Irish Company Surmounts Challenge By Diversifying Accounts, Business
C.J. Sheeran: Irish pallet company responds to the huge blow of losing a major customer by diversifying its accounts and expanding its line of products.
By Rick LeBlanc
Date Posted: 6/1/2006
When Irish brewing legend Guinness made a corporate decision to use only one pallet supplier in 1992, veteran Irish pallet manufacturer Canice Sheeran weathered a huge blow to his business.
His company, C.J. Sheeran, was one of four that supplied pallets to the Irish beer producer at that time (C.J. Sheeran specialized in making pallets for Guinness products that were exported to the U.S.) Guinness accounted for about 90% of the modest pallet supplier’s sales. The brewer selected one of the four to supply all the pallets it bought, allotting the business to a pallet supplier that was licensed to produce Europallets. The decision left C.J. Sheeran in a struggle for survival.
Canice’s son, Mark, had recently returned to the business after having worked in England and the U.S. He had studied business and marketing at the University of Limerick. Mark believed the company could be saved if he could get orders from a few new customers to keep things going while they rebuilt the company. He also recognized how important it would be to diversify Sheeran’s customer base so the company would never again be so dependent on a single account.
Sheeran benefited from favorable economic changes that were taking hold in Ireland at that time. “There was a lot of foreign direct investment beginning to take place in Ireland at that time,” Mark recalled. “Ireland had joined the European Union, and large American companies saw it as a launching pad into Europe.”
Taking over the company reigns from his aging father, Mark targeted the influx of new manufacturing businesses. He was able to secure some new accounts, concentrating on selling specialty pallets and custom packaging that were higher value and brought higher margins.
“As we became imbedded with these new customers,” Mark said, “they began asking for standard pallets, also.” This proved challenging for Sheeran’s small plant, but relocating in 1997 gave the company the room it needed to expand production of standard pallets.
With the lessons of relying too heavily on a single customer still fresh in his memory, Mark was keen to explore opportunities for diversifying the company’s operations. Two opportunities emerged: recycling pallets and scrap wood and manufacturing wooden garden products, such as fencing, gates and outdoor furniture.
While supplying pallets and wood packaging to customers, C.J. Sheeran also learned they needed scrap pallets and packaging removed. In deciding to offer this new service, Mark quickly discovered that trucking and recycling waste wood was strictly regulated, requiring permits from a number of government agencies. For example, the company must have permits from each county where its trucks retrieve waste wood.
Another business opportunity that emerged was fencing and gates for farmers as well as lawn furniture, sheds, and other wood products for lawn and garden. As this part of the business began to grow, Mark saw its potential. He branded the company’s products in this sector ‘Garden Gate’ and worked to expand the product line. He realized it would be impractical to market the line of products directly to consumers and instead focused on selling them wholesale to retail garden centers, hardware stores and other businesses, obtaining 25 customers. Mark used his marketing background to design packaging and point-of-sale displays for his products.
He also contracted with Werth-Holz, a German manufacturing company, to distribute a full line of its outdoor products, including children’s play equipment. He decided to represent Werth-Holz because he believed his connection to the retailers would be strengthened by his ability to provide a wider range of complimentary products.
As C.J. Sheeran expanded and grew, its operations were based at three locations. Mark began to look to consolidate operations on a single, larger site. The opportunity came in 2002, when he moved to a five acre site formerly owned by SmurfitKappa. It had a 40,000-square-foot building, a dry kiln and lumber treating equipment. Mark also was able to hire residual employees of the former business, and they blended well with the staff he moved to the new location.
The larger facility benefited C.J. Sheeran and helped Mark further develop all three sectors of the business. The dry kiln and lumber treatment equipment were instrumental in helping C.J. Sheeran move forward with its Garden Gate brand of outdoor products.
The dry kiln has benefited the pallet business, too, because the company can use it for heat-treating pallets for export applications. “Some of our customers were already taking the lead in asking for heat treatment,” Mark said. “It was a necessity for us to have a kiln.”
Sales have continued to grow. C.J. Sheeran had annual sales of $6 million (Euros) in 2005, with sales of new pallets and containers accounting for about half of revenues. Pallet and container sales increased 25%, helping spur a 20% increase in overall sales. In recent years the company has experienced annual increases in revenues of about 20%.
Mark categorized C.J. Sheeran as a mid- to large-size pallet company by Irish standards. He recently completed a 16,000-square-foot addition to his building to make added room for wood recycling operations. A savvy marketer, he invited the host of a popular Irish television show on gardening to speak at the grand opening earlier this year.
“C.J. Sheeran is already leading the way through its extensive waste recycling operations,” said Dermot ONeill, the celebrity gardener and host of the television show. “Holding licenses to dispose of waste from county councils across Ireland, the management at C.J. Sheeran made a conscious decision to recycle rather than merely remove and dump waste wood products.”
C.J. Sheeran receives several truckloads daily of used pallets and scrap wood. Each pallet is inspected to determine if it can be repaired or recycled or else disassembled to reclaim usable lumber. For pallet dismantling, the company has two machines, a Smart Products bandsaw machine and a machine made by a Dutch equipment manufacturer, Cekamon.
Lumber that cannot be recycled as stock for pallet parts or building remanufactured pallets is processed by a Rotochopper machine, which grinds scrap wood into mulch and produces colored mulch in one pass through the equipment. Mark has been very pleased with the Rotochopper, particularly its dual ability to grind and color. He considered buying a small grinder, but added, “We were lucky we didn’t.”
The two most popular types of colored mulch are red and walnut. It is packaged in plastic bags and sold wholesale to garden centers and other retail outlets.
For manufacturing new pallets and containers, Mark buys lumber mainly from Irish sawmills or lumber suppliers; he also buys some lumber from the Baltic countries. C.J. Sheeran buys both pre-cut pallet parts and other lumber that is cut to length with a Holtec cross-cut package saw. The company also has a panel saw.
The rest of the plant is equipped with several automated pallet assembly machines. The company has three machines from Gunn Vanderloo, a Pallet Chief nailing line, and two shop-built nailing machines. Some specialty pallets and crates also are assembled at tables manually with pneumatic nailing tools. Typical materials used for building containers include plywood, heat-treated lumber, polyethylene foam, high tensile steel nuts and bolts, T-nuts and steel plates.
C.J. Sheeran has two sales representatives, Joanna Fitzpatrick and Brendan Hogan. Key customers are in such industries as pharmaceuticals, technology, agri-business and engineering. The vast majority of the customers export their products, so having ISPM15 certification is essential, noted Mark.
C.J. Sheeran offers ongoing training and development for employees. In fact, the company participates in the Irish government’s Excellence Through People program and recently was one of the first companies to win an award for its proactive approach to staff development.
At the time Mark was interviewed, some of the employees involved in treating lumber were taking an educational course, and Mark was just completing a training skills certification course.
“Through years of experience I’ve acquired a lot of knowledge,” Mark said. “Now having become a more skilled trainer, I can pass on my skills to employees through a structured process.”
C.J. Sheeran can be reached on the internet at two Web sites, www.cjs.ie and www.timberfencinggates.ie
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