Leasing Program Helps Global Lumber Business

Mike Parton, along with his nephew Tim, of Gilkey Lumber in Rutherford County, oversees their family-owned lumber manufacturing business. Started in 1953 by Mike’s father, the hardwood mill initially served the thriving North Carolina furniture industry.

“We used to ship all of our lumber within a 100-mile radius,” says Mike. “Today, we ship it all over the world. Most of it goes outside the United States. The main reason for that is the furniture industry pretty much left us. We had to follow them.”

Infrastructure Helps Keep This Business Moving

The lumber they ship will end up in furniture and millwork products such as moulding, trim, paneling and flooring. With 65 employees and a process that starts with professional foresters (including Mike’s son Jess) who purchase the timber, Gilkey Lumber’s facilities and systems are set up like clockwork to keep each phase moving to meet the international demand. A lot goes into turning timber into lumber.

From the moment logs are unloaded at the Gilkey site, each log is scaled, graded, and recorded into their digital system. They are then de-barked (the bark is sold for landscaping mulch) and then sent to the sawmill building to be manufactured into 4/4 lumber. Lumber graders inspect every board and mark it based on a 5-point system. An optimizer reads the mark and transfers the lumber into a corresponding bin where it is stacked with other boards of the same grade. From there it moves to dry kilns for 30 days.

Four dry kilns that each hold 85,000 board feet are filled to capacity in a special building that is constructed to handle 180 degrees and are heated with a huge boiler using the operation’s sawdust. To get an idea of the scale of each kiln, 85,000 board feet equates to 8 to 10 tractor trailer loads of lumber.

The drying step is critical. It’s one of the early steps to a fine piece of furniture and happy customers.

“We dry all our lumber to 8 to 10 percent moisture content,” explains Mike. “It has to be dried down to that so glue lines will hold when the furniture people make a product.  You make a high-price piece of furniture and then the glue lines start breaking apart when it gets to the customer’s home and you’ve got a problem.”

While the process continues from there, this gives a glimpse of how critical proper facilities, equipment and technology are to businesses like Gilkey Lumber.  It’s all housed in 12 different buildings to keep everything moving to meet the demands for product to fill more than 500 shipping containers each year.

Farm Credit Leasing Option Helps the Bottom Line

Mike says that traditionally their business approach had been to wait until they could afford to build something. He felt that only the leasing companies benefitted. A few years ago, that changed. When Mike and his brother William were looking to add a new building to handle an automatic de-sticking process for kiln-dried lumber, they learned about the Carolina Farm Credit leasing program.

Mike says they had never considered leasing but decided to hear what Carolina Farm Credit had to offer. That was followed by some homework.

“Our accountant put all the facts and figures together. Leasing saved a lot on the outlay of our own money. He figured the tax situation and how it would help us on our taxes.  It was a good deal so we tried it. We put in about a million dollars’ worth of equipment and then built the building around it. It went very well. We were very happy with it. It was the first time we worked with Farm Credit but it won’t be the last, I can assure you that!”

Mike says the company is now looking toward another large leasing project with Carolina Farm Credit. “Because lumber is considered agriculture, Farm Credit just fit right in with us. They are excellent folks to deal with.”

This is the 2nd in a two-part series on Farm Credit Leasing products. In part 1 Jeremy Lee, leasing manager, outlines six major benefits to leasing. To learn more contact your local loan officer or reach out to Jeremy Lee, leasing manager, 828-292-9333 or jlee@carolinafarmcredit.com.