Norfolk, VA, August 2, 2006--Inside a cluster of warehouses at Lambert's Point Docks are 17,000 crates of imported hardwood from around the world awaiting shipment to U.S. manufacturers, distributors and retailers, according to the Virginian-Pilot.
Stacked amid the crates are panels of a lumber substitute, a product from China that is being sold to U.S. builders. Although more expensive than wood, the polyvinyl chloride panels and moldings are resistant to termites and rot.
Lining up factories to make a durable replacement for wood exteriors has been one way that The Penrod Co., a Virginia Beach-based company with a 118-year history, has kept up with a changing global marketplace. During the early 1980s, its management determined that Penrod had to diversify to survive, recalled Edward A. "Buzz" Heidt Jr., chairman and chief executive officer of the distributor of hardwood lumber, flooring and hardware.
That's why the Beach company also spent $15 million building a hardwood-flooring plant near Montreal. The Canadian factory, which began operating in February, produces flooring for residential and commercial use in the United States, Canada and Europe. The factory has the capacity to turn out more than 100,000 square feet of flooring a week.
Penrod's diversification strategy has worked, but it hasn't been trouble-free. A sharp rise in the value of the Canadian dollar against the U.S. dollar this year could hamper its exports of Canadian-made flooring to this country.
Heidt figures the Canadian dollar will continue to gain value over the U.S. dollar. However, that hasn't dampened his confidence in Penrod's four factories north of the border. Canada, he said, "is a great place to have plants because of the favorable work environment," advantageous tax laws and government support for the country's forest-products industry.
Penrod also is working on a new type of flooring made from hardwood and recycled plastic. Once the development is complete, the wood-and-plastic flooring will be produced at one of the company's Canadian plants, Heidt said.
Like other U.S. companies buying and selling hardwood, Penrod has benefited from the robust demand for wood furniture and wood for building interiors, including the greater use of hardwood flooring in homes. The volume of hardwood flooring brought into this country last year-- valued at more than $415 million--was more than twice the amount imported three years earlier.
Yet because of the business risks they encounter in international markets, hardwood distributors like Penrod have had to become more flexible in the way they operate, said Brent J. McClendon, executive vice president of the International Wood Products Association, a trade group in Alexandria.
"You can't be risk-averse and be an importer," he said.
Penrod, once known as Penrod, Jurden & Clark, has roots stretching back to the late 19th century, when its Indiana factories turned walnut into lumber and veneer for furniture. In 1932, the company opened a plant in Norfolk, where it made gun stocks, airplane propellers, veneer for radio cabinets and furniture, wood panels for Army troop gliders during World War II, and hardwood trim for the interiors of Cadillacs and Buicks.
Penrod eventually consolidated its manufacturing in Norfolk, which became its headquarters in 1949. By the early 1980s, however, the Norfolk plant was losing its customers for hardwood veneer. The furniture industry had begun moving overseas in search of lower costs. Rather than continuing to produce veneer for furnituremakers, the management decided in the early '80s to close the plant and concentrate on distributing hardwood, said Heidt, who once bought logs in Nicaragua for the Norfolk plant and later worked in its sawmill.
