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| ‘Innovation’ Turns Down Cycles Around |
| Raw Materials/Parts | |
| By Stephanie Sims | |
| Wednesday, 14 March 2007 | |
 Innovative employees contribute to Harrigan Lumber’s success, even during a down cycle. Harrigan Lumber was founded in 1972 in Monroeville, Ala., producing Southern Yellow Pine dimension lumber. A decline in the lumber market nearly forced the company out of business in its first few years, but the market eventually turned and Harrigan Lumber turned with it. William Harrigan and son, Dwight Harrigan, founded the company. When the elder Harrigan passed away in 1976, his son took control of the firm. Harrigan Lumber expanded its operations in 1988 with a pole mill on the same site as its sawmill. The pole mill produced untreated Southern Yellow Pine poles and pilings to suit a variety of applications. But due to a decline in the market, the pole mill was shut down in 2002 and its employees were transferred to the sawmill. Dwight’s oldest son, William “Chip” Harrigan III, joined the company in 1989, and today, holds the title of vice president of production and chairman of the board. His brother, Patrick Harrigan, joined the company in July 2000 as the vice president of operations. He became the company president in 2003. Patrick Harrigan says the company is used to the unpredictable market. “It’s cyclical, and that’s the nature of the business,” he says. “We have to be ready, and predictions differ and vary a bit. Predictions for the end of 2007 and the first part of 2008 are for housing to come back. We are just in the business where we’re left standing and we benefit from the market when a good market comes around. “Those companies that have done things right during the good times will be the ones left standing after a down cycle,” he adds. Getting Rid of Rough Patches Harrigan Lumber also benefits by not being the first adopter of new technologies. “In this business, oftentimes the first installation is never a good one,” Harrigan says. “People often don’t get certain technologies fine-tuned right away. It’s good to let other folks have the headaches associated with that and the construction involved.” New sawmill technologies, for example, have benefited the company after other companies worked out the bugs. In 1991, Harrigan Lumber completed a major sawmill renovation, transforming its old chip-n-saw mill to a modern sharp chain system. Current production capacity is approximately 115 million board feet per year. It also produces Southern Pine dimension lumber in lengths up to 20 feet, as well as some small timbers. The pressure-treating industry, a large customer base of Harrigan Lumber, has changed the chemicals that are used in the pressure-treating process. The old chemical had a green tint that would darken the wood and mask a defect known as skip dressing, or a rough patch missed from the planer machine, Harrigan says. “When we made a push to decrease the target sizes we were cutting to in the sawmill, thus increasing the amount of lumber that could be made from a log, we saw a slight increase in the amount of skip dressing,” Harrigan says. But this was not an issue at the time and the company was able to get more lumber out of its logs, he notes. Now, new pressure-treating chemicals have little or no color, Harrigan says, and skip dressing is more noticeable, especially to more engaged homebuyers. ‘More Nimble’ Harrigan Lumber works hard to maintain and improve its relationships with its customers to compensate for its slowness in acquiring updated technology. “Because we’re in a commodity market, there’s not a lot to distinguish it from anybody else,” Harrigan says. “Our advantages come from relationships with customers. People try to get a competitive advantage on the cost side with technology, but when the business is very much in a down cycle, companies can come out with a lot of debt. “We’re able to be more nimble and don’t have any worries about making interest payments,” he says. “All of our sales for our company and major business is in telephone sales. Our salespeople have developed good rapport with customers due to their day-to-day interaction with them.” ‘Innovative Group of People’ Harrigan says he is proud the company has survived the past 35 years, especially during its first 25 years, when it was a low-cost producer. “I think one reason we survived as long as we did was we might not have had the highest-valued product itself, but we made up for it on the cost side,” he says. In the near future, Harrigan Lumber likely will move into other market sectors, Harrigan says, so the company has more money during down cycles. “[We’d like to have] a little more cash flow, so we’re not afraid to spend money when the market’s bad,” Harrigan states. He says he has not considered what sectors the company might move into, however. |
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