Article by Tom Trone
John Deere Forestry
About four years ago, Russell Stites came to the realization that higher production was no longer the key to s-uccess in the woods. “The more production you move, the quicker you fill your quota” way of doing business wasn’t how he wanted to operate. Stites saw an opportunity to expand his business model and diversify his offerings. He had a vision, shifted his mindset, began looking at new business models and never looked back.
Today, Stites, president and owner of Pro South Companies, Booneville, Miss., is working smarter, not harder, by focusing his business on the value he can add. In addition to his logging and trucking crews, he’s added a storage wood yard that lets the team continue to work year round, worked to get FSC certification to certify the tract they cut, and most recently, added a sawmill so they can bring in the majority of their own raw material to run and sell.
“Our production is actually lower now than it was in years past, but we sell more in a variety of ways,” he explains. “The product is worth more and gives my workforce the opportunity to put their unique skill set to use in new applications.”
A mistake many loggers make is not looking beyond the trees like Stites has successfully accomplished. Looking beyond the trees means thinking about all of the potential customers and the log taking other forms to squeeze more margins and more volume. This forward thinking approach of merchandising and expanding your business model through diversification is one way I believe loggers can enable their business to be sustainable over the long term.
I often say if I was younger, I would go into the forestry business because there are ample opportunities available. If you keep your eyes and ears open, the world is your market.
Not convinced? Let’s start simple: the log.
If I cut down a tree, I can sell it as a log. I can then take it one step further by identifying the species—cedar, pine, oak; you name it. At the base level, I have logs. However, each species has a different potential value depending on the end user.
These logs can then take other forms. I can convert them into chips to sell instead of just logs. Those chips can be sold to other markets and even other countries.
Perhaps there is scrap liquid that can be extracted and sold? Lectin can be added to metal to make it more pliable, and has a very high value.
If I continue to grow and add my own sawmill to the mix, I can cut my logs as timbers, crossties or lumber to sell.
The point I am trying to make is that there are a lot of different ways to use that simple log in a variety of market segments.
Do these opportunities require capital? Yes. Is there is risk involved? Of course. But, those who adapt and seek out these opportunities, like Stites, are the ones who are going to stay in business.
“As much as people complain about it, I enjoy the challenges and constant changes that go with the industry,” says Stites. “I like finding solutions and making them work.”
It starts with awareness that you are capable of taking control of your business. People are always going to need products made of wood, but there’s opportunity and growth in this industry beyond traditional logging operations. Look at the world and observe what is being demanded and the factors influencing that demand. Stay focused on your business, but adapt and change as the conditions require.
Trone is Director of John Deere’s North American forestry business, and is responsible for all sales and marketing activities as well as product development. Over his career, he has owned and operated several businesses. He is also a lecturer at the University of Illinois where he has taught the subjects of entrepreneurship, business strategy, organizational development and leadership.