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Bucking the recession, small Oregon mill finds a successful wood products niche

Eric Mortenson, The Oregonian By Eric Mortenson, The Oregonian
on January 26, 2013 at 2:00 PM, updated January 27, 2013 at 9:16 AM
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Oregon mill finds successful niche
Enlarge January 14, 2013 - Elk Creek Forest Products employee Alex Espartaz prepares a beam for trimming. The Independence mill found a successful niche remanufacturing lumber and filling custom orders for high-end home and commercial construction. Beth Nakamura/The Oregonian Elk Creek Forest Products finds a successful niche gallery (22 photos)
INDEPENDENCE -- For a company representing the resurgence of Oregon's wood products industry, Elk Creek Forest Products isn't dressed for a party.

The lumberyard is ice-crusted mud and gravel. The office is a converted single-wide mobile home. Company executives wear jeans and sweatshirts. The protective paper wrapped around lumber shipments was purchased from a company that went broke and sold off its inventory. Rather than spend money on wrapping paper of its own, Elk Creek snapped it up and put it to use. As a result, some of the loads going down the road or across the ocean bear the failed company's label rather than its own.

None of which matters to Brett Slaughter, Elk Creek's founder and president.

"It's not a flashy business," he says. "It's important to me to have a blue-collar mentality."

Elk Creek began with Slaughter personally answering phones, filling orders and loading trucks. Working instead of sleeping, refusing to be out-hustled by competitors. "Flat determination," he describes it.

millbrett.JPG View full size Elk Creek CEO Brett Slaughter, shown here with a 24'x24'x20' timber, credits a "€œblue collar mentality" for his company's success.  
In less than 10 years the company has grown to nearly 40 employees and $20 million in annual sales. It ships small batches of specialty beams and timbers to New York, Hawaii and points between. At any given time Slaughter has about $3.5 million worth of inventory sitting in his lumberyard, and his graders and traders are hopping.

By all accounts Elk Creek has found a successful niche in what the timber industry calls "secondary manufacturing."

In Oregon, where recurring recessions, environmental restrictions and technological changes have whittled the wood products workforce and emptied mills for 35 years, that's saying something.

Wood products and logging employment combined sank from 81,376 people in 1978 to 33,274 in 2008, according to the Oregon Office of Economic Analysis.

The latest recession didn't help. Using broader and more numerous employment categories, a report commissioned by the Oregon Forest Resources Institute said the industry lost 14,000 jobs from 2007 to 2011 alone. Elk Creek and other small, specialty mills alone won't do much to reverse those numbers, but they do seem to be holding their own.

Slaughter's company owns no timber itself, and doesn't bother competing with big mills that churn out construction two-by-fours or sheets of plywood.

Instead, Elk Creek buys rough-sawn material from sawmills and reprocesses it. It kiln-dries, resurfaces and custom-sizes beams and other wood used primarily in high-end homes and commercial buildings. Elk Creek fields inquiries from and sells to lumber wholesalers, who in turn supply contractors.

With the housing market showing recent signs of improvement, people in all facets of the wood products industry are allowing themselves a little optimism.

"Markets for wood seem to be picking up," says Tom Partin, president of the Portland-based American Forest Resource Council, an industry advocacy group. "Dimension lumber and plywood are at levels we haven't seen for a couple of years."

Having ridden out the recession, Slaughter says his company is in an especially good position. "In 2005 and 2006 it was a great economy," he says. "I was catching crumbs off the side of the plate of the big guys and building clientele. When the recession came it didn't affect me as much."

The downturn created opportunity as well as difficulty, he says. Other companies curtailed product lines or went out of business, leaving customers in need. Experienced, competent wood products veterans also became available for hiring, and Slaughter assembled what he describes as an all-star crew.

Slaughter's father and grandfather were in the wood products business, and he started in 1993 as a green-chain grunt pulling and stacking freshly cut boards. He then spent six years with Forest Grove Lumber, going from the lumberyard to yard manager and to sales. He worked for his father for a time, then struck out on his own.

In 2007 he struck a partnership with Idaho Pacific Lumber Co., which provided capital and became the majority shareholder. Slaughter is an Idaho Pacific shareholder and sits on the board of directors these days. In 2011 he moved the business from the Eugene-Springfield area to Independence and set up operations in an abandoned mill that had operated in various incarnations since the 1940s. Slaughter graduated from Western Oregon University in nearby Monmouth and lived in McMinnville, and several key employees were commuting from the area, so the move made sense.

Shawn Irvine, the city's economic development director, says the impact of an Elk Creek-type business in a small town cannot be overstated.

"This one is really important," Irvine says. "The real big sexy project that brings in 500 jobs gets the press, but jobs like this are really the most important. These guys pay a good wage, they want to hire local people and they're growing."

Slaughter contends continued good times are ahead, despite the overall trend for mills.

Some wood the company has on hand is immense and nonstandard: 6 inches wide by 20 inches high, or 8 by 12, for example, and 20 to 40 feet long. Much of it is high-grade, tight-grained Douglas fir, straight and strong, suitable for use as exposed beams. Other grades are used in heavy timber-frame construction. Slaughter estimates his company remanufactures about 40 percent of the lumber that arrives in his yard. The rest it matches with orders and sends back out.

The company's strength is its inventory, which gives it the ability to quickly assemble and ship custom packages. Sitting in a warehouse, for example, is a beam 2 feet square and more than 25 feet long; Slaughter knows someone will need a beam that big at some point.

"They're able to put together packages for customers that we are not geared up to do," says Tim Hunt, sales manager at D.R. Johnson Lumber Co. in the southern Oregon town of Riddle. The sawmill sells lumber to Elk Creek, which remanufactures it to fill orders from wholesalers, who in turn supply contractors. It wouldn't be economical for D.R. Johnson to do the custom cutting itself.

"To ship to the East Coast we'd need a full truck or railcar to make it cost effective," Hunt says.

Elk Creek is filling a production niche the sawmills don't want to pursue, agrees Greg Chase, sales manager of Herbert Lumber Co., also in Riddle.

"We can't afford to do that, to interrupt our production schedules," Chase says. "His inventory is shippable for almost immediate delivery."

"It's not worth our time," agrees Scott Manke, secretary and sales manager of the Manke Lumber Co. sawmill in Tacoma. "He'll buy the lumber from me, and pull a fancy grade out of it; he's got the remanufacturing capability. And they get big money for it."

The lumber-trading business is known for its relationships. Deals involving hundreds of thousands of dollars worth of lumber are carried out over the phone, with not a piece of paper exchanging hands. Elk Creek and Slaughter thrive in that world.

"He's got a good reputation, he's a good guy. Very honest," Manke says. "In this business you know there's a few people you can deal with, and he's one of them."

Slaughter intends to keep it that way by operating in a "moral, ethical and honest" manner. Stay late, load at any hour, take care of the customer.

"If the answer is no," he says, "there'd better be a good reason we can't get it done for you."

--Eric Mortenson

 


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21 comments so far
Years ago when I worked for the Forest Service a district ranger up on the Olympic Penninsula came up with a plan to end clearcutting on her district, and instead sell old growth trees selectively to high end industries, like musical instrument makers, boat builders, and architectural specialty markets. She did an economic analysis on this and estimated she could make much more money for the government (you and me), cut far less timber and thus conserve older forest habitat, AND create more value and jobs in local communities. 
 
The Forest Service higher ups said no way. We were in the "volume" business, not the money making business. A few years later logging was almost completely shut down on her ranger district due to habitat loss from clearcutting. 
 
We could have been nurturing businesses like Elk Creek, and instead we squandered our forests by selling cheap and turning fantastic trees into 2 x 4s. Crazy.
Great story Eric. Value added work ethic can work wonders for sure. Good luck to Elk Creek!
WHAT? A small business successful without a government subsidy? Shame on them. What don't they understand about Socialism versus Capitalism. Someone call the Governor and tell them to get with the program. 
 
I couldn't be happier that they are successful on their own.
Glad to hear of a successful small business. Good luck!
The important point of this success story is the manner in which the business, more or less, began, grew and continues to grow, in a word: organically. The virtues of this approach and the aspects that characterize it were adequately explained years ago by Paul Hawkin in his book Growing a Business. Unfortunately, it continues to be ignored by politicians and government bureaucrats because it does not further their interests or the interests of socialized corporate interests. 
 
Here’s a summary: 
http://www.squeezedbooks.com/articles/growing-a-bu... 
 
The approach that usually fails is the familiar one of investing lots of money, public and private, in the next big thing such as solar panels, windmills, nanotech, biotech, or biofuels. It is the norm because it is driven by large established and entrenched vested interests, private and public cronyism. It is inspired by the get rich quick mentality so beloved of investment banksters and venture capital (i.e., people with money far in excess of their needs as well as their knowledge). 
White Bird Woods in Aumsville, Oregon is filling a niche market by supplying custom doors to builders on the west coast. Its proprietor, Gary Hamm, is employing several people after starting from scratch a couple of years ago. Entrepreneurs like Hamm and Slaughter are the backbone of our local economy, and they deserve our respect and support.  
 
Check out Hamm's work at http://www.whitebirdwoods.com/index.html
Read this in the print version this morning. Excellent story. Thanks!
Good job Slaughter. You're a breath of fresh air in an environment dominated by lawyers, cheats, and parasites that produce nothing while robbing workers and their pensions. This sounds like the good old America and Oregon.
Governor Phony Cowboy says Nike is the company that deserves special tax deals. A company that makes it's products in China and Vietnam, who sponsors sports scoundrels like Lance Armstrong, Tiger Woods, Joe Paterno and Marion Jones. 
 
The systems is stacked against regular people doing regular jobs.
Good work Eric.Thank you
While our leaders pander to marketing giants... giving tax breaks and fawning attention, this company gives a bright example of how our nation became a giant. 
 
Elk Creek MAKES SOMETHING... WITH TANGIBLE VALUE ADDED. It makes no difference if it is a small manufacturer or a huge employer of thousands... turning something into a more valuable item that has a market demand is the very best influence possible upon capitalism. That the company appears to also have deep commitment to its people and community... and some plain old simple thrift... is icing on the cake. Thanks for a great example.
You sir, have a great name. 
 
Hopefully we can get the feds and state out of the way and open up oregon timber to china and the rest of the asia pacific region in a sustainable way. Trees can grow back people, they grow back.
I'm all for sending more dimension lumber to China. Sending our trees to China is stupid employ the chinese to mill our wonderful resource or put Americans back to work milling our trees...
Staples, you are approaching it from an emotional standpoint and that is fine.  
 
Currently I have family that works for a dimensional lumber mill and they have two customers, China and Home Depot/Lowes. In fact, so many mills have closed down, that they basically wrap with other companies wrap, because they are also contracted.  
 
Quite a bit of dimensional lumber from Oregon does go to China, but they are in a recession! Not as big as the rest of the flounder'ers but when your population is nearly 5 TIMES the US, they stop buying quickly.  
 
As far as trees growing back, they do, but not under a timber company's usual management, they are not equipped to handle multiple yield harvests. They buy a lot  
Wonder why, small woodland lot owners, log a different way? Yet, their yield puts to shame most commercial timber land.  
 
Why not have closed mills, re-mill existing dimensional lumber? The landfills, craigslist and your neighbors barn are probably full of it. Why don't we make trash into treasure?  
 
Why not use the forest's for other things besides just timber: food, water, recreation, heck even aesthetic value. Sometimes it might be nice to have a some wildlife in the backyard, rather than a neighbor or a paper company. Forests aren't grown over night. The good ones we originally chopped down, took around 1,000 years to develop, we can't mimic than in even 25 years.
Uhh because the "dimensional lumber" (otherwise known as the "wood pile") in my barn and shop are there to be reused on my property, not for reselling and remilling. It doesnt sound like you've been around a small farm before, but most people actually already recycle their lumber. Anything thats rotted out gets burned, and no, it doesnt make good shavings. There isn't some great shadow inventory of lumber sitting around available to be remilled that you think there is. 
 
Our forests are one of our greatest resources here in Oregon, we use it for regreation and aesthetic value, and we can harvest it for export in a sustainable fashion
I would agree if any of that delusional fantasy was true. Why don't you come out with me to the forests in my hood that are virtual dead zones from the "sustainable" harvesting, don't forget trash littered, animal devoid and weed filled from timber production.  
Isn't it convenient when the economy goes south, you start preaching sustainability. We have been preaching it for over 100 years.  
 
But every thing you are complaining about and want to occur, is happening dingbat! just like I mentioned above, but you ignored. China is buying our dimensional lumber, but its not enough. I can take you to multiple cities with rows of brand new built unused houses.  
Your thinking needs to reflect, that we have overbuilt and overexploited for quite some time and now your surprised its catching up to bite people in the butt who didn't plan for it. Sheer lazy man's thinking on your part.  
 
My family has been logging in Oregon for 5 generations.
"a 24'x24'x20' timber" 
 
It sure doesn't look lie 24 ft by 24 ft by 20 ft to me!
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Come on BB, you know what was ment.....come up with something useful.....
Thanks for catching that, Brent - I wish I had! Obviously, 24 inches by 24 inches.
That's really neat guys worked around the B.S. spotted owl and all that.