Cabinet company’s expansion leads to greater productivity and $50 million in sales this year.

 

 

     
     
   
   
Canyon Creek’s new owner gave the company a chance to build cabinets for houses in the $500,000 to $800,000 range.

Change has been good for Canyon Creek Cabinet Co.

Over the last five years, the company has gone through a complete makeover: new owners, new factory, new image.

It has paid off. The company, based in Monroe, WA, near Seattle, should hit $50 million in sales this year, up from $14 million in 1995, says president and CEO Bill Weaver.

And the new showroom and factory, completed in 1997, incorporates an environmental award-winning paint and finish department.

New Owner Allows for Refocus

Canyon Creek began in 1980 as a manufacturer of lower-end cabinets for residential builders. While the emphasis on residential cabinetry remains, Weaver says the company’s purchase by Beltecno, a Japanese industrial firm, gave Canyon Creek the chance to refocus on the higher side of the market.

“We did a complete remake of our image,” which included participating in Seattle’s Street of Dreams home showcase, Weaver says. “We were very aggressive in the marketplace relative to our position. We wanted to build a company that has more to sell than price.”

It helped that Beltecno offered the necessary capital for the transition while keeping a hands-off management policy, Weaver says. But good timing was the biggest factor for the company’s newfound success. Canyon Creek’s makeover coincided with a boom in the local housing market and the Northwest’s economy.

A regional slump started to turn around in 1996. Microsoft and the rest of the Silicon Forest spawned a host of stock-option millionaires and boosted the general economy.

Flexibility Among Markets

In addition to selling its own line of cabinets, Canyon Creek handles North American marketing and sales for Beltecno’s high-end Sokee cabinets. Canyon Creek has also racked up some export sales to Japan, which calls for redesigning cabinets for the Asian market’s different dimensional standards.

In the domestic market, Weaver says, “We’ll go into $1 (million) and $2 million homes.” But most of the company’s business centers around houses in the $500,000 to $800,000 range, Weaver says.

Geographic Distribution Grows

The company uses two main distribution channels: direct sales to builders in the Puget Sound area and indirect sales through dealer resellers in the Northwest and an expanding market in the Western states. About 75 percent of current business is in the Northwest, Weaver says.

But Weaver says he wants to further diversify Canyon Creek’s geographic distribution. “We need to weather the ups and downs” in the housing market, he says. As a result, last year the company started selling in the Southwest, and earlier this year entered the southern California market.

Factory Consolidation Makes Expansion Easier

The new factory, a 196,000-square-foot replacement for three separate facilities, was built with growth and efficiency in mind. Weaver says Canyon Creek wanted to avoid turning operations upside down when the time to expand arrives. The company has already gone from 140 employees five years ago to 475 today. The facility produces about 850 cabinets a day.

The growth plan demands balance to avoid outgrowing production capacity. “We’ve maximized our growth rate,” he says. “We’re growing as fast as we can.”

At the same time, the company promises on-time delivery.

“In five years we’ve made it every day of the year,” Weaver says. “That’s where we put our focus –– on time, every time.”

The challenges of keeping that commitment come not only from suppliers but also from customers unused to that level of service. Expecting delays, some builders add extra time for requested deliveries only to be surprised — and not always ready to accept orders — when their cabinets arrive on time, he says.

Some of the production equipment from the old site was moved into the new factory. An additional $5 million in new machinery rounded out the plant. Two assembly lines handle framed cabinets, with a third line for frameless, which currently make up about 16 percent of Canyon Creek’s sales. A fourth assembly line can be added when demand calls for it.

“We don’t run a rough mill,” Weaver says. Outside suppliers provide some milled parts and foil doors as well as wood doors that either aren’t in high demand or call for special equipment to create unique features. Canyon Creek buys mainly from two door manufacturers, M and J Woodcraft and Brentwood Inc.

Focus on Finish Department

The finish department takes up 24,000 square feet, running two half-mile tracks in a winding course through sanding, staining and sealing stations and through conventional and infrared ovens.

 

     
     
   
  The company’s paint and finish process has won two awards for environmental pollution control and uses water-based materials almost exclusively to produce minimal pollutants. Two lines, each a half-mile in length, take the products through stain application, drying ovens, sanding stations and finish rooms.  

Canyon Creek uses water-based materials for stains, top coats and seal coats, with the exception of one solvent-based sealant that it’s working to eliminate, Weaver says.

Moving to a new facility gave Canyon Creek the opportunity to take an approach that combines various techniques in a new way and also anticipates stricter finishing regulations in the future, Weaver says. The overspray material is so well filtered that it can be flushed through the sewer.

The company’s finishing operation earned the Governor’s Award for environmental pollution control and the Environmental Protection Agency’s Area 10 Evergreen Award for 2000. Local EPA officials use the facility as a showcase.

Although the system uses more expensive materials, it ends up applying less finish on every component, which helps to balance costs, Weaver says. The savings in avoiding disposal costs and fewer reporting requirements help make it a winner.

The finishing equipment and booths represent a $1.5 million investment. Akzo Nobel, Canyon Creek’s finishing materials supplier, helped design the award-winning water-based finishing system. Dickson Equipment engineered and installed the overhead conveyor line, while ovens were supplied by SBS. The rest of the plant includes Selco and Casadei panel saws, a Biesse Rover CNC machining center, two Unique CNC door machines, three Voorwood Model 178 shaper-sanders and a Holz-Her Triathlon edgebander.

Room for Wide Selection

The new facility also includes an extensive series of showrooms, with samples covering cabinets for an entire house.

One showroom is dedicated to displaying Beltecno’s Sokee line. Also included is a kids’ kitchen play area to keep children amused while sales staff work with their parents.

Weaver says he’s proud of Canyon Creek’s on-time service, but also lists two aspects of the company’s product line as strengths: the custom department’s ability to handle special orders, and the broad selection of stock cabinets. He says he once calculated that with all the options in styles, materials and finishes, Canyon Creek can produce a basic cabinet 22 million ways.

For custom work, “If they send us a drawing and it’s feasible, we’ll do it,” he says.

Laminates Add to Options

The company’s catalog offers framed and frameless cabinets in six wood species as well as laminate. Customers can choose from more than 100 door styles and 17 standard stains, plus the option of custom stains to match desired colors. Canyon Creek also offers painting to match any color laminate produced by Wilsonart International.

MDF makes up about 10 percent of the company’s framed cabinets. Wood remains the material of choice. “Everybody wants wood,” Weaver says. “Wood is hot.”

Maple and oak are the best sellers. Maple recently overtook oak in sales dollars, although Canyon Creek still produces more oak boxes, he says. Cherry and hickory, followed by alder and rustic alder — both added to the list about a year ago — and then rustic pine round out the standard woods.

Another option is a new laminate line with a strong wood-grain look. “Laminate is moving to a new place,” he says. “You can’t tell it from real wood.”

Better alternative materials such as the new laminates will draw customers away from solid wood. “There are only so many trees,” Weaver says.

Employee Benefits

The rising cost of materials is one of the biggest challenges facing the company, second on the list behind finding and keeping a quality workforce, Weaver says.

“We’ve looked at alternative materials with better yields and better buying power” to control material costs, he says.

When it comes to labor, Canyon Creek has stepped up in-house training, starting with supervisors. The goal, he says, is to reach the point that they’ll be able to run the show if upper management leaves.

“We don’t want to get into the hero syndrome,” he says. The preparation also means flexibility for long-term expansion plans that may include acquisitions of other companies.

The company is also examining wages and benefits to try to make wages and benefits more attractive to prospective production workers as well as to cut turnover.

Automation offers some answers to the labor problem, Weaver says. Whereas the main focus in determining whether or not to add equipment once was the payback period, now the key is whether the machine will add efficiency. But it’s not a complete solution.

“I don’t see us being able to put enough automation in to reduce the number of employees,” he says. “We just won’t need to increase as much. We work with some pretty thin margins in this business.”

Above all, flexibility is the word to remember. “This business is very fluid,” he says. “What we do today may not be what we do tomorrow.”

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