The times are a changing … One of the most successful jarrah businesses in Western Australia has closed its doors, but not without becoming a major player on the American scene.
That business, Jensen Jarrah, under the guidance of Max and Kerry Jensen, grew from very meager beginnings and, as Max says, it was a combination of things that prompted the move.
“My father owned a small wood processing business in the town of Nannup where I grew up. My father wanted to work for himself but I wanted to take the risks and make things into a larger business.
“When I should have been studying I had been having a thoroughly enjoyable time travelling to the UK and Europe, and after five years of doing that was time to catch up. I had just met my wife-to-be Kerry and I wanted to settle down. I had made up a small amount of furniture in my father’s business and I could see there was an opportunity to take it further. The fundamentals to commence manufacturing furniture in the south-west looked good. Excellent quality jarrah, particularly in the short lengths we required, was readily available at a reasonable price.
“By 2001 we were achieving sales in excess of $12m and exporting two thirds of this to the United States.
“As we approached this peak we could see that our supply situation had significantly changed. Rather than the mills having an excess supply of short boards, we were having to increasingly use the longer lengths. When I started the over-supply of short boards our supplier, Bunnings, began manufacturing outdoor furniture. We overcame this by aiming to very logically use what fell down from other uses (e.g. 50mm x 38mm was the last recovery size when either cutting for 38mm or 50mm). We designed an entire range around that size of wood and eventually we used a stockpile of some 1200 cubic metres that had built up over many years,” Max said.
“The largest impact came from the previous Government’s Old Growth Forest Policy. What effectively happened was the best quality forest was locked away from use, the quality of log supplied to the saw mill dropped substantially, the proportion of first or select grade that the mills recovered dropped significantly and the proportion of wood that we received that was at the bottom end of the grade increased greatly.
“The outdoor furniture industry had been using all of the short boards that accumulated when the cut of jarrah was 360,000 cubic metres. Now that it was only 130,000. We had to start using the more expensive longer timber. Basically, the cost of timber effectively doubled over a four year period. It was not only that the price per cubic metre from the mill increased, but we now had to purchase a proportion of longer boards and our internal loss factor went up greatly due to the lower quality. The Old Growth Forest Policy was fundamentally flawed from the start,” Max said.
Jensen Jarrah focused on building a niche in the US market, and its main competitors, Clarecraft and Inglewood Products, had gone into Europe so it seemed a logical choice.
Jensen Jarrah opened a small office in California and built up a team of sales representatives that covered the country. “We participated in a national trade show and our target market was the speciality retailer of upmarket patio furniture. Our goal was to find a good quality store, get them to tell a jarrah story with three to four settings on the showroom floor and we would give them an area of exclusivity.
“At the peak we were making close to 70% of sales by volume and 100% of profit from the US market
“Jensen designs will continue in the US market as a joint venture with Cimal IMR, a long-established Bolivian furniture manufacturer. They were well established in the European market and had been looking at entering the US market for a couple of years. They appreciated the value of going into a joint venture with me as it offered a safer more certain option.”
For the next couple of years at least Max and Kerry will be busy with the US market.
After that, the couple will “do what we want to after some long, hard years of work”.
More pressing is a public auction of their entire plant and equipment. This will be held April 3-4.
