Paul Gaines is one of four owners of Madison County Wood Products in Fredericktown, Missouri. The business was founded by his father, Douglas Gaines, and James Kesting. Today, it is operated by Doug, Paul, and James and James’ son, Bryan.
Madison County Wood Products recently acquired another Missouri pallet manufacturer, Kenmar Timber Company.
PALLET ENTERPRISE: A lot of consolidation has been going on in the industry. Why did you buy Kenmar Timber Company? What kind of abilities do they bring that you didn’t have? How do you see that being a synergy between the two companies?
Gaines: Definitely freight-wise it gives us an advantage when reaching Kansas, Iowa, Nebraska, and northern Missouri compared to the plant in southeast Missouri. The two plants are about four-and-a-half hours apart…We’re looking at ways to grow our market share through acquisitions. It was a good opportunity that just came up.
PALLET ENTERPRISE: Is existing management staying?
Gaines: Yes, we had a relationship with Kenmar in the past. Having the relationship that we did…Kenmar approached us. The owner wanted to make sure his business would go to a company with good values and would keep his team working.
PALLET ENTERPRISE: Have you ever seen a market as crazy as this? When do you think the ride is going to stop?
Gaines: We have never seen a market like this right now, moving as fast as it is. It’s pretty volatile right now. It’s almost changing weekly. When is it going to stop? We really don’t know. We hope it won’t drop as fast as it went up. We’re hoping it will last until the end of the year…We’re banking that it probably will last through the year.
PALLET ENTERPRISE: You’ve been vertically integrated for a while. Why did you do that and why is it important?
Gaines: It’s definitely important to have that ability (to produce pallet lumber). We try to have a really good inventory of raw material — logs and cants — on the yard at all times. In times like this, when material supplies are short, it gives you the opportunity to have an upper hand. We’re not letting our customers down. They’re not going without pallets.
It’s very important that you protect those relationships you’ve built over the years. We’ve been contacted by new customers, other companies that need pallets. There’s a lot of business we’re not taking on because we don’t want to damage relationships we’ve built over the years. It protects our customer base. With vertical integration…during good years and bad years, Madison County Wood Products is going to be able to supply their needs.
PALLET ENTERPRISE: When it comes to integrating a new company, do you think the fact that you’re in the same state, that you knew the people already — that was an advantage?
Gaines: We’re far enough away, so that hasn’t helped us a lot. For instance, log supply? I didn’t know any of the loggers until I started going up there. We share the same trade associations. That’s been helpful. Other than that, I don’t think it would have been much different from integrating a company from Indiana versus Missouri.
PALLET ENTERPRISE: Who has helped you shape your attitude in how you run your business? Do you have a mentor? Where did your business philosophy come from?
Gaines: Well, honestly, my dad and Jim have both molded Bryan and I more than anybody. We definitely have peers in the industry who have influenced us in the last several years, James Ruder being one. We’re just bringing our Christian beliefs more prominently into the business than we did in the past. We are being more direct about our faith shaping our business decisions.
PALLET ENTERPRISE: Obviously you hope to grow through this acquisition. Is there anything distinctive about Kenmar’s capabilities?
Gaines: It’s definitely a smaller operation that we feel has so much potential to grow. There is a good timber resource up there. There seems to be a pretty good logging capacity there and timber resources. They have a lot more softwood species than we’re used to. There are a lot of different opportunities. We don’t just build pallets.
