April 2005

Merging Cultures

Ilex Woodworking prepares for growth after merging with a local woodworking shop.

By Michaelle Bradford
Ilex Construction

& Woodworking


Baltimore, MD

www.ilexconstruction.com

Year Founded: 1986

Employees: 80

Shop Size: 75,000 sq. ft.

FYI: Ilex recently moved from a 25,000-square-foot shop to a 75,000-square-foot shop. Although the move took three months to plan, it only took six days for the actual move.

Not many companies can take on a $1.75 million project the scope and size of a recent job for George Washington University. However, Ilex Construction & Woodworking's recent merger in January 2004 with LCM, a company in the later stages of bankruptcy, gave it the manpower and capacity needed to complete the project by July 31, 2005. LCM's strong background in the commercial market blends well with Ilex's expertise in high-end residential woodwork, making it well-equipped to handle such a project.

The GWU construction consists of a new building, the School of Business and Public Administration, and renovation of Funger Hall. Work featured in the project will be a Capital Markets classroom with four quad stations - (two) five-stations, a six-station and a teacher's desk. Four people will be able to sit at each quad, and each quad will have three computer screens, says Michael Alt Jr., project manager.

Materials used in the GWU project include 7,500 square feet of select, plain-sliced, white maple; 18,000 square feet of MDF paneling painted to match the owner's sample and miscellaneous hardware including monitor supports and CPU slings - all of which will be fabricated in-house because it is all custom and involves a lot of woodwork and metal. However, the plastic laminate for the office and reception areas, and the solid surface countertops for recycle areas and lavatories, will be outsourced, Alt says.

GWU is a large job, and Alt hopes Ilex will do more of them. Until now, a typical job for the company has ranged from $500,000 to $1 million, but some of them have been high-profile jobs.

Ilex Woodworking fabricated the paint-grade lattice work for Phillips Seafood Co.'s restaurant in the Inner Harbor shopping mall located in Baltimore, MD.

For example, a few years ago, Ilex completed work on the Hyatt Regency Chesapeake Bay Golf Resort, Spa and Marina, in which the company custom-made the following: buffets and banquette seating for the dining area; door casings; running trim; wood and glass partitions for the personal training rooms; ceiling panels; handrail; and counters and bases for room vanities. Other work by Ilex for the 400-room resort included wall paneling, staircases, desks and a coffered ceiling in the lobby.

Ilex also has done millwork for the renowned Phillips Seafood Company's restaurant, located in Baltimore's Inner Harbor shopping mall on Chesapeake Bay, and for Ravens Stadium, located in downtown Baltimore.

"Our capabilities are limitless," Alt says, in part, because of the company's recent merger and also because of its expansion and relocation, moving from a 25,000-square-foot facility to a 75,000-square-foot facility.

Laying the groundwork

Doug Croker and Delbert Adams, both of whom are veterans in the construction industry, started Ilex in 1986. From its inception, Ilex has been in a constant state of growth and transition.

Although Ilex started out constructing homes, its management quickly saw the need for quality architectural millwork for its projects. According to Alt, Ilex purchased millwork from small shops to get the job done. Finally, an opportunity came along and Ilex bought a woodworking shop to gain quality control over its millwork needs for residential jobs.

"We were in so many different woodworking shops that it seemed to make more sense to bring the work in-house," Adams says.

Thus began the evolution of Ilex Woodworking. "Once we took over woodworking, we wanted to make it grow like we did for construction," Alt adds, "so we started taking on more commercial jobs and larger residential jobs."

The company has now grown to three times its original size. Three different woodworking companies were purchased and moved into one location over a three-to-five-year period. The most recent shop purchased by Ilex, and also the biggest one, was LCM.

As with any merger, its success is largely dependent on how well a transition is made. It involves merging two companies and two ways of doing business, Alt says.

The registration desk features quartered anigre panels with maple trim at the base and mahogany porthole-style accents.

Agreeing with Alt about the nature of a merger, James Forner, general manager, says, "Transition doesn't have to be painful. It just has to be slow and methodical. We had a plan and we tried to stick to it as much as we could."

Having the right people in place was key to the company's success in this process. Ilex had approximately 40 people originally and added 40 more from LCM, so that planning was critical. A roster was put together of the LCM personnel Ilex needed to move forward, and the company made sure it was able to retain them, Forner says. "We were able to offer everyone left from LCM a job through the transition with an evaluation period, and with the exception of one or two people, they are all still with us."



Growth with a purpose

Though Ilex's woodworking division began with a focus on high-end residential woodwork with the purchase of its first two woodworking shops, the company set goals to increase its commercial work as well.

"But we needed a bigger footprint, more equipment and more people to do it," Forner says. "We knew we had to get a bigger place, and we needed to turn to automation to augment our production across the board. We are setting about doing that."

The purchase of LCM enables Ilex to continue to grow its commercial work, which accounts for 70 to 80 percent of Ilex's business. With the merger, Alt says Ilex will grow from $3 million to $10 to $15 million in revenues.

Although it took the company three months to plan the move into its new facility, it actually only took six days to complete.

"We had to get production moving as soon as possible," Forner says. "The biggest threat when you are moving into a new place is your downtime, and you want to keep that to a minimum. You just have to start building, making cabinets as soon as possible and make the revenue to pay for the move and to make your profits."

To compensate for the downtime, Forner says their project managers went for "quality sales," or higher margin work, which would pay good dividends and be accomplished in the necessary time frame. These jobs were mainly in the range of $200,000 to $400,000, which Forner says Ilex does frequently.

The challenge now is to increase sales at a pace that can be maintained in the shop, says Patrick Martin, sales and marketing, and utilize all of the company's new capabilities, thanks to its expanded space and workforce. By all accounts, Ilex is hitting the benchmarks it set for itself.

"Last year showed we can be a player," Martin adds.

Sustaining the growth is essential. "We have the infrastructure," Martin says. "2004 was a learning year. 2005 has been a year of consolidation, but we are off to a good start. We have holes to fill, but they are easily attainable."

In order to obtain those goals, Martin says the company plans to increase its face-to-face meetings with general contractors, become active in local organizations and building congresses, and market more to architects and end-users.

Martin says he is confident Ilex can quickly grow into a $10 million company.

Preparing the new shop

Ilex went through nine different versions of its shop layout before settling on a design that, according to Forner, will more than likely change in the next five years, depending on what type of upgrades are made to machinery.

According to Alt, "The shop is set up where the project flows right through."

"We took a look at the blue print of the shop from the very beginning [to determine where each machine would go], because a lot of machinery was left [from LCM]," says David Hanold, plant manager.

The 75,000-square-foot shop is currently set up into six main areas: milling, bench (cabinet), sanding, finishing, reassembly and delivery.

When a work order is received, the material is pulled from the stock area, marked for the job and taken to milling. "Lumber can come off the stock area and go right into the straight line saw to be ripped to size," Alt says. "From there, it is sent to the joiner and then run through the moulder to be shaped or it can be sent to the overhead planer."

Current machinery in the shop includes: a Fay-Egan straight line table saw; Lazzari shapers; two Timesaver overhead sanders; two Brandt edgebanders, a Northwood Axxis N255 CNC router; a Scheer panel saw from Richard T. Byrnes; an Altendorf sliding saw and a Weinig Profimat moulder.

Hanold says the company is constantly self-evaluating and will eventually upgrade to more automated machinery to become more competitive.

Forner emphasizes that the key to success for Ilex's future is to move and shake with the market.

"We have that flexibility," he says. "We can do commercial woodworking, residential woodworking and construction. It is a neat mixture that was purposefully created by the owners."

                                                                                                                                                                                           

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