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Oklahoma Hardwood Mill Finds Now Is Opportune Time to Enter Pallet Market: Fourth Generation Company Stays Small, Nimble to Survive
Gray’s Sawmill: Oklahoma hardwood sawmill company has remained a family business for four generations by being small, nimble, and finds now is a good time to enter the pallet arena.

By Tim Cox
Date Posted: 4/1/2009

DURANT, Oklahoma – Manufacturing has slowed as the country wrestles with a recession. Accordingly, business is down for pallet suppliers – manufacturing businesses need fewer pallets. Some pallet companies, as well as other businesses across a wide swath of the economy, have lain off employees in order to control costs during a period of declining revenues.

            It’s a good time to get into the pallet business – at least for Chad Gray.

            Chad, 38, runs a hardwood sawmill business, Gray’s Sawmill (Gray and Sons Sawmill & Supply), that has been in his family for four generations, starting with his great-grandfather.

            The company consists of two buildings (about 20,000 square feet combined) on 40 acres, an assortment of equipment, and seven employees. It produces 50-60,000 board feet per week of mainly industrial lumber products. The mill’s lumber production is sold rough green although Chad also distributes some pressure-treated pine lumber. The company also sells hardened nails for pole barns and pallet nails. The company’s lumber products are sold wholesale and also are sold directly to businesses that use them; customers are primarily in north Texas and Oklahoma.

            When Chad bought the business from his father, Bryant, in 2007, annual sales were $400,000. Last year he increased sales to about $500,000 because he expanded into pallet manufacturing. When his father owned the mill and during the period he was producing lumber for the furniture industry, annual sales regularly reached $1 million.


Lumber Products

            Gray’s Sawmill produces high quality bridge decking, shoring timbers for the oil industry, trailer flooring, and other industrial lumber products. The mill also makes various types of blocking and pallet material. Rough lumber is sold to make barns and other outbuildings, corrals, and other applications.

            Pipe chocks or tubing blocks – specially cut blocking to keep pipes in place during transport – are a steady product for the company; most blocks are cut to a certain dimension and length, and then split diagonally. Gray’s Sawmill also makes keel blocks for aircraft carrier construction.

            For the furniture industry, the company supplies random width stock in common thicknesses from 4/4 to 12/4; lumber is stacked with stickers between layers to allow air to circulate, which prevents mold, mildew and staining. In the past the company has supplied lumber to La-Z-Boy Chair Co., Batesville Casket Co., Zenith TV and other businesses. Some lumber has been exported to Japan and Russia.

            Shoring timbers, also referred to as mats and cribbing, are used to support oil drilling equipment and other industrial applications; they can be cut up to 16x16 and up to 16 feet long.

            For pallet manufacturers, the sawmill can supply 1x4 and 1x6 from 8-16 feet long and cants; pallet cants are usually 4x6, 4x8, 6x6 or 6x8 and the same length.

            Trailer flooring normally is 1-3 inches thick, in 4-12-inch widths and from 8-16 feet long. Chad’s company also provides a service to replace floors in trailers – whether it is a small, 8-foot landscape-type trailer or a semi-trailer. The staff will remove the old flooring and install the new, using the mill’s rough sawn green hardwood or pressure-treated pine. They do a couple of trailers per week.

            Gray’s Sawmill sells lumber both retail and wholesale; it will sell one board at a time to an individual or by the tractor-trailer load.

            In Gray’s part of Oklahoma, prominent Southern hardwoods include red oak, white oak, burr oak, post oak and other oaks, and hickory, pecan, white ash, walnut, aromatic cedar, hackberry, sycamore, cottonwood, elm, willow, and some bois de arc.

            According to a state Web site, Oklahoma has nearly 70,000 square miles, of which about 24% is forested. Chad buys logs within a radius of about 60 miles. There is a good supply of hardwood timber, he said, primarily because over the years landowners have not clear-cut their property.

            “They do select cuts,” he said. “If it’s not mature enough for a saw log, it is left to grow.” With that approach to forest management, re-planting forests has not been necessary; only mature trees are cut, and the forests regenerate naturally.

            One of the most abundant hardwood species is post oak, which is in the white oak family. According to Chad, is it also called “blue whistler post oak” because the freshly sawn wood quickly acquires a blue tint.

            Chad buys logs down to 12 inches on the small end and ranging from 8-20 feet long. The mill regularly cuts logs from 36-48 inches in diameter with the average log 24 inches in diameter.


Pallet Arena

            Chad previously sold thin side-boards to small pallet companies that remanufactured the material into deck boards. The pallet companies wanted to pay very little for the raw material. “I figured, if they can spend $2-3,000 a month with me, they’ve got to be making more than that.”

            He entered the pallet arena last year, primarily manufacturing pallets for sod farms. The Red River, which separates Oklahoma from Texas, is 19 miles south, and the area along the river supports a number of sod farms. The farmers ship sod into Texas, predominantly the Dallas-Fort Worth region.

            Chad visited some sod farms to speak with the owners about their pallet-buying practices. The sod farmers used a three-stringer pallet with no bottom deck and bought them by the truck-load from suppliers in Dallas.

            The machine used by sod farmers to harvest sod cuts the sod, automatically loads it on a pallet, and drops the loaded pallet on the ground – all while moving continuously. The loaded pallets are picked up later. However, the farmers had a problem. Pallets were sometimes prone to failure – the stringers would lie over because they were too thin to support the load.

            Chad designed a better pallet that also weighed less. His design featured stringers that were not as high but were a full 2-1/4 inches wide. Another benefit of his design was that the pallet had better flotation when it was dropped under load on the turf. He made samples and supplied them to sod farms to try.

            Chad knew how much the sod farms were paying for pallets, and he priced his less. In addition, he agreed to supply them in smaller quantities, and some farmers liked the fact that he was 15 miles away, not 100. “I was just catering to what the customers needed,” he said, and not requiring them to buy large quantities.” Within a few months, he had several customers.

            When he entered the pallet market, Chad bought the Smith bandsaw, the rip saw and the chop saw to remanufacture rough lumber into pallet parts. The chop saw is all he has to cut one board or cant at a time to the correct length, but Chad is in the process of building a three-head trim saw to automate the process.

            Pallets are assembled by hand with a shop-built turntable and jig. It takes about 30 seconds to assemble a pallet, said Chad.

            He is currently building two different pallet sizes, a 48x48 pallet for the sod farms and a 48x80 pallet for a furniture maker. The company produces 1,000-2,000 pallets per week. As the pallet business has grown, Chad has had a difficult time producing enough pallet stock to meet his own demand.

            Besides fabricating some equipment to expand the pallet operations, he is researching options for equipment, particularly multi-head band resaws and automated chop saws or cut-off saws.

            “What I need is a more efficient way to make pallet parts,” Chad acknowledged. “My material is free, but my labor is eating me up.” He is also interested in upgrading the sawmill with a vertical edger.



            The head rig consists of a converted steel Corley 440 head saw with a Meadows automatic carriage. The carriage was installed in 2001; until then, the mill ran a manual Corley carriage with a man riding the carriage. The head saw originally had a wood frame; Chad helped put it on a steel frame his senior year in high school.

            The head saw runs a 60-inch circular saw blade. Chad normally uses a Simonds, B.H. Payne or IKS inserted tooth blade — a BF pattern blade with 54 teeth. If he is running clean logs, he usually files and swages the teeth once per day. In the spring, when the logs are usually dirtier, he swages the teeth a couple of times a day.

            Chad usually buys head saw blades from B.H. Payne. He usually gets three or four weeks from a set of Simonds steel bits and changes the shanks as needed. “You lose them (shanks) more than anything,” he said.

            The head saw blades generally require very little tensioning, in part thanks to a little trick Chad’s father came up with when he was sawing for Chad’s grandfather in the late 1970s. His father rigged an agricultural sprayer to spray a fine, steady mist of water on the eye of the saw. Centrifugal force carries drops of water outward on the blade.

            “You’ll keep the rim heat down,” said Chad. “It lubricates the guide block, and the saw runs cool all the time.” His last saw ran three years before re-tensioning.

            The sawmill is housed in an old barn that is not much bigger than a large house.


Other Equipment

            The mill has an assortment of other equipment to finish the job of processing logs to lumber. It is not equipped with a resaw per se, so boards are sawn on the carriage. A worker positioned after the saw picks up slabs, places them on dead rollers and moves them to a conveyor that feeds a Precision Husky chipper. Behind him, he can feed or put flitches on another set of dead rollers and shove them along to the infeed of a Corley manual three-saw edger.

            Another worker pulls boards exiting the edger and places them on the infeed of a Corley two-saw trimmer. The trimmer drops the finished lumber onto a shop-built green chain.

            One man operates a Morbark Stac Trac lumber stacker, picking up lumber from the green chain. The Morbark Stac Trac is a small boom loader that travels on rails; it can pick up, move and stack material. The operator can rotate 360 degrees, so material can be stacked on either side of the rails. It can pick up anything from pallet deck boards to 12x12 timbers. The machine does the work of four men, said Chad, and there are “no mashed fingers, no back injuries.”

            There are a few other machines for remanufacturing lumber into industrial products. For example, in order to make pipe chocks, Chad built a machine that holds the block at a 45-degree angle and makes the diagonal cut with a circular saw blade; it even has an automatic feed mechanism to hold several blocks at one time. The most common pipe chocks are made from 4x4 and are 6 inches long.

            Chad added a Smith Band Resaw horizontal bandsaw for reclaiming slabs. Now the Smith saw is mainly used for resawing cants into pallet deck boards or sizing thick material. He also has a Newman two-sided planer that is used for dressing material to the correct thickness, a Go Fast manual 24-inch chop saw, and a Gripper 18-inch rip saw that is used to make stringers.


Suppliers, Residuals

            Chad uses Mid Continent Magnum fasteners and pneumatic nailing tools, and he makes no bones about why.

            “I refuse to buy Korean or Taiwan nails just because they’re a half a penny cheaper,” he said. “By God, I’m American, and I’m going to buy an American product.”

            He buys circular saw blades for the edger and has them serviced at Pine Creek Saw Shop in Valliant, Oklahoma.

            One innovation that Chad brought to the business when he bought it was grinding the slabs and selling it along with sawdust; in the past, waste material and sawdust was simply burned.

            From March through September, Chad usually chips his waste material; the rest of the year he bands it in bundles and sells it for firewood.

            Markets for chips include Texas schools that use it to cover playground areas and another business that grinds it for a wood fiber product used by the oil industry to absorb spilled crude oil.



            The mill was founded by Chad’s great-grandfather, A.P. Gray, in 1936. He started cutting railties with a broad axe and eventually purchased a small sawmill. Chad’s grandfather, A.M. Gray, took over the mill in 1951, continuing to produce railties and expanding into industrial lumber products for the oil industry and later the furniture industry. The sawmill has been in its current location since 1952.

            Chad’s father, Bryant, took over the mill in 1981 and focused primarily on the furniture industry; when the oil industry declined in the early 1980s, he began selling low-grade material to pallet companies.

            With those ancestors, Chad had an early introduction to the forest products industry. His father was a logger earlier and supplied logs to Chad’s grandfather for the sawmill. As a youngster, Chad worked both in the sawmill and logging with his father and was operating heavy equipment by about age 12.

            After graduating from high school, he went to work full-time in the sawmill, although he left on four different occasions after “bumping heads” with his father, who by then was running the mill. At various times he worked as a parts specialist, trucking dispatcher and truck driver.

            Chad also attended Southeastern Oklahoma State University for two years, but then decided to get a technical education. He studied at Kiamichi Technical School for two years and earned a degree in industrial technology. The school continues to be a resource, providing monthly safety meetings for the company.

            Chad was active in the Durant Police Reserves from 1994-2004 and remains a commissioned charter member. He is president of a local Lutheran church congregation. He also enjoys making furniture and other woodworking projects as well as skiing, boating, and motorcycle riding. “I’ve got plenty of hobbies,” he said. He has coached little league baseball the past five years, too.

            His father, 65, is semi-retired and works for Chad from time to time, filling in as sawyer.


Shop-Built Equipment

            Having grown up in the family business, plus his technical school training, Chad is adept at machinery and equipment – keeping it running and modifications. “We run older equipment that is low maintenance and easily repairable,” he said. “We seldom have a breakdown that we can’t repair on-site. Waiting on parts to arrive is rare.”

            For example, the rip saw was purchased from a lumber yard in Texas for $300. Chad is using it to produce 6,000 stringers per day.

            When he added the Morbark Stac Trac in 2006, Chad and his staff expanded the track by 10 feet and increased the travel speed by 30%. They also modified the hydraulics so the Stac Trac would coast to a stop instead of instantly halting when the control sticks were released.

            Perhaps the most impressive modifications were to a Barko knuckleboom loader. Instead of running the loader with its normal diesel engine, Chad and company replaced it with a 1980 Ford Pinto engine and transmission to power the hydraulic pump.

            “We run the engine at 1,500 rpms and in second gear,” said Chad. “The result is we only use about five gallons of fuel every two weeks, and the machine runs as quickly and has as much power as it did with the normal, big, six cylinder diesel engine running direct.”

            “We have a knack for making things work,” he added. “We build and modify to suit our needs and cut costs.”

            Besides his green chain, Chad built the slab conveyor, block saw and other equipment. “I’m a very good welder,” he said. “I do all my own maintenance…We don’t out-source anything.”


Small but Nimble

            Asked to describe what he does well, Chad answered, “Being visible on the Internet.” He has a very good Web site, he said. “I put a lot of money into it.” (The Web site is: www.grayssawmill.com.)

            The Web site increased the company’s visibility. “That’s how people do business now,” said Chad. “They find everything” on the Internet.

            The Web site was designed and built by a cousin. The design included the use of key words to make sure the business would be featured prominently in Internet search engines for searches for hardwood sawmills and Oklahoma sawmills. The only other form of advertising he does is in ‘shopper’ type publications and at rodeos.

            “Having a good-running head saw,” he added, “and making a quality product.”

            “We make sure everyone knows that the customers write our paychecks,” he said. “We really try hard to make a good quality product.” To achieve that, an accurate, good running saw is needed as well as good saw maintenance.

            “I’m hands-on,” noted Chad. “I’m always there. I’m not in the office. I’m under the shed,” running the head saw. “I’m there, and I’m available to my customers.”

            Chad’s company provides hard hats, eye safety wear and hearing protection for employees. He also pays a yearly production bonus; 10% of the business profits go to employees, based on longevity. Another 10% goes to his church.

            He is contracting for all trucking. His father wrecked one truck, and a fire in 2008 destroyed his other rolling stock, and the loss was not covered by insurance.

            Chad singled out his older brother, Gray, who comes down from Tulsa to help out as needed. When Chad gets behind in the log yard, Gray helps by unloading logs and spreading them out so they can be scaled. He also loads customer’s trucks. The last occasion that Gray was at the mill, he slept on an air mattress in Chad’s game room for three months. He also gave Chad the Pinto engine and transmission and helped set it up with the loader. “He’s been a tremendous help to me,” said Chad.

            One thing that has enabled the business to continue operating for so long is that Chad and his predecessors have remained small and nimble, he said.

            “We keep debt to a minimum and prefer to save the funds needed for new equipment rather than finance,” said Chad. “If a customer asks for a product or service that we don’t offer, we will consider if we can be competitive in that venture.”

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