Assessing Underperformance in Saw Mills Portfolio
The Challenge
In spite of a growing housing market, a private equity-owned saw manufacturer in the U.S. Pacific Northwest was reporting low sales performance. Executive management attributed the cause to dwindling production at mills they supplied and possible regulatory slowdowns due between the U.S. and Canada.
Our private equity client sought to reconcile the disconnect between positive macro trends observed in the logging industry with the underperformance of their portfolio company. Why was the industry doing well and their portfolio company was not? Was this a company-specific challenge, or were larger industry dynamics at play?
Apex Leaders ensured total anonymity during a sensitive investigation. They conducted all the research and interviews on our behalf.
Target Profile
- Saw file managers at competing and supplying mills with an ability to articulate shifts in demand and output.
- Vendor managers responsible for all consumables purchasing decisions in Canada and the U.S. Pacific Northwest
- A public policy expert with focused knowledge of the Softwood Lumber Agreement affecting trade between the U.S. and Canada.
“Both our portfolio company and our team here at Milestone were impressed by Apex Leaders’ quantitative approach and the practicality of their recommendations. We will absolutely use them again in the future.”
Peter Elkes
Milestone Partners
The Search
Apex Leaders conducted all research and outreach on the clients behalf, interviewing 36 saw filers, public policy and trade association staff with the functional knowledge to speak to any of the four key concerns:
- What manufacture do you buy saws from and why?
- How has production changed at your mill over the last year?
- Do you see an increase or decrease in production in the upcoming 12 months?
- To what extent, if any, have recent trade agreements impacted production at your mill?
The Results
- 80% of respondents noted they maintained or even increased output within the last 12 months
- 20% of respondents described that shifts had been reduced, however the output of the mills remained unchanged do to better technology, equipment and lean management principles
- All trade professionals noted no significant impact to their mills/business due to shifts in public policy.
Last Word
The overwhelming evidence from interviews allow our client to concluded that the current leaderships’ claims of underperformance were unsubstantiated. The client had acquired enough details to make an informed decision about the future of their investment.