Neiman Enterprises

With tight environmental restrictions, growth can be a difficult prospect in the timber industry. As Neiman Enterprises approaches 500 employees, the Rocky Mountain company is thinking cautiously about whether it should pass that threshold and open itself up to enhanced forestry industry regulations.

The drought in qualified workers entering the timber industry has further complicated that decision to grow. The company’s workforce is aging and retiring faster than it can train new employees, says Marcus Neiman, plant manager for Neiman Enterprises’ Spearfish Forest Products facility. This makes it difficult to develop the next generation of talent. “We got to this level because we had the key personnel with the inherent knowledge and gut instinct to make the right decisions,” Neiman says.

The timber industry has been automating out of necessity, Neiman explains, but smaller businesses like Neiman Enterprises are beginning to reach the limits of what can be handled by machines while still delivering the niche products its customers want. The industry needs young, qualified workers, who have become increasingly difficult to find as society and the education system focus more on computers, causing students to lose the ability to create with their hands. “Our education system struggles at promoting skilled labor,” Neiman argues.

To Neiman, the solution is clear: change the education system. But to accomplish that, Neiman says competing businesses must collaborate to create a sustainable structure that feeds skilled workers into the economy. “It has to be a collective effort from the industry,” Neiman explains. “One company cannot fix the system on its own. I think we’ve seen the education system isn’t going to do it.”

A possible blueprint for that change is the internship program at Vollmer, a German manufacturer of grinding and erosion machines for rotary tools and saw blades used in the wood and metal working market. Neiman visited Vollmer earlier this year during a woodworking convention and was impressed by how the company of 500 employees dedicated space and time to teach its trade to 60 interns. “The immediate value to the company isn’t going to be the work those students are doing,” Neiman says. “It’s the sustainable education in the community.”

Holding On To Heritage

As a fourth-generation member of his family’s business, Neiman understands the importance of passing on industry knowledge to the next wave of workers. The Neiman family came from an agricultural background, growing corn in Colorado during the Great Depression before his great-grandfather A.C. Neiman moved to South Dakota’s Black Hills and opened his first mill in 1936. 

“Through attrition and hard work we’ve managed to build the company we have today,” Neiman says. 

Neiman Enterprises has four mills, two in South Dakota, one in Wyoming, and one in Colorado. Spearfish Forest Products is the largest facility and is capable of producing 100 million board feet (MMBF) of timber each year. It was designed to be a live saw dimension mill but has since converted into a board mill. Rushmore Forest Products is a small log mill that produces 60 MMBF of ponderosa pine boards and pattern annually. Like Rushmore, Devils Tower Forest Products produces 60 MMBF annually but focuses on high-quality shop grade lumber which is used in doors and windows. Montrose Forest Products is located in Colorado, and each year outputs 60 MMBF of premium studs from beetle-killed forests. Having different operations at each mill gives Neiman Enterprises the flexibility to shift its log sort based on timber sale trends, Neiman adds.

Neiman Enterprises’ primary focus is on pine boards and its products are typically used in home remodeling projects or to make tongue and groove paneling for interior walls. The company manufacturers its own wood pellets from the byproducts left over by board production or sells the material to be used for mulch or flower bed decorations.

Impact of Globalization

Natural resources cannot be outsourced and the need for wood products from a national forest has long shielded Neiman Enterprises from the influences of a flat world economy. But even in the timber industry globalization has taken root during the past two decades, Neiman says. The company has seen sales in Mexico drop off as the value of the dollar has risen, prices are fluctuating as the Chilean lumber industry recovers from the earthquakes in 2010 and even timber sales as far away as China can tip the market. “You definitely have to have your finger on the pulse of the wood industry on a global scale,” Neiman says.

When Neiman Enterprise started, it made one product and sold to one company. Its expansion in the ensuing decades have made it a leader in ponderosa pine, but now globalization is causing similarly sized timber businesses to shift toward the remanufacturing side of the industry – companies that can supply custom details and respond to customer orders.

Neiman Enterprises remains competitive by setting annual goals for capital investments at its plants to ensure that equipment and computer systems remain up to date. But Neiman and other company leaders are still debating whether those investments should lead to growth. If Neiman Enterprises exceeds 500 employees, the company will fall into a higher industry category and be subject to additional forestry regulations that limit the number of trees it can purchase from loggers. Those imposed restrictions could endanger the wood supply and health of the four mills, Neiman says, which has made the company balk at moving forward. Neiman Enterprises is part of the Sustainable Forestry Initiative, an independent organization that oversees forest management and sets standards on the supply chain.

The many regulations and difficult market conditions have created a different atmosphere from 1936, when the only things A.C. Neiman needed to start his forest products business was a truck frame and a motorized saw. “The entry level is very difficult nowadays,” Neiman says, “if there were to be a young, ambitious person out there who said, ‘I want to build my own sawmill and my own dynasty.’”

Since Neiman Enterprises is still mulling its future, the focus now is more on fiber recovery, taking the most value out of every stick it can. “It’s caused us to be more focused on the byproduct side to ensure we’re encompassing as much revenue from the entire spectrum of the industry as possible,” Neiman says.

Although the company now must compete in the global marketplace, Neiman says its smaller size and proximity to customers helps it provide the best service. “The bigger you get the more difficult that becomes,” Neiman explains. “That’s where, in today’s capitalist market, you can find your niche.” 

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