WHEN Rossi American Hardwoods took the export route to expand its business in the 1970's, increasing the company's bottom line was clearly the main driving force. But for Rossi, there was an addi­tional motivation of moving beyond the shores of the vast domestic market in the United States - it allowed the company to develop relationships, a philosophy that was close to the hearts of its founder, Mr. Joe Rossi, as well as its current President, Mr. Theodore (Ted) Rossi.

 

"We started our export business relatively early because I felt there was an opportunity to be different from other lumber producers, "said Mr. Ted Rossi.”In the 1970's, there were few companies involved in ex­port but I was young and had a lot of energy. I figured it was a good place to put that energy to work - to develop our philosophy of cultivating relationships. A good place to do that was the export market because the hardwood lumber business involves very close re­lationships especially in the export trade.

 

"And we were very successful in developing and maintaining re­lationships. That's one of the keys to our success."

This success has translated to markets in various parts of the world. Markets outside the US, which consume half of Rossi's output, include Europe, Asia and the Middle East. Total annual pro­duction is more than 110 million board feet of hardwood lumber in all grades and all major species, both green and kiln dried. Rossi also sells veneer logs, sawn logs, dimension products as well as hardwood products from other manufacturers.

Europe was Rossi's first point of entry into the export market. Being involved in foreign markets inevitably had its challenges but one on which Mr. Rossi thrived. In fact, being exposed to cultural diversity and differences is one of the most exciting aspects of the business.

"I enjoyed getting to know other people's cultures.

That was one of the benefits of being in this business."

The real difficulty, he recalled, was the physical demand of travel and communications.

"In the 70's, almost everything had to be done on a one-to-one basis to familiarize importers and manu­facturers with American hardwoods. It was physically demanding," he said. "Communications too were a lot more cumbersome in those days. What we have today with e-mails and other communications technology have changed the way we do business."

 

Taiwan, whose furniture manufacturing industry started to boom back in the late 1970 and early, 1980's, was Rossi's first major Asian market and one that es­tablished a strong foothold for the company in the re­gion.

Then known for its industrious work force, low labor rates and entrepreneurial spirit, the Taiwanese furniture manufacturing industry in those days was really a precursor to what China is today. And it was the Taiwanese who kick started China's phenomenal development by relocating their production facilities to take advantage of its lower manufacturing costs. Today, China is the world's largest consumer of Ameri­can hardwoods as well as Rossi's most important mar­ket.

On the whole, Asia accounts for 40 per cent of Rossi's export business. The remainder goes to Eu­rope and the Middle East.

 

"We are happy with what we've achieved in China," he said. "But there is more competition from other American hardwood suppliers than any other market in the world because it's the biggest market and everyone is here. But we're comfortable because we have a good base in China. We have two offices ­one in Shanghai and one in Shenzhen, and we've kept our Taiwan office. Between these three offices, we have good representation in that part of the world and we've maintained good relationships.

"Reputation is important to us and I think that's critical in China as well as other far eastern markets. They respect partners and suppliers that have integrity and the be­lief in long-term relation­ships."

 

Elsewhere in Asia, Rossi has recently set up an office in Vietnam. It also has an agent in Thailand and Malaysia's APP Timber takes care of its markets in Malaysia and Indo­nesia.

 

Asked if Rossi faced issues of pricing in China, Mr. Rossi replied: "Yes, price is always an issue but we face that in every market that we are in­volved in, not only in China."

 

He added: "We're competitive but we're not in the price game. We look for customers that seek the com­bination of price, quality and service."

 

Rossi American Hardwoods had its roots back in 1925 when Mr. Joe Rossi, the father of Mr. Ted Rossi, started the business with a flatbed tuck and a portable sawmill, producing railroad ties, industrial lumber and firewood in Connecticut.

 

Mr. Ted Rossi assumed the helm of the company in 1966 and he led Rossi to become one of the leading producers in the world market for Appalachian and northern hardwood lumber. From an operation that was based primarily in its home state of Connecticut, Rossi currently has sawmills and manufacturing operations in six different states.

In recent years, it embarked on a series of acquisitions and expansions to enable the company to offer a complete range of wood species and products. A number of manufacturing sites have also been upgraded and modernized.

 

One of them is Blue Triangle in Pennsylvania, the mill with the highest production capacity within Rossi and one of the finest sawmills in the US. As Rossi's flagship mill, Blue Triangle handles between 30 to 40 million board feet per year. Recent investments in­cluded new sorting and grading equipment to better select different grades according to customers' needs as well as sorting to specific width and length.

"Blue Triangle is able to handle any customer's demand. We have 45 different markets worldwide so it's critical that we have this capability and flexibil­ity," said Mr. Rossi.

Likewise, Graham Lumber in Tennessee has also recently been upgraded with new equipment. Today, it is one of the largest producers of hardwoods in the state, manufacturing mainly while oak lumber, which is in big demand for Rossi's export mar­kets.

 

"As a hardwood producer, get­ting the right raw materials is a challenge, so is labor," said Mr. Rossi. "Because it's manual labor, it has become more and more difficult to do this job at a wage that could allow us to be competi­tive. The rising cost of transporta­tion is also a challenge. Those are probably the three major problems we face."

 

Modernizing its plants would go a long way to alleviate the shortage of labor. As for raw materials, Rossi has entered into numerous agreements to buy timber rights from landowners to ensure that raw materials would always be available.

 

"We also located our facilities in timber country, both in Pennsylvania and Tennessee," Mr. Rossi noted. "We are in the heart of good hardwood timber country and we are right where the resource is."

Another site in Emory River, also in Tennessee, is a sustainable, certified timberland and sawmill certified by Forest Stewardship Council (FSC) Chain of Custody.

Such a certification is generally not required in the Asian markets but necessary to convince certain end users and customers that US hardwood resource is sustainable, Mr. Rossi said.

 

"We don't have illegal logging problems or regulatory issues. The resource for the entire US hardwood lumber industry is sustainable - we grow more than we cut. We have good manage­ment practices in place for harvesting. We just have to come out with a way to convince some markets that we have a long-term, sustainable and well-managed resource base. Some people want certification that we don't have in the US. So they ask for FSC because that's the one they are familiar with. As a percentage of our total production, demand for FSC certified products is limited. But it is growing, particularly for government and municipal projects and anything that is financed by public money. More than 90 per cent of this demand is from Europe."

Mr. Rossi added that the painstaking efforts to take care of this resource would ensure that US hardwood lumber would continue to be available for years to come. "We have excellent infrastructure, manufactur­ing facilities and kiln-drying capability, and we can be relied on for long-term supply. That's the advantages of American hardwoods. There are beautiful and high quality European and tropical species, but US hardwoods are more plentiful and more easily accessed."

Recent statistics from the American Hardwood Export Council (AHEC) pointed towards the rising consumption of US hardwoods, particularly in Asia, which has some of the fastest growing markets. In view of this development, plans are in place for Rossi to step up its presence in Asia.

 

"Vietnam, which is like Taiwan 20 years ago, is likely to be an area where there will be more rapid expansion in the next couple of years," Mr. Rossi said. "Vietnam will be a very important market. I see dou­ble-digit growth there for many years to come and that's where we are likely to increase our presence.

 

Other up and coming markets for Rossi include Malaysia and Indonesia, whose furniture industry ­like China and Vietnam - is dependent on re-export back to the US.

 

But there is potential of rising domestic consump­tion of products made from American hardwoods. The Chinese market is already seeing a trend of rising do- We've been there, stayed there and we have a policy of never dropping our export market for our domestic market. We do not play the price game in that if we favor a market that gives us better returns at the expense of others. We like to maintain all markets at the same level and grow with them in both good and bad times.

 

"Any producer that is going to be successful has to meet their customers' needs through good and bad business cycles. So while we are driven by the bottom line, we prefer to sacri­fice short-term gains for long-term profitability. On a long-term basis, the company's bottom line is going to be better under that philosophy."

 

As the current Chairman of the AHEC as well as a long­standing Director of the National Hardwood Lumber Associa­tion (NHLA), Mr. Rossi is also active in promoting the US hard­wood lumber industry. He is the founding President of the new Hardwood Federation now representing 27 member associa­tions and 800,000 families. His rationale is simple: in any new markets, if customers do not understand what they are buying, they will not know if they are buying the right thing at the right price.

 

"Lack of knowledge can be our worse enemy," he said.

 

"They more they know about American hardwoods, our grad­ing systems, the more familiar they are with our pricing, the closer AHEC works with them and the stronger our relation­ships, the easier it will be for us to do business. I believe that's the same with all markets."

 

Meanwhile, Rossi American Hardwoods will continue its expansion path while remaining true to the way Mr. Joe Rossi did business - by treating everyone it deals with as though they're family. "Everyone is part of our growing family - cus­tomers, suppliers, agents, distributors and employees," said Mr. Rossi. "Out of mutual trust and respect, we go the extra mile for each other to make sure the job gets done and done right."

 

That's the Rossi way and one that promises to take the com­pany to new heights ... as well as new markets.