Summary
¦ James Donaldson & Sons celebrates its 150th anniversary this year.
¦ The occasion was marked by a visit from the Duke of York.
¦ The group includes DTE, Parker Kislingbury, MGM Timber and JDT Chorley.
¦ Turnover will exceed £100m in 2010/11.

July 14 saw the meeting of two dynasties, the Windsors and the Donaldsons, at a sawmill in Leven, Scotland.

The occasion was the sesquicentennial anniversary of James Donaldson & Sons, which was marked by a visit from Prince Andrew, the Duke of York.

One hundred and fifty years earlier, the eponymous James Donaldson set up shop at Tayport, 20 miles or so away from the current Leven site. Tayport’s east coast location and harbour made it the ideal site for importing timber from the Baltics. Two decades later the Leven site, close to the Methil port facility, was opened and, in 1919, the company was incorporated and became a limited liability company.

Control has passed from father to son throughout the 150 years, with the fifth generation Neil Donaldson currently at the helm as chairman and chief executive. While for the first 125 years the company remained a conventional timber importing business, the last 25 years have seen the creation and acquisition of the business enterprises that make up the Donaldson Group today.

Roof trusses

In 1985, for example, the company could see the potential for a “really professional” roof truss manufacturing business. “I thought if we’re going to do trusses, let’s do it properly and form a new company,” said Neil Donaldson.

Donaldson Timber Engineering (DTE) guaranteed delivery in seven days and achieved this by gearing up with the latest equipment and working extra shifts. “Our target was to get to 25% market share in the first two years,” said Mr Donaldson. “We did that, we achieved our seven-day delivery guarantee and, in the second year, we made money.”

The success of that first branch in Buckhaven gave the company the confidence to expand into England and DTE now comprises seven branches across the UK, stretching as far south as Ashford and Andover. It is the UK’s largest independent roof truss manufacturer, with a market share of 35% in Scotland and 18% in England.

“James Donaldson Timber (JDT), the importing, sawmilling and distribution side, is a major part of our business,” said Mr Donaldson. “It’s our heritage and as long as I breathe the sawmill will continue to operate, but every opportunity that comes along is one that we must embrace and timber engineering was a chance to use more wood and also to develop an industry where we believed there was big market share to be achieved.”

Merchant business

Maximising the market for timber from its JDT core sawmilling business was also at the heart of the decision to buy 50% of Scottish timber merchant MGM Timber (Scotland) Ltd in 2002 and the remaining 50% in 2005.

Donaldsons wanted to be able to ensure that it could market its timber, but was aware that contracts with merchants could be lost as well as won. “So we thought we’d buy our own company and make our own destiny,” said Mr Donaldson.

The well-established MGM name was retained and, under the managing directorship of Scott Cairns, the business has doubled in size over the last five years. In terms of financial performance it has become Scotland’s largest independent merchant group.

The chain, which sells to trade and public, has 12 branches across Scotland and has masses of potential. “It’s a great company with a great management team and we plan to further develop the brand in Scotland and, where (and when) appropriate, south of the border. There’s the rest of the UK to play for.”

More diversification came in 2006 when Donaldsons became the sole owner of hardwood specialist and bespoke moulding manufacturer Parker Kislingbury (PK).

At one point this was one investment that didn’t look like working out. In fact looming recession and the prospect of owning a business outside Donaldson’s softwood importing and distributing comfort zone almost led to the decision to fold PK. But, instead, a thorough review of the business was undertaken. It cut stock to a core range and deliberately reduced turnover, shedding customers in far-flung corners of the UK and concentrating on the Oxfordshire/Buckinghamshire geographical area.

“It worked and we haven’t looked back,” said Mr Donaldson. “We’ve got a good management team who are on a high and the long-term strategy for PK is to grow it within the Donaldson Group,” he said, adding that manager Rob Wilbore and his colleague Paul Wren have been gifted a percentage ownership of PK in recognition of how they’ve turned business around.

Further opportunity

A further opportunity arose in November 2008 – “the absolute eye of the storm” – with the collapse of Palgrave Brown. Palgrave Brown’s Chorley site had several points in its favour as far as Donaldsons was concerned. “It would give us a presence in the north-west of England, the seven-acre site was freehold and, most importantly, it manufactured MDF mouldings [under the Silktrim brand] which we’d wanted to get into for some time.”

Donaldsons bought the Chorley site’s assets from the receiver and reverted to the facility’s original name, Alfred Hulme, rebranding it as JDT Chorley earlier this year. JDT managing director Iain Torrance took on the additional role of MD at the plant, and spends two days a week there.

“We made money in year one, which was fantastic,” said Mr Donaldson. “We’re majoring on I-beams and growing the redwood PAR business and we’re developing the MDF mouldings as much as we can.”

There are now synergies between the Donaldson Group companies that demonstrate “a logic to everything we’ve done”.

For example, MGM Timber and Parker Kislingbury can now buy MDF from within the group, which is new business for JDT Chorley. And, in MGM, PK also has a new customer for its hardwood. “Each business is run as its own autonomous unit and they make their own buying and selling decisions. They just know they should support each other.”

Online service

This spirit of co-operation bodes well for the future of the Group, as does its flair for innovation, an example of which is Parker Kislingbury’s online bespoke machining service – www.timbercut4u – which Neil Donaldson sees having cross-company applications. “If a customer wants a length of wood specially machined, timbercut4u will do it, shrink wrap it and deliver it by courier. No order is too small.

“It needs development, but it’s a fantastic new age practice with great potential.”

The Group as a whole also has potential. Timber volumes (around 15% of which is home-grown) “are at least 50% higher than the Group’s nearest competitor in Scotland” and turnover is set to exceed £100m in the 2010/11 financial year.

These are, added Mr Donaldson, good times for a well-run timber business, but being “a good Scottish Presbyterian”, his optimism is tempered by the prospect of the impact of public sector cuts. “The antennae are up, but let’s do well while we can.”

While Scottish Presbyterianism will keep the brakes on and prevent overstretching, there is no doubt that the entrepreneurial spirit continues and the Donaldson eye for the main chance remains undimmed.

Expansion in England

There is, said Mr Donaldson, potential to expand the company’s interests in England, possibly by acquiring a small sawmilling business in the south. And, he added, while importing is in the company’s make-up, “we need to be very mindful of what is going on in the home-grown sector and I would never rule out any opportunity that might present itself to invest in that sector”.

Present and future success depends on the calibre of the Donaldson Group employees, he added. “My dad [George Donaldson, now honorary president] would tell you it’s all about the people,” he said. “He would argue it’s to do with innovative thinking and keeping up with the times, but mostly it’s to do with the culture of the business and the people within it. Why else would a small company like ours survive?

Respect for employees

“We believe that customer service is hugely important and respect for and loyalty to employees is equally important,” said Mr Donaldson, adding that key and senior employees had the opportunity to buy shares, with 15% of the company being owned in this way. “It’s an opportunity for them to build up a portfolio of value and feel part of this culture.”

His mantra, he said, is “always do for others as you would have done to you. These are some of the values that have taken the business to where we’re at”.

And, of course, the Donaldson dynasty continues with the sixth generation already on active service at the family firm – Michael has been with the company for five years and is now general manager at DTE’s Buckhaven site, while chartered accountant Andrew has just joined from KPMG.

“With the next generation coming along and the extremely capable team that I have, the future is looking pretty good.” said Mr Donaldson.