On the Move
Five-year capital investment plan positions Iowa sawmill for future markets.

By Jennifer McCary

EDGEWOOD, Ia.-- Tim and Rhonda Kendrick are nearing the home stretch of a five-year expansion and modernization program that has replaced or updated every breakdown center in the family-owned hardwood sawmill. The next step of the program, slated for mid 2005, will install a cogeneration facility to fuel Kendrick Forest Products' dry kilns and generate electricity.

The $6.5 million investment program has increased production to 10MMBF on a single shift operation, boosted lumber yield by 17%, and improved overall operating efficiency.

The Kendricks run a vertically integrated business that includes managing 1,300 acres of forestlands, timber procurement and harvesting, trucking of raw material, a lumber mill, three dry kilns and a cabinet business - Forever Cabinets by Kendrick. Controlling the entire process from stump to store provides opportunity to eliminate inefficiency, enhance customer service and profitability.

Red oak, white oak and hard maple account for 75% of production with smaller quantities of walnut, ash, hickory and elm rounding out the mix.

Expansion of the sawmill building to accommodate a McDonough 6 ft. linebar resaw kicked off a five-year investment program.

For the most part, the Kendricks deal direct with end customers with a small percentage going to distribution. Export markets include furniture, millwork and flooring producers in European and Asian markets. Domestically, Kendrick sells to these manufacturers as well as producers of windows, doors, toys, cabinets, handles, kitchen specialty products, railroad ties and pallets.

Markets have been strong lately, but even when they were tight in recent years, the Kendricks remained focused on their long-range expansion plans, which would provide the competitive edge needed to continue the company's growth.

"We don't have control of the markets," observes Tim. "But we can control our response to it. Everything that we've done to upgrade the mill, and getting so much more out of each log, helps to position us for any kind of market."

UPGRADING

Tim and Rhonda Kendrick, with son Kirby

In the mid- to late-'90s it was apparent the sawmill needed to increase production to remain profitable. At the time, annual production was hovering around 3MMBF. The owners were reluctant to add a second shift so they started out working two shifts just one day a week. That eventually grew to two full-time shifts and production increased to 6MMBF.

"Our production levels were where we needed them and we felt we had done a lot of the things we needed to do with the exception of getting more yield out of each log," Rhonda says. "At first we looked at building a whole new mill, but then we decided to do it a little at a time and make a five-year commitment to it." Although each phase was planned in advance, spreading it out over time provided opportunity to evaluate and adjust if necessary to achieve the ultimate objective.

In 2001 a 4,000 sq. ft. sawmill addition was built to make room for a McDonough 6 ft. linebar resaw. This installation allowed them to go back to a single shift operation while also increasing production volume.

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(c) 2004 Hatton-Brown Publishers, Inc., used by permission.