SHIRLEY, Missouri — Located in southeastern Missouri, the breadbasket of low-grade hardwood timber, Reed Lumber has felt the pinch of tight lumber markets. Cants and cut stock for pallet companies are in short supply with prices increasing, according to owner Carl Barnes.
“We have been fortunate that we have managed to maintain log deliveries at the level we need,” Barnes said recently in discussing Reed Lumber’s operations.
The company also has been aided by the upgrading of its Hurdle Machine Works circle sawmill, which is used to cut grade lumber, cants or railroad ties. Reed Lumber installed a Hurdle mill in 1996 but replaced it with a new model this past spring.
Beyond these recent moves, the company replaced its scragg mill in 2006 with a Baker Products tri-scragg system after a fire destroyed the previous scragg system. The Baker system has boosted production by more than three-fold and exceeded expectations by about 50%. Together, the sawmill and scragg mill produce about 15 million board feet of lumber annually.
The production gains with the scragg mill have eliminated the need to buy pallet lumber or cants. “We are pretty much in equilibrium between the quantity of lumber we produce and the lumber we need to manufacture pallets,” said Barnes. The company currently is not manufacturing No. 2 pallets, so all No. 2 lumber is sold.
Three Departments Power Reed Lumber
Each of the company’s three production departments — the grade sawmill, the scragg sawmill, and the pallet assembly operation — is housed in a separate building. Although the arrangement requires moving material among the mills and the pallet nailing department, it does keep the three facilities isolated and reduces the risk of a catastrophic fire. The office/machine shop and maintenance garage also are in separate buildings.
“We view the sawmills as disassembly processes and the pallet department as an assembly process,” said Barnes.
Reed Lumber sells residuals — bark, chips, and sawdust — to various markets. During the past three years the chip market has been in flux in this region.
Reed Lumber buys tree-length hardwood logs, and it also buys some tie and grade logs cut-to-length. Logs are purchased by weight and unloaded in the yard by three stationary log loaders: a Prentice, a John Deere, and a Timberjack, and a back-up Prentice machine. Butt cuts over 13 inches are merchandised in the yard with saws attached to the loaders, and those logs are routed to the grade mill.
Besides supplying the scragg mill, Baker Products also supplied most of the peripheral equipment, and Reed Lumber is equipped with 25 Baker horizontal bandsaws for its resaw operations. A slab edger was supplied by Brewco for the scragg mill.
First, logs that will be processed in the scragg mill are debarked with a Nicholson 27-inch ring debarker. After debarking, the scragg logs are cut into blocks on a Baker log merchandiser. The Baker tri-scragg, with two 48-inch circular saws, processes a block into a two-sided cant and two slabs. The two-sided cant continues inline on a sharp chain to a Baker horizontal bandsaw and is split into two three-sided cants. Meanwhile, the slabs are routed to the Brewco edger to produce a three-sided cant. Ultimately, each scragg block has been processed into four three-sided cants.
The three-sided cants are cut to exact length on a Baker double-end trimmer, then they are resawn using one of two resaw lines, a Baker seven-head and a Baker four-head thin kerf bandsaws. The boards are pulled by hand and graded No. 1 or 2 and stacked.
The scragg mill also contains a complete Baker line of equipment to cut long cants from the sawmill into more pallet stock. Baker handling equipment feeds the cants into a Baker four-head Multi-Select chop saw to be cut to length. Then the material goes through a Brewer sizer and into a line of seven Baker horizontal band resaws.
For the last two years the company has used Deck Duster thin kerf bandsaw blades from Kenne-Saw, its primary supplier of saw blades, on its band resaws for cutting pallet stock. The Kenne-Saw blades have been so effective at removing sawdust from the cut that Reed Lumber no longer uses the Baker Sidewinder de-dusters that worked so well for cleaning boards.
Grade logs are debarked on a Fulghum rosserhead debarker, then cut on the new Hurdle sawmill. The Hurdle headsaw removes 4/4 grade lumber from the log and also cuts them into pallet cants or railroad ties. Flitches and heavy slabs are squared on two sides with a Corley edger. After edging, big slab material is cut to length with a chop saw and resawn on a Baker two-head horizontal bandsaw into pallet lumber.
Pallet Operations Require Precise Planning
The company makes about 200 different pallets. About 60% of the company’s pallet production is the GMA footprint, 48×40, or variations of it. The company also makes several types of single-face skids. The remainder are custom pallet sizes.
“We plan pallet production several weeks in advance,” said Barnes, “and the bill of materials for the pallets we plan to make guides the cut stock production plan for the sawmills.”
The nailing department is equipped with a Viking Turbo 505 that is operated 50 hours a week. The company also has a Viking Duomatic available to use. Cut stock is staged near the nailing department, and material is moved to the nailing machine as part of the changeover process.
Reed Lumber invested in a Kiln-Direct heat-treating chamber in 2017 for heat-treating pallets used in export shipments. Reed Lumber relies on Profile Technology for cutting tools and 21 Saw Shop and Douglas Saw Shop for circle saw service. Bulk nails for the Viking machines are supplied by Mid-Continental Nail Corp. and Garnett Co.
Reed Lumber’s customers are manufacturers that mainly produce food, consumer products, and pharmaceuticals. They are located predominantly in the St. Louis region, central Missouri, and southwest-central Illinois. Although Reed Lumber deals directly with customers on pallet design, delivery, and other matters, it relies largely on brokers for sales. About 80% of the company’s pallet production is sold through a small number of brokers.
Story Behind the Success
Reed Lumber is located in Shirley, Missouri, about 75 miles southwest of St. Louis and nine miles west of Potosi. All of the company’s facilities are in one location, and it has an estimated 60,000 square feet under roof.
With about 70 employees, Reed Lumber manufactures more than 750 thousand pallets annually. The company operates one shift. Pallet assembly operations are conducted 50 hours a week although individual employees work a 40-hour shift.
Carl Barnes bought Reed Lumber from Elmer Reed in 1993. “I had a long-term interest in owning my own company and being in the manufacturing sector,” he said. “I had developed a pretty specific profile of the company I was looking for, although I did not focus on a particular product.” Barnes considered about 15 other businesses over two years before he bought Reed Lumber.
Reed Lumber has a long history and holds a significant place in the history of the pallet industry. It was founded by Elmer’s father, Ott, in the late 1940s, when pallets were nailed by hand — meaning with a hammer, not a pneumatic nailing tool. Elmer, the oldest son, took over the company in the 1970s, and he and five brothers operated it until the sale to Carl Barnes. At the time the business changed hands, it was manufacturing about 250 thousand pallets annually.
Tom DePew was a close friend of Ott and Elmer. He was a frequent visitor and developed several of the company’s markets and contributed to Reed Lumber’s evolution. He invented the Tier-Rack, a frame that can be attached to a pallet unit load to enable several unit loads to be stacked on top of each other. Tom, who died three years before Carl purchased Reed Lumber, was one of the founders of National Wooden Pallet and Container Association and served as its first president, and he was instrumental in developing standards for pallets, like the GMA standard.
Strong Financial Management
Carl Barnes and general manager, Brock Fisher, developed a model of the economics of the company in Excel spreadsheet software. It factors in material costs, labor costs, fixed costs, and variable costs, and it allocates those costs among the company’s products. The model helps them understand the profitability of each product and what they contribute to the company’s overall margins.
“Brock and I both have financial backgrounds, and we over-analyze the company, but we have fun doing it,” said Barnes.
Reed Lumber has developed production standards for each department. In the nailing department, for example, it has a benchmark production time for each pallet the company makes. “Each day we compute the percent of the standard each department has attained,” explained Barnes. “This gives us a pretty good idea of where we need to spend our attention and also is used as the basis for calculating the employees’ production bonus.”
Better Customer Service Starts with Taking Care of the Employees
Reed Lumber has an employee manual containing all human resource policies. The company offers group health insurance and a 401(k) retirement plan. It maintains 12 OSHA-mandated safety programs and has a monthly safety meeting to emphasize one of the programs in each meeting.
The company pays bonuses to production employees based on the their department’s attainment of operating standards. Foremen also earn bonuses.
“Our experience has been that the bonuses make a difference in the behavior of most employees,” said Barnes, who has served on the governing board of the Missouri Forest Products Association in the past and was president from 2003-05.
Reed Lumber was one of the founders of the Missouri Wood Industry Insurance Trust, which provides workers compensation coverage. Engineers from the trust visit the company several times a year to assess safety compliance.
In addition to Brock, other key employees include bookkeeper and office manager Renee Cantrell, who has been with Reed Lumber nearly 20 years and also handles most of the order entry process, and procurement manager Mark Payne, whose duties also include managing the standing timber controlled by Reed Lumber’s affiliated timber company.
Leroy Bodimer, an employee for 43 years, is the company’s head machinist. His father preceded him as head machinist, and Leroy’s son, Jason, has been working in the machine shop for several years.
Carl’s wife, Lisa, is a 50% partner in the ownership of the business. “I’ve learned what a supportive person she can be,” he said. Lisa worked as an attorney and recently retired after a 29-year career with Anheuser-Busch Companies as an associate general counsel.
They have a son, Fred, 24, who currently is serving as a legislative assistant to a state representative. Their daughter, Emma, 19, is a sophomore at the University of Missouri, where she is majoring in biochemistry.
Carl reflects on his experience in the business, “In the nearly 25 years I’ve owned the company, we’ve had several challenges including at least three recessions, a catastrophic fire, basic shifts in important markets, the sudden departure of key employees, and several OSHA inspections. We’ve tried to learn from each of these experiences and turn most of them into opportunities.
“I don’t generally use sports analogies in business, but we tend to play small ball. We haven’t made dramatic acquisitions. Rather we’ve grown internally at about 5% per year. We’ve also gotten consistently more productive. In 25 years, we have tripled the unit volumes we produce with respect to both board feet sawmilled and number of pallets manufactured, while increasing employment by about one-fourth.
“I have no regrets about having bought and run the company. I’ve accomplished the things I set out to accomplish to this point. I believe we have a bright future, and I’m excited about taking the company forward.”
