LELAND, Illinois – Dave Dugan and his step-son, Josh Thacker, have found it makes good business to have a couple very different markets to serve, markets that are not connected or related. If business is down in one area, the other market will not necessarily be affected.
The combination is helping them get through these tough economic times. Their company, Dugan Wood Products Inc., has two emphases – custom stairs and a sawmill.
“We’re getting more action on the sawmill side now,” said Josh. The sawmill, he explained, is their “insurance plan” for times when the staircase business is slow. “We advertise that heavily if stairs are slow,” he said.
Dave, 58, has a sawmill background, and owned and operated Sugar Grove Sawmill, about 45 minutes west of Chicago, in the mid-1970s until he sold the business in 1981. During the next 20 years he worked as a foreman for an excavating business and also worked for a custom stair manufacturer.
Josh, 33, graduated from Illinois State University with a degree in criminal justice and promptly took a job selling computer software.
They went into business together, building custom stairs, in 1998. Within a few years, Dave thought about getting the sawmill back. He bought it in 2001 from the people he sold it to. “He loves the sawmill,” said Josh.
The ‘bread and butter’ of the business is stairs. Last year the company had sales of about $300,000; about 80%-85% of the revenues came from stairs.
Dave and Josh specialize in stairs for high-end residential construction. Their customers are small, custom home builders in the Chicago region.
The stairs are custom — hand-made, assembled on the job site. Occasionally they build and install ‘box sets’ – a stairway that is assembled in the shop and essentially installed as one piece in a house.
Working with a list of builders in the region, Josh has marketed the company by faxing information to the builders. In 2005, when home building was strong, he could send out a fax to 200 homebuilders that would generate about 40 calls and 10 jobs, he said. If sales stayed on their 2005 pace, the company could have grossed about $1.5 million in 2008, he said.
The two of them can handle about $300,000 in annual staircase sales using some occasional labor in the shop and for installations.
Like other businesses tied closely to the housing industry, they have been impacted adversely by the recession and weak homebuilding. A year ago, when business was better, they had six employees. Now it is down to the two partners. “We’ll do about $225,000 this year in stairs,” said Josh.
That’s where the sawmill comes in. The sawmill is a niche service with few competitors. There are only about two other mills within 75 miles, estimated Josh.
The higher grade lumber is used for dimension lumber and stairs, and the low-grade material goes for industrial lumber products. In fact, the main product of the sawmill is trailer decking, and the second leading product is fencing material.
At the time Josh talked to Pallet Enterprise, the partners were cutting about 2,000 board feet per week.
They sell trailer decking retail directly to contractors who need material to replace old wood decking on a trailer. Dave and Josh also provide installation service; contractors can drop off a trailer and pick it up later with a new deck installed. The decking is usually white oak material. White oak and pine are cut for fencing material, which is sold retail mainly to farmers.
Other sawmill products are timbers, fireplace mantels and dimension lumber sold to woodworkers and other customers. They also sell some products to a lumber company in Wisconsin and a business that makes staircase components. For example, they may supply theses businesses with 6/4 or 5/4 boards. And they provide custom sawmill services – sawing logs supplied by customers who want specific lumber products. As indicated above, they also saw some material for their own stair components – mainly red oak.
They advertise the sawmill in local newspapers and the Yellow Pages. In addition, the company is registered as a state licensed timber buyer, which generates inquiries, and Dave still has contacts from his old sawmilling days years ago.
The mill has cut red and white oak, ash, different types of mahogany, alder, beech, birch, cherry and Brazilian cherry, hard and soft maple, hickory, poplar, walnut, and different species of pine. “There’s a lot of old white oak in the area,” said Josh.
Most lumber is sold rough green, but some lumber must be dried. The partners do not have a dry kiln, so they contract with a nearby farmer who has a home-built dry kiln. They sticker their lumber production to air-dry.
The business has an office on five acres with some space to store lumber and the mill, contained in a 6,000-square-foot building. The head rig is a Helle, which is manufactured by Sawmill Hydraulics Inc. It runs a 56-inch circular saw blade. Dave maintains the blade or sometimes sends it out for service.
The mill can cut logs up to about 30 inches in diameter and 18 feet long. If a log is an overly large diameter, Dave and Josh square it off with a chain saw.
They only have two other principal pieces of equipment, a Miner two-saw edger and a chop saw. The flitches are fed to the edger after they come off the head saw, and the edged boards are cut to length on the chop saw. Dead rollers are used to move the material from one area to the next. They use a tractor fitted with forklift tines and chains on the tires to pick up the logs and load them onto the infeed deck.
They get logs from a variety of sources. They buy logs from wood yards and tree service companies with whom they have established relationships, and they buy some standing timber. Most logs come from people who are harvesting some trees on their land and want the logs processed into lumber.
Dave and Josh work together, either in the sawmill or the stair shop or installing stairs. The stair shop is equipped with various machines and tools for remanufacturing lumber into finished components, including table saws, planers, sanders and more.
Sawdust is supplied to farmers for animal bedding. Trim ends are sold for firewood, and some slabs are cut up for firewood. They also use some scrap material to fuel a wood stove that supplements the heat in the stair shop.
The Internet is an important tool in their business, especially for marketing stairs. The company has a Web site at www.duganwoodproducts.com. Besides sending faxes to builders, they advertise in local newspapers and also get referrals from builders. However, the Web site is the main draw for new business. They pay for an advertising service by Google, the Internet search engine company, that enhances their visibility on the Web.
In addition, the Web site enables builders and other customers to view the selection of components for stairs and rails; they can look at the illustrations and make their selection. Customers also can pay via the Internet through PayPal and a credit card.
Occasionally they come across some high grade logs with no ready market for the lumber. They will make something out of it and then advertise it on their Web site. They also advertise special material for sale on Wood Web, an Internet site that, among other things, brokers sales of lumber and specialty wood products. They recently sold some walnut beams through Wood Web.
Josh is optimistic about the housing market and the staircase part of the business. “I see things turning around in the third quarter…once everything calms down,” he said. He is hopeful that tax incentives and credits for buying a new home and easing of credit markets will spur home sales and put builders back to work constructing new homes.
