New York Company Fired Most of Its Customers in Order to Improve Profits
H&H Wood Products Focuses on Assembly, Doing More for Fewer Customers
By Diane Calabrese
Date Posted: 10/5/2004
“I’d been out of college for a year,” said William, recalling how he got hooked into the industry by his father and quickly became committed to wood products. “I wanted to be in the restaurant industry,” he explained.
His major at
“My father said, ‘Try it,’ ” William recalled. He went to work with his father in 1983.
Today, as he thinks back to that decision, William has only good thoughts about taking the unexpected path. “I’m glad I landed in this” industry, he said.
August marked the nine year anniversary when William bought the business from his father. Bud is retired but still helps “on an advisory basis,” said William.
Bud had purchased H&H Wood Products from another owner in 1983. The previous owner formed the company under the name Orchard Park Industries in 1973.
When Bud bought the business, he already knew it well. During his 24-year tenure in the banking industry, Bud had often called on Orchard Park Industries. When Bud moved the company from
H&H Wood Products manufactures pallets and skids, using both new lumber and recycled lumber. The company’s focus is custom pallets and skids. “I broker any traditional pallets we need,” said William, using D&F Pallet in
H&H Wood Products also provides pallet repair services, but mainly as a service to core customers. “I want to repair what I make,” said William. “I don’t repair other” company’s pallets, he explained.
“Custom size just does not lend itself to automation,” William noted. There are ways to increase revenue without relying on high volume
William runs H&H Wood Products as a niche business and has taken an innovative approach: he got rid of most of his customers.
“I used to have 60 customers,” he said. “I fired all but two over the years. I got rid of the low volume customers. I got out of the box business.”
William determined that carrying many small volume customers added to costs in accounting, inventorying, shipping and receiving without necessarily adding significantly to the bottom line. He decided to pare the business down to his biggest customers and sell more to them by meeting more of their needs. In short, he envisioned doing more business by doing business in a more focused way.
“What more could we do for large volume customers?” explained William, became a driving question for him.
One answer to that question was to provide heat-treating services. In 2002, William -- along with James Perez and Rick Perez -- launched a separate business, Integrated Thermal Solutions in
“We are heat treating with a Pest-Heat unit,” said William. “We chose Pest-Heat due to the efficiency of their unit.”
Portability was also a crucial factor in choosing Pest-Heat as a supplier. “We didn’t want to pour a foundation,” William explained, because the
The Pest-Heat unit is fueled with natural gas but can be changed over to other fuels if they become more economical. “We could change to propane if we wanted,” said William.
When William spoke with Pallet Enterprise, the Pest-Heat unit was running at 30% capacity; it was heat-treating about 300 skids or pallets per day. Integrated Thermal Solutions looks forward to running the system at full capacity as its customer base grows. The auditing agency for the heat-treatment operations is the Northeastern Lumber Manufacturers Association.
Pest-Heat offers heat-treating chambers in several sizes. William’s company purchased the largest unit, the Pest-Heat EC-60-IC, which can hold more than 600 pallets. The chamber is loaded with a forklift and can hold pallets stacked 20 high.
Doing business with Pest-Heat fits another goal for William. “My philosophy in purchasing,” he said, is that “I first buy locally. If I can’t find it locally, I go to
William will go outside the
With saw blades, the story is just the opposite. H&H Wood Products buys all its blades from Sawell, a company based in nearby
The main facility of H&H Wood Products is in
The 18 employees of H&H Wood Products are unionized although the two employees at Integrated Thermal Solutions are not.
The recycling plant is equipped with a PDI Inc. bandsaw dismantler for disassembling pallets and skids. A Whirlwind pop-up saw is used to cut recycled lumber to length. “They’re the best American-made saw out there,” said William. An Auburn Machinery Yield Pro equipped with (brand or manufacturer) cutting tools is used to resurface reclaimed deck boards.
The company also has some operations to remanufacture lumber into pallet and skid components. A Baker Products bandsaw is used to size material, and a Samuel Kent Baker Inc. block saw is used to produce blocks.
For repairs and assembly the company uses mainly Stanley-Bostitch power nailing tools.
An Advanced Recycling Equipment Challenger grinder reduces wood waste, and the grindings are sold for animal bedding. Some scrap wood is sold for firewood.
H&H Wood Products also has three 24-ft. flatbed trucks. Two are GMC and one is a Ford.
About 75% of the lumber recycled at the
H&H Wood Products uses new lumber, too. William buys mainly pre-cut stock. “I’m buying that as far away as
“Our main focus is assembly,” said William, and it has been the company’s main focus for the last seven years. Shifting the focus to assembly increased profitability because it enabled H&H to trim its workforce from 35 to 20 employees, eliminating a second shift.
Tapping his education in economics, William said he made a lot of graphs during his early days in the wood products industry. However, his most valuable insights into business did not come from his studies of economics. They came from listening to – and hearing – his customers.
“I think the biggest thing is to have a vision for the future,” said William. “We thought we would change some things,” he said, instead of allowing the business to be governed by markets and prices. “It’s more than just having…customers,” he explained. “Listening to them” is a must.
“Give customers what they want,” said William, “not what you think they need.” That was one important lesson he learned early in running H&H Wood Products.
The company’s biggest customer, located in western
William also plans to add heat-treating capability to the
The predecessor of H&H Wood Products was a member of the National Wooden Pallet and Container Association (NWPCA), and Bud and William remained active members. William began serving the association on the education committee, and the past eight years has been a member of the standards committee.
“We have always tried to preach high quality,” said William. “I thought uniform specifications would help to level the playing field.” He believes the pallet industry one day will agree to standard specifications, although he laments that it has not arrived there yet.
A native of western
“I’m an avid sports fan,” said William. Working with the Blue Coats provides the opportunity to do something for the community and to interact with some of the Bills players. His success at raising funds for the charitable group has earned William some special trips, including one to the Pro Bowl in
Other recreational interests also compete for William’s free time. “I play a lot of golf,” he said. “I record a lot of live music” at concert venues.
Leisure time is scarce, however. William said he often tells people who ask about running a business the following: “You work half-days, and you decide which 12 hours.”
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