Business Goal at Clary Lumber Is Clear: Make Quality Pallet Cut Stock;

GASTON, North Carolina — Gaston is a small community in Northampton County, which borders Virginia just below Emporia. The town overlooks the Roanoke River and the city of Roanoke Rapids. The region is rich in timber resources that support plants of a couple of giants in the forest products industry, International Paper and Coastal Lumber Co. International Paper operates a mill in Roanoke Rapids that is the region’s largest employer, and Coastal Lumber has its headquarters and sawmill operations in the adjacent town of Weldon.

                      Gaston has one traffic light at its main intersection, where the post office is also located along with a small handful of other businesses. Clary Lumber is located just off one of the two main roads that intersect in the town and just a few minutes from I-95.

                      John Lucy, 46, president of Clary Lumber, grew up in Lawrencville, Va., roughly 30 miles to the northwest. His family has a long history in the forest products industry, and John grew up in the pallet business. His grandfather started Brunswick Box Co. in Brunswick County, Va., located just a few short miles south of Lawrenceville, and the business today is operated by one of John’s uncles, mainly as a pallet manufacturing company.

                      John’s father, John Lucy Jr., owned and operated a pallet manufacturing business near Lawrenceville and in 1969 purchased Clary Lumber to keep the pallet plant supplied with lumber. The business was purchased from James Clary, who eventually would become John’s father-in-law.

                      “There’s a lot of sawdust going way back,” said John.

                      (John and his father took the family pallet business public in 1995, forming Pallet Management Systems, in an effort to remain viable and profitable as a volume manufacturer of GMA and other standard pallets. He compared the experience to a trip to Las Vegas – where visitors at least have a chance to win. Taking the company public was the only chance they had to continue running profitably, he said. At its height, Pallet Management Systems had another plant in Petersburg, Va. and several facilities in Florida, Alabama, Illinois and Indiana. The company went bankrupt in 2003, however, after being taken over by outsiders with no pallet industry experience, and John turned his attention to Clary Lumber.)

                      John attended the University of Richmond and then transferred to Virginia Tech, where he earned a business degree. He lives with his wife in Apex, which is located in the Research Triangle region of Duke, Chapel Hill and Raleigh but closer to Raleigh and about 90 miles from Gaston. The couple relocated to the region in 1998 so their two sons could attend schools there; one is in law school now, and the other is a freshman in college.

                      Clary Lumber has about 70 employees, and its operations are located on a site of about 18 acres. The company has a large log yard and several buildings that house its mills, cut-up shop, pallet assembly area and offices.

                      Clary Lumber produces about 15-16 million board feet of products annually. Lumber makes up about 60%-70% of sales, and pallets comprise another 15%-20%. Sales of cants, railties and residuals make up the remainder of the company’s revenues.

                      The company produces pallet cut stock, 5/4 and 6/4 lumber, cants, and railties. It also manufactures custom pallets for a few accounts. The company’s lumber customers are located in such states as Tennessee, Ohio, New York, Georgia, North Carolina, South Carolina and Virginia.

                      The company buys only low-grade logs, mixed hardwoods — all ‘gate wood.’ It buys a large volume of oak logs. Other species include gum, maple and poplar. The company buys random length and diameter wood as well as some tree-length logs. Clary Lumber does not buy timberland or standing timber.

                      Incoming logs are merchandised carefully by an employee in the yard running a loader who decides what the log will produce – lumber, a cant, or railroad tie.

                      Clary Lumber cuts about five or six truck-loads of switch ties and cross ties weekly.

                      The company has two sawmills, a relatively new Cooper overhead end-dogging scragg mill and a Corley head rig and carriage. Both mills are fed by a single debarking line, a Cambio ring debarker, and the logs pass through an MDI metal detector after debarking. The logs are either kicked off to the Corley mill or picked up by a Prentice loader and placed on a live deck feeding the Cooper.

                      The Cooper usually is used to break down logs ranging from 10-22 inches in diameter while the Corley head rig is fed logs ranging from 10-30 inches in diameter. The sawmills either remove two sides from the log or square the logs, depending on what the mill is running.

                      The Cooper scragg mill is equipped with two circular saws that remove two sides of the log with one pass. The Corley head rig is a single circular saw, requiring the log to be turned on the carriage before another side is removed.

                      Some cants are fed directly to a Corley double-arbor gang saw. Depending on the size of the cant, the gang edger splits the cant or may split it and also cut two boards. Lumber is routed to a Corley trim saw and then to a green chain to be pulled.

                      For lumber that will be used to manufacture its own pallets, Clary Lumber uses a pop-up saw to remove defects and a planer to surface the boards.

                      The cut-up shop is equipped with Brewer Inc.-Golden Eagle machines to remanufacture cants into pallet components. A Brewer single cut-off saw is used mainly as a stand-alone station to cut cants appropriate lengths. A Brewer twin-select cut-off saw performs the same function but feeds inline to a Brewer gang saw so the sized cants may be directly resawn into deck boards or stringers. The cut-up shop also is equipped with a Brewer double-head notching machine, a Brewer horizontal single-head bandsaw, and a Wagner mini-gang saw for resawing material up to 3-1/2 inches thick.

                      The company has several Precision drum chippers for chipping residual material. Chips are sold to two primary markets, either for paper production or as raw material for medium density fiberboard. The bark is sold to another sawmill business that grinds it to produce landscape mulch.

                      The company, which is a member of the National Wooden Pallet & Container Association and the North Carolina Forestry Association, buys saw blades from a local supplier. It also has a three-man mechanical maintenance staff to keep the mill equipment running and sharpen the chipper knives.

                      The company makes custom pallets in such sizes as 64×98, 48×124 and 52×124. All pallets and skids are assembled by hand with Stanley-Bostitch power nailing tools and collated nails.

                      Clary Lumber manufactures only custom pallets because the company does not want to put itself in the position of competing against customers that buy its pallet cut stock. The company supplies niche pallets that are an unusual size or construction. For example, it manufactures a long pallet that is used to transport a type of construction material that is very susceptible to damage; the application calls for a pallet with no protruding nails that can damage the goods in transit. In fact, a single protruding nail could damage an entire pallet load of material. Another unusually long pallet is made to ship another construction material; the pallets are built to be high quality, durable shipping platforms, and they are used in a closed loop application that is managed by another company.

                      John is focused intently on the company’s core operations of producing cants and ties, pallet cut stock and low-grade lumber for the pallet industry, as well as a few niche accounts for pallets. For example, he has little interest in operations to produce value-added products from residuals, such as colored mulch. Clary Lumber also does not have a fleet of trucks; John prefers instead to rely on contract haulers for delivering the company’s products.

                      The addition of the Cooper overhead end-dogging scragg mill in 1998 enabled the company to double production and also positioned it to begin manufacturing pallet cut stock. “Our objective was to create flexibility in our operations and to supply high quality material,” said John.

                      The company’s market in the pallet cut stock arena is for pallet manufacturers that buy high quality pallet components – and are willing to pay for it, explained John. “Our cost is a little higher,” he said, “but our quality alleviates customer down-time.”

                      Clary Lumber produces “first class” pallet lumber, said John. “It’s right when it leaves, and that’s the way we want it.”

                      The company’s cut-up equipment gives it a great deal of flexibility, and it needs it. “We cut a lot of different items,” said John. For example, the company makes stringers in such lengths as 28 inches, 36 inches and 198 inches.

                      Clary Lumber has an ongoing safety program. “We’re very safety conscious,” said John. Any employee is authorized to shut down production equipment if someone walks in the work area without wearing personal protective equipment, such as a hardhat. The company conducts monthly safety meetings and also uses a consultant to provide annual safety training.

                      Some of the company’s key employees include David Simmons, who oversees the pallet shop, planning, scheduling, customer service and transportation; Mike Ferguson, who is in charge of the sawmills and maintenance; and William Gibson, who oversees the cut-up operations. The office is staffed by Sharon Keene and Joanie Delbridge.

                      The log supply has been tight in previous months but recently has begun to improve, John indicated. During the winter three years ago, the company only had enough logs to run three or four days per week. “This winter we’ve kept a low inventory but we didn’t run out.”

                      Between working, commuting and his commitments at home, John has little time for leisure pursuits or hobbies, although he and his wife have enjoyed hunting in the past.

                      John is also focused on keeping the business relatively small and improving efficiency. “We don’t want to increase production dramatically,” he said. “We want to stay small so we don’t have to increase our overhead.”

                      Keeping the business at its current size and concentrating on efficiency and producing quality products enables the company to be more flexible, he noted. The capital investment and other costs associated with a quantum step in growth would put the business on a track of having to meet certain production requirements in order to cover the increased overhead, he said.