46 | Sector Focus: Panel Products
◄ The company managed the timberlands to only harvest the volume equal to the growth each year. As the value of the timber increased from year to year, there were always vultures around, who would like to buy the company and liquidate it for cash. The reason this did not happen to Medco was that Baker Fentress had control of nearly 50% of Medco shares. In addition to Medco, Baker Fentress had many other timber holdings, which were sold off over the years partly because they did not have the control they had with Medco. These holdings became the core of some of the giants of the modern US forest products industry.
Management and decision making at Medco evolved over the years as it became a more locally managed autonomous company. In the early years it was directly managed by Baker Fentress and by the late 1970s was in the third generation of local management, as Bob Higgins took over as president from Russ Hogue, forming his management team, and looking for opportunities to leave his legacy on the company.
The open question at the time was in what way to invest into the future? Pulp, paper or perhaps in new technology opportunities, with long term potential?
Top: The MEDITE factory at Clonmel in Ireland
Above (from left): Liam O’ Reilly, personnel director MEDITE of Europe and Ray Fuentes, plant manager from the US,
presenting the first sheet of MDF off the line at Clonmel
Below: Many striking promotional
campaigns, including the MEDITE house, came from the creative marketing team
There was never any doubt that the Medford management knew that big decisions needed Baker Fentress’ approval and their job really was to make sure that Baker Fentress had the most complete information and recommendations to make those decisions. Into the late 1970s the Medco board of directors had three members who were sons of Calvin Fentress Sr as well as the son of Henry Chaney who was chairman. An observation over the years was that although Baker Fentress had many other investments, it seemed to have a special attachment to Medco and particularly to the timber, so it was not a big surprise when they were not completely adverse to an adventurous project in the Republic of Ireland.
IRELAND – AN OPPORTUNITY During the late 1970s the Irish government was addressing solutions to two problems. First was finding an outlet for the pulpwood being generated by its plantation forests and, second, finding uses for the by-products of its infant sawmill industry. The Irish Forestry Department along with the Industrial Development Authority (IDA) recognised that there would be a need for a new industry by the end of the decade. The IDA did a thorough study looking at many product areas, eventually reduced it down to five, including MDF and then carried out a determined marketing campaign mainly in North America to find a company that could establish a significant wood processing operation in Ireland. The IDA wanted a company with good financial strength, strong technical experience in its product area, an established market, a potential for added value in Ireland and a comfortable size operation for the available timber. Medco was a target in this search and received an extensive prospectus in late 1979 which was quickly labelled the ‘SHAMROCK CAPER’ by Ted Bauer, the Medco Medite MDF sales manager.
While this was going on, the original Medco Medite MDF mill (approved for construction in 1972) had started its pioneering 150,000m3
operation in Medford
Oregon in May 1975 and the business was growing well. Export markets were sought and gradually developed with Canadian sales being handled by Weldwood in Vancouver and other overseas markets being handled through Seaboard Lumber Sales and its network of international overseas offices. The first small shipments of MDF to the UK (to Phoenix Timber and Keizer Venesta) and to mainland Europe (Het Hout De Bruyn in NL) started in 1976, with the small quantities of Medite MDF taken by rail from Medford to Vancouver and then shipped utilising Seaboard’s 30,000 tonne bulk carriers to Tilbury and elsewhere on the continent. Over the next three years, and by 1979, this export trade in MDF from the US to the UK and Europe had built to around 12,000m3
with a
variety of importers. In 1978 Ted Bauer came to the UK to deliver an inspiring conference paper at the FIDOR conference in Eastbourne – whetting the appetite of the delegates of the potential for MDF in the UK and Europe, based on the American experience so far.
At the time, Medco was made up of three business segments—the traditional lumber, plywood and veneer operations, kitchen cabinets and MDF. There was little potential for growth in lumber and plywood because of a shrinking timber supply and the cabinet division was already approaching national distribution of its products, so that left MDF as the most likely growth possibility.
TTJ | November/December 2023 |
www.ttjonline.com
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