North Pacific Group, Inc. Business Information, Profile, and History

Company Perspectives:

We are a billion dollar company offering the economies of scale that come from being big. But, in reality, we operate like several dozen small companies, each with their own independent decision makers with the power to solve your problems quickly and efficiently.

North Pacific Group, Inc. is committed to being the "Supplier of Choice" through product and service excellence. Our emphasis is on being a responsible, innovative business partner providing value-added services to customers and suppliers worldwide. Employees remain our most important asset. Through training in all areas with an emphasis on technology, service and ingenuity will be enhanced, promoting our long-held tradition of commitment to service, ethical business practices, financial strength, and flexibility.

History of North Pacific Group, Inc.

North Pacific Group, Inc. (NOR PAC) is one of the nation's largest wholesale distributors of building materials, distributing wood, steel, agricultural, and food products through more than 30 separate business units and subsidiaries and more than 175 inventory locations. Its eight business units are decentralized by product areas and regions and include: Burns Lumber, a market leader in the distribution of construction-grade forest products; Hardwoods Business Unit, a major manufacturer, distributor, and trading company of quality hardwoods nationally and internationally; Landmark Business Products, supplier of products used in the industrial, furniture/cabinet, and retail lumber yard markets; Saxonville USA, distributor of building materials in the Northeast; Schultz, Snyder & Steele, supplier of building products in the upper Midwest; Softwoods Business Unit, worldwide distributor of OSB, plywood, MDF, particle board, and softwood lumber; Southern Business Unit, wholesaler of lumber, building materials, and specialty products in the southern United States; and Specialty Products Business Unit, supplier of treated wood poles and pilings, composite products, steel pipes, tubing and coils, and various food and agricultural products. NOR PAC's customers include furniture makers, building products retailers, power companies, and farm supply retailers. The company has been employee-owned since 1986 when its founder retired. It is the second largest privately held company headquartered in Oregon.

Steady Growth and Diversification: 1948 to the 1960s

Doug David and Herman Tenzler founded North Pacific Lumber Co. in November 1948 with an initial investment of $15,000 and 12 employees in three trading departments. David, born in 1916, grew up in Tennessee and came to Oregon in 1934 to work in its sawmills. He was graduated from the University of Oregon in 1942, having worked his way through school. David went on to earn a master's degree in business administration from the University of Washington and then served stateside in the U.S. Army during World War II.

Described as a survivor, according to a 1983 Oregon Business article, David was "adept at steering an intuitive course through the wood products industry's many minefields." After World War II, the timber industry cut its way west, and full-scale logging began in the Pacific Northwest. Throughout the 1940s and 1950s, the lumber industry sold its goods primarily through wholesale companies in the Midwest or through commissioned salesman scattered throughout the rest of the country. David built NOR PAC into a highly diversified forest products manufacturer-wholesaler-distributor that prided itself on benefiting suppliers with prompt payment and customers with flexible payment terms, ample inventories, and on-time shipments.

In the 1950s, NOR PAC formed its plywood division when it entered into trading plywood and panel products. It also formed its hardwoods division. By mid-decade, the company had formed specific trading divisions to focus on hardwoods, inland species, plywood, import, export, and specialty products. It moved its corporate office from Vaughn Street to Gideon Street in Portland in 1955.

By the early 1960s, the company was handling more than 124 forest products, including 45 exotic species of wood and all domestic species and plywood. It shipped 25,000 carloads of forest products annually, via rail, truck, ship, and barge to customers in the United States, Canada, Europe, Australia, Japan, Hong Kong, and Korea. It also was importing wood from sources worldwide. In a company brochure from 1963, NOR PAC boasted that "[i]f all the lumber and plywood sold annually by North Pacific were laid end to end, [it] would form a path 12 inches wide that would encircle the earth at the equator more than eight times."

The 1960s saw several changes designed to increase the efficiency of NOR PAC's operations. In 1961, the company introduced telephone sales and WATS (wide area telephone service) lines. The WATS lines enabled the company's traders to be in much closer contact with buyers, and the company boasted weekly--or even daily--calls to check on prices for customers. NOR PAC's traders also began to focus by region with the debut of the Western Sales Division, which sold products only in 11 western states (and later Hawaii and Alaska). In 1966, NOR PAC also added its trucking department to facilitate the shipping of its products to all the western states.

In addition, NOR PAC diversified its business to include two new realms. In 1962, it formed North Pacific Trading Co. to trade agricultural products and various items produced by or used by farmers and ranchers, which included peas, beans, lentils, grains, feed, fertilizers, and chemicals, and by the later 1970s twine, wire, steel, nails, fiberglass items, and salt. In 1968, it moved into mill operations with the purchase of a mill in Waynesboro, Missouri. This purchase marked the debut of NOR PAC's Southern Sales Division, which joined its Western Sales and Canadian Divisions that same year. By the late 1960s, its advertising and printing department was producing its owns price lists, catalogs, and educational materials.

Expansion Followed by Curtailment: 1970s and 1980s

Although NOR PAC's core business continued to be distribution, growth in the 1970s came in the area of production with special emphasis on hardwoods, southern pine, western red cedar, and cedar specialty items, such as fencing. The company went into lumber production in the West with the purchase of the San Poil Company in Republic, Washington, in 1969. Its construction lumber division developed a program geared to the manufacturers of mobile homes that included notched and dadoed lumber of all sizes. The plywood division branched out in the areas of mixed car shipments, cut-to-size plywood, and treated products. The company also began to serve the mobile home and recreational vehicle market with shipments of pre-finished paneling, mouldings, particle board, and hardwood plywood. With annual consolidated sales greater than $100 million in the early part of the decade, NOR PAC added a 40-acre distribution facility in Portland and an office in British Columbia, Canada, which went by the name of Cascade Imperial Mills. Ownership of NOR PAC shifted when Doug David and employee stockholders bought out Herman Tenzler. David became the majority stockholder of the solely employee-owned company with operations in Oregon, Mississippi, and British Columbia.

With production came an emphasis on scientific forest management for NOR PAC: planting vigorous fast-growing trees, controlling insect damage and fires, utilizing harvested trees as efficiently as possible, according to a booklet published by the company in the mid-1970s, "[b]ecause trees are a renewable crop and forests can be harvested and regenerated, a more complete utilization of this resource is realized. Now, it is to each of us to help preserve this heritage for future generations, and enjoy the maximum benefits of our forests--trees are for people!"

In the late 1970s, NOR PAC went through a difficult spell when it faced litigation over noncompetition agreements with former employees. The company was accused of barring Les Oliver, former assistant manager of its hardwood division, from taking employment in similar work for two years after he left NOR PAC and of encouraging hardwood traders to make money on claims by settling with mills for a greater amount than customers had agreed to accept in settlement. Despite such bad press, in 1979, NOR PAC achieved its peak volume of business. The company had 1,179 employees, including 290 traders, and did business through 13 specialized profit centers, several subsidiaries, two lumber mills, its trucking company, and storage and distribution facilities.

The economic challenges of the 1980s led to cutbacks at NOR PAC. It shut down storage yards and warehouses in northeast Portland and sold all of its mills (including San Poil Lumber in 1981), trucks, planes, and distribution facilities. Leo Gibbons, who had joined the firm as a trader in 1969, became president and chief operating officer in 1982, and under his leadership, the company undertook extensive restructuring to refocus once again as a trading company. The Western Sales Division closed, and the company liquidated its inventories. Yet despite the 60 percent cutback in personnel--the company scaled down to about 200 traders and slightly fewer than 1,000 employees by 1980--NOR PAC served more than 20,000 customers and producers that year. Its 1983 sales volume of greater than $450 million equaled its 1979 peak.

Another development of the late 1980s that affected NOR PAC had to do with supply. In the face of timber shortages in the West and environmental restrictions in the Northwest, the leading timber companies began to seek new sources of supply to keep their mills running. Many North American timber interests moved to South America, where there were more trees and fewer rules, in their search for additional sources of wood. NOR PAC began importing radiata pine from Chile in 1989.

In 1986, the company also underwent a change in management. David sold the company to a group of nine employee-stockholders. Gibbons became board chair and chief executive officer, and Tom Tomjack replaced Gibbons as president and chief operating officer. Gibbons' term was brief, and, in 1989, Tomjack moved on to become chief executive and board chair. NOR PAC now had operations in Oregon, Mississippi, British Columbia, and Missouri and boasted of being one of the only distributors to maintain inventories throughout the United States with the effect that it could offer lower prices through economies of scale.

Leadership in a Changing Market: The 1990s to the Early 2000s

By the early 1990s, NOR PAC had annual sales in excess of $500 million and a staff of nearly 400 people. North Pacific Trading Co. had branched out into worldwide sourcing and distribution of everything from frozen seafood to exotic birdseeds, dried edible foodstuffs, processed oils, grass seeds, fertilizer, and hardware. In the mid-1990s, NOR PAC was the third largest privately held company in the state of Oregon, according to a new listing by Oregon Business magazine of Oregon's 150 biggest private firms. With $950 million in sales, NOR PAC was also the nation's fourth largest building materials wholesaler. In 1991, it had purchased Saxonville USA, a leading distributor in the northeast of building materials sold to professional lumber dealers and manufacturers. In 1994, it acquired and merged with Schultz, Snyder & Steele Lumber Co. of Lansing, Michigan, which would operate as a wholly owned subsidiary of NOR PAC.

These two purchases allowed NOR PAC to grow and respond to changing market conditions and industry consolidation by developing as a full-line distributor. By 1994, Saxonville had grown 74 percent to $96 million in sales, doubling its distribution centers to six and extending its territory in the Northeast. It also became more involved in remanufactured products, such as cedar fencing and siding. With the addition of Schultz, Snyder & Steele Lumber Co., NOR PAC became one of several large building materials distributors to put more emphasis on distribution by purchasing regional companies that could respond to customer requests within 24 hours.

As NOR PAC moved further away from its wholesaler role, a change came about in its corporate culture; it moved from fulfilling customer requests to anticipating them. Beginning in 1992, it initiated a training program for its traders, teaching them sales skills, improving their market knowledge, and widening their computer skills. As a result, the average order per trader per day began to rise. The company also moved into other markets, as, in 1996, when it acquired Moore Co., an electronics wholesaler.

In 1997, the company changed its name to North Pacific Group, Inc., and began "whole-tailing," selling directly to end-users to accommodate a dealer base that wanted more products less expensively and more quickly. The year was a good one for lumber shippers in the Pacific Northwest as there was continued demand for new houses and relatively high lumber prices. Three years later, the company acquired Burns Lumber, a market leader in the distribution of construction-grade forest products.

Management changed again in 2002. Jay Ross became president, replacing Tomjack, who continued as chief executive officer and chair of the board. The company purchased Wasatch Technologies Inc., with which it had collaborated in 2000 on a project to develop a fiberglass wrap for wood poles, and changed the name of its newest venture to North Pacific Composites. NOR PAC ranked once again as one of the largest privately held companies in Oregon in 2002, according to Oregon Business, moving up to second place.

Principal Subsidiaries: Burns Lumber Company, Inc.; Cascade Imperial Mills, Ltd.; Comercial Norte Pacifico de Chile; Landmark Building Products, Inc.; Roberts Pacific LLC; Saxonville USA; Schultz, Snyder & Steele Lumber Company.

Principal Competitors: Georgia-Pacific Company; Louisiana-Pacific; Weyerhaeuser Company.

Chronology

• Key Dates:
• 1948: Doug David and Herman Tenzler found and incorporate North Pacific Lumber Company (NOR PAC).
• 1955: NOR PAC moves to larger facilities.
• 1961: The company installs WATS (wide area telephone service) lines.
• 1962: The company forms North Pacific Trading to trade agricultural and other products.
• 1966: Company adds its trucking department.
• 1968: The company debuts its Southern Division to support sales from its new lumber mill in Mississippi.
• 1969: The company buys the San Poil Lumber Co. in Washington state.
• 1981: NOR PAC sells the San Poil Lumber Co.
• 1982: Leo Gibbons succeeds Doug David as president and chief operating officer.
• 1986: Doug David sells his company to his employees; Gibbons becomes board chair and chief executive officer; Tom Tomjack succeeds Gibbons as president and chief operating officer.
• 1989: Tomjack becomes board chair and chief executive officer.
• 1991: NOR PAC acquires Saxonville USA.
• 1994: Company acquires and merges with Schultz, Snyder & Steele.
• 1996: NOR PAC moves its headquarters to Portland, Oregon; the company acquires Moore Co., an electronics wholesaler.
• 1997: Company changes its name to North Pacific Group, Inc.
• 2000: The company acquires Burns Lumber.
• 2002: Jay Ross becomes president and chief operating officer; the company acquires Wasatch Technologies, which becomes North Pacific Composites.
• 2003: The company sells both North Pacific Composites and its steel department; Ross becomes chief executive officer.