The ties that bind

Summary
• Last year Grainger Sawmills exported 60,000m³ of timber to the UK.
• Its CHP plant now powers the whole facility.
• Glennon Brothers has acquired UK mills and manufacturers.
• It produces more wood and employs more people in the UK than it does in Ireland.

“Have no doubt about it, no-one is making any money in this business in Ireland at the moment.” So says Niall Grainger, managing director of Enniskeane-based Grainger Sawmills.

He’s anything but defeated, however. “My father’s saying was ‘we’re not in this for a good time, we’re in it for a long time’. It’s about surviving and one thing about Graingers is that we’re resilient – we’ll do whatever it takes.”

It’s an attitude that is mirrored across the Irish sawmilling sector, which is moulding its output to new markets and capitalising on its enduring relationship with the UK.

“The last four years have seen superficial changes in equipment at Graingers but dramatic changes in our stock as we play the hand we’re dealt,” said Mr Grainger. “For example, in 2008 you wouldn’t have seen a single stick of 47mm [pallet and fencing] material in the yard – now we’ve in excess of 4,500m³ of it.”

What is largely absent from the yard is the imported carcassing timber, bought in to service the Irish construction sector. In 2007 the company was buying in excess of 100,000m³ per year; in 2011 it was around the 15-20,000m³ mark.

“Our overall output hasn’t changed a lot over the last couple of years,” Mr Grainger continued. “We’re producing around 120,000m³ of finished product a year; but what has changed is the mix. What we cut is determined by the log availability and what the market requires.”

Two years ago that meant producing construction grade material for the export market – and specifically for the UK.

The summer of 2008 saw the company’s first push into the UK construction timber market with 9,000m³ of exports in that year, rising to 30,000m³ in both 2009 and 2010.

Historic relationship

It would not have been possible, said Mr Grainger, without the company’s sound, historic relationship with the UK market, built up through years when domestic demand could have seen it turn its back on its near neighbour.

“During the boom times in Ireland it would have been very easy for us to sell everything we produced here, but we took a more strategic approach,” said Mr Grainger. “As an example, four years ago we could have sold more fencing material into the Irish market, but we didn’t want to let our UK customers down, so we imported blanks, processed them here and exported back to the UK market.”

Last year the pendulum swung away from construction timber towards pallet and fencing timber and within the 60,000m3 exported to the UK it was a 50:50 split between the two. Holland and Belgium are also export destinations and last year Graingers made a “one-off” shipment to Turkey.

Seventy per cent of the sawmill’s woodchips are exported to central European and Scandinavian paper and panel producers.

One of Graingers’ best strategic developments has been its combined heat and power (CHP) plant commissioned in 2004. Graingers was the first Irish mill to build one. Fuelled by the mill’s residues it produces 2MW of heat for the kilns and 2.5MW of electricity, which now powers the whole facility, making the site carbon neutral. Electricity is sold back to the grid between 6pm and 8am.

The CHP has been “a superb investment”, protecting the company from rising electricity prices (up 60% in the last three years) and boosting Graingers’ environmental credentials, something that the company intends to make more of in future.

“It’s been a huge feather in our cap and it differentiates us from our competition,” said Mr Grainger. “When we’re all selling C16, CE marked timber, what’s going to make our piece of timber different from the next piece? Being carbon neutral does and it’s a message we’re going to pick up and run with.”

Meanwhile Glennon Brothers, which celebrates its centenary next year, has taken a different route to securing UK market share.

Its first foray into the British market was in 2003 when the log shortage in Ireland and the need to feed its giant Fermoy and Longford mills led it to import raw material from Scotland.

Greater supply

“A couple of years later we decided we needed to go where there was greater supply of spruce and this led to the acquisition of Windymains Timber in Humbie, near Edinburgh,” said joint managing director Mike Glennon.

In 2007 the 65,000m³ capacity fencing and treated carcassing mill had a new stable mate with the acquisition of Co Wicklow-based Dempsey Timber Engineering. The company further strengthened its position in the UK by acquiring one of its largest sawmills, the 150,000m³ capacity Adam Wilson & Sons, in Troon, in 2008.

Adam Wilson is known for its kiln-dried, stress-graded construction timber and the purchase included sister company Alexander’s Timber Design. A supplier to the likes of Persimmon and Wimpey, the timber frame and engineered roof truss manufacturer produced around 600 units last year.

It adds up to a sawmilling group of considerable standing – a €90m turnover, a 340-strong payroll, a combined sawn wood capacity of 465,000m³ per year, with an annual kiln drying capacity of more than 220,000m³.

“We want to become the one-stop shop softwood solution for the British Isles for carcassing, fencing, decking – you name it,” said Mr Glennon.

Total group sales in the UK in 2010 were 290,000m³, only a third of which was supplied from Ireland. “Most people think of Glennon Brothers in terms of the Irish sawmilling industry but, in fact, we now produce more wood and employ more people in the UK than we do in Ireland,” said Mr Glennon.

UK investments

There’s no doubting Glennon Brothers’ commitment to its UK operations. In 2009 it invested in planing and treatment facilities at Adam Wilson and 20 additional acres have been secured for development at Windymains. “We see this as a site of great potential,” said Mr Glennon. “The sawmill is very flexible and customer focused and produces a whole basket of fencing products.”

Glennon Brothers’ turnover and sales figures are a graphic illustration of the Scottish mills’ contribution to the business. As the Irish market contracted so did Longford and Fermoy’s sales, but Windymains and Adam Wilson’s mitigated against this, enabling overall sales to continue to rise.

Turnover also fell dramatically at Longford and Fermoy in 2008 and again in 2009 as a result of “carnage in the Irish industry”, but were pulled back in 2010 thanks to two-thirds of the Irish mills’ output being exported.

“The UK has to be the biggest market for us and while we can deliver niche products to different markets, it has to remain the core,” said Mr Glennon.

It may be the core, but the UK isn’t the sole focus of export attention. “In 2009, in an effort to cap our exposure to sterling, we made history in Ireland by sending carcassing timber to France and 10% of our Irish output went there in 2011,” he said, adding that the company also recently shipped two containers to the Chinese market.

Just like Graingers, Glennon Brothers says it’s “in for the long haul”.

“We’re a typical family business with a flat structure and very close contact with the customer base,” said Mr Glennon. “Our Scottish businesses are also family-run and they’ve all endorsed the same philosophy of a strong commitment to customer service.

“We’ve transformed the business from a domestic operation to an export one and you can’t do that without a willing team.”