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Closer to the Supply

8/22/2014 4:00:00 PM
Article by John Howell

In a recent article entitled “Closer to the Market”, I showed several advantages of reshoring our furniture manufacturing in consideration of our local market. In this article I’ll discuss some advantages that can be gained by being “closer to the supply.” I’ll be focusing on solid wood since that’s where the advantages show themselves the most.

The first, and most obvious, advantage is the fact that the closer we are to the point of harvest, the lower the shipping cost. Since wood is a bulky, relatively heavy material, shipping costs are significant. I’m sure this is a primary consideration among the foreign furniture manufacturers who have recently decided to open manufacturing plants here in the United States.

As compared with imported woods, the difference in the cost of shipping is more than just the cost of carrying the wood across the ocean on a ship. First, the wood needs to be taken from where it’s harvested to the point where it’s shipped. This may involve several transfers, from animal to truck to rail, etc. It then needs to be loaded on the ship. When it reaches its port of entry into North America, transfers will be needed again, this time in reverse order (okay, maybe not the animal). By the way, all this “embodied energy” makes the wood less green environmentally, as well.

Even within North America, transportation is costly. The costs include more than monetary considerations. The wood itself may lose some of its perceived value. I’ll illustrate what I mean by describing some of the most idyllic methods of acquiring wood for furniture, although some methods may not be practical for most woodworkers.

The ultimate method of sourcing wood is to own a forest of mature hardwoods that are suitable for furniture. As the trees mature, you harvest and season the wood. Then just select from this supply as needed for each piece of furniture you manufacture. This is a nice system if you own a hardwood forest, but even so, keeping this kind of inventory is expensive.

If you don’t own a forest, the next best option is to purchase wood directly from a local sawmill. In some cases, the lumber cut from a particular tree can be kept together and purchased as a log, in a manner similar to purchasing a flitch of veneer. This gives the woodworker the opportunity to match the wood on a piece of furniture very effectively.

Local sawmills can often tell you where a particular log was harvested. Having wood with a local history can be used as a marketing tool in many regions of the country. It makes each piece of furniture unique in the eyes of the customer and gives it a connection to the local community. Even woods from urban areas are available in limited quantities as a result of expanded development, storm damage, etc.

I spoke with Collin Miller, Director of Wood Products Initiatives at the Northern Forest Center in order to gain some insight into how this is working in northern New England and New York State. The Center promotes a healthy, forest-based economy by supporting businesses that utilize regionally harvested wood.

Collin has personal experience with several furniture manufacturers who purchase woods directly from local sources; some are integrated in that they take a piece from log to the finished product but more often the norm is to purchase it from a local sawyer. One company that makes large tables and wall panels will catalog individual cuts from the mill. Their customers can then select from finished samples of wood from that particular log to be used in the furniture they purchase.

Most of us can’t afford to purchase lumber with cash and hold inventories for extended periods of time. Likewise, local sawmills often can’t afford to extend credit for months since they need cash to purchase logs to keep the mill running. In most cases, thirty-day payment terms are acceptable, but when it gets out to one-hundred-twenty-days, the mills quickly lose interest in doing direct business with secondary producers. According to Collin, this presents a challenge to working directly with local sawmills.

This is where the broker or wholesaler comes in. They purchase wood, often from many sources, hold inventory, sometimes providing value-added services such as drying, planing and offering mixed sorts. They can extend credit to furniture manufacturers and other woodworkers. In the process, the boards from any particular log are mixed in with boards from other logs, and the identity of each gets lost in the shuffle. In fact, several different species may be grouped together and sold as a single lumber category. The category named “Red Oak”, for example, can include up to seventeen different species. Needless to say, choosing from a category like this and trying to match one board to the next can be quite challenging. Smart hardwood mills have stepped in to offer their customers a customized lumber solution to fit an individual customer’s unique specifications.

The other concern with the wholesaler is that they must mark up the price to cover costs and generate profit necessary to sustain their business. Normally, this added cost will be passed on to the woodworker.

Large manufacturers can usually purchase directly from sawmills and get extended credit because they deal in large enough quantities. In these cases, sawmills include the services normally provided by the wholesaler. As with the wholesaler, the unique identity of the wood is lost in the process. Typically with large manufacturers, the process of matching adjacent boards is replaced by color toning, glazing, tinting, etc. The results are usually muddy, monotone finishes.

At this point in time, the viability of purchasing wood directly from sawmills is limited, but can work depending on your location and relationships with a particular producer. It’s a more promising option if you are seeking to differentiate your products from commodity produced goods and target a market where potential customers have an interest in local products and an appreciation of the beauty of local woods. Small cabinet shops and furniture makers have been doing this for centuries. The use of local woods for our products will become a reality for more of us, as long as we can communicate not just why “wood is good,” but why where it came from really matters. And for this, one may want to get closer to the source.

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