Adjusting to Changing Times 


You won't stay in business very long without re-inventing yourself a few times, and Atlas Lumber should know – they've been in southern California since 1944. Still, the pace of change has picked up considerably in recent years.

As recently as the mid-1990s, about 80 percent of the company's sales went to the furniture manufacturing industry, which was booming and apparently growing in California. But that market has now moved overseas, and the major west coast manufacturers have largely chosen to relocate production to China or simply shut down. “We adapted by turning into a company that mostly provided building products to fit into the housing boom that was really taking off at the time. We probably shifted to about 75 percent building products,” said Steve Ondich of Atlas Lumber. “As the housing market has slowed down, we've shifted gears around and now we're doing high-end architectural millwork and a lot of residential flooring,” he described.

As Ondich sees it, that's something a smart business simply has to do, because you can't service a market that's no longer there. “A lot of our competitors seem to be waiting passively for the economy to pick back up again,” he noted. “I think that's a recipe for disaster right now, because 2009 will be a tough year, so you need to replace that business that you've lost with new business.”

The decision-making process behind those transitions usually involves 3 people. Randy Porter is the CEO at Atlas, and he happens to be the grandson of the company's founder. The CFO is Chris Porter, his brother, who is a CPA with an MBA and investment banking background. Ondich is the VP of Sales & Marketing. “We make an interesting triangle, because sometimes our interests are in opposition. For example, Randy may want to work down the inventory, and I may want to ramp it up because I'm thinking that the more inventory we have, the better our chance of selling it. And Chris will give his take on whether we can afford more inventory right now.”

The threesome meets regularly to brief each other on any new developments in their respective departments. “We don't have a big bureaucracy to work through,” said Ondich. “When a decision needs to be made, we make it quickly.”

Atlas employs about 40 people, including 9 salespeople. Their Chino headquarters is spread across 4 acres and includes 50,000 square feet of warehouse space. There's a mill on site, with moulders, rip saws, glue-racks, sanding, and cut-to-size capabilities. In a typical year, the company generates about $20 million in sales.

Today's sales are coming from a new set of clients. “Our typical customer is someone working on custom projects, whether it be cabinets or millwork. Or it may be someone who needs a customized floor that's not available off the rack elsewhere,” Ondich stated. “We're dealing with more customers – and with more inquiries for custom products – than we ever did before.” That diversified clientele is a far cry from Atlas's old model. “It used to be that 20 percent of our customers gave us 80 percent of our business, but it's more like 60/40 now. It's really spread out,” he said.

First-time customers tend to be clients who are looking to supply an unusual product spec-ed by an architect or designer. The Atlas sales crew truly relishes the challenge of providing these customers what they're looking for. “It puts a smile on my face when we can provide a product, especially when someone else has told a potential customer of ours that something is not available,” said Ondich. “A lot of times that will get us started with people we've been on the outside with.”

Customer inquiries are exactly why Atlas Lumber decided to became FSC Certified. “We saw the interest was there,” said Ondich. “You could tell it had made its way mainstream a few years ago when you started going to a place like Crate & Barrel and see the FSC tag on the furniture.”

After getting their Chain of Custody certification in June, 2007, Atlas Lumber waited for the sales to happen. The initial results were disappointing. “We got a lot of inquiries about FSC products but they weren't turning into orders,” said Ondich. “In a lot of cases, we got the sense that the end-consumer was asking for an FSC product, and when the contractor called us I got the feeling they were hoping we'd tell them the product was not available so they could just tell their customer they'd have to settle for regular wood.”

Of course, the supply of FSC lumber was somewhat tighter in Southern California at the time, and some end-users who might prefer to use FSC wood were unwilling to pay a little more for the product.

That picture began to change for Atlas Lumber about a year ago, because a lot of commercial projects such as casinos and hotels committed to using FSC materials. “It's not that price is no object, but it has to be FSC, and if you're not an FSC supplier they're not interested,” said Ondich. “That kind of limited our competition and helped us close the deal on a number of nice commercial projects and hotels. If you're not Chain of Custody certified, you can buy it and sell it, but you can't call it FSC.” In addition, Atlas has been getting more FSC inquiries from consumers who are not necessarily interested in LEED projects, but would rather use an FSC product from a philosophical standpoint.

While other yards are cutting back, Atlas Lumber has stepped up its inventory. “We've brought in a lot of flooring woods that are FSC Certified so we have them ready to go. We're trying to get the word out that we can offer FSC Certified flooring, and lot of people are surprised to find out that we can do that without a big upcharge,” Ondich told us. “We just did a 6,000 square foot solid walnut job, and it had to be FSC Certified walnut.”

At Atlas, the hot flooring products right now are walnut, hickory, and white oak. They've started to stock FSC Certified eucalyptus as a substitute for Honduras mahogany. It's about half the price of mahogany and has the environmental advantages their customers seem interested in.

One reason Atlas Lumber has been able to adjust its inventory so freely is because they cleaned up their inventory at the right time. “The new CARB regulations are coming in this year, and I don't think we have any material left that's not CARB compliant,” Steve noted. “We see a lot of competitors around town who had huge sheet good inventories left over from when new construction was booming, and a lot of that stuff is not CARB compliant. Prices are really dropping as people dump that stuff or try to move it outside of California. We didn't want to be in that boat, so we got rid of anything that might fall into that category before the end of the year.”

That has taught Atlas Lumber two important lessons: first, that a California business needs to keep its eye on the environment. And second, that competing in commodity lumber is not as good a fit for them as selling customized products, especially in the face of growing competition from Asian suppliers.

As the Atlas team sees things, their future is offering products that clients can't buy off the shelf somewhere else, and supplying materials on pretty short notice. Ordering products from China can take several weeks, and is probably limited to what fits in a shipping container. “Our advantage is that we can fill orders on a short lead time and we're able to fill product niches that other people can't. We won't be the low-cost manufacturer, but that's not in the cards for anyone in the U.S. right now.”


A blog that won't be Wally Pipped

When Atlas Lumber ( updated their website in 2007, they decided that a blog might be a good way to promote things to their customers. “But there are so many blogs out there that seem like something you'd want to read, but turn out to be just advertising and make people's eyes just glaze over, so we decided not to go that way,” said Steve Ondich (photo, right). “Instead, we wanted to put a human face on it. If someone goes on your website, they still don't really know who you are, but if they read the blog then maybe they'll get the sense that we're a real company with real people.”

So the blog is not just about selling wood, although it might mention an upcoming sales promotion. But some weeks it addresses business related topics that may not be specific to the hardwood industry. A recent blog entry mused about the lessons we might learn about decision making from US Air pilot Sully Sullenberger. One recent topic included ideas about Gonzo selling, and another reminded us how Lou Gehrig took advantage of Wally Pipp's day off at first base for the Yankees. “I don't spend a ton of time on the blog; usually it's just a few paragraphs at a time, and a lot of it is human interest,” said Ondich. “Some things just pop into my head and I use them on the blog.”

All that is intended to generate steady and recurring visitors to the website, but that's only worthwhile if you respond to customer inquiries. Many companies set up a general mailbox and then don't bother to read the incoming messages. Ondich reads – and responds – to those e-mails, even when the sender seems unlikely to become a customer any time soon. “The website is really becoming a factor in our business,” says Steve, “and we're getting the calls that show it produces some tangible results.”




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