That was the experience of Ron Johnson, a veteran production manager of a Agilent Technologies (formerly Hewlett Packard) manufacturing plant in
When the electronics company relocated its manufacturing operations to
“I made that trip to
In mid-2003, after 20 years as an operations manager in the electronics industry for Hewlett Packard and Agilent Technologies, he was looking for something else. About that time, he spotted a ‘for sale’ ad in a local newspaper for CW Products. With his operations management background, Ron was confident he could make it work.
CW Products Inc. was started in 1947 by John Christian, who first called the business Christian Wood Products. A relative in the funeral business asked him to build caskets, and that is what the business was founded to do. John later expanded the business to include pallets. Some pallet customers later asked him if he could make crates, too. Eventually John halted production of caskets to concentrate on pallets and crates.
Ron still receives an occasional call from someone who wants to order a casket – a simple pine or plywood coffin with 2×4 framing. “It is something we have considered doing,” he said. “The cheapest cardboard casket you can buy at a mortuary is $895, but it does come with additional services.”
“I went from high tech to low tech, but there certainly is some skill involved in crating,” Ron said of his induction into the world of pallets and containers. “I went to an industry I didn’t know anything about. Luckily, I had employees who knew a lot about the industry, and that was good enough for me.”
When he bought the business, Ron wanted to change the name to Choice Wood Products. However, the local market was so familiar with the Christian Wood Products name that he kept it. In fact, he began using the company’s full name again, not just the initials. “We now refer to ourselves as Christian Wood Products,” Ron explained, “but on our business card it says CW Products.”
Ron purchased the business from Rod Roe to become the fourth owner in its 57-year history. Rod had a heart condition in the years leading up to the sale, and the business struggled. The company had strong accounts in the telecommunications industry, but
When Ron evaluated the purchase price of the company relative to its assets, it looked like a good investment. “It had an exceptional customer base and a good reputation in the local community,” he said. “After I bought it, I spread my wings and thought about what we might do a little differently.” He tried different approaches to marketing, such as direct mail and radio advertising. Now, 14 months after buying the business,
Christian Wood Products manufactures crates, pallets and some specialty wood products, such as bed frames. Pallets are the least profitable part of the business; the profit margins on crates are larger.
“We are trying to focus on service,” said Ron. “We are really going after the heat-treated market. I would say that probably 30 percent of our
“What is interesting is that we were seeing people wanting one or two of this and that in heat-treating, and now it is several hundred at a time,” he added. “That’s the industry trend.” One customer has gone 100% to heat-treated shipping platforms in order to avoid the complications of inventorying heat-treated and non-heat-treated pallets for both domestic and export shipments.
“Any product we buy now in dimension, we try to buy heat-treated,” said Ron. “I don’t want to have separate materials if I can help it. For pallets we buy the 1-inch rough. For plywood we have been buying some off-grade, more mill certified.”
The CW Products staff includes Ron, his wife, Shelly, and three full time employees. Shelly administers payables, receivables and payroll. Some of their children help occasionally with cleaning the shop. (Two of their children have graduated from high school and the eldest is in his second year of college.)
“We have increased our
Implementing the Crate Pro computer software for designing and costing wood containers allowed Ron to eliminate an intermediate management position. “Now everything is documented electronically, so when an order comes in, you shoot it down to the floor off the system,” he said.
“It just made a lot of sense,” Ron said of the Crate Pro software. “Once the inventory and material costs are established in the program, there is a specific design number dedicated to each customer’s pallet or container. You pull that design number when a job comes up, and you repeat the product build. It comes out the same way every time. You print up the sheet for that particular run, and it goes to the production floor job rack.”
Aside from electronics, other industries served by CW Products include light manufacturing and food and feed industries. The bed frames the company manufactures are made for a local furniture company.
There has been a silver lining in the trend of outsourcing jobs abroad. Ron has a number of contracts to supply crates for production equipment that is being shipped to
“We just did a job for a large electronics company here in
After the crates were completed, CW Products contracted with another company to make steel plates to attach the machinery to the pallets – and a crane company to do all of the lifting. We essentially built the crates and brokered the job.”
“We wrapped and bolted them to the skids and otherwise readied them for shipment,” Ron said. “It’s the type of contract I would like to see more of. You are not only providing the crating but also a contracted service.”
CW Products has built some huge crates for massive motors used in mining operations. The crates were in excess of 20 feet long and 16 feet wide and were about 12 feet tall. “We did about four of those for some motors that were going to
The company has a $2 million liability insurance policy, which is required by some of its larger customers.
CW Products operates out of an 11,000-square-foot building in the
All nailing is done by hand, and the company uses Stanley-Bostitch power nailing tools as well as collated nails. “They are exceptional,” said Ron. “They provide all of our maintenance, and they show up on site at least once a month. Their delivery performance has improved. I’ve got my complaints about the surcharges in the metal industry right now but that’s a different story. I think everyone’s got that complaint.”
In August, CW Products did almost twice the volume it did the same month a year ago, but the company has had to contend with higher material prices. “Our margin has nowhere near doubled,” Ron said. “There is no way that customers will tolerate the increase we are seeing in material. We used to have one year contracts, but now we don’t go beyond three months because we can’t see past that. And customers aren’t willing to absorb that inventory cost.”
CW Products benefits from being in a less price sensitive segment of the industry. “Because we are a high mix, low volume company, most of our customers are looking for that responsiveness and high quality,” Ron explained. “We make a lot of plywood pallets. It’s not unusual for us to make a pallet that goes for $30 to $60. That’s because they are putting a $10,000 or $15,000 product on this pallet, and they don’t want it coming apart.”
With higher costs for material, one way to offset smaller profit margins is to increase efficiency and production. With a background in lean manufacturing and other state of the art manufacturing practices, Ron has been able to transfer that knowledge and experience to his company.
“We brought the lean manufacturing approach to our shop, and a lot of that has been reducing the amount of waste,” he said. “When employees are cutting for a product, they don’t just pull the board closest to them. Are they going to get more efficiency and less waste cutting it out of an 8-foot board instead of a 10-foot board?”
“We are really trying to move that decision making ability to the shop floor and not tell them every time how to do it,” Ron added. “When I bought the business, workers didn’t make a move unless they were told. Now we’ve picked that up a level. We pay them better than the industry at large, but we expect them to make those types of decisions.”
Rising material costs remain a major concern, however, and have proven to be a hurdle to providing just-in-time service and delivery. Ron previously used a lumber broker who had enough purchasing power to buy in volume and sell to CW Products in partial loads at the same price that Ron would buy truckload quantities. The arrangement enabled Ron to reduce inventory carrying costs dramatically while providing material at the same price. “It was a great relationship for about six months until the market changed,” he said. Now Ron is sourcing material from further away and has had to return to purchasing truckload quantities.
CW Products uses a marketing approach not frequently seen in the pallet and container industry – radio advertising. “With our radio ads we’ve actually started picking up e-Bay customers shipping motorcycles and scooters,” Ron said. “We have also picked up lawn mowers, antiques and pictures. We end up utilizing a lot of our scrap, cut ends, that type of thing. The community at large didn’t really have anyone else to turn to.”
“What we were looking to do is to diversify our product mix so we’re not just doing electronics companies,” added Ron, an avid cyclist and sports car enthusiast.
As part of its full service approach, CW Products picks up the objects a customer wants shipped, brings them to its shop, builds the container and packages the shipment, contracts for shipping, and loads it onto the truck.
Ron is optimistic about the economy of eastern
Shortly after acquiring the business, Ron recognized a major inefficiency: a lack of systematic documentation of specifications and plans for containers for various customers. “We had manila file folders everywhere,” he said, “and some drawings were 10 years old. There were little yellow sticky notes for changes. It was something that was causing me a lot of anxiety.”
Ron performed some Internet searches, looking for software that could design and draw crates, and Crate Pro kept coming up. He called Deploy Tech Services, the maker of the software, and talked to Jeff Duck. “He sent me out a copy of his product to review,” Ron recalled. “Jeff represented himself extremely well. He seems to know a lot about the industry as well as about his product.”
“Two years ago Crate Pro was completely re-written for the first time in 10 years,” said Jeff, “and it is now much more stable.”
Ron began trying Crate Pro, but he experienced some initial confusion about the way the program determined the various costs of a container. The confusion stemmed from the way Ron previously figured his costs.
“I think that part of it was that I thought it should be giving me a different number,” he explained. “I had to establish some confidence in the way it was quoting and pricing product. I look at it now, and the simplicity with which Jeff approached it, and I realize that it was just a mind set change.”
Jeff recalled Ron’s frustration in attempting to get the same cost outcome from Crate Pro as from his existing spreadsheet program. Finally, Jeff asked Ron to send him the spreadsheet to look at, and he discovered an error.
“I’m not sure we were accounting for scrap as well as we should or nail costs,” Ron said. “With Crate Pro you can even get down to the cost of spray painting a number on the side of the pallet — that type of thing. It captures all of those costs.”
After getting over the initial hurdle, Crate Pro software has become an integral part of the way Ron does business. The most important benefit is consistent quality and repeatability of a design.
“Crate Pro is the first thing I turn on in the morning and the last thing I shut off at day’s end,” said Ron. “The employees love the consistency of the documentation that rolls out to the floor.”
“It is in that system,” said Ron. “You put your energy up front one time, and you make sure that you do that well. As a result, it has increased my productivity because I don’t have to dig through files. I literally just have to put in the quantity and the date and send it out to the floor. I’ve got a release to production and cost control.”
“If you call me up today for a quote, I quote within Crate Pro,” Ron said. “And then it’s in the file under your name. If you call me back with the order, I release it to production. There is a reference and a file for each customer.”
“The more experience I’ve had with the program, it is really quite straight forward,” he said. “When you set the software up, it asks you questions, such as how much time you intend to take to set up a saw, how long it takes to cut up material at the cut-off saw or the panel saw, to shape a board or to resaw a board. You’ve got all that information in the program, and it captures all of that time as it relates to costs. The biggest variable to me was assembly. I struggled to understand how he (Jeff) arrived at his assembly number, but now I know that very well.”
Crate Pro is not a computer-assisted drafting (CAD) program, and the illustrations it produces are not CAD drawings, Ron noted.
Another reason he likes Crate Pro is because it can be used for both pallets and crates. Ron found other software that was for pallets and other programs for crates, “but I wanted something that would do both. Crate Pro serves that need.”
Ron did not miss a beat when he moved from the electronics industry to the world of wood shipping platforms and packaging. His expertise in lean manufacturing as well as innovative ideas about marketing are helping him succeed in his new career.
