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Building a Strong Mat Business and Vertical Integration Feed Success of Sterling Lumber
Sterling Lumber: A family-owned wood products company expands into a new facility and continues its success in the matt construction market. Its third generation leadership maintains a commitment to controlling its own material sourcing and a traditional business mindset.
By DeAnna Stephens Baker
Date Posted: 2/1/2014
Phoenix, Ill. — Building good industry relationships, vertical integration and quality products have all helped Sterling Lumber grow and expand into multiple wood products markets.
The Sterling family has been in the wood products industry for three generations. The company was founded in 1949 by Gerhard Sterling, selling hardwood blocking and dunnage into the steel service centers of Chicago and Northwest Indiana. After Gerhard’s son, John Sterling, took over the company he expanded into civil infrastructure. Since then, Sterling Lumber has contributed to many major reconstruction projects on Chicago landmarks, including Soldiers Field, the Shedd Aquarium, the Museum of Science and Industry, the Field Museum of Natural History, the Lincoln Park Zoo, the Art Institute of Chicago, Navy Pier, Trump Towers and many bridge reconstruction projects.
Now, the third generation of the family is running the vertically-integrated family business that currently operates in multiple locations in Illinois and Missouri, employs 176 workers and manufactures timber mats, industrial lumber, pallets and skids. John’s four sons are all involved in the company. Carter took over as president of the company in 2004. Christian is the vice president of internal operations; Carson is the vice president of market research; and Cooper is the vice president of purchasing and operations.
Even though they have moved the company forward and expanded into new markets, there are some things that the Sterlings have kept the same.
“We value our traditional business mindset, which means we like to work hard for our customers and take care of our employees,” said Mike Zarnott, director of sales and marketing. “In addition to those two seemingly simple concepts we enjoy the challenging projects that others turn away from. We feel that this gives our customers value they just cannot find anywhere else.”
Matting Division Launched Company into New Sector
The matting business is Sterling’s newest venture, started in 2005 in Blue Island, Ill. Mats are used for ground stabilization as well as temporary road systems for large cranes and other construction equipment.
“Electrical utilities and oil and gas pipeline companies started to understand the financial, safety and ecological reason to use matting when working on Right of Ways for transmission lines and pipelines,” Zarnott said. “At first we started re-selling mats made by others and quickly realized that in our core we enjoy manufacturing and we are good at it.”
Sterling builds a wide variety of matting products ranging from traditional timber mats to the newest cutting edge designs which are still confidential. The traditional timber mats use like-sized timbers bolted together horizontally to form platforms that can be laid down side by side allowing cranes and other heavy equipment to drive across them while dealing with unstable ground or preventing the ground below from being damaged by the equipment. Access mats are constructed with three layers of lumber laid transverse to each other and bolted vertically with carriage bolts.
Today, the mats are manufactured mostly by hand at Sterling’s newest facility in Phoenix, Ill. Carter said that the company regularly analyzes the impact of automation in its process, but finds the market place to be quite dynamic and enjoys the flexibility that comes with manual construction. Sterling manufactures standard sized mats as well as custom-fit mats. The company services many industries including the pipeline, wind power, transmission lines and marine construction sectors. In 2012 the company branched out into mat installation and removal services with an entity they named Midwest Access Solutions.
Vertical Integration – Controlling the Lumber Resource
In 2004 the company purchased a sawmill in Louisiana, Mo. adding much needed flexibility to respond to its customer needs. This location is now home to three mills after some expansion projects. Sterling sources lumber from multiple operations throughout the Midwest right down to Texas. However, according to Carter, they have learned that nobody will jump as high or as fast for their customers as they will.
“Bringing this process in-house was very challenging and is still quite challenging, but a necessary step in supporting the promises that Sterling makes to customers on a daily basis,” Carter said.
“Vertical integration is the only way to ensure the quality, service and reliability that our clients absolutely depend on to be successful,” Carter said.
The sawmill operation sorts timbers by species and length, cuts logs into lumber, and sorts and ships to Sterling’s other manufacturing locations where secondary products, such as crane mats and industrial and commercial lumber are manufactured. Machinery at the sawmill includes a Hurdle circle mill package and a Cleereman circular mill with a 20" vertical edger and Silvatech setworks that breaks logs into cants and flitches. These are then fed into a West Plains resaw with runaround system.
Carter said that they have been relatively pleased with their machinery.
“The Hurdle is an easy piece to install, operate, and puts out good volume,” he said. “The Cleereman was purchased with the mill and we had it rebuilt. It saws well with a Silvatech setworks and vertical edger. The West Plains was purchased for its value relative to speed and ongoing maintenance.”
Last year, the company shipped around 190 million board feet of product between its different divisions. Sterling currently manufactures between 500,000 and 600,000 board feet of products each day.
Expansion Requires Operational Movement and then Consolidation
As the matting business grew, Sterling’s Blue Island location began to burst at the seams. In 2007, the company began building and refurbishing timber mats in a newly acquired Gary, Ind. location. In February of 2013, the company acquired 14 acres in Joliet, Ill. to continue the growth. Then, in December 2013 the company consolidated all mat manufacturing and industrial lumber operations from its Blue Island, Ill., Gary, Ind., and Joliet, Ill. plants into a single facility in Phoenix, Ill..
“We have been looking to move for three years,” Carter said. “When the right property came available, we were ready.”
The move into the new facility occurred over a couple months. Sterling hired local workers to start building mats at the new location, using supervisors from the best of its current crews while continuing production at the existing facility. While normal office operations continued, Christian Sterling, the vice president of internal operations, went ahead to the new facility to prepare it, making setup rather quick.
“On the day before Thanksgiving, we packed up the office and most of our phones and computers were up and running within three hours,” Carter said.
The 60 acre property has two buildings, one a 514,000 square foot manufacturing plant that houses timber mats, access mats, and industrial lumber and skids and pallets. The pallet and skid division manufactures all new skids and pallets.
“Our core business is the steel service centers that we also sell our blocking lumber and dunnage products to,” Carter said. “Therefore we build a lot of sheet skids, coil skids and heat treated skids.”
Pallet machinery includes several military notchers for banding grooves, some four way notchers, band saws, package saws and a fleet of radial arm saws.
The other 83,000 square foot manufacturing building at the new facility is currently leased out but will be available for expansion in three years. Both have an open layout and are heated with a combination of natural gas furnaces and wood fueled furnaces from Biomass Combustion Systems that utilize waste generated on-site.
Three rail spurs at the facility can accommodate up to 24 rail cars at a time. Sterling’s products are shipped throughout North America and the company manages all product delivery in-house. The company also maintains a trucking fleet that it uses to deliver logs and lumber to its own facilities as well as to customers. Having the option to ship by rail allows Sterling to save its customers some shipping costs on orders that have both the sufficient volume for a rail car and a little more time for delivery, Carter said.
Out of all the lessons he learned growing up and working in the wood products industry, Carter said that the top one is that relationships are a vital component of doing business.
“It is critical in this industry to build and maintain good relationships through honesty and integrity,” Carter said. “The suppliers in our industry need to know they can trust us to pay on time, and purchase their material with reliability. We have been buying lumber for 64 years and we have always maintained great relationships. Without a steady supply of raw material, the rest of the business needs really fall away in importance don’t they? On the other side of that is the customers. If they cannot rely on you doing what you say, they will stop calling eventually and likely
sooner rather than later.”
When it comes to running a family-owned business, Carter said that a good rule to have is to expect that everyone works for their pay and to treat any non-family workers equally.
“No freebies. You want to get paid, you need to earn it,” Carter said. “Treat all employees and co-workers as family. Period.”