Woodcraft Industries Inc.

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Woodcraft Industries Inc.

525 Lincoln Ave. SE
St. Cloud, Minnesota, 56304
Telephone: (320) 252-1503
Fax: (320) 252-1504
Web site: http://www.woodcraftind.com

Private Company
Incorporated: 1945 as Woodcraft Company
Employees: 1,300
Sales: $104.6 million (2002)
NAIC: 423310 Lumber, Plywood, Millwork and Wood Panel Merchant Wholesalers

Woodcraft Industries Inc., founded in 1945, is one of the country's premier manufacturers of hardwood volume and laminated componentry. The company designs and produces kitchen and bath cabinetry, drawers, and architectural millwork trim and molding among other wood components for residential, office, and institutional furniture. Producing products through three divisional entitiesWoodcraft, PrimeWood, Inc., and Brentwood Corporationthe company maintains six production facilities in four states with over 600,000 square feet of manufacturing space and approximately 1,300 employees nationwide.

Old World Craftsmanship in the Heart of Minnesota

A wave of immigration from Germany in the late 19th and early 20th century brought many talented old world craftsmen to newly established towns on the central Minnesota frontier. As families continued to bring over relatives to established farms and businesses, the population grew and with growth came the need for more businesses, churches, schools, and homes.

Two German cabinet makers, Paul Dlugosch and Theodore Ritsche, opened a retail shop named the Woodcraft Company in St. Cloud, Minnesota, in 1945. They began with five employees and set their sights on producing cabinets and fixtures for the expanding St. Cloud neighborhood establishments.

The company began building furnishings for bars, restaurants, and retail stores. In 1947, a St. Cloud appliance manufacturer, Franklin Manufacturing, turned to the Woodcraft Company to produce its wooden shipping containers. Shipping containers remained a part of Woodcraft's product line until the 1970s.

In 1955, Woodcraft started its Builders Products business. Home cabinetry followed and the business began the slow and steady growth that marked its early years. In 1957, the company expanded its production facility, adding a finishing room and a second level shop. Two years later, fire destroyed the original plant and the company rebuilt at a secondary location. The same year Woodcraft rebuilt the shop in its original building, and increased its cabinet operation. The company employed 100 people, making it one of the largest employers in the area.

Looking for future markets, Woodcraft in 1962 began manufacturing a commercial line of cabinetry to be used in schools. The company manufactured items for use in churches as well, creating a line of church pews and church furniture in the 1960s.

Minnesota was the land of 10,000 lakes and with lakes in abundance the manufacture and use of recreational watercraft was a natural part of the regional economy. In the mid-1960s Woodcraft joined in the local boat-building trade and began creating wooden boat parts. However, the timeliness of wooden boat production was questionable. For centuries wood and steel were the only materials used for boats but with plastics and newly engineered materials being manufactured, wood lost its place in the maritime industry. Wooden boats and wooden parts were soon replaced by fiberglass and other synthetic components and Woodcraft's boat part manufacturing was short-lived.

The company also discontinued its cabinet and fixture business in 1964, and concentrated on expanding its Builders Products line. The same year, Woodcraft created a wood products line known as hardwood dimensions.

1960s and Beyond, Developing a Niche

In 1968, cofounder Theodore Ritsche's son, Tom Ritsche, bought the company and began a strategic planning process which led to a restructuring within the company. Ritsche divided the company into formal divisions, forming Builders Products and Industrial Manufacturing.

The 1970s were a time of consolidation and acquisition for the company. In 1975, Woodcraft discontinued its crating business and phased out its retail operation. The company expanded its hardwood dimensions line and its Builders Products division. At this time there were approximately 90 people working for the company.

Toward the end of the decade, Woodcraft looked for ways to expand its business through acquisition. In 1978, it purchased Weikert Brothers Millwork in Foreston, Minnesota, and in 1979 it bought D & M supply in Fargo, North Dakota.

Woodcraft continued to operate both the Fargo plant and its millwork plant in Foreston until the 1980s. In 1982, the company consolidated its operations and moved the Fargo works to St. Cloud. A 1983 merger between the Foreston Dimension Company and the Woodcraft Company resulted in the name change to Woodcraft Industries Inc.

The focus of the company had also taken a shift. Previously, Woodcraft's Builders Products division had made up a large percentage of the company's interests. In 1983, the decision was made to sell off its Builders Products division to Trimpac, Incorporated and to focus on the company's machined hardwood components.

The mid-1980s brought the company measured success in its cabinet component and product package work. Woodcraft spent its resources developing its Foreston, Minnesota operation and invested in the town of Foreston as well. The company built the city of Foreston a water tower in 1985 and officially donated it to the city the following year. In 1986, Woodcraft built an addition to its Foreston facility and streamlined production by consolidating its rough mill and machine room at the plant.

In 1989, Woodcraft Industries began expanding its markets, diversifying product lines to strongly include the furniture industry. The company also looked overseas to markets in Europe and began exporting goods to established European manufacturers.

New product development resulted in Woodcraft starting production of door assemblies. The company added on to its St. Cloud rough mill and employed approximately 340 people at its two Minnesota sites.

The 1990s brought a renewed focus on cabinet doors and in 1992 Woodcraft built a plant devoted to its cabinet works and expanded its workforce to 500 employees. The Foreston, Minnesota operation gained 50,000 board feet of drying space in 1993, increasing its production capabilities significantly. In 1994, the cabinet production plant had proved successful and a 14,000-square-foot expansion was added to the facility.

The company celebrated its 50th anniversary in 1995 and had grown substantially over the years from its meager beginning as a retail woodworking shop with five employees. The company now had over 700 workers at its two established plants and the company had just launched a third facility in Bowling Green, Kentucky. Woodcraft had been looking for a source for more timber and found it in the lush hill area of Kentucky. The Bowling Green facility was set up to process lumber that could then be shipped to Minnesota for finishing.

1990s and 2000s: Capital Investment

With a fair amount of growth already and good indicators for the future, Woodcraft was bought out by a group of Minneapolis, Minnesota-based leveraged buyout specialists, Goldner, Hawn, Johnson & Morrison Inc. Goldner, Hawn controlled seven large companies mostly within the state of Minnesota. Mike Goldner explained in a March 1996 article in the Minneapolis Star Tribune the company philosophy on takeovers: "Mind you we're not talking the kind of hostile takeovers that stained the reputation of the LBO business during the 1980s. We're not in the business of taking over a company and busting it up for a quicky profit, instead the aim is to find mid-sized companies with solid market positions, experienced management and strong growth potential, then to provide the resources over a five- to seven-year period to help achieve that growth."

In 1998, with investment capital behind it, Woodcraft Industries set its sights on PrimeWood, Incorporated. PrimeWood was founded by Ed Shorma in Wahpeton, North Dakota, in 1981. The company manufactured veneer raised panels for cabinetry and was named the fastest-growing company in its industry in 1990. With over 600 employees in 1993 and over 200,000 square feet of production space, PrimeWood had established itself as an industry leader, especially regarding its work in melamine laminating.

PrimeWood also controlled a wholly owned subsidiary by the name of Prime Wood Transportation Services, Inc. Woodcraft eventually sold off the transportation company in 1999 to Three Rivers Transport for an undisclosed amount.

PrimeWood was an industry leader in product development, and made use of an innovative technology first developed for the aerospace and automotive industry in the production of its Rigid Thermo Foil (RTF) product line. RTF used a PVC film that could be colored or pressed in unlimited designs. With extremely good durability and the possibility of countless applications, RTF production in the cabinet industry allowed the company to greatly expand its product offerings.

With the acquisition of PrimeWood, Woodcraft Industries employees now numbered 1,550. The development of its company continued throughout the late 1990s and into the next decade with a marked expansion of its facilities and the purchase of another company.

Company Perspectives:

The passing of time in the wood industry brings with it not only an increased wisdom and passion of our trade, but a further appreciation of our world's greatest natural resourcetrees. Producing the broadest line of fine hardwoods and laminated componentry in the industry, Woodcraft Industries is committed to providing excellence in manufacturing and conservation of resources while supplying our customers with on-time, superior products and service.

The company added machining capabilities to its Kentucky plant in 2002. Woodcraft also added a spray/dehumidification tunnel at its PrimeWood facility in Wahpeton. By far the biggest move in the calendar year was the purchase of Brentwood Corporation of Molalla, Oregon, in July.

Brentwood helped Woodcraft gain a foothold in the West. The company, organized in 1978 by Bud Gabriel, was initially named Homestead Cabinet and Furniture, Inc. It produced custom hardwood and rigid thermo-foil doors. Gabriel had moved his business to Molalla, Oregon, in 1994 and renamed the enterprise Brentwood Corporation.

Keeping true to its investment philosophy of buying, developing, and selling off its holdings in five to seven years, Goldner, Hawn sold off Woodcraft in 2003. In May 2003, Behrman Capital, a private investment firm headquartered in New York City and San Francisco, acquired Woodcraft and its wholly owned subsidiaries. According to an article in Wood & Wood Products, a trade industry publication, John Fitzpatrick, president and CEO of Woodcraft, commented on the acquisition: "Behrman Capital has an established record of working with companies to support their growth and expansion. With Behrman's support, we will continue to expand our product development programs with the objective of further increasing our market share and pursuing opportunities for additional growth."

With its strong production capabilities and developed market base and with the backing of Behrman Capital, Woodcraft Industries appeared well prepared for expansion in the coming years. Homebuilding and renovation were at record highs. The company was poised to capitalize on consumer trends by utilizing new technology developed for the cabinet and hardwood component industry.

Key Dates:

Woodcraft Company begins as a custom cabinet shop with five employees.
Woodcraft doubles its facilities and begins manufacturing shipping crates.
With over 100 employees, Woodcraft is now producing commercial cabinets for schools, and also making church pews, furniture, and boat parts.
Woodcraft redirects business by expanding its Builders Products division and discontinuing its cabinet and fixtures work.
Tom Ritsche buys Woodcraft.
Woodcraft sells its Builders Products division to Trimpac and focuses on its machined hardwood components.
Woodcraft is bought out by Goldner, Hawn, Johnson & Morrison.
Woodcraft acquires North Dakota-based Prime-Wood.
Woodcraft acquires Brentwood Corporation.
Behrman Capital purchases Woodcraft.

Principal Divisions

Brentwood Corporation; PrimeWood, Inc.

Principal Competitors

Colonial Craft, Inc.; Cutting Edge Components; Great Lakes Wood Products; Pacific Vermillion; Northland Forest Products, Inc.; St. Croix Valley Hardwoods, Inc.; Superior Dimension & Doors, LLC.

Further Reading

"Behrman Capital Acquires Woodcraft Industries, Inc., in $145 Million Transaction," Business Wire, April 9, 2003.

Derning, Sean, "Woodcraft Optimizes Rough Mill Productivity," Wood & Wood Products, October 1993, p. 87.

MacFadyen, Ken, "Behrman Tackles Two Deals in One Week," Buyouts, April 28, 2003.

Pease, David A., "Plant Tour Participants See Secondary Facilities," Wood Technology, January-February 1996, p. 21.

, "Rough Mill Situated in Hardwood Country," Wood Technology, May 1996, p. 20.

"Woodcraft Industries Buys Brentwood," Wood and Wood Products, October 2002, p. 16.

Youngblood, Dick, "Goldner Hawn Helps Mid-Sized Firms Grow," Star Tribune, March 25, 1996, p. 2D.

Susan B. Culligan

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Woodcraft Industries Inc.

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