By Peter O’Brien, president, Veneer Solutions, Clarksville, TX
Working in “small town America” is a great way to compete in the world market. Here at Veneer Solutions LLC, we have a great advantage over our global competitors due to the incredible working relationship we have with the small rural city of Clarksville, TX. We are especially blessed to be located in Texas, a business friendly state. We believe our success can be replicated by other manufacturers and small towns throughout the country.
Veneer Solutions- Our Story
Gary Hogman and I started O’BH Associates LLC in 1990 as Manufacturers’ Agents to the furniture, fixture and cabinet industries. We represented Prowood Inc., a Little Rock, AR manufacturer of veneer edgebanding and related items. In 1999 Prowood’s owner decided to sell the business.
Our company and business associate Don Wilson decided to buy Prowood. Don owned an empty manufacturing plant in Clarksville, TX, about 2-1/2 hours northeast of Dallas. We decided to change the name of the company to Veneer Solutions LLC and relocate the factory to Clarksville.
From the beginning Clarksville’s city leaders proactively lent Veneer Solutions a helping hand. They immediately agreed to pay for the plant relocation costs in order bring our factory’s jobs to the city. .
Veneer Solutions produces and/or sells veneer edgebanding from .5 mm to 3 mm thick, profile wrapping veneers, and flexible veneer sheets. We also supply Jowat hot melt adhesive, melamine edgebanding and other specialty products to our customer base. Peter and Gary’s roll has been to handle sales through O’BH associates for Veneer Solutions in several southern states. Other independent Agents sell the products throughout the rest of the country. Don Wilson oversaw the manufacturing processes at the factory. In 2005 Peter and Gary bought out Don’s shares of the company and hired a plant manager to run the manufacturing part of the business.
During that same time period, Veneer Solutions accepted an offer from the city leaders in Clarksville to build a brand new 37,000 square foot manufacturing facility in the city’s industrial park. They agreed to customize the facility to meet Veneer Solutions production requirements and lease it to our firm for $1.00 a square foot for five years with a five year option.
The city of Clarksville received grants from county, state and federal agencies to be used primarily for construction of facilities and to retain and create jobs. They also offered to pay the relocation costs from the original plant to the new plant in the industrial park. The city leaders were motivated to add a new facility to the Industrial Park as a show piece to entice other companies to relocate there.
Between 1999 and 2006 Veneer Solutions grew slowly, and worked through a difficult learning process – in pursuit of our goal to become the number one veneer edgebanding manufacturer in North America. During that time Veneer Solutions was renewing their existing equipment and buying new equipment whenever possible. These were very difficult years for the company and profitability was never reached during that time.
The ownership was not satisfied with the knowledge base inside the company and looked outside for technical help. The process of manufacturing veneer edgebanding in continuous rolls was invented in Germany 1974 by Amin Wiblishhauser of Furwa GmBH. Since that time several other European factories and a few American factories began manufacturing this product. Furwa has remained a leader in this industry throughout the years, by continuing to develop new high quality innovative products.
In 2006 in an effort to improve processes and quality, Veneer Solutions sought out the help of Furwa and its president, Roland Reigbert – regarded as one of the leading veneer experts in the world. A joint venture agreement was established between Veneer Solutions and Furwa GmbH, an arrangement that has allowed Veneer Solutions’ efficiency, quality, and service to improve dramatically under Reigbert guidance.
How we produce edgebanding
Unlike a typical one-size-fits all approach that many veneer edgebanding manufacturers take regarding production, Furwa allows for customization for every customer. Veneer Solutions now uses the Furwa approach to manufacture veneer edgebanding.
When working with veneers most customers have different requirements and specifications. They are concerned with color, grade, grain, thickness and length between joints etc…Veneer Solutions can now customize each order for the customer. This ability gives Veneer Solutions a significant advantage over the competition. Overseas competition certainly cannot offer this benefit without long lead times and large production runs. It doesn’t make a lot of sense to send domestic veneers all the way to Asia, where they are processed into edgebanding products and shipped them back to the USA. Just the carbon foot print alone is a disadvantage of this process.
Subsequent to our joint venture, Veneer Solutions also began purchasing products from Furwa that we don’t have the equipment or capacity to produce. Veneer Solutions also produces and exports certain domestic veneer products to Furwa at a lower cost than it can achieve in Furwa’s German factory.
The process Veneer Solutions uses for manufacturing rolls of veneer edgebanding, along with all the equipment used, originated in Europe. Since 2006 Veneer Solutions has rebuilt or replaced every piece of equipment in its factory spending over $1.2 million. In 2009 and 2010 alone an investment of over $400,000 was made for new, state-of-the art, European specialized equipment. This equipment improves efficiency and lowers costs. It also allows Veneer Solutions to compete effectively with our North American competition.
The capital investment for the new equipment has been partially financed by low interest rate loans from the Clarksville Economic Development Corp. These low interest rate loans were offered at a time when banks were restricting lending. Without these loans, Veneer Solutions would not have been able to make all of the plant improvements and would not have been in a position to grow the business.
In order to meet the growing demand for FSC certified products, Veneer Solutions will apply for FSC certification for chain of custody controlled wood in 2011. This will increase the FSC business in edgebanding and profile wrapping veneers.
In 2007 Shawn Songer was hired as the general manager of Veneer Solutions, bringing over 28 years of wood products manufacturing experience to the company. Songer has been instrumental in two plant start ups, and four major expansions. He has facilitated the purchase of over $18 million of state-of-the-art manufacturing equipment. He has worked at all levels of leadership from front line supervision to director of operations, and now general manager of Veneer Solutions.
Songer is well known in the industry and is considered one of the industry’s leading experts in efficient manufacturing processes, engineering, training and executing repeatable procedures. Shawn is a hand’s on leader and can personally run every operation in the plant, including major repairs and maintenance of equipment. Shawn believes employees and their actions are a reflection of their leaders.
Good leaders are servants to their people. He feels there is always a better way to do things, and what gets measured gets done. Shawn feels the key to success in the manufacturing environment is to release the potential and creativity of each employee through their measured participation and input.
Veneer Solutions and Clarksville – Give and Take.
In late 2008 and in 2009 the business at Veneer Solutions took a turn for the worse, along with most other manufacturing facilities tied to the furniture, fixture and cabinet industries. Toward the end of 2009 the plant was running an average of 32 hours per week. The average plant employee at Veneer Solutions earns $8/hour. With only 32 hours per week these employees were suffering serious financial burdens.
After a very tough 2009 Christmas season for the employees, ownership of Veneer Solutions vowed to guarantee 40 hours per week in 2010, while focusing on increasing sales. At that time the production demand was not high enough to employ the workers for 40 hours per week at the factory. We decided to make these workers available, on a volunteer basis, to perform community service work for the City of Clarksville, during short production weeks.
These employees were offered the option of doing community service work at full pay from Veneer Solutions or take the time off without pay. Initially there was 100 % participation and the City was very grateful for the help. Starting in January of 2010, plant employees worked Monday through Thursday at the plant, and on Friday performed eight hours of community service work with pay. This work consisted of clean up, painting, and repair work throughout the city.
This gesture created additional good will between the City of Clarksville, and Veneer Solutions. As expected, Veneer Solutions’ business made a great comeback in 2010 with growth of more than 20% for the first 8 months and 60% in Q4. The community service program is still in place. Currently Veneer Solutions is running full shifts with a few operations running two shifts.
Can this small town manufacturing model be replicated around the country?
With the technology that exists today, the sales and administration offices don’t necessarily need to be at the same location as the manufacturing plants. This opens up tremendous opportunities to move manufacturing plants to small towns where production employees are available, and keep the administration offices near where the office personnel live.
Advantages of manufacturing in small town USA
- Cost of living and labor rates are less in small towns. (Veneer Solutions has a budget of 8% of sales for direct labor cost.)
- Cost of building and leasing is less.
- In many cases money is available for job creation through the local Economic development councils.
- Local workers would rather live in their home town than drive 20 to 40 miles because of the high cost of this travel.
- Typically there are low interest rate loans available through the EDC.
- The companies enjoy direct community involvement and influence.
- Moving allowances may be available.
- Tax incentives to employ local people are available
- Lower costs are available for local contractors of all kinds
The last 10 years have not been easy, but Veneer Solutions kept doing things on a daily basis to improve the company, and the products we produce. We have received a lot of support from the City of Clarksville, Roland Reigbert, and our growing customer base.
Veneer Solutions works closely with our nationwide distributor partners in passing along the advantage of customized low cost production, fast service and high quality, allowing them to grow their market share in these product groups.
The Veneer Solutions team will stick to our plan of becoming the number one edgebanding manufacturer in North America. We will continue to focus on doing things on a daily basis that will allow us to reach the goals laid out by the plan.
Comments from Ann Rushing, Clarksville Mayor, and Ed Wayne, Clarksville City Manager:
Our city of Clarksville received a grant from the Economic Development Administration for $1,000,000 along with local public funding of $667,000 to construct a 37,000 SF building to adjoin the building the City was leasing to Veneer Solutions. (The EDA’s mission is to lead the federal economic development agenda by promoting innovation and competitiveness, and preparing America’s regions for growth and success in the world wide economy). The building built by local contractors was completed in late 2009. Veneer Solutions expanded into this additional space in 2010. The City has also arranged several low interest rate loans through its local Clarksville Economic Development Corporation (EDC) totaling over $400,000 to Veneer Solutions to be used to purchase additional state-of-the-art industrial equipment to enhance their ability to compete in the global market.
These efforts by the Community of Clarksville, the US Department of Commerce Economic Development Administration and the Clarksville EDC will and has created jobs in this area. The anticipated impact / outcome are 34 jobs created, 16 jobs retained and $3,000,000 in private investment leveraged. This in turn acts as a catalyst to the local economy through increased business activity of the manufacturer leasing the building. Seed money from the lease will be used to fund future economic development in the region, thus strengthening local economy and creating jobs. Clarksville is continuing to pursue industries and businesses who want a proactive community in which to locate their facilities.