Summary
• Severn Valley Woodworks began life as a coffin manufacturer.
• Its brands now include Challow, Lingward and Hutton Garden & Landscaping Products.
• It manufactures more than 70% of the UK’s drive-on crop storage systems.
• It manufactures timber components for an acoustic and earth retaining wall system.
When Severn Valley Woodworks (SVW) directors successfully pitched to the H&B buying group recently, they began by pointing out how far under the radar the company is. It might sound like a marketing disaster, but the low profile hasn’t hurt the Gloucestershire-based timber processor one bit.
“I remember telling H&B that nine years ago we were a £3m turnover business that 99% of the timber industry had never heard of and now we’re a £9m-plus turnover business that 99% of the timber industry has still never heard of,” said director David Twigg. “And that’s the way we prefer to operate.”
It’s an MO that has seen the company through several incarnations, some of which it admits have been more organic than strategic, and which has resulted in a diverse business, both in terms of product portfolio and customer base.
The company was established in 1970 as a small-scale coffin manufacturer, but pressure from volume producers turned it in the direction of timber pallets and packaging. Blue chip customers included Heinz, IBM, Hewlett Packard, Fuji, GKN, British Timken and the Ministry of Defence and business was good until those customers began to downsize or close their own manufacturing operations in the UK.
“We made the decision not to try to replace customers as they went because we didn’t believe that the business would be there in the long term,” said managing director Simon Brown.
Another multi-million pound revenue stream – this time the exclusive supply of timber dowels and plywood pads (used for reinforcing the coal face as it was being mined) for British Coal – also fell by the wayside, although rather more abruptly. “The business disappeared virtually overnight with the miners’ strike in the mid-eighties,” said Mr Brown.
Opportunities
Fortunately other, more enduring, opportunities immediately arose and were swiftly seized on.
“Challow Agricultural Products came to us to supplement its manufacturing as it couldn’t keep up with demand,” said Mr Brown. “Eighteen months later we owned the company.
“Challow is a brand name which any farmer would know, either for agricultural buildings or crop storage,” he added. “In fact drive-on crop storage floors are often referred to generically as ‘Challow floors’.”
A few years later SVW then undertook manufacturing for a competitor in the crop storage sector and in 1999 completed the set by acquiring Lingward of Pelham. Today SVW is the UK’s largest supplier of drive-on crop storage systems, manufacturing in excess of 70% of the current market demand. “In the last 12 months we’ve supplied 45,000m² of floor – and the previous two years were at that sort of level as well,” said Mr Brown.
Keruing imports
This level of output also makes the company one of the biggest importers of keruing in the UK, at up to 2,000m³ per year.
The keruing, mostly Malaysian, is the material of choice thanks to its durability and relatively competitive cost. “The floors are being driven over by tractors with huge loading shovels and trailers so they need to be extremely tough. When they were first specified in the UK 30 years ago keruing was freely available – we’ve attempted to use other hardwoods over the years, but none of them has been as successful, so we’ve stuck with keruing and we’ve had no problems with availability,” said Mr Brown.
Challow and Lingward continue to operate as distinct brands within SVW. “Challow has always been seen as the Rolls Royce of the industry, although since we’ve owned Lingward I wouldn’t say there was any difference in the quality,” said Simon Brown.
“The difference now is that Challow floors are manufactured in the factory, pre-assembled in jigs and then sent out to site in a ‘Meccano’ format, while the Lingward components – joists, top plates, mesh and so on – are sent to site where our fitters install them. By not doing all the work here in the factory, we’re able to produce substantially more.”
Continuing to manufacture for a major competitor also has some logic, said Mr Brown. “It enables us to make the most efficient use of the 2,000m³ of keruing we buy, there’s more of our product out on the market and we don’t have to sell it ourselves.”
Agricultural sector
The agricultural sector now accounts for around 25% of SVW’s business and has been in relative rude health in recent months. “Arable farming has been pretty buoyant although, ironically, grain isn’t really attracting its true value – break even is £120/tonne and it’s only getting £90/tonne,” said Mr Brown. “But we know there is huge demand for it both as a food source and now as a biofuel, so there is big investment in crop storage capacity, which can only benefit us all in the future.
“For non-arable farmers, those that are in it big time and have contracts with supermarkets are doing extremely well, but dairy farmers and small farmers are under more pressure. However, there is still demand for timber frame buildings [within the sector], particularly from those people who are interested in the aesthetics of the product, rather than just the bottom line.”
Softwood framed and clad agricultural buildings for animal housing have certainly been a big market for SVW in the past and there is a school of thought that timber frame is better than alternative build methods for livestock, as condensation is reduced.
Challow buildings also feature in the leisure market in the form of bespoke golf driving ranges and log cabins which have been used variously as fishing lodges, heritage centres, holiday accommodation, home offices and classrooms. As with the agricultural buildings, these can be produced on a supply only basis, but SVW has its own team of fitters and much prefers to see projects through from start to finish.
Other strings in the company’s bow are Hutton Garden & Landscaping Products, a brand it acquired in 2003 as a way into the garden centre market, and the production of the timber components for an acoustic and earth retaining wall system, made under licence.
The timber crib system, which is widely used overseas as an acoustic barrier, is manufactured from radiata pine and SVW imports up to 10,000m³ of the species from Chile every year for the purpose. (Timber usage across all the ranges is around 35,000m³ per year.)
Machining capability
It’s the type of volume production that necessitates a hearty machining and treatment capability and SVW has that in spades. The 7ha site at Westbury on Severn and a 1,400m² factory at Lydney include six moulding lines, six computerised cross-cuts, a K2 automated joinery machine (the company also supplies a property developer with oak frame housing sets and flooring) and three (12m, 18m, and 24m-long) pressure treatment plants. The company treats 95% of its machined timber with either Tanalith E or Tanatone, making it one of Arch Timber Protection’s biggest customers in the south of England.
The Lydney factory, which was set up at the end of 2007, boasts a high-speed moulding line with mechanical infeed and outfeed and an automated cross-cutting line and processes most of the volume work – decking, cladding and joists, as well as the timber crib walling components.
It adds much needed capacity to the main site, which has some operational constraints due to slightly restricted working hours and issues with electricity supply. The Lydney factory, on the other hand, is able to run 24 hours a day if necessary and may operate on two shifts this summer to meet demand, said Simon Brown.
Not only does it add significant manufacturing capability, it’s also an indication that while the business may have evolved organically, SVW truly is the master of its own destiny.
“We talked about creating more capacity in order to grow the business and within two or three weeks we’d sourced the machinery and found a building,” said David Twigg. “There was no lengthy justification process.”
It typifies the hands-on approach of the directors who are all shareholders and are just as likely to be seen driving a lorry, operating a forklift or repairing a machine as they are doing their “proper” jobs. “There’s no ivory tower scenario where the message can get altered from top to bottom,” said Mr Twigg. “And our customers like the fact they can easily access decision makers and get an on-the-spot answer.”
And, he added, the secret of SVW’s success and its presence in so many different markets is “the answer is always ‘yes’, now what’s the question?”