Founded in 1959, the Forest Products Group, a family run enterprise presently has four offices, two in Ohio and one each in North Carolina and Indiana. It is a specialty wholesale wood products distributor that places a special emphasis on its relations with suppliers and customers. New milling equipment has been brought in to improve efficiencies and keep up with the technological advances. It is excited about its growth into the North Carolinas. We spoke with Vice President Charlie Hess.
Forest Products Group was founded by Charlie’s grandfather, who came back from World War II and was looking at options for a career. His friend suggested wholesale lumber because he was an exceptional people person and always had the drive to do right by his customers. Charlie’s grandfather worked the business from 1959 to March 1, 1983, which is when his son, Charlie’s father, bought it.
“My father has been the owner/operator ever since. Forest Products’ true story is in looking at some of the key employees that he hired during the early years, such as our General Manager Heath Smith and President Rick Esselstein. They have led Forest Products over the last thirty years to what it is today,” says Charlie.
Forest Products is family-run by the Smith family. Heath Smith is the general manager and started in the yard pulling boards in the 1980s. He proved himself to be the best salesman, manager and general manager in the history of Forest Products.
“His brothers Chad, Mike, and Mark, along with other family members, have become employees of ours and have proven themselves invaluable. His son Brad has been with us for seven years and has recently become a manager in his own right, covering the North Carolinas,” says Charlie.
Forest Products is a wholesale lumber, distribution, and building products materials company. It acts somewhat as a reserve supply for its customers of the products they use during everyday construction and remodeling of homes.
The company centers on two lines – CedarPro and PinePro – which have been the bread and butter of Forest Products over the last thirty years. It has also diversified into engineered products, becoming an engineered wood products distributor and designer.
“We have been able to design and distribute engineered wood floors, which has become a successful niche in the Ohio area over the last ten to fifteen years,” says Charlie.
Forest Products does have competition, but most rivals are large corporations aided by serious consolidation over the last ten years. Forest Products is privately owned and has four locations, whereas many competitors are owned by investment firms and may have forty locations.
“We make our impact in the industry through excellent customer service and face-to-face relationships with all of our customers. We feel they do not get that with the large behemoths,” says Charlie.
Charlie says one of the company’s greatest challenge is what he deems “the footprint problem.” This means that the suppliers generally would like to distribute by only using one company in all fifty states. Forest Products cannot offer that, as it does not have the locations. But, it feels it repeatedly dominates those larger companies in the areas in which it operates.
This is the reason Forest Products can work with the suppliers and has led the company to sit down with some bigger customers and look to the future. The decision to expand into North Carolina was based on this dialogue and the knowledge that this is where the suppliers needed the company most.
Forest Products has only recently experienced issues with shortage of labor. However, accurately forecasting sales has been an issue all year. At the beginning of 2018, a boom in housing starts was predicted.
“The issue was with floor framers, plumbers, and electricians. Because of that labor shortage the average time to build a house and how many houses that our customers wanted to build went down. Obviously, from this, our sales went down,” says Charlie.
Forest Products sees the business as simply deferred. Those houses will still get built, but construction may be delayed until fall or sometime next year. The company has been lucky to avoid truck driver shortages. It has a great core of tenured drivers, and there have been some new hires. Unfortunately, another issue has come from the rising price of oil, and it follows that expenses go up.
New milling equipment will allow Forest Products to put its own patterns on cedar and pine boards. In the past, this is something that was outsourced, but through time and research, it was discovered that this work could be accomplished in-house with its own equipment. The company realized that this could become a great profit maker.
“We made that move at the end of last year and began the process of bringing in the molder as well as a large saw,” says Charlie. The equipment upgrades cost $1 million, and the hope is for all of the company’s own milling to be done in-house soon. “Our goal is to become completely self-sufficient by the end of September,” says Charlie.
Technology in milling equipment can be extremely advanced. While $1 million may sound like a lot, there are much larger groups that have $100-million mills that program what cut and pattern go onto the board via a computer. The milling equipment owned by Forest Products may be less complex, but the company has still been affected by technology. “The main impact of technology – this year and for the next few years – has been the online logs trucks have to complete to stay in line with the government regulation,” says Charlie.
Those on-line logs ensure that no truck driver drives over the legal number of hours. Forest Products has evaluated how and where it ships to ensure the optimum value for shipments. This is where its technology has been effective.
The biggest short-term goals for Forest Products are to deal with downtime issues at the mill that can be caused by something as simple as wood chips. Running wood through a mill makes chips fast, and these must be disposed of. There are also operational issues and supply chain issues that must be examined.
Another short-term goal is to get the North Carolina location fully operational and profitable. “If we can accomplish that within a year, that is a great goal and achievement. We feel confident that all the pieces are in place to be successful over the next two years and that we need to follow up on the path we have laid,” says Charlie.
“We get on basic population-based websites and pick a hundred-mile radius around different portions of the U.S. and measure their population and housing starts,” says Charlie. The bottom line is that more people mean more construction. If one was to draw a hundred-mile radius around the North Carolina location, the large population will drive demand for housing, so opening a location here just made sense.
Fifteen to twenty years down the road, the aim is to have two more locations, and building starts and industry numbers show that the hottest markets are in the southeast portion of the U.S. Expansion for Forest Products should continue through North Carolina, down the coast, and into the south. It will also continue to invest in the milling equipment in Indiana.