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Collective Bargaining

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A western New York company demonstrates how cooperation between customer, dealer and manufacturer can lead to diversified products and increased business.

Larry Trojak November 8, 2012

There is much to be said about the value of a solid working relationship between an equipment user and his dealer or supplier. Truly committed equipment dealer will do more than just answer a call or provide spare parts when needed. They will understand—in many cases, even anticipate—their customer’s needs. They will get actively involved with their customer’s business, looking for ways in which they can play a role in making it better. They will act as a conduit, if necessary, between the customer and the equipment manufacturer when concerns need to be voiced or a suggestion for a design change made. They will help that customer explore new markets for their products or make existing ones better and more profitable. And mostly, they will appreciate the fact that their customer’s success ultimately means success for everyone involved. Conversely, the customer has to have a high level of confidence in those relationships to help make that happen.

Nowhere is such a relationship more evident than the one that exists between Covey Tree, its equipment supplier, L.C. Whitford, its dealer representative Bob Miller, and its equipment manufacturer, Morbark. Because each party understands the role they play and the particular expertise they bring to bear, Covey has recently undergone a dramatic change in its business focus. As a result, the possibility for future growth—and additional equipment purchases—looms very large. A win-win for all involved if ever there was one.


Change in Direction

Started in 1991 as a professional residential and commercial tree service company, Covey Tree grew its business over the years to include right-of-way contracts with divisions of the Western New York Dept. of Transportation (NY DOT) as well as with more than 40 municipalities throughout the area. In 2010, when an opportunity arose to purchase an existing chipping operation and add a new dimension to the business, they did so, based on equal parts instinct and vision.

“Because our chipping operation came with a Morbark 50-48 chipper, we also reached out to Bob Miller, the dealer rep from L.C. Whitford who originally sold the unit and have valued his input ever since,” says Matt Ekstrom, Covey Tree’s sales manager. “That’s not to say we hadn’t done our homework; we actually had about a year’s worth of research under our belts at this time. But we wanted to do it right and knew what a valued resource Bob could be, so we’ve worked hard to keep him in the loop and it’s really helped us.”

Despite having some expertise in chipping, Covey Tree knew it had its work cut out for it, citing the seismic shift that’s taken place in the chipping market. Years ago, according to company founder and owner, Kevin Covey, a landowner with high-dollar trees on his property would pay a company like his to come in and cull out the aspen and poplar.

“Today, things have been turned around 180 degrees to where we are now paying them for the right to come in and cut,” he says. “But the market for fiber has undergone some serious changes which have made that happen. We simply have to adjust to those changes.”


Picky, Picky

The changes to which Covey refers have been in the making for some time now, as wood fiber in all dimensions, sizes and colors grows in popularity and usage. Where once only large facilities could or would invest in biomass, smaller ones are now seeing the feasibility of making a change. Products which were once solely made from virgin timber are now being molded from pressed wood fiber. Even a product as innocuous as wood mulch, is, in many cases, becoming a specialized commodity. Meeting those newfound needs takes a company geared up for the challenges it presents, and Covey Tree meets those demands nicely, says Bob Miller.

“People have always asked for chips and, for the most part, chips have always been a byproduct of the logging operation,” he says. “But, for a number of reasons, that seems to be changing today. Most important of those is the fact that, as biofuel, pellets and other products grow in popularity, there is a much greater demand for chips and less demand for the things that initially made them a byproduct. What that means is companies like Covey’s who, in the past, could have simply blown chips into a van and called it a day, now have a wealth of options available to them for new products, new customers, and new markets. In a sense, they’ve become a custom chip manufacturer.”


Using what they have
And that’s where the relationship between Covey, L.C. Whitford and Morbark has paid dividends. Getting the right machine for the application, making sure it is outfitted correctly, seeing what ancillary equipment might improve the process even further, and so on, have all been made easier. Covey Tree, for example, has a customer that demands a specialized chip and working with Bob Miller and Morbark now has a machine which is dedicated solely to that customer.

“But that particular product is a log-only chip,” Ekstrom says, “meaning we are cutting down a tree and using only the bottom one-third of it. Our whole goal has always been centered around sustainability, so it is up to us to ensure that we have markets for the remaining two-thirds: the twigs, the leaves and so on. We are working hard to make that happen and Bob is as committed as any of us to seeing that through.”


Year-Round Production Goal

Fortunately for them, markets for new products seem to appear almost daily, as technology evolves and more and more people see trees as an excellent resource. It also doesn’t hurt that Covey Tree is located in an area surrounded by pellet mills and potential biomass customers. Nevertheless, their market plan stresses product diversity.

“In the last year we learned that having as many products as possible would be key, so that, depending upon the time of the year, we have a product that is in demand,” Covey says. “The flake and particle board market, which goes hand-in-hand with the housing industry, essentially shuts down for winter out here. Co-fired biomass customers can flip the switch whenever they want, based on pricing. Straight biomass customers often need product 24/7. Then, of course, there is the mulch market where it is three months feast and nine months inventory. The bottom line is, some customers are always out there, and they are often demanding a very specific product which I feel we are well-suited to providing.”

How specific that product can be sometimes borders on the unbelievable. Ekstrom says they are currently working with a customer who wants them to get a specific breed of tree, in a very particular color, and they want it reduced to a very specific size. “As challenging as that sounds, that type of customer—and others like them—will ultimately drive our success,” he says. “We are lucky to have aligned ourselves with companies like L.C. Whitford and Morbark who share our vision for where the industry is headed. Morbark has been excellent in working with us to customize our machines to better meet our particular needs. They’ve played a huge role in our success to date. I know for a fact that other manufacturers would not be so accommodating.”


Maintaining the resource

Getting to a point where they will be able to meet everyone’s needs and sustain steady growth will take a concerted effort and demand a huge supply of timber. Ekstrom says the general impression people get when they learn about an operation of that size is a real fear of overtaxing the timber supply.

“And we understand that,” he says. “Coming from a tree-service background, sustainability is very important to us; the last thing we want to do is deplete the resource upon which we rely. However, a recent 142-page feasibility study from the New York State Department of Environmental Conservation (NYSDEC) shows that, as of 2010, tree growth was outpacing cutting in the state by about 60 percent. This, despite all the new focus on biomass, all the new demands for fiber-based products and so on. That’s great news and shows that the efforts of both forestry professionals and companies like ours who focus on replanting have been effective.”
 


Opportunity Knocks

In keeping with its focus on strategic expansion, Covey Tree recently acquired the shuttered Ellington Hardwood sawmill in Frewsburg, N.Y., which it hopes to one day reopen and bring more employment to the area.

Kevin Covey says he has been blessed with a great team of people (all locals) who make up his company and sees the growth of his company as good not just for the principals and key players but for everyone involved.

“Our development has really come about in steps,” he says. “When we first got the Morbark chippers we knew we were going to make specialized chips for several custom applications, but in order to keep up with the chipper, we had to invest in a harvesting crew. In order to move the product fast enough, we had to invest in a trucking company. In order to keep all three of those groups working, we had to make sure we had outlets available for the custom products.

Morbark’s sales tag is “Equipment that creates opportunities for success.” Covey Tree is that tagline at work. There used to be 15 full-time people employed at Ellington Hardwood and they are all working again for Covey doing everything from administrative work to mechanics to driving to harvesting to equipment operation.

“And, in addition to those, we have a dozen cut and skid crews with two men per crew,” he says. “So it is not just opportunities for us; it is opportunities for everyone involved in our business, opportunities for the local economy. We’ve really only been in business for a year and I think we can all be proud of what we’ve accomplished in that time and excited about what lies ahead.”

 

This story was submitted on behalf of Morbark Inc., Winn, Mich.

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