Quebec City, Canada
Anybody who has had the pleasure of visiting Quebec City knows what a beautiful city it is. As you head north from this unique city, you slip into a more sparsely settled territory and into the vast Quebec forests, home to much lumber to meet the needs of eastern Canada and the eastern portion of the United States.
You name a lumber product, and it can probably come from Quebec. Many of the lumber products that come from eastern Canada are sold through wholesalers. This is true for pallet lumber as well as lumber for other products, ranging from construction through fencing. Most wholesalers specialize in a specific market. The biggest function that a wholesaler provides is service and knowledge. Both of these require excellent connections so that they can connect mills and supplier sources to people with a need. The more a wholesaler knows about his product line and his customers’ needs, the better he can serve content customers.
René Harpin started working with a group of Quebec sawmills in 1985. In 1988 he and a partner started Kheops, a wholesaler that has served the pallet industry since its beginning. In 2001, René sold his shares and started his second company, SPEC Wood & Marketing Solutions. What excited René was that he could use what he had learned from about 15 years of working with sawmills and pallet plants and start all over. He believed that it would be easier to make some of the changes he wanted to make in a new company. He didn’t have to alter something that was already established. He had a fresh start with lower overhead. He believed he could take the best from his experience and quickly put together a service that could excel from its beginning.
For example, SPEC now functions with about 21/2 sales people for each support staff, a more efficient ratio than most wholesalers. Each person has two computer screens to allow quickly changing from one item to another, a step that the staff has found to be very beneficial. Little things can mean a lot.
SPEC has grown from the two people who joined René to a ten person team today. SPEC buys from many of the same mills he has known so well over the years. René stated, “Knowledge and experience are two of the major things our team provides to our customers. Long standing relationships serve everybody involved.”
SPEC specializes in supplying pallet lumber to recyclers and pallet manufacturers for both new and combo pallets. While SPEC can supply random length lumber, about 90% of SPEC’s product is cut stock. SPEC ships at least 80% of its products from some 16 supplying mills in eastern Canada and the United States. Other than a little western red cedar, SPEC does not buy lumber products from Western Canada. After about six years, SPEC is shipping over 3,000 trucks of lumber products a year, mostly to customers in the U.S. They can ship pallet lumber directly from mills to customers by truck or through a rail reload facility. SPEC ships via boxcars and flatcars through reloads in Chicago, Ohio, Montreal, and near Windsor.
SPEC provides individually stamped heat treated pallet stock pieces to U.S. customers who need them, but René reports that most heat treated pallets in the U.S. are treated by pallet manufactures in their own chambers as assembled pallets. There is a lot of demand for treated pallets, but the extra expense of double handling and individually stamping pieces makes shipping treated cut stock across the border a less attractive option for many buyers.
René put SPEC’s wholesaler function in perspective when he said, “We can serve our customers more objectively. Mills are often emotionally involved with their products and rightfully so. We function as a buffer between our supplying mills and our customers. We know and appreciate our products and are in a position to make objective decisions about what our customers need and what the market can supply.
“A knowledge of logistics helps us serve our customers professionally. We have professional foresters and a staff that knows shipping and logistics options. We know how to cut lumber. One of our people is out in the field visiting our mills every week.
Importance of Middlemen
Every time that I look at a middleman situation, I am reminded of what my lawyer once said. A valued and loyal asset to our publishing company, he stated that as a small law firm he can offer all of the advantages of a larger firm without its limitations. He worked for one of the most prominent law firms in the eastern United States when he decided to launch out on his own. He said, “I still have all of the legal minds and assets for my clients that I had before. I can still pick up the phone and any of my former colleagues are at my disposal. But now I am not obligated in any way to stay inside of one firm. I can reach out to any good lawyer for an opinion when it is needed.”
The same thing can be said about a good wholesaler. He has the resources of numerous mills, along with a strong relationship to get things done. But he is under no obligation to buy from within a specific company or mill location. SPEC Wood can mix and blend wood from different mills. One of the benefits that SPEC offers customers is its knowledge and experience in logistics. The company has the time to develop contacts and knowledge of shipping because it is not burdened by the problems that mills have to focus on that relate to their production and supply issues.
SPEC can mix and blend various products from different mills at reloads. A typical load may contain three or four different products. SPEC uses trucking companies, and it uses the logistics resources of its supplying companies.
While wholesalers do not have to actually own and run sawmills and their related machinery, the efficiency of using the best machine for the job is still important. In recent years the most common mill upgrades have been machines to cut with thinner kerf and control over accuracy in thickness, length, etc. All kinds of machinery so often associated with sawmills are important. SPEC has to understand the machinery to provide the best service to both its customers and its suppliers, machinery such as bandsaws, guided saws, sizers, optimizers, lasers, optimizing trimmers, scanners, stackers, etc.
While a conventional grade hardwood sawmill is designed to cut higher grade hardwood products with pallets using the downfall and lower grades, scragg mills are designed mostly to saw pallet stock and other lower grade products, such as crossties. Probably 80% of SPEC’s supply comes from scragg mills.
SPEC can supply a wide variety of products because of its mill mix and reloading capabilities. 48×40 material still dominates its product offerings, constituting about 80% of the products shipped. SPEC can supply whatever a customer needs; 42” material is another popular size. A progressive supplier provides the services that its customers need. For example, a customer may want his lumber wrapped. For SPEC this is common for fencing lumber, not pallet lumber.
SPEC has a multilingual support team. It includes knowledge of forestry, log harvesting, sawing operations, grading, distribution, marketing, manufacturing, logistics, and consumer trends. René said, “Our suppliers rely on us to take care of their marketing and promotion, and because we understand our mills’ capabilities, we can work with them to meet our customers’ needs.”
About 95% of SPEC’s pallet lumber is hardwood, mostly aspen. The remaining 5% is softwood. This mix has changed tremendously the last few years. The wholesale function allows the flexibility for SPEC to adjust as necessary to better supply its customers and represent its suppliers.
Communication – A Key for the Future
René said, “The web is the communication tool of the future. Our new web site (www.woodspec.ca) is a step on the road to communication with both our customers and our suppliers. Orders will be placed over the Internet, and the paper trail will be simplified. Ultimately the Internet will lower our cost of service making products more affordable. I anticipate the Internet will be a necessary tool for tomorrow’s service and success. By established standards, a typical wholesaler will be extinguished if he keeps doing business the same old way. I expect more just-in-time production.”
SPEC carries many items in inventory for rapid delivery. René says that an order placed by noon on one day is typically delivered by the next day if it is in inventory.
When asked for a few words of wisdom, René said, “Brokers adjust to a very demanding market. In my opinion, many do not understand that we sell two primary things — logistics and quality. We offer service and expertise, not just lumber. Our staff is knowledgeable of logistics, forecasting, industry related trends, and grading information. We offer solutions and services, not just lumber. It is up to us to see that our customers and mills are successful. We offer more than wood; we offer solutions and information.
“Loyalty helps preserve the natural source of our supply chain. We ship quality lumber from Canada and the U.S. into the Northeastern and Midwestern markets. One of the moves we have made is to get into the global market. We have to know freight rates and understand fluctuating exchange rates. We are in a global market but SPEC’s loyalty is to the Northeast and Midwest. Our customers are there, and the best suppliers for our region are located there as well.
“Trade barriers change the rules for one country. Change can be good. I love changing markets; they make room for innovation. Changes have provided SPEC with our best opportunities.
“Uruguay has some unbelievable forests, but Canadian fiber will continue to be available. It will keep growing and be sold. It is our team’s responsibility to provide quality Canadian products that provide good value for our customers.”
