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The following article was published in the September issue of Timber Processing.

Buse Timber Co. continues to ride the momentum of an ESOP transacted in 2004.

By Rich Donnell, EVERETT, Wash.

Once the employee stock option purchase (ESOP) was completed in March 2004 at Buse Timber & Sales Inc. here, the management team began injecting a positive attitude into the ranks. This new mindset, plus new operational efficiencies and banner markets in 2004 and 2005 have allowed Buse Timber to pay off significant debt, put money back into the mill, and pay quarterly bonuses.

Talk about good timing!

Even in 2006, Buse Timber hasn't been hammered as have some of the conventional dimension producers-because it's not one. Seventy percent of Buse Timber's 89MMBF annual production is timbers 4 in. and larger, which feed a range of specialty end uses. The timbers market has held up and prices have stayed up, according to Tom Parks, VP/Sales.

Half of Buse's timbers are indeed 4 in., but the mill cuts up to a 24x24 in. beam up to 26 ft. in length. Douglas fir accounts for 80% of the timbers, with the remainder in hemlock. About 30% of production is dimension along with a small percentage of 1 in.

Markets range from high grade architectural to lower grade industrial, rough or planed, including heart free timbers for log homes, and timbers for railroad bridges, dams and even crane mats. The biggest export customer, in Peru, purchases mining timbers from Buse Timber.

"There's not a mill that makes as many products with as many different markets as we do," states Parks.

"Tom has been able to find new products and build new markets," comments Mark Hecker, VP/Operations. "The challenge of putting all those orders together (in the mill) keeps everybody on their toes. It takes new employees a while to get to know our system, with so many different orders and matching them to the log we have available, even if they are coming from another cutting mill."

 

"The Moore Log and Lumber Inventory Management System and overall information technologies have enhanced operations tremendously."

 

THE ESOP

Hecker, Parks, President/GM Ron Smith, VP/Finance Loren Meade and a fifth officer (since retired) comprised the management team that instigated the buyout. Today 16% of the company stock is owned by those four officers.

The remaining 84% of the company stock is owned by the BT&S Employee Stock Option Trust, which is a retirement plan set up under IRS and Dept. of Labor rules. The company borrowed the money and loaned it to the Trust to buy the company stock. As the loan to the Trust is paid back to the company, shares are released to the employees' accounts. The number of shares allocated to each employee is based on his/her W-2 wages as a percentage of the company's total payroll. The value of the shares is based on the yearly stock price appraisal which is required by the DOL rules.

There is also a seven year vesting schedule. Employees who retire (at 65), die, or become disabled are automatically 100% vested in the current balance in their account. Employees who quit or are terminated for any other reason must wait about six years before they start receiving their vested balance. Their unvested balance goes back into the pot and is divided up amongst those still employed.

The ESOP bought out members of the Buse family. Brothers Delmer and Norm Buse started manufacturing lumber at this site with a portable sawmill in 1946. They built a stationary mill with circle saw headrig in 1949. They added planing and drying operations during the 1950s, and then built a state-of-the-art electric and push-button controlled mill in 1959.

Eventually, Delmer's son, Dave, became serious about selling the operation and an ESOP was considered during the mid 1990s. The idea surfaced again in 2003, and it became a reality on March 11, 2004.

The four current managers all have a history with Buse Timber and the lumber industry. Hecker began work here in 1973, departed in 1985 to work with Liberty Lumber and returned in 1995. Smith, who is a forester, also started here in 1973, departed in 1992 to work for himself and then for WTD Industries and returned in 2001. Parks started in 1980 and left briefly during 1993-1995 to go with Seattle Snohomish before returning. Meade has been here the past 20 years, following stints at Anderson/Middleton and Mayr Bros. Though Smith's background is forestry, he was hired back in sales and not long after was asked by Dave Buse to put together the ESOP.

Hecker comments, "We always felt we could do a good job if we had the freedom to run the operation, and so far we have been successful."


INTERNAL AFFAIRS

The mill itself was still producing a quality timber, Hecker notes, but the facility had aged drastically, and worker morale was in decline.

Among the first things they did was paint the entire facility, repair the blacktop paving, send most of the boneyard to the scrap dealer, perform a thorough cleanup, reorganize the yard and begin reinforcing the mostly wooden structures.

At the same time, the management team began communicating with the work force. "It's their company," Hecker says. "It (morale) actually changed the day we took over."

Smith adds, "We heard from customers and vendors that the first time they came around they could see the difference."

The operation has become interactive, Hecker notes. "Everybody is communicating. My office is non-stop. We've given more responsibilities to the supervisors and they take the ball and run with it.

"Another thing we insist on is that every employee is treated with respect. Their ideas are valued and encouraged. This is really the centerpiece of our management philosophy."

Even after the ESOP, stemming from the way it was, there was an element of mistrust of the management team. But that has dissipated and turned into a trustworthy relationship.

Safety meetings, an employee ESOP committee, a company newsletter, and a general open door policy are just some of the ways in which communication barriers have been brought down at Buse Timber. The bonus incentive has helped in that regard, as have drawings and prizes for longtime employees, a company softball team and annual picnics. The operation has also started up a 401k profit sharing matching plan.

Buse Timber employs 135, including day and night shifts in the sawmill and a day shift in the planer mill.


MILL OPERATIONS

"One of the things we do different now is plan," Hecker emphasizes, while smiling at himself for stating what should be the obvious, but hasn't been.

While communication between management and the work force has improved, so has communication with the mill itself, so to speak. Such things as a computerized maintenance work order program, the Moore Log and Lumber Inventory Management System and overall information technologies have enhanced operations tremendously.

Most logs are procured from industry timberlands, compared to 15 years ago when 85% of raw material came from the national forest. Logs arrive by truck or by raft, specifically via the Puget Sound. All logs are scaled and then sorted on the yard. One of the first machinery purchases under the new ownership was a LeTourneau log stacker, which along with three Caterpillar 988s transport logs throughout the yard and to the mill.

Logs proceed through a 50 in. Salem ring debarker, and to a Concept Systems programmed log bucking line that includes an LM chain saw deck saw. It provides a diameter measurement at any place along the length of the log and also the total length of the log and the individual segment lengths. It maintains a Scribner count going into the mill.

Two headrigs are a double cut 7 ft. Salem bandmill and slabber with four knee Salem carriage and Nelson Brothers Engineering scanning and optimization, and a Salem 5 ft. bandmill and slabber with Salem 17° tilt carriage with Inovec light curtain scanning. Bigger, rougher logs run through the double cut. Oversize logs are taken to "Mill B" for sizing by an 11 ft. bar and chain saw before they're moved back to the headrigs.

In addition to the overhead scan heads, another set of scan heads is mounted on the back of the double cut carriage for a more complete picture of the log, and Hecker says the optimizer package is one of the most trouble free he has seen. The system allows the operator to override solutions for grade cutting and then rescans the remainder of the log.

From the headrigs, pieces go to a Salem four saw, 8 in. edger with Inovec setworks, to an Albany 5 ft. twin band resaw with Inovec setworks or to a timber deck. Pieces converge on an old Salem trimmer. (Feasibility studies are under way for upgrades at the trimmer and edger, and communication with vendors has begun on machine and optimizer possibilities.)

At the timber deck, a grader grades and trims ends for orders. This center is used mainly for wide 6 in. timbers up to 24x24 in. up to 26 ft. in length. Timbers are loaded on a hydraulic rollcase, measured with a Banner digital laser, graded, then trimmed by a new 52 in. hydraulic controlled circle saw, and sent out to one of two outfeed decks for removal by forklift.

Following the Salem trimmer, pieces go to the grading area, where two graders have the option of sending them to one of two green chains or back into the mill resaw. The green chain has about 80 sorts. Two inch hemlock goes to a sticker machine and is dried in kilns. Only 11% of production was kiln-dried last year.

A lot of the rough fir timber and higher grade hemlock is dipped in fungicide.

Chipper is a 61 in. Acrowood, and the hog is from West Salem. Chips go to Kimberly Clark, while hog fuel sawdust and shavings are sold locally.

The filing room includes three Armstrong #4 benches, four Armstrong #4 grinders-one with a Digicam upgrade, a Simonds autoleveler, a Wright W-350 side grinder and Wright W-150 face grinder, and Beroteck key knife sharpener. Carbide is used on the circle saws. Cut Technologies provides circle and band saws. Kerfs, such as .145 on the resaw and .180 on the edger, have remained the same, as big timbers make kerf and plate reduction difficult.

The filing room employs three during the day shift and two at night. Band saws are changed every four hours. Udeholm Swiss steel is preferred on the saws.

The planer mill includes a Stetson Ross planer for surfacing anything from a 2x4 to 8x12 to 6x14. It also processes a lot of 2 in. stock for laminated beam plants.

A Lucidyne grade mark reader and a Clawson double end grade stamper have recently started up, along with an LM Equipment Verticut package saw line. This setup provides customers more options on lengths and allows Buse to cut for short orders out of longer pieces without having to run back through the planer line.

The planer mill line has three stackers and two green chains. The stackers handle bigger timbers, while everything else (2 in., 3 in. and narrower 4 in.) is pulled.

Product is moved out by trucks and rail cars. Buse Timber owns five rigs itself.

"There's still a big demand for timbers," Hecker says. "You'd think with all the engineered products that the market may not be there. That was one of our concerns, but our research said there's more than we can handle out there."

One of the things that won't change is the name of the company. There was some speculation about it when the ESOP occurred. But the consensus here is that over the years the Buse name has always been associated with quality products and that will continue to be the number one goal.

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