For over 30 years the leading pallet and sawmill magazine in America.
Strong Family Leadership and Controlling Its Supply Line Help M & H Crates Succeed
M & H Crates: Texas sawmill and pallet manufacturer controls its supply chain and relies on strong family leadership to stay competitive. Former Texas A&M quarterback runs his family’s third generation facility as he acquires new plants to augment production.
By Chaille Brindley
Date Posted: 5/1/2013
JACKSONVILLE, Texas–The McCown family is known throughout Texas for its football passing pedigree, but it is also true that the family has sawdust flowing through its veins. Long after the roar of the crowd faded away for Randy McCown, president and chief executive officer of M & H Crates, family is what matters most as he leads the sawmill and pallet company that has been in the McCown family for three generations.
“I have avoided a lot of potholes by learning from my dad and grandfather,” said Randy McCown. In college, Randy was a star quarterback for the Texas A&M Aggies. He helped lead the Aggies to an 11-3 record in 1988, a tie for the 2nd most wins in one season in Texas A&M history. Over his college career, Randy passed for 4,187 yards and 22 touchdowns. Randy’s two younger brothers, Josh McCown and Luke McCown, were accomplished college quarterbacks who later played in the National Football League.
But there is a lot more to life than just football. When Randy jumped back into the family sawmill and pallet plant in 2001, he discovered that slugging it out in the wood business is just as hard as any competition on the gridiron. Randy said, “I learned from my football career that success comes by doing things better than the previous generation, and the bar has been set pretty high here at M & H Crates.”
Legacy of Hard Work and Determination
The McCowns began in the wood industry in 1968 when Rayburn McCown got out of the rock crushing business and started a small veneer plant. Pat McCown, Rayburn’s son and Randy’s father, said, “We kind of backed into the pallet industry to do something with material that wouldn’t be a good fit for our veneer operation.”
Rayburn had a friend in the pallet business and learned about the potential in the emerging field. About the early years of the company, Pat McCown, the former president of M & H Crates, said, “Hunger is a great motivator.” The McCown family and the company’s dedicated employees worked hard to succeed. Pat added, “We have multiple 25 plus year tenured people working here. The employees who have been with us a long time are a big reason for our success.”
Pat took over the control of the wood products businesses in 1990 from his father. In 1998, the McCown family sold the sawmill and pallet and crating operations to the employees. The veneer operation is owned separately by Pat McCown. And in 2005, Randy took over the operational control of M & H Crates from his father.
Randy said, “I learned from my father the importance of the attention to every little detail. We have to look for little ways to cut waste and get the most out of the log.” These little areas of improvement have included automating with stackers, reducing the number of times that a worker touches a piece of lumber or a pallet, reducing logistics costs and empty miles, upgrading equipment to relieve bottlenecks, and finding more lumber sources to improve supply options.
The McCown family has grown its forest product enterprise way beyond just the initial veneer operation. Today, there are multiple companies in three separate locations producing a wide variety of products. M & H Crates processes and manufactures cants, pallet stock, crossties, cut stock, crates and custom wooden packaging.
Challenges and Benefits of Being Employee Owned
When employees own part of the business, they take a different attitude about their work. Randy said, “Statistics show that employee owned companies have been the most successful through the recent recession. All employees have a dog in the hunt.”
Commonly referred to as an employee stock ownership plan (ESOP), these businesses provide the workforce with an ownership interest in the company. In many cases company stock is supplied to the employee at no cost. Employees must stay with the company a certain time period before becoming fully vested and able to obtain the benefit of stock ownership. Shares are held by an ESOP trust until the employee retires or leaves the company. Then the shares are sold giving the employee money to use for retirement or other purposes.
The percentage of ownership is based on employee salary although all full-time employees are fully vested after seven consecutive years with the company.
Randy said the ownership program has been especially effective for managers who realize they aren’t just making money for the McCowns, they are making money for everybody when they do little things to become more productive and grow the business.
M & H Crates offers ownership opportunity to all employees. The process does require some extra bookkeeping but the benefit pays off in terms of employee output and motivation. The company does have to keep a certain amount of liquid capital to pay off shares as older employees leave the company and cash in their shares. At M & H Crates, employees can take payout as either a lump sum or a larger amount over a five year period. However, the risk of cash flow problems are diminished because employees must wait five years after leaving the company to cash out their shares.
Only M & H Crates is employee owned. The veneer operation is owned by Pat McCown. M & H Manufacturing and Crosscut Hardwoods are owned by Randy McCown.
Growth through Acquisition
The McCowns bought Crosscut Hardwoods in 2001, which is located in Alto, Texas about 25 miles away from the main facility. Logs are unloaded with multiple Prentice 410 knucklebooms. Then logs are transported by Caterpillar 928/938 wheel loaders to mills to be processed. The Crosscut Hardwoods plant has a Cooper end dogging scragg to process the smaller logs and a Hurdle sawmill to process larger logs. Both of these mills produce cants and ties. The side lumber from the logs is processed by a Brewer multiple trim saw and two Baker four-head saws and a five-head saw followed by Baker dedusters. Each sawmill has its own individual line of Brewers and Bakers that is used to process lumber that will be used in the pallet assembly at M & H Crates in Jacksonville.
Rayburn, the founder of the company and Randy’s grandfather, explained, “Years ago we struggled to get lumber so we decided to control our own supply.”
Randy added, “The more you can rely on your own operations, the better off you are. The acquisitions allow us to become more efficient in sourcing lumber and reducing logistics costs.”
The acquisitions give M & H Crates extra capacity, a wider geographic distribution and capabilities to process a wider variety of material.
Sticking with this mindset, Randy McCown bought late last year Bobo Lumber Co. in Longview, Texas and changed the name to M & H Manufacturing. Bobo Lumber had been in operation for more than 30 years.
At the M & H Manufacturing facility, logs are unloaded with a Prentice 210 knuckleboom and a Tigercat 235 loaders, then transported by CAT 928 loader to a Cooper end dogging scragg and Cox sawmill. The Longview plant follows the same process as Crosscut Hardwoods. Little logs are processed in the Cooper while big logs go to the Cox line. Both mills produce ties and cants and pallet lumber to be carried back to M & H Crates in Jacksonville.
Between the various plants, the combined companies employ more than 160 people. But the companies are looking to cut people where possible. Randy said, “New laws, such as Obamacare, will force companies to become leaner and cut their workforces.” He stated, “We are looking at automation in some areas to release the costs of employees.”
Facing Challenges, Moving Ahead
One of the biggest challenges at the primary M & H Crates location is space. “Everything is kind of tight in this location.” Managing inventory is very important given the space limitations as well as the company’s focus on making specialty pallets. Randy said, “We make so many different pallet sizes that lumber inventory management is a key concern for us.”
Material turns very quickly at the main location. Randy commented, “We don’t have any lumber that sits on our yard for more than a week.” Despite this fast turnover, the company has not had a problem with mold because it manages its inventory well making sure that everything runs on a first-in/ first-out basis. About 50% of the pallets produced at the facility are heat treated in Kiln Direct chambers.
M & H Crates at its Jacksonville, Texas facility produces about 25,000-30,000 pallets per week. It processes about 65% hardwood and about 35% southern yellow pine through the mill at this location.
Logs are unloaded with multiple Prentice 410 knucklebooms. These logs are transported by Caterpillar 928/938 wheel loaders to the mills to be processed. This facility has two Hurdle sawmills and one Cooper end dogging scragg. It follows the same philosophy as above mentioned mills with log sizes. All of the mills are followed by Brewer multiple trim saws and Baker band saws. All of the cants that come to this location are processed by a Baker multi select saw and then fed through Baker multiple head bandsaws and dedusters.
Toyota forklifts are used at all locations to load and handle pallets and lumber.
All ties and cants are stacked by multiple Morbark StacTracs systems at each location. All scrap wood is processed at all locations by Morbark chippers
Once pallet wood is produced from all the plants, it is then nailed on three Viking 505 machines located at the Jacksonville facility. Smaller loads are made on hand table stations. The company also produces and repairs agricultural crates by hand.
M & H Crates recently added a third Viking 505 to its lineup because of the good experience the company has had with its first two Viking machines. Randy said, “Familiarity with Viking is a big plus for us. We are really pleased with the performance of our 505s. Viking’s products and services are phenomenal.”
Randy said, “Right now, we are looking to make little changes to cut lumber waste and get the most out of each log.”
With so much lumber capacity, M & H Crates needs to find lots of logs to keep everything running. Randy said, “We use up to 35 truckloads of logs per day between our three locations.”
Putting the market dynamics in perspective, Randy explained, “Rising logging and trucking costs has certainly impacted our operations.” In Texas, the forest products industry has to compete against the booming oil and gas market for trucks.
M & H Crates has a fleet of trucks for handling delivers as well as relies on some outside contractors. It will make deliveries all over the state of Texas and some in Louisiana.
Three Generations of McCown Family Leadership
Being able to draw on the experience of his father and grandfather has been a huge plus for Randy. He said, “The biggest thing I learned from big daddy (Rayburn) is that all the diamonds on top of the ground have already been picked up, if you want to make good living now you have to dig a bit to find the diamonds today.”
Talking about his father, Randy said, “The best piece of advice that my father ever game me was that all you can control is what you can control. I followed this advice on the football field not to worry about things like the weather. I use the same attitude today in business challenges, such as the rising price of diesel fuel or Obamacare.” He further explained that he still prepared and reacted to those things, yet he never let things outside of his control get him too worried.
The company’s success results from the hard work of many key employees. Caleb Bolton, the general manager, oversees the production of all lumber that is used to assemble the pallet and crate orders for M & H Crates. This amounts to about 40-50 truckloads per week. Bolton coordinates as many as 10 different saw lines daily with multiple changes per each line at multiple locations. He also is in charge of managing employees at M & H Crates, which has more than sixty people on the lumber side of the operation. Randy stated, “Caleb brings a vibrant and tireless work ethic to his position.”
Andy McCown, the pallet production manager, manages the daily production of all pallets and crates produced at M & H Crates. He also is responsible for the inspection of pallets, maintenance of all 505 machines and heat treating chambers. Randy commented, “Andy has many years of experience in the field from running sawmills to bandsaws and now nailing machines. That knowledge is extremely valuable in daily decision making. Andy is always willing to do whatever it takes to get the customer’s pallets delivered on time.”
Davy Sanders, the office and human resources manager, has been with the company the longest of any of the key management staff. He has worked at every position. In the last few years he has transitioned into more of an office position where he manages payroll, payables, HT requirements, data analysis along with many other things. Randy commented, “Davy has been a constant throughout the years at M & H, he can do anything needed at the plant and is more than willing to fill in as needed. A dollar value cannot be placed on his years of experience and industry knowledge.”
Dustin Treadwell, the primary sales representative, deals with all the customer needs and questions on a daily basis. His interaction with customers involves taking the order, scheduling delivery, arranging delivery tickets and invoicing. Dustin also handles the dispatching of the trucks as he coordinates the trucking with what best fits the customer’s needs. Randy said, “Dustin has a reputation with customers of going the ‘extra mile’ to service their needs and of being great to work with. Customers really enjoy dealing with Dustin and how he takes care of them.”
Randy was quick to point out that there are many other valuable people in the company who really make everything run smoothly. Like the lessons he learned on the football field, you need a good team around you to be a success, and you need to remember the legacy of those who came before you. The growth of M & H Crates and its sister companies is a sign that Randy McCown has taken these lessons he learned from his family and on the football field and applied them to the pallet and lumber industries.