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FAST 40: Magnolia Forest Products Turns Adversity into Opportunity

Posted on: Tuesday, 17 January 2006, 15:00 CST

By Anonymous

Magnolia Forest Products Inc., a wholesale lumber company, based in Terry.

Magnolia Forest Products turned adversity into opportunity when the Terry-based lumber company was challenged by competition from low-margin, high-volume operators that forced team leaders to rethink their marketing strategy and alter their focus.

In 1976, Harold Mayo established Magnolia Forest Products as a broker-oriented lumber business that stored little inventory. Until the mid-1980s, the company mostly brokered sales of the popular Southern yellow pine framing lumber, selling primarily to retail and industrial customers in Mississippi and surrounding states. Within a decade, annual sales topped $6 million.

"When the doors opened at our first office, located in Jackson, there was only one salesperson," recalled Mayo, president and CEO of Magnolia Forest Products. "Within a few short months, the sales staff had grown to four. The company was quickly well established and known within the industry as professional, hard working and honest. The future of Magnolia was seemingly assured. Little did we know the scope and depth of the challenges ahead."

Magnolia Forest Products expanded into hardwood sales, began servicing the wholesale lumber market with specialty and industrial products rather than volume parts, and contracted with independents to exclusively produce the products.

"As time went on, we became more and more involved in panel products, both plywood and OSB (oriented strand board) in special grades, cut-to-size and cut-to-length," said Mayo. "As panel volume increased, both domestic and international, we made a significant investment in our future by purchasing panel remanufacturing plants located in Arkansas and Georgia. Today, these plants are the backbone of our company."

Magnolia Forest Products makes precision components for doors, boats, crafts, fine furniture, shelving, reels, cable and chain for industrial customers ranging in industries from appliance to glass manufacturing. The company makes parts and also supplies complete kits for crates and containers. Lumber remanufacturing capabilities include surfacing, thin-kerf resawing, gang ripping and cutting to length.

At its plants in Carrollton, Ga., and Lewisville, Ark., Magnolia Forest Products manufactures pre-cut components of plywood and other panel products. At its plant in Danville, Va., the company makes cutto-size panel components.

Magnolia Forest Products has repositioned itself as a remanufacturer of panels in industrial markets, including the pallet industry. Most of its plywood and OSB is bought from domestic producers. About 90% of its plywood is purchased by "downfall" contracts from leading forest products companies, such as Georgia- Pacific, Louisiana-Pacific and Weyerhaeuser. The company has 65 employees, and annual sales exceed $58 million.

"The key to our success is simple," said Mayo. "Hire good people, provide them with the tools and support they need, then get out of the way and let them do their job with as little interference as possible."

The company's greatest challenge has been managing the tremendous sales burst of the last few years.

"Keeping up with the unique talents of our sales staff and their varied endeavors has required a significant investment in technology and support staff," said Mayo. "We maintain inventory in numerous locations across the nation that is fundamental to our success but difficult to control and finance.

"Our next step involves opening a lumber remanufacturing plant, perhaps located in Mississippi. There are many opportunities for the right mix of sales and production capabilities that we would like to explore."

Copyright Mississippi Business Journal Nov 28, 2005

Source: Mississippi Business Journal, The

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