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Magnolia Forest Products Blooming as It Adapts, Taps New Markets;
Southeastern Company Supplies Custom Panel, Lumber Components to Industrial Markets
By Tim Cox
Date Posted: 4/1/2002
Magnolia Forest Products has shown how companies can successfully adapt to changing market conditions – and how important the people in a business are to tapping into and developing new markets.
Magnolia Forest Products was founded by Harold Mayo in 1976 as a broker-oriented lumber business in Terry, Mississippi that carried little inventory. From its start to the early to mid-1980s, the company mainly brokered sales of Southern Yellow Pine lumber. It sold heavily to retail customers and, to a lesser degree, industrial customers in Mississippi and neighboring states. Within 10 years the company was recording annual sales in the range of $5-6 million.
Since then, however, it has evolved and grown significantly. Just a few years ago Magnolia was named one of the top 40 fastest-growing privately held businesses in Mississippi. The company is positioned now mainly as a remanufacturer of panels although it also supplies remanufactured softwood and hardwood lumber. Its customers are mainly in industrial-related markets, including the pallet industry. Magnolia has annual sales now exceeding $30 million, 110 employees, remanufacturing facilities and offices throughout the Southeast, and represents mills from Virginia to Arkansas and extending to the Mid-West.
Steve Brent, vice president for sales and production, joined the company in 1981 to supervise trucking operations. Later he began selling for the company and advanced into management.
Initially the company mainly traded in full sheets but later began cutting plywood to size. "In the beginning, we set up inventory locations at places strategic to our mill bases," Steve recalled. At first Magnolia contracted for the cutting and remanning work. Gradually, the company began buying the facilities and finished the process of acquiring them within about five years. Today, the company cuts about 70% of its panel-related products.
Market conditions have drawn the company more strongly into lumber sales in recent years. Magnolia named Rodney Haas as sales manager of its lumber department two years ago. "Hiring Rodney has turned out to be a good move," said Steve. Rodney has two sales personnel under his supervision, and the department likely will continue to expand, according to Steve.
Another fairly recent change of significance was the addition of four international traders about 18 months ago to begin developing import and export markets. Magnolia now is exporting products to Mexico, the Caribbean and Latin America. During the same time, Magnolia has begun to import panel products that service domestic customers with industrial grade products. Recognizing the rapid-growing demand for imported panels, the company has established itself as a leader in importing panels from 4x6 to 5x8. "That is starting to take off," said Steve, "and is going to be a big part of our company."
Magnolia buys the vast majority of its plywood and OSB from domestic producers. It buys about 90% of the plywood it needs from leading companies in the forest products industry, such as Georgia-Pacific, Louisiana-Pacific and Weyerhaeuser. The company contracts to buy their ‘downfall.’ "We take their downfall and make it into a value-added product," said Steve.
"One of our niches," he added, "is to go to an end-user and analyze their application – what they’re using and why – and to look for alternative solutions in order to minimize their costs." Wood packaging or industrial wood components represent a fixed cost for businesses, he noted. "We try to reduce it or increase the life of it."
For the pallet industry and other industrial customers, Magnolia supplies pallet tops and virtually any type of pre-cut panel components and a lesser amount of pre-cut softwood stringers and deck boards. Other products include panels and other parts for panel-deck pallets, pre-cut parts for boxes and containers, and furniture components.
"We have a lot of services to offer the pallet industry," said Steve. Magnolia will stock parts for pallet manufacturing customers and provide them with just-in-time delivery. "We’ll hold inventory for them. We tell a customer, if he wants that much on the ground, we can ship it to him, so all we have is transportation time."
Other products and services for pallet and industrial customers include circles and triangles, painting and edge sealing, rounded edges and holes, and virtually any type of lumber or panel remanufacturing. Magnolia offers high-speed production, special van loading, prompt samples, drop-ship and less-than-trailer-load quantities.
"When the economy is good," said Steve, "we get a lot of business from people who have their own production, but they don’t have time to do everything. We do their overflow."
The company can also supply fully-assembled, ready-to-use custom pallets, skids or containers of any configuration. Customers can furnish specific pallet performance requirements, and Magnolia’s staff will provide a custom design to meet them. The company also offers metal-reinforced shipping containers. The company manufactures a wide range of knock-down bins and other containers for commercial and military applications.
Magnolia markets the ‘E-Bolt’ plywood deck pallet, introduced in 1982. The innovative ‘E-Bolt’ fastening system combined with round, laminated posts for the ‘feet’ of the pallet provide strong resistance to fork-lift tine impact damage. The pallets have superior strength and load characteristics and durability.
Heat-treated lumber or components for wood packaging used for export shipments is an important consideration for a lot of pallet and container companies, Rodney noted, and Magnolia is certified to provide heat-treated material and components. "We’re getting more demand for it," he said. Pallet companies that supply a small volume of pallets for export shipments may not be large enough to carry two kinds of inventory, he noted.
The company’s bread-and-butter orders are for specialty items and components, according to Steve and Rodney – not volume parts. "We’re trying to stay in the specialty area," said Steve. "We’re not out to become a mass producer of GMA-type pallet parts."
Magnolia is servicing pallet industry customers in the Southeast, particularly from Virginia to South Carolina, and as far west as Ohio -- which is a big industrial market for the company -- and Indiana and Illinois. "I tell customers we go from Dallas to Chicago and up the East Coast," said Steve.
In other industrial markets, the company will make precision parts for doors, boats, crafts, fine furniture, shelving, reels, cable and chain, and much more. Magnolia has industrial customers in such industries as appliance manufacturing, glass, metal, sheet steel, and others. It supplies components to some customers and complete kits for crates and containers to others.
The company can perform any type of remanning to plywood and composite panels, such as particleboard and medium density fiberboard. Some of its plants are equipped with automated, computerized CNC equipment for cutting, drilling and routing plywood, oriented strand board (OSB) and other panel materials. Some of the equipment can cut, drill and route panels to accuracies of plus-or-minus 1/32 to 1/64 of an inch, according to Steve.
The company’s lumber remanufacturing capabilities include gang ripping, thin-kerf resawing, surfacing, and cutting to length. The company also can supply special separators, banding material, and similar products.
Magnolia has several plants and offices in the Southeast. In Carrollton, Ga. and Lewsville, Ark., the company manufactures pre-cut components of plywood and other panel products, including medium density fiberboard and OSB. A plant in Danville, Va., is similarly equipped but is somewhat smaller and focuses strongly on cut-to-size panel components. In Hot Springs, Ark., it has CNC equipment for remanning panels and focuses strongly on specialty applications, such as routing and ‘bull nose’ parts; this location manufactures panel-type blocks for brewery industry pallets and various kind of panel slave pallets. Another plant in Monk’s Corner, S.C., is devoted to lumber applications – components that require ripping, resawing, band grooves, and other remanning.
Magnolia does not have much machinery supplied by companies that are familiar to the pallet industry. However, one of its plants is equipped with a KM-16 multi-trim made by Newman Machine, a recognized name in the pallet industry.
Computerized machines supplied by Northwood give the company the capability to perform various reman operations to panels, including drilling holes, optimized cutting, and routing. Lauderdale-Hamilton and Globe supply automated panel saw machines.
Magnolia also has hardwood operations based at its headquarters in Terry and has inventory at its locations throughout the Southeast. It supplies furniture grade material, buying middle to upper grades of green Appalachian hardwoods that it dries and surfaces.
When asked if the company’s growth in industrial panel products has been the result of growth in those industries using them or growth in the number of applications, Steve indicated that Magnolia has witnessed greater acceptance of panel materials for wood packaging and other, industrial purposes. The heat-treatment required of softwood packaging for export also has prompted greater attention to panels, he indicated; the heat-treatment requirement does not apply to wood packaging made of manufactured wood material, such as plywood. Pallets made of panel materials are well suited for applications that require durable shipping platforms, he noted. Another trend the company has observed is a growth in the use of OSB while reliance on plywood has declined. The company also has seen an increase in government and military applications for wood containers.
Magnolia has its own traffic department for coordinating shipping. It uses some carriers that haul exclusively for Magnolia and also relies on common carriers. Sales offices are located in Terry, Miss., Beaumont, Tex., San Diego, Monk’s Corner, and Miami.
Steve is optimistic about the nation’s economy. "We see industrial markets kicking back in a little bit," he said. "We’re seeing some movement that gives us hope for the near future."
Customer’s also have the benefit of working with Magnolia’s mature sales personnel, said Steve. "They have a lot of experience and expertise," he said.