A Not So Tall Tale
Zeeland Truss & Components’ story is not a fairy tale. At least, it’s not on the level of Cinderella folklore. However, on the surface, its story appears an improbable one. In January 2011, Zeeland Truss & Components began operations in Wyoming, Michigan (a suburb of Grand Rapids), and has prospered. Let’s deconstruct that last sentence. A truss plant opened its doors in the current economy. In Michigan. It’s succeeding. In fact, it’s contemplating running a third shift! How can this be? First, we have to look at where it came from, then we can begin to look at how its business model is enhancing its success.
Once Upon a Time, There Were Two Lumber Yards…
For close to 60 years, Zeeland Lumber & Supply Company and Hamilton Lumber were fierce competitors in the western Michigan market. Zeeland was started by John Vanden Bosch in 1947 as a pallet and box manufacturing company, and when his sons took over the business they expanded it into a building material distributor. An agricultural cooperative called the Hamilton Farm Bureau started Hamilton Lumber in a nearby town. In early 2009, these two former competitors merged into Zeeland Lumber Holdings, LLC.
Up to that point, Zeeland contracted with a collection of local manufacturers to have components built and delivered to fill customer orders. Hamilton had a small manufacturing facility with one truss line, a mothballed wall panel line and a few truss designers on staff. Zeeland immediately started filling truss orders through the Hamilton facility too, but quickly found it hard to keep up. “In 2010, we were running three full shifts,” said General Manager Dean DeHoog. “We still had to purchase floor trusses, I-joists and wall panels, as well as some roof trusses, from other manufacturers in the area.”
Fortunately, the Zeeland Board of Directors saw the truss business as a positive contributor to their overall business operations. DeHoog added, “The Board saw it as an opportunity for organic growth. Components represented a strong product to offer their existing customers and attract new ones.” Expansion was inevitable then, but the hard question was how to go about doing it.
This Building Is Just Right…
As a lumber distributor, Zeeland was aware that one of its wholesalers, North Pacific, had recently filed for bankruptcy. After a little research, it found that one of North Pacific’s distribution facilities in the Grand Rapids area was being auctioned off through the bankruptcy process.
In this case, the location could not have been more perfect. As a lumber distribution site, it had a well-maintained and active rail spur, which would help lower the cost of bringing in raw materials. Further, it already had an extensive lumber storage infrastructure, and the building itself was ideally set up for lumber throughput. “The first time I walked into the facility, I thought to myself it was a nearly perfect truss facility,” said DeHoog.
The building’s physical location also is an asset as Zeeland has expanded its market reach beyond the western Michigan lakeshore area into northern Indiana, northern Michigan, and east into the greater Detroit area. The facility is located at an interchange of the two major highways that run through Grand Rapids, US 131 and M6, making it an ideal multi-modal hub (see map). “This building is perfectly situated to allow us to work with builder customers from Howell, Ann Arbor and Lansing to South Bend and all the way to Traverse City and Petoskey,” said DeHoog.
I’ll Huff & Puff & Visit Your Open House…
Zeeland took the keys to the new facility in November 2010, and purchased new equipment through auction in December. By February, the new equipment was installed successfully and the first trusses were produced. By April 2011, Zeeland Truss & Components was already running two shifts, 25 employees on the first and 12 on the second.
In May, Zeeland hosted an open house for its customers and all the Zeeland employees and their families. “It was a great opportunity to show everyone our high level of commitment to this industry and in helping our customers be successful,” said Zeeland VP Sales & Marketing, Mark Vanden Bosch. “By bringing in our customers, we could showcase our manufacturing capabilities.”
During the open house, there was at least one operator stationed at each piece of equipment to talk about its capabilities. Zeeland had purchased at the auction an automated jigging table, a linear saw and floor truss line. In addition, moved over from the Hamilton facility were a component saw and a 90-foot gantry line.
“Everyone who walked through was impressed by the cutting-edge technology used in the newer equipment,” added Vanden Bosch. “Between the automated jigs and lasers to the computer-aided assembly, our customers walked away knowing we were focused on quality control.”
Zeeland was also able to promote the advantages of its design approach. “Our engineered wood, wall panel and truss designers all work in the same space,” explained DeHoog. “They work as a team, which ensures good communication through every facet of a project.”
Whistle While You Work…
During the busy months of June, July and August, Zeeland hired additional employees to run a third shift just to keep up with orders. “That will be our biggest challenge going forward,” predicts DeHoog. “In 2012, we will have to run all three shifts and get creative with hours in order to meet demand. But in 2013, we are going to have to be ready to expand to an additional production line.”
While setting up the current operation, they had the advantage of doing so during a soft market. Slightly used equipment was available for a bargain through auctions. In addition, several truss manufacturers had closed their doors in the western Michigan area in the recent past. That meant there were a number of experienced truss production workers available for hire as Zeeland put together its new production team.
“The real challenge will be timing our equipment purchases and hiring the next time around,” admitted DeHoog. As housing starts begin to creep upward in Michigan, and elsewhere around the country, other facilities will undoubtedly come online. Equipment auctions will become even more competitive, and workers with truss experience will be recruited by new competitors.
“It’s exciting to think about,” said DeHoog. “To sit here today and be worrying about expansion and keeping up with orders. It definitely beats the alternative.”
In a Land Far, Farther Away…
“Probably the biggest challenge we faced was in the area of personnel,” said DeHoog. “When we moved the truss operations 40 miles from Hamilton to the Grand Rapids area, not all of our original employees could make the move.” They ended up keeping only six of the 20 production employees.
After they were able to find and hire new employees, they found it was difficult to train them to use the new automated jigging table. “We found the experienced truss guys wanted to create their own jigs and do most of the work the automated table would already do,” explained DeHoog. “It was a little like trying to use a calculator like an abacus.” In the end, they turned to the younger employees, who were more comfortable with the technology.
On the plus side, moving to the new location did make it easier to expand the market. The strategic location of the facility made it easier to transport materials to a larger geographic area, and the added capacity allowed the sales team to push component framing solutions to existing builder customers, as well as seek out new customers.
Getting to Happily Ever After…
The key to Zeeland’s success appears to be one part good fortune, one part good timing, and one part good positioning. “In Michigan, the fall off of the housing economy is driving a change in the supply chain,” explained DeHoog. “The middle-men are being squeezed out of the process.” While truss companies used to sell components to lumber yards in Michigan, now lumber yards are simply operating their own manufacturing facilities.
This evolution allows the building material distributors to strengthen their core businesses, as well as solidify and even expand their customer bases. It certainly is working for Zeeland; the question is whether others will be able to follow suit. “The design aspect is certainly a barrier,” agreeed DeHoog. “The production infrastructure is a challenge as well.”
Whether others are able to imitate its road to success remains to be seen, but one thing in this tale is for certain: Zeeland is doing well at a time when many others are struggling.