When TTJ profiled a newly-established company back in 1993 its young co-founders told the journalist they had a plan B: if the business didn’t take off they could open a hot dog stand in the industrial estate where they were based.
Twenty years on and fast food’s loss is the timber industry’s gain because Premier Forest Products has certainly taken off, growing from a £1.8m turnover company in its first year to approaching £80m today. Out of the 240,000 companies in Wales, it’s just been ranked by Wales Business Insider magazine at number 90 (based on 2011-2012 turnover), up from 125 the previous year.
Not bad going for the three directors, Nigel Williams, Terry Edgell and Dilwyn Howells who, in 1993, were "just three ambitious 26- year-olds" keen to make their mark and control their own destinies.
The three cut their teeth with Meyer and met when they were all based for a time at the company’s Newport site. In 1993 they decided to have a stab at running their own importing and distribution business and duly set up shop in Abercarn, Gwent.
It was a pretty steep learning curve, according to Mr Williams. For a start, they weren’t too keen on driving the forklift. "When it arrived we all just looked at it," he said. Necessity forced their hand, however, and they all "mucked in" on the yard duties.
In terms of the business management, Mr Howells took charge of finance, Mr Edgell was responsible for purchasing, with panel products his particular forté, and Mr Williams handled sales.
The new kid on the block wasn’t exactly warmly welcomed by some of its competitors. "There was huge commercial pressure [from the established competition] on the supply chain not to support us," said Mr Edgell. "But we picked [supply chain] partners that our main competitors didn’t have influence over. "We also had the advantage of setting Premier up at the tail end of a recession," he added. "Customers were quite keen to save money and had time to engage with us. There was also a core of suppliers that needed to sell and they were prepared to back us."
The banks and credit insurers were also prepared to back the fledgling company. The deal Mr Howells struck with Griffin Factors, part of Midland Bank, now HSBC, was fundamental to Premier’s growth in the early days and the company has the same strong relationship with the bank today.
Factoring, whereby invoices are sold to a third party (the factor) at a discount in order to improve cash flow, was an innovative move for a business set-up in those days and it allowed it to grow very quickly.
Similarly, the effort Mr Howells put in to establish a strong bond with the leading credit insurer of the day, Trade Indemnity, also paid dividends, winning Premier a credit rating at a very early stage.
Outgrowing the premises
Business rapidly picked up. So much so that within a couple of months Premier had outgrown the 4,000ft² warehouse the directors had once thought was so huge. The lease was renegotiated and within 18 months the company had relocated to Caldicott.
"Our aspirations for the first year were to turnover £1m and we thought we would have really established ourselves by then," said Mr Edgell. "In our first year we did £1.8m. Our five-year goal was to turnover £5m and we’d achieved that within our first three years."
By 1999, and with turnover well into double figures, the company took out a long-term lease with ABP Newport at Alexandra Dock, retaining the Caldicott site for the first 12 months before relocating fully to the quayside facility that is its headquarters today. In a neat 360°, Premier’s founders are back on a former Meyer site.
The quayside location has obvious advantages. Products can be imported from anywhere in the world and, with the M4 just a few miles away, transported anywhere in the country. Premier also has its own railhead on the site. In 2005 the company opened a 40,000ft² sales and distribution facility in Birmingham but quickly made the decision to limit its function to sales only, leasing the rest of the building to third parties. "We aren’t merchants, we only import and distribute and we have quay facilities all around the country and a great operation at Newport," said Mr Williams.
Panels predominate
Throughput is around 250,000m3 per year and while Premier maintains a healthy presence in the softwood sector, its main area of operation is in panel products, which account for 85% of the company’s business. Product is sourced worldwide, from Scandinavia and Europe to South America and China, and supply chain partners include Finsa, Kronospan, KronoFrance, SmartPly, UPM, Panda Panels, Pfleiderer, Unilin, Vanerply and Norbord.
The product range is correspondingly enormous – everything from commodity OSB, plywood and chipboard to specialist valueadded sheet materials, door blanks and worktops.
"We pride ourselves on an exhaustive list of sheet materials," said Mr Edgell. "There are very few that we don’t stock or can’t lay our hands on very quickly."
Plywood – and particularly Chinese plywood – makes up a large chunk of business and Premier has worked tirelessly to ensure it stays the right side of legal and moral boundaries.
For example, during his tenure as the Timber Trade Federation’s National Panel Products Division chairman Mr Williams worked alongside BM TRADA Certification on the Q-Mark scheme, which was designed to address quality and performance issues.
And Premier engaged with plywood manufacturer Jiangsu Sainty Bancom and with The Forest Trust (with Timber Trade Action Plan funding) to gain Verified Legal Compliance (VLC) status on an 80,000ha poplar forest in the north of China. "The central area of the forest had FSC certification but that’s not good enough on its own for EU Timber Regulation compliance," said Mr Williams.
Premier and TFT’s work in bringing the first 100% legally verified Chinese plywood into the UK was marked by a TTJ Achievement in Sustainability Award in 2010 (Premier won the TTJ Panels Trader of the Year Award in 1998).
"The point to make about Chinese plywood is that if you work with the right partners and have the right manufacturing processes and supply chain, the product can be better than anything produced anywhere else in the world," said Mr Williams. "The key thing is that we go to the factories and do our own checks. I’ve been to China three times this year already."
It’s hard to imagine how there’s time to travel to the other side of the globe as it’s not exactly been quiet on the home front either.
Organic to acquisitive growth
Despite being comfortable with organic growth, in 2007 the directors wrote a five-year business plan that factored in acquisitions. The recession put the mockers on that for a while, but in October 2011 Premier made its first purchase – the stock and other assets of FG Hawkes (Western) Ltd, trading as RKL Plywood.
The purchase was completed in just 10 days, an indication of how quickly the directors are able to turn decisions into actions, and the experience has been "all encompassing".
"Some of it we were pleasantly surprised about and some of it we were tearing our hair out about," said Mr Williams. "It took about 15 months for us to get full completion on everything we’d bought. Working the stock through without upsetting the balance of the market was a challenge."
It was the start of a sea change for Premier Forest Products.
"Purchasing the assets of what was our main competitor at the time changed the dynamics of the business," said Mr Edgell. "It changed our aspirations and our vision of where we felt we could take Premier."
The boost in profits also set them on the road to their next acquisition – Brooks Group, in Ireland, in May 2012.
The 220-year-old timber company, Ireland’s oldest, was in administration, but after the administrator sold off its heating and plumbing side, Premier saw good prospects for it.
The purchase included two branches in Dublin (west and south), one in Cork, one in Galway, one in Sligo and one in Tullamore. "They are all well-invested mega-sites with big infrastructures and the business is thriving and reinvigorated," said Mr Edgell.
Not ones to let the grass grow, Premier bought the assets of Ornamental Ironworks on May 1 this year. In spite of its name, Ornamental Ironworks, which had bases in Lydney, Gloucester and Newport, was a sheet material processing operation.
Now it’s a division of Premier Forest Products and rebranded Premier Processing and Fabrications, and the assets have been transferred to the Alexandra Dock site and more machinery will be installed over the next few months.
Rather than outsource its value-adding processes, such as edgebanding, coating, cutting and component production, Premier is now able to do this in-house.
"We can now offer low-cost, quick processing as, effectively, we can go from ship to fabrication to customer," said Mr Edgell.
An additional benefit of in-house further processing is that, with the Construction Products Regulation coming into force on July 1, Premier will be able to test and certify its own products, rather than rely on a third party.
New dynamics
And as recently as June 3, Premier Forest Products made its fourth acquisition in two years – the Dublin Plywood and Veneers company. "It’s a strategic move for us," said Mr Edgell. "They specialise in sheet materials, giving us coverage in north Dublin and it will broaden Brooks’ product range."
The new dynamics of the business have also resulted in the recruitment of a layer of middle management at Premier Forest Products, allowing the three directors to turn their full attention to further strategic growth.
For example, Mr Edgell now goes by the title "acquisitions and integration director". "Instead of buying supply I’ll be buying companies and growing us into a vertically integrated organisation," he said.
It’s a far cry from those early days of getting to grips with their first forklift.
"We’ve been a good team," said Mr Edgell. "We are three completely different characters and we have the right blend of skill sets and personalities to make it work.
"I don’t think either one of us setting up Premier Forest Products on our own today would make it the success it’s been. It’s been a total team game."
