Paul Hogan’s plan was to cut prices and beef up inventory to keep his millwork operation busy during the recession.
Contemporary Cabinetry East makes cabinets, architectural millwork and countertops for general contractors, developers and retailers. The Cincinnati company engineers, fabricates, delivers and installs its own work.
Company president Hogan believed in August 2008 that cutting prices would keep CCE busy and well-positioned for the turnaround, which he believed would start in January 2010. The strategy worked – until January 2010.
“We were more progressive with our pricing,” he says. “The other guys were more stubborn. I was hoping there would be more of a bounceback, but that hasn’t happened, and we had to layoff five people for the first time ever.
“A lot of guys think inventory and machinery are expensive dirty words,” he observes. “We buy inventory in bulk. The cost of not having what we need every day would be much higher.
“Having $50,000 worth of material on our floor makes us healthier than having cash deposits. And we can get better pricing buying in bulk and can get cash discounts. We’re not afraid to stock items.”
Contemporary Cabinetry East’s customers are book stores, call centers, retail stores and airport foor service, and include Kroger, Prasco, Cincinnati Children’s Hospital Medical Center, Urban Active Fitness Center, Liberty Mutual Insurance, Schlotzsky’s, GE Aviation, Beacon Orthopedics and Davita Dialysis. Retail has taken a hit, but health care business has grown.
“Our business in health care, hospitals, doctor’s offices, pharmaceuticals and health insurance companies has expanded from a quarter to a half over the past 20 years,” Hogan says.
Proposed changes in healthcare reform and financing slowed healthcare construction, but Hogan believes the uncertainty has passed. A hospital’s oldest areas may be 10 years old and out of date, so these areas will need to be rebuilt.
Connections with general contractors have led to work around the country. Andy Biggs, vice president, had contacts in the restaurant business that led to more out-of-town work.
“We’re happy particularly in this market to try to supplement the slack in our capacity by doing work out of town,” Hogan says. “That work is more attractive now than it was a few years ago when we had all the business we needed within 50 miles of the shop.”
New building expansion
Biggs says that the company invested more than $2 million on a new building and new equipment. CCE built a large addition and loading docks in 2008, and remodeled the engineering department into an attractive room that overlooks the shop
“We’re using more technology, and a larger slice of the payroll pie is going into engineering and management,” he says. “We’re trying to do a better job on the front end so we have more productive manufacturing hours in the shop.”
CCE has 45 employees, with 37 in the shop, including a second shift with seven employees. Overall, business is divided evenly between casework and custom millwork. Most jobs are in Planit Cabinet Vision Solid or AutoCAD, and about 20 percent of special jobs are still hand drawn.
Biggs says the next step is screen to machine, which will happen later this year. “Cabinet Vision Solid will create all of the parts with the machine code,” Biggs says. “It will tell the machine exactly what to do as far as drilling and routing, replacing our post processor, currently AlphaCam. It also gives engineers the ability to draw a part in Cabinet Vision like a countertop and provide machine code to go to the flatbed.”
Processing custom parts
The primary machine in the shop is a Morbidelli Universal 3616 pod and rail machining center, which is versatile enough to process all cabinet parts and small custom parts. Most programs used here come out of Solid.
The shop also has two Olimpic S2000 edgebanders, Gabbiani Galaxy 125 panel saw, and two Striebig Optisaw 2 vertical panel saws, one used for countertop cutting. The laminating department does countertops and all finished ends in an open area in the middle of the shop.
A Hurst pull drilling machine was bought at IWF and proved to be very useful for drilling holes for handles. A Powermatic table saw and sander are also used. CCE uses a combination of screw and dowel joinery.
Separately, a Morbidelli 3615 Universal flatbed router handles full sheets. “This was a really good addition that made us money,” Biggs says. “We’re doing large-format pieces on this, solid surface, and we can do v-grooving.”
Also here is a small SCM contour edgebander, SCMI Olimpic M80, a second Striebig saw for cutting solid surface and veneer, SCMI Sandya 3 single-head sander, Optisaw 2, toe kick notcher and line boring machine. CCE doesn’t run mouldings and buys what they need from a local supplier.
In the finishing room, a Global Finishing open booth was added, along with a large air makeup unit. An AES line finisher can brush and scuff. Biggs added a pressure regulator and Graco pumps to improve control and versatility to the machine.
FasTrax Rite-Hite doors to the finishing room automatically close after opening. A Big Ass Fan Co. large fan hovers over the new addition, helping keep the heating bill down in winter and cooling in the summer, replacing many smaller fans.
What’s the outlook for 2010? Hogan says he does not see any improvement in the near term. “We started cutting our prices in August 2008 and have continued to cut since then. This allowed us to stay very busy until mid-Jan 2010. Sales are down slightly, profits are down but we have continued to turn a profit.”
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