Case Studies

Hardwood Industries Inc.

A niche market in regraded hardwood products in Oregon

Headquartered in Sherwood, Oregon, Hardwood Industries Inc. occupies more than 200,000 square feet of production, warehouse and office space across four locations. As a wholesaler and distributor of quality hardwood lumber and related products and services, Hardwood Industries operates additional facilities in Bend and Medford, Oregon, and Woodinville, Washington.

Standing out with value-added products

The proprietary grades of lumber that Hardwood Industries produces are second to none. “What we do is regrade and remanufacture products and make them work for applications better than anything else on the marketplace,” says Jeff Wirkkala, founder and president of Hardwood Industries. “We’re the only ones that do what we do in the country.”

What separates Hardwood Industries from other wholesalers and distributors is the value that the company adds to each product. Every order is customized to the customer’s application which reduces labor costs, increases yield and strengthens inventory position. “Boards are graded for an application instead of to a minimum standard,” says Wirkkala. “This business approach fares well with contractors of all sizes.”

Getting started

Starting from scratch, Wirkkala founded Hardwood Industries in January 1981. Though he began his career working for another lumber company, Wirkkala always knew that he wanted to start his own business. “I was 24 years old and I saw an opportunity so I decided to take it,” he recounts. “It was a leap of faith but I’m glad I did it.”

Hardwood Industries began strictly as a lumber supplier and over time Wirkkala invested in equipment to create Hardwood Industries’ own brand of proprietary graded hardwood. Hardwood Industries (HI) Brand is the result of Hardwood Industries seeking a solution for low yields or unusable boards due to the many variations within each grade that many boards produce.

Hardwood Industries has found success in marketing its own brand. “We have sales people that market HI Brand to contractors,” says Wirkkala. “We want people to use it once and then come back and ask for HI Brand. It usually happens once a customer tries it out.”

Hardwood Industries Inc.

In the business of creating custom materials for contractors, efficiency is everything and a major factor for of success. The company recognizes the challenge of constantly improving speed and quality on each line item. “Right now we’re between the eight and nine minute range for each line item once it is ordered,” says Wirkkala. “That’s down from taking 20 or more minutes, so we monitor that real close.”

Wirkkala says that the company’s overall efficiency has saved jobs for his employees. “When you can figure out how to do things faster and then leverage that to create more sales, people keep their jobs,” Wirkkala explains. “That’s really what’s happened for us since we started working on these lean improvements in 2012. It’s been really big for us and I feel that we have a big advantage just from the standpoint of understanding the mentality of making sure your employees are getting better every day.”

Hardwood Industries has adapted a performance dashboard method of measuring efficiency and success. This approach creates awareness throughout the entire company of what is expected to be accomplished in 30-minute increments. “I find it works across the board for everyone,” says Wirkkala. “Ultimately, you want to get your team of people, whatever process they’re in, to work as a team to make the job as easy and as fast as you can make it.”

During a visit to Germany, Wirkkala was influenced by a trip to the Porsche factory. The efficiency that company displayed inspired him to make speed and quality a focal point of his company. “Every three minutes an engine was completed at the factory and every three minutes a full car comes off the line,” recalls Wirkkala. “Porsche sales went up in America 27 percent last year so they have done a great job as an efficient company to maintain quality and assure people that they are buying a quality product. That’s exactly what we’re doing with our HI Brand. We want people to know that it’s lean and a great product that is going to work for them.”

Overcoming adversity

When the recession hit in 2008, the construction industry was at the forefront of feeling the effects of the housing market crash. While the economy continues to rebound, the housing market remains down 30 percent compared to where it was before the economic downturn. “With the amount of competition there is more capacity out there than needed,” says Wirkkala. “We have to continue to hone what we do and continue to be the best at it.”

The savvy handling of assets also contributed Hardwood Industries’ ability to survive the downturn. The company sold a fifth location and had set up AR reserves in preparation for tough times. “We did whatever we had to do,” says Wirkkala. “We also sold some equipment.” Through the tough economic times Hardwood Industries manages to survive to become stronger as a result.

When a small business is created, survival is the first primary concern. Once that is established, employees and their families are often thought of next as a company is nothing without its people. Wirkkala has experienced these stages firsthand and though he doesn’t complain about his lifestyle, money has never been a motivator for him as a business owner. “It’s all about the people and seeing your workers succeed,” he says. “That’s the way I’ve always felt and I personally know 20 other business owners that feel the exact same way.”

As the company progresses, Hardwood Industries will be experiencing a transition in the coming years as the next generation of the Wirkkala family begins to take ownership. “I’m going to be 60 this year but I’ll probably work until I’m 70,” says Wirkkala. “The transition will be partial to start but eventually will be complete.”

Furthermore, Wirkkala says the company has no long term debt which should allow it to continue to dominate the industry.

While the company focuses on constant evolution and improvement, Hardwood Industries Inc. is poised for the transition and the future. 

Published on: November 25, 2015

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