Oregon Company Has Adapted, Evolved Beyond Original Roots: Marine Lumber Forges Relationship with Machinery Supplier JF Industrial Technology
Marine Lumber: American packaging and wood products company relies on equipment made in China to stay competitive and reduce labor costs.
By Tim Cox
Date Posted: 4/5/2019
TUALATIN, Oregon — Ed McGrath knows how important it is for a company to adapt to changing market conditions to prosper and survive. This business principle has led him to steer his company, Marine Lumber, into new markets and products, and even to establish a plant in a foreign country – China.
Automation has been central to Marine’s growth as well as managing its labor costs. Marine Lumber has turned to a Chinese machinery supplier, Qingdao Saifan Wood Packaging Machinery and its U.S. representative J.F. Industrial Technology, in part due to its extensive experience in the Chinese market.
U.S. Operations Offer Wood Packaging Components, Pallets and Crates
Marine Lumber has two plants in Oregon a couple of miles apart — in Sherwood and Tualatin, suburbs of the southwest Portland area. The Tualatin plant, which also contains the company’s headquarters, re-mans low-grade lumber and plywood into components for wooden packaging. This material is supplied to industrial customers for producing pallets and containers. The Tualatin lumber re-man operations include cutting to length, resawing, notching, and similar tasks, such as cutting grooves for banding and strapping.
The Sherwood plant has similar lumber remanufacturing operations, but it uses the cut stock it manufactures to produce wood-based containers that are supplied mainly for agricultural and military shipments. This facility also produces wooden stakes and other specialty wood products. Together the plants employ 80-100 permanent and seasonal employees, and Marine Lumber generates annual revenues of about $35-40 million. Crates for the military are shipped throughout the United States while agricultural containers are supplied mainly to customers on the West Coast.
Pallets and mil spec and agricultural crates represent about 25% of the company’s business. Marine Lumber currently has no automated nailing equipment for assembling pallets or containers. “What we focus on is custom pallets and skids,” said Ed McGrath, “not commodity or high-volume pallets. We have friendly relationships with the other pallet manufacturing companies in this area and we all have our own niches. Accordingly, specialty pallets and crates are assembled at the Sherwood plant with pneumatic nailing tools using mainly Stanley Bostitch tools and collated fasteners.”
For both plants, Marine Lumber buys softwood downfall lumber and softwood plywood from some of the big mills on the Pacific Northwest — companies like RSG, Boise Cascade, Weyerhaeuser, Hampton Lumber, and Seneca Sawmill.
Expanding into China – Big Risk and Reward Potential
Marine Lumber began importing plywood from China in 2004. Eight years later, Ed McGrath began operations in China, primarily to make crates for the U.S. military that are shipped to bases throughout Asia, the Middle East, and Europe. The crates the company supplies to the military are used to transport a service member’s household property and belongings when they are transferred and move to a new base. The overseas bases are supplied by the company’s operations in China, and U.S. bases are supplied by the company’s operations in Oregon. For the China operations, the company ships lumber from Oregon overseas, and the plant remanufactures it there and assembles the components into containers. This ends up saving our military a large amount of freight expense due to its proximity in the Asian theater where a lot of our troops are stationed.
McGrath explained his decision to set up operations in China. Over a period of about 10 years, a single large company bought up or drove out of business other companies that made these moving box containers for the military. A life long friend of his, Evan Wonacott, had lived in China for 20 years, and agreed to partner up and oversee a manufacturing facility there.
“The only way it made sense, the only way I could compete, was to look at unorthodox ways of competing, one of which was to open a plant in China,” commented McGrath.
The plant in China enabled McGrath to have the advantage of lower freight costs for shipping to the overseas military bases. The affiliated business in China operates in a building with about 150,000 square feet and employs 40-50 people. The plant is located next to the Port of Qingdao on China’s northeast coast, across from the Korean Peninsula, which is the seventh largest seaport in the world.
“In the long term, it’s been great,” said McGrath of the business decision.
McGrath gets to work at 7 a.m. and leaves at 5 p.m. However, at 5 p.m., it is 8 a.m. in China, he noted, so he frequently gets business-related phone calls from China after returning home. “I get questions from the second I leave the office until I go to bed,” he said.
McGrath Selected Chinese Manufacturer to Supply Automation for Plants
To equip the China plant, McGrath turned to the leading Chinese manufacturer of woodworking and nailing equipment and crate assembly equipment for the pallet and container industry: Qingdao Saifan Wood Packaging Machinery, which is owned by Johnson Wang.
McGrath made the decision to purchase several programmable automated chop saws from Wang’s company. “That’s how I was introduced to him and we have been close personal friends ever since.”
The military moving box business is a very high-volume account similar to the crate business. Accordingly, the plant must cut a large volume of the same type of components from its raw material. The Chinese plant buys certain lengths of low-grade lumber, 7-foot or 8-foot, for example, and the saws can be programmed to cut each length for the best yield. The machines also are fast and safe, noted McGrath.
“A lot of people have the misconception that Chinese machines are not good quality,” said McGrath. That’s simply not always true, he added.
There are differences, however, between the U.S. and Chinese markets for machinery. U.S. companies prefer and can afford more durable, heavy-duty quality machinery and equipment and Johnson Wang, Saifan, and their engineers understand this very well.
In recent years, McGrath decided to add equipment in Oregon to increase production. At the time, the company was operating two shifts at the Tualatin plant. “Running the night shift became a nightmare,” recalled McGrath, so he decided to add machinery in order to double production capacity and eliminate the need for a night shift.
Labor costs have risen substantially over the past few years, nearly 50%. It was a big factor in McGrath’s decision to invest in automated machinery because before he used manually-operated pop-up saws for cutting lumber to length.
He elected Wang’s company to supply the equipment based on the positive experience of using his equipment in the plant in China. Wang was thinking of entering the U.S. machinery market. He essentially told McGrath, ‘I’ll make you a deal you can’t refuse.’ He needed to know how to modify his machinery in order to succeed in the U.S. market and have an American customer to be a springboard. “He wanted me to be the test ground, and he spent a lot of time here studying the requirements of the American customer base,” said McGrath.
Johnson made a “good offer” that included installation and training Marine Lumber employees on the new machines. “We have ran those machines for years now, and we haven’t had any trouble with them at all,” stated McGrath.
With the additional cutting capacity, the company was able to eliminate the night shift. Now it runs four 10-hour shifts with half-crews on Monday and Friday. “It worked out great,” added McGrath.
Wang’s company supplied the Tualatin plant with six automated ‘push’ chop saws, which feature a robotic arm to infeed lumber. Running a single blade, the machines can cut to length six 2x4s on edge, fed side-by-side, all at one time, up to 20’ long.
McGrath also purchased eight custom-built stake pointers designed by Wang’s company. Marine Lumber is operating two of the machines, and six more have just arrived and are in the process of being installed.
All wear components of the machines are easily obtainable and can be purchased ‘off the shelf’ from U.S. businesses. “That was one of the key things we discussed,” said McGrath, designing the equipment so wear parts would be readily available in the United States.
Establishing Marine Lumber as a showcase customer helped Wang — who established a U.S. affiliate, JF Industrial Technology — to market to other U.S. companies. “A lot of my customers already are buying equipment from him,” said McGrath. J.F. Industrial Technology has sold 15-20 saws to companies that McGrath buys from or sells to, he estimated.
Marine Lumber Company Background and Growth
Marine Lumber was founded by Ed’s grandfather in 1946. Before the advent of containerized freight for transport by ships, cargo was separated on vessels by building wood floors and walls. The company supplied low-grade dimension lumber for carpenters to build the structures aboard cargo ships — hence the name, Marine Lumber.
Ed’s father, Stan, eventually took over the business. With the introduction of containerized freight in the 1960s,
however, that part of the company’s business was decimated. Under his father’s leadership, the company began remanufacturing low-grade lumber to make components for pallets and crates. He also opened a retail lumber yard, which later closed.
Ed took the helm of the family business when he was only 23 when Stan retired, and eventually he expanded the company into manufacturing specialty pallets and crates for the military and the agriculture industry.
Ed refers to Marine Lumber as a “small, family-owned company.” His wife, Lisa, handles all accounting tasks and oversees the company’s finances. His son, Eddie McGrath, 25, buys all the company’s raw material, handles several of Marine Lumber’s top accounts, and also helps oversee production operations. He will become the fourth generation to run Marine Lumber when Ed steps away from the business, which he anticipates doing in about 10-15 years.
Ed McGrath is looking at plans to continue to grow his company and add to the Marine Lumber product line. He also is considering new business ventures, both in the United States and in China, using Saifan’s equipment.
“We’re all about service and quality,” said McGrath. “That’s been the principles that have led to our growth and success. I see the same commitment from Johnson Wang and the people at J.F. Industrial Technology.” For more information on J.F. Industrial Technology, read the sidebar below.
Industry Veteran Launches New Machinery Brand in the USA, Quality Equipment Produced in China for Less
Pallet companies want quality automation at a competitive price. That is one of the key reasons that John Conway, who is well-known in the industry, teamed up with Qingdao Saifan Wood Packaging Machinery to develop a new line of lumber and pallet machines designed for the North American market. This machinery is being marketed under the WoodTech brand and is being sold by JF Industrial Technology.
John Conway has done a lot of jobs in the pallet industry starting in 1996, from being on the faculty at Virginia Tech and managing the William Sardo Pallet Lab to serving as a technical director for the National Wooden Pallet & Container Association. He also was a sales director for Williamsburg Millwork, one of the oldest pallet companies in Virginia. And most recently, Conway has been in a lot of pallet plants as he also runs a pallet and lumber inspection certification agency. All this to say that Conway knows what it takes to make great pallets and the automation level required in North America.
John Conway stated, “ JF Industrial has vastly improved the machinery typically available from China, and has developed robust equipment designed with the U.S. and Canadian market in mind. Due to lower manufacturing costs, WoodTech offers comparable saws and pallet machinery at a sizeable discount to traditional suppliers.”
The first big sellers for WoodTech are an automatic chop saw designed for the small-to-mid-sized pallet company. JF Technology has supplied equipment to U.S. pallet and container manufacturers as well as other lumber remanufacturers since it began domestic operations in 2017. JF Technology’s product line includes single and double-head stringer notching machines, double-head trim saws, automatic chops saws, pallet nailing equipment, and equipment to assemble panel-built containers with metal profiles that eliminate the need for fasteners. The company plans to introduce a multi-head trim saw later this year and also is in the process of developing a hydraulic pallet nailing machine.
Johnson Wang is the owner of JF Technology, which sells machinery manufactured in China by Qingdao Saifan Wood Packaging Machinery.
With more than 100 employees and three manufacturing facilities, Qingdao Saifan Wood Packaging Machinery has significant manufacturing capacity.
Conway said, “Many domestic suppliers have limited capacity. Customers are currently facing significant wait times. But we have most of our most popular products in inventory in our showroom located in Fredericksburg, Virginia. If you need machinery now, it can ship fairly quickly, usually delivered in ten weeks or less.”
JF sells more than 800 machines annually and has been supplying equipment to customers in Russia, India, Turkey, Spain, South Korea, Egypt, Brazil and Australia.
When it comes to quality, Conway stands behind the equipment. He said, “WoodTech machinery meets or exceeds U.S. standards usually at a significant discount.”
The company is seeking long-term marketing and distribution partnerships with industry leading manufacturers to expand product lines into the U.S. market. JF also is exploring contract manufacturing, custom design machine manufacturing and brand name manufacturing opportunities as well.
Visit www.jfwoodtech.com for videos and specifications about machinery. For inquiries, companies in the East may call John Conway at (800) 996-5677 or (540) 760-1963 or email email@example.com; companies in the West may call Yunfei Ding at (929) 258-8277 or email firstname.lastname@example.org.
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