COLUMBIA, Kentucky — Many companies start out with a single product or a group of products and stay within that category forever, regardless of what the marketplace dictates. Savvy managers, however, continuously study the market and adapt to changing circumstances.
One company that has adapted well over more than 45 years is Kentucky Tie and Lumber Co., based in Columbia, Kentucky. Columbia is in the south-central region of the state, almost 100 miles south of Lexington.
Started as a business to supply railroad ties, the company has moved through different enterprises through the years. Although the company still produces some railroad ties, Kentucky Tie & Lumber also manufactures grade lumber, pallet cants and pallet cut stock, and pallets. The business is led today by Bill Steele Jr., president.
In the early 1900s, Bill’s great-grandfather and two brothers operated a business called Bond Brothers that produced and treated railroad ties.
"I’ve been told that at one time Bond Brothers was one of the two largest treaters of railroad ties in the country," Bill said. "Of course, railroads were expanding very rapidly then, and that was a big business."
In 1957 the men sold the business, and some employees were laid off. Two of the workers were Bill’s grandfather, T.J. Turley, and Turley’s son-in-law, Bill Steele Sr. – Bill’s father.
"In 1958 the two of them, plus two other Bond Brothers employees, decided to form a similar company, which was Kentucky Tie & Lumber," Bill said. "They wanted to go into the sawmill business and produce lumber and railroad ties. They didn’t want to treat and sell directly to the railroads. They wanted to produce the ties and sell them to people who did the treating and had the contract with the railroads. They didn’t even do the manufacturing themselves. They had six portable contract sawmills that sawed exclusively for them. They bought standing timber, sawed out
the stand, and moved to the next one. They were cutting almost exclusively hardwoods."
Bill’s father died in 1967, the same year Bill graduated from college. T.J., his grandfather, told him, as Bill related it,
" ‘We can sell this company. Or, if you have an interest in coming into it, I’ll stick around as long as I’m able to help you learn the business.’ "
"So I graduated one weekend from the University of the South in Sewanee, Tennessee, with a degree in forestry and the following Monday morning started with the company," Bill recalled. He’s been with the company ever since except for one short stint in another industry.
"I spent four and a half months trying my hand working in a factory and didn’t like it at all," Bill said. "My grandfather was still active and gave me the option. He said, ‘Why don’t you go ahead and try that for a short time. If you’re not happy with it, we’ll keep the doors open and you can come back.’ He was an exceptional gentleman, and I’ve always been indebted to him."
Bill’s grandfather stayed active in the business until 1974. Up until that time, the company still had no sawmill of its own, contracting through the years with other mill businesses. Then, the last of the contract mills shut down, and Bill built his first sawmill in Columbia.
"It was a small circle mill that started operation in October, 1974," said Bill. "Then in 1980 we bought an existing mill in Tullahoma, Tennessee, moved it to Columbia, and set it up on the same yard. We’ve been operating the two sawmills here since 1980."
In 1993 Bill decided to expand the company by remanufacturing cants into pallet cut stock. He invested in a Brewer Inc.-Golden Eagle cut-off saw and a single-arbor gang saw, putting the cut-up equipment into one of the mill buildings.
"We were strictly doing pre-cut parts for other people in the pallet business," said Bill. That was Kentucky Tie & Lumber’s only involvement in the pallet business for about the next 10 years, manufacturing pallet cut stock.
Next came a year-long experiment that didn’t work out as expected. Bill added a building to the site and put in a scragg mill. He moved his existing cut-up equipment into the new building and also added a Brewer Inc.-Golden Eagle two-head band resaw system. Before long he added another Brewer Inc.-Golden Eagle resaw, this one a four-head system. The experiment with the scragg mill proved unproductive, however, and Bill took it out.
"And still we weren’t making pallets," he said. "We were still just making parts."
However, the company was receiving plenty of requests from some customers and other businesses for pallets. "People kept asking us, ‘Why don’t you go ahead and nail these things up, as long as you’re making them?’ " Bill recalled. "Our standard answer was that that
was a different set of customers, and
that we were comfortable with what we were doing."
In 2002, however, Bill decided to enter the pallet manufacturing arena. Kentucky Tie & Lumber received a contract to supply some industrial pallets and crates. The company had to begin pallet and container assembly operations.
"We put in a revamped Viking DuoMatic that was upgraded by the
factory," Bill said. "We put it in a
new building and started assembling pallets."
Even with adding pallet assembly operations, the company uses only about 40% of the pallet cut stock it produces. The remaining 60% is sold to other pallet manufacturers in Kentucky and other states. "We’d like to get to where we use about two-thirds of what we produce to assemble pallets in house," said Bill.
Grade lumber manufacturing and sales continue to be the dominant part of the company’s business. Grade lumber sales represent about two-thirds of the company’s annual revenues while pallets and pallet cut stock account for roughly the other one-third.
"We do a little bit of everything," Bill said. "We actually have another corporation that’s strictly a logging company, and that we use as we need. We buy standing timber. Sometimes we log it ourselves and sometimes we contract with other loggers to cut it. A lot of the logs we buy, we buy at the landing, and we just transport them to the mill."
In the mill yard, logs are sorted by grade. Low-grade logs are cut in the circle mill and logs that will produce grade lumber are cut in the band mill.
"We concentrate more on grade lumber recovery there, but we still reclaim at least one pallet cant out of the heart of each grade log," Bill noted. "And out of the logs that go to the circle mill, we still saw some railroad ties. It just depends on the size of the log."
The company produces a full range of grade lumber products. "The lower end wood goes principally to hardwood flooring," said Bill. "The middle grades go into cabinets or furniture, although there’s not a lot of that left because the Chinese have so much of that. And the upper end tends to go into molding and interior housing trim."
The company cuts about 50% oak, both red and white. Yellow poplar is next, and hard maple and hickory make up most of the balance. The company also saws a few cherry and walnut logs as well as less valuable species, such as gum and elm, which are manufactured almost entirely into pallet material.
"The two parts of the company complement each other very well," Bill observed. "We’re going to produce a certain amount of low-grade lumber and a certain number of pallet cants, and if we can add some value to them, it’s a good combination."
In the area of pallet cut stock, the company manufactures deck boards, stringers, material for crates and containers, and industrial components and dunnage for packaging and transporting equipment and other goods.
Kentucky Tie & Lumber relies on other sawmill businesses, too, to keep it supplied with enough cants and low-grade lumber for its pallet assembly operations. "We produce about half of our requirement in terms of cants and low-grade lumber in our two sawmills," Bill explained. The company buys other pallet grade material from other sawmills within a radius of about 80 to 90 miles.
The company takes a very organized approach to remanufacturing cants. Specific types of cants are cut with a particular customer in mind, Bill explained.
"We cut our pallet cants for specific orders," he said. "We saw probably eight or 10 different cant sizes that are designated for specific orders. We do it this way to try to maximize the yield on those orders."
If the cants are needed right away to cut for an order, they will be moved directly from the sawmill to the cut-up mill. Otherwise, cants are sorted by species group, length and dimension and stacked in the yard.
"We group species by three groups," Bill said. "The real hard species we call Number 1, the medium density we call Number 2, and the softer woods we call Number 3. That’s how we tell our people what they need to run." Typically, Number 1 cants include oak, hickory and hard maple. Number 3 species are poplar and basswood, and everything else falls into the Number 2 category.
"We schedule cutting on these lines on a week to week basis, so we know what orders we’re going to be running in a specific week," Bill said. "We try to stay ahead of our cut-up line so we can tell them what we need next."
The company actually has three main cut-up lines for remanufacturing cants
or low-grade lumber. One line is equipped with a GTEK machine and
the other two run Brewer Inc.-Golden Eagle equipment.
The GTEK line is the newest, and the majority of the company’s cut stock from denser hardwood cants is being produced by this new line. "The GTEK line is a twin cut-off saw and a double arbor, single bay gang saw," said Bill. "This operation cuts virtually all pallet stringers and some decking. Most of what’s cut here goes on over to our pallet building for pallet assembly." This GTEK cut-off saw also is used to cut some 4×4 to length for the steel industry. All of this wood is denser hardwood species; softer species such as yellow poplar are rarely cut on this line.
The second line, which also cuts mainly cants, consists of a Brewer Inc.-Golden Eagle single cut-off saw and a Brewer Inc.-Golden Eagle two-head horizontal bandsaw. It is used to cut "a lot of short material that a normal gang saw won’t handle," Bill said. "We cut a lot of 18-inch material on that saw." The second line produces deck boards and stringers for industrial pallets and skids and also blocking; most of the lumber is sold to other pallet manufacturing companies although a small volume is used by Kentucky Tie & Lumber.
The third cut-up line consists of a Brewer Inc.-Golden Eagle single arbor, double bay gang saw. It is used strictly to resaw low-grade lumber. "A lot of the pallets we build are pretty heavy pallets, and they use full 1-inch decking," Bill said. "We take low-grade lumber and run it through that line to cut decking for those heavy duty pallets. About half of it is used in house and about half goes to customers who do their own assembly."
In the building dedicated to pallet and container assembly, there are three main work areas. One area is for the Viking DuoPro for pallets that will be nailed automatically.
"Machine-built pallets are not the biggest part of what we do," Bill said. "In fact, that nailing machine is under utilized. We haven’t found that our niche is in high-volume pallets. We’re just not particularly competitive in that business."
Two other areas in the building are used for assembling pallets and containers by hand with pneumatic nailing tools. "In one of those areas, we build heavy duty pallets for industrial use," Bill said. "In the other area we build nothing but crates. These are all hand assembled. A lot of the pallets that we build have companion crates that go with them. Once the product is mounted on the pallet, then it’s completely crated on the other four sides and the top. We build about 14 or 15 different size crates, so that line stays busy."
The circle mill for processing low-grade logs is equipped with an HMC debarker, and the head rig features a Cleereman carriage. The band mill, where grade lumber is manufactured, has a Fulghum debarker, and the head rig is a Salem carriage with a Salem 7-foot band mill. Other equipment in the grade mill includes a Corley edger and an Irvington trimmer. Both mills are equipped with Silvatech set controllers.
The circle mill has a Precision chipper, and the grade mill is equipped with a Fulghum chipper. Chips are sold to a pulp mill. The company sells bark to businesses that use it for mulch, and sawdust is sold for boiler fuel or to a company that manufactures charcoal.
Sharp Tool supplies strob saw blades to the company while it relies on Simonds for band saw blades. For its automated nailing machine, Kentucky Tie & Lumber uses Magnum fasteners from Mid-Continent Nail Corp. The company is equipped with Stanley-Bostitch pneumatic nailing tools that use Stanley-Bostitch collated nails.
Kentucky Tie & Lumber Co. has about 75 employees. The company provides various types of safety training and other training. Much of what his experienced employees know, Bill said, they have learned by working at the company. "Normally we don’t hire many skilled workers," he said. "We try to promote from within. We train a lot of people in-house, and most of it has to be on-the-job training."
Kentucky Tie & Lumber has a health insurance program, but Bill said that rising health insurance premiums have made it impossible for the company to offer the level of insurance he would like. Instead, employees can buy insurance elsewhere, and the company reimburses them for a percentage of the cost.
"There was a time when we paid 100% first dollar coverage," Bill said. "I wish those days were still possible. Today, if someone can go to Farm Bureau and get as good or better coverage than we can offer at a cheaper rate, they bring their receipt to us and we reimburse them for up to $100 per month on their plan."
Kentucky Tie & Lumber also has a 401K retirement savings plan, with matching contributions by the company, and paid holidays and vacation time.
One of the biggest factors in the growth and success of Kentucky Tie & Lumber, Bill said, is the quality of the company’s key people.
"We have some people who have been here 30 years and who have been totally committed to the company and who have grown with the company," he said. "Many of these are people who came in at entry level jobs and who have been willing and motivated to learn. Today they hold some of the most responsible positions we have."
The other important factor, Bill said, is faith. "We’re a family who has a strong faith, and we’ve been rewarded for our faith," he said. "Those are the two things that I see as being instrumental in our company’s success."
Kentucky Tie & Lumber likely will continue as a family business for years to come. Bill’s wife, Sharon, company vice president, has been in the business for 29 years — longer than she and Bill have been married. Their sons, along with their wives, also work in the business.
"I had just started dating Sharon, and she was working as the sales manager of a chain of newspapers that was headquartered here, and she and her boss weren’t getting along very well," Bill said. "My secretary apparently felt the same way because she had just quit." Bill told Sharon that if she ever wanted a different job, to call him. A week later she did, and they’ve been working together ever since. Sharon keeps the books and runs the financial side of the business.
At age 27, Bill Steele III is known as ‘Little Bill’ — even though he’s bigger than his father. Bill III is transportation manager for the company, and oversees the tractors and trailers, and every other piece of transportation equipment the company owns.
"He’s involved in everything from hauling logs in from the woods to moving all the product out," Bill said. "He also takes care of the shop and all the equipment that’s there, including some trucks we take in from other people for repair." Bill III’s wife, Sarah, is a company secretary.
Tom Steele, 25, Bill’s son, is operations manager over the sawmills. His wife, Raena, handles human resources, including payroll. Randy Curry supervises the cut-up and pallet side of the business.
In the next few years, Bill is considering building a new, state-of-the-art bandsaw mill as the company’s principle profit center. "We’ve just really started talking about his," he said, "so it’s going to take a while."
He also would like to expand the company’s pallet business. "We’re a specialty shop, and we average 400 to 500 units a day," Bill said. "I’d like to see us grow to about 1,000 units a day." The two challenges to accomplish that will be to identify and develop more customers and additional lumber resources.
This year, Kentucky Tie & Lumber is building a new office with family in mind. "It’s long overdue," said Bill. "I think more consideration went into designing it to accommodate the three dogs and the six grandchildren than anything else. All three of the dogs and any number of the grandchildren may be here at any given time."
"I would like to see the next generation come into the business if they want to," added Bill. "It’s an opportunity for them — if it interests them. On the whole, this company has provided us with as good a standard of living as we could have hoped to have had, and if it can generate the same thing for my grandchildren, I’d like to see them in it."
