What did two business buddies who bought a little lumber wholesaler west of Portland in 1984 know about gates, grass, power tools and er, um, dog urine 30 years ago?
Not a lot.
But with their eyes peeled for diversification in 1987, Jewett-Cameron Lumber Chief Executive Donald Boone and corporate secretary Michael Nasser flipped a 34-year-old business into a holding company — Jewett-Cameron Trading Co.
Now with four separate operations under its business umbrella, Jewett-Cameron reported $45.9 million in sales in 2012. The North Plains, Ore., company performed well enough in the last two years to earn the third-highest spot in The Seattle Times’ 22nd annual ranking of publicly traded companies based in the Northwest.
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Pretty good for a company whose fab five recognition this year mildly surprises CFO Murray Smith, 42, “because we kind of keep under the radar.”
For starters, the company’s self-described “conglomerate” of 49 employees — the second smallest workforce on this year’s list — isn’t a recognized hot shot in the consumer world. As a general rule, specialty plywood, dog kennels, grass seed and power tools don’t rate high in business sex appeal. In fact, no financial or industry analysts that might track Jewett-Cameron could be found.
Even so, all three men agree the secret to their success is far from hush-hush.
“We look for companies that are limping … targeting distressed businesses where there is value and we can turn it around,” says Smith.
Their original diversification plan, according to Boone, 72, was born out of a sense of survival during what he calls a “low moment” in the 1970s and ‘80s — even before timber-harvesting limits sent local lumber markets onto the skids in the ‘90s.
“As a lumber wholesaler at the time, we could see the writing on the wall,” says Nasser, 66. But their little lumber company didn’t have the resources to cut it in the national big leagues then, he says. At the time, part of their success was measured by “a tremendous amount of business with Ernst (Home Centers),” a home-improvement chain of 95 stores across 12 western states that eventually fell into bankruptcy in 1996.
To buoy its existing business in 1986, the lumber company bought Material Supply International, an importer/distributor of pneumatic air tools and industrial clamps. A year later, Boone and Nasser incorporated Jewett-Cameron into a holding company and immediately turned their lumber business into a wholly owned subsidiary through a stock-for-stock exchange with Jewett-Cameron Trading.
By 1996, when Jewett-Cameron Trading incorporated Material Supply into MSI-PRO, it was pumping new life into the pneumatic air tools and industrial clamps it imported and sold to retailers, which markets the tools to builders. MSI-PRO now offers digital calipers and laser guides under its Avenger brand. Though a smaller part of Jewett-Cameron’s overall business, new products helped crank its tool sales by 33 percent in 2012.
Barely four years later, when the execs saw a neighboring Oregon community farm struggling, it scooped it up and sprouted its next subsidiary — Jewett-Cameron Seed Co. Today, growers bring their crops to a 13-acre site near North Plains for cleaning, processing and storing before JCSC sells the seeds to distributors. Higher cereal and livestock feed prices helped boost the company’s 2012 sector sales here by 10 percent.
With the acquisition of Greenwood Forest Products in 2002, Jewett found yet another way to float its diversification boat. This subsidiary distributes various specialty wood products, including treated plywood, mostly to marine manufacturers. Its sales were down 7 percent last year, mostly due to unsteady economic waters in the marine sector.
About the same time, Jewett-Cameron went barking up another tree in the pet containment and lawn/garden structures business. As homeowners and pet lovers spent more on 2012 backyard projects, this sector with kennels, greenhouses, fencing and yard systems collared a $3.3 million increase in sales.
And with two patents and the manufacturing rights to Adjust-A-Gate — an outdoor gate-frame kit for fences sold to contractors and through big-box stores to do-it-yourselfers — Jewett-Cameron latched onto yet another piece of that lawn/pets market.
“The biggest nemesis in building a fence is always having to go back and fix the gate,” says Nasser says. “About seven or eight years ago, there was this local guy in the fencing business who invented and was manufacturing these (gate adapters). He recognized that we could sell a lot more than he could and we could manufacture it for less, so we took over manufacturing and sales, and gave him a per-piece royalty. We ended up purchasing his patents and company several years later.”
Similarly, when another local guy couldn’t keep up with demand for his own outdoor containment systems, Jewett bought into yet another product line: dog kennels.
Like with any new product Jewett-Cameron has adopted or created, says Nasser, “there’s always a learning curve. With the dog kennels, we saw that dogs urinate. Surprise, surprise.”
When the company saw the effects dog pee had on their kennels and other metal goods over time, they went back to the original designer, Don Thompson.
Today, says Nasser, “we have an invisible zinc-enriched powder coat that makes our product different than Brand X.” It’s part of the reason the American Kennel Club and ASPCA now endorse some of their kennels.
So what’s next for the company? Nasser says, “Don and I are never really satisfied. We’re also looking for the next opportunity.”