they can increase sales substantially, which he feels is achievable given the current construction boom in British Columbia.

“Right now, we’re picking the projects we want. We’ve had jobs from all over— Puerto Rico, Alaska, Hawaii. But for the time being, we’ll keep focusing here in BC and when business comes our way from other areas, we welcome it.”

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