Profile: Brenlo Custom Mouldings, Mississauga, Ont.
As noted in this issue’s “From the Editor” department, there is a feeling in the industry that the glory days of solid wood are over. The labour-assisted killing of Quebec’s Shermag group of solid-wood manufacturing sites is often held up as an example. But then, the old Shermag group has been purchased by Bermax and is in full production.
And then there’s Brenlo, making and shipping 220,000 lineal feet of custom hardwood moulding into the Greater Toronto Area each week (nearly a million per month) to the high-end residential builder market.
“We only do custom,” says John Kitchen, c.e.o. of Mississauga, Ont.,-based Brenlo Custom Mouldings. “If you move over into components, it is mainly a low-margin market.”
Suddenly, Kitchen becomes intense. “Wood is a beautiful product,” he says, “but the industry does not recognize that ‘value-added’ wood is a race to the bottom. Volume is NOT the end game. You end up working for wages, not return on your investment.”
According to Kitchen, you have to be in control of every economic aspect of your business. “There is always going to be a market for solid wood out there,” Kitchen says. “Wood is nature’s fingerprint.”
However, Kitchen acknowledges there have been changes, and many of his competitors are gone and their equipment is up for sale. “Moulders that used to be $400,000 can now be bought at auction for $8,000.” In fact, capital investment in machinery has yielded in Kitchen’s calculus to the Top Three cost factors, those being raw materials, labour and hydro.
Obviously, the main consumers of hydro at Brenlo are the six moulders of varying ages and efficiencies sitting in rows on the floor, the infeeds and outfeeds meeting up with a material-handling route along the outside.
However, what the casual eye does not see is the hogging system for scrap, which runs the ground waste under the floor to a briquetting machine in a separate area. Unlike small, grill-and-shop pellets, these products are more like hockey pucks, and, being of nothing but heated, untreated hardwood, can be sold on the open market. In Brenlo’s case, they have a customer base in the horticulture industry using them as winter heat for greenhouses.
“About 10 years ago, our plant manager went to the IWF show in Atlanta and saw a briquetting machine and recommended we buy it. This is a profit centre for Brenlo, says Kitchen, but even here the market economics play their role. “When we put this in, the price of fuel was high,” he says, “but with the price of oil down where it is, it is hard to put a reasonable margin on it. Still, we were paying for sawdust and shavings to be hauled away.”
Labour is another issue. Brenlo has very low turnover, Kitchen says, Brenlo maintains about 48 employees in production, but their skilled workers are getting older. Moulder operators are hard to find, he adds, and the trade schools aren’t even producing any anymore. “Immigration is where it’s at,” says Kitchen. “They seem to have the skills, and you will see the United Nations when we go out on the floor.”
According to Kitchen, government involvement in labour is killing it, as is so often the fact. “Minimum wage is the job killer,” he says. “It has an equalizing effect on everybody else’s wage,” making it hard to give the best incentive to the best employees.
There is no question in Kitchen’s mind that people respond to incentives. Without a shade of a joke, he says, “We are just good employers.”
And he seems to have a case. The shop tour for this profile revealed a close, comfortable relationship between employer and employees, and it was common for Kitchen to ask a worker about a family event recently past or an upcoming appointment.
“All of our employees are on profit-sharing,” Kitchen says. “In addition, we have a quarterly business-review meeting where we show them everything. Ever one of them knows the impact we are experiencing from the exchange rate on the Canadian dollar, since that affects the price we pay for raw materials. We also did a company-wide survey.
“We have three rules for employee engagement,” Kitchen says. “Communicate. Communicate. And communicate. We must have an open environment. It’s who we are.”
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