San Diego, California–Situated here, just a few hundred yards from the commercial border crossing with Mexico, PG Forest Products has established itself as an international distributor of wood products, with a focus on supplying United States- and Canadian-produced goods to Mexico.
According to Ross Parsons, Business Development Manager at PG Forest Products, the company started formal operations in 2014, a time when the United States was in the middle of a fundamental shift in terms of furniture and case goods manufacturing. Some of those jobs, which had left North America in the early 2000s and went overseas, were returning.
Parsons, who joined the PG Forest family in 2015, noted that while the company may be somewhat young, his experience, as well as that of other key team members, spans decades.
“Our team has a great set of skills, knowledge, and relationships that allows us to service the retail and industrial markets in Mexico. We are a lean group with low overhead and great inventory turns,” he said. “We do not have to do business with every company out there. Instead, we attempt to strategically pick our partners on both the customer and supply side. We need partners that understand the business, have a need, and that will also allow us a chance to make some money.”
Parsons said that providing solutions is paramount to the success of PG Forest Products, adding that when it comes to the company’s suppliers, open communication is fundamental.
“We need to be able to understand what they do and also express the needs and goals of our customers. Our best suppliers know who our customers are and we team up to provide the solutions that they need,” he explained. “I find that we have a much better chance of success if we go in as an open book with our partners. I am very confident of where we, PG Forest Products, fit in this equation. We will provide the sales relationship, strategic warehouse location, financial credit, and international export documentation needed for dealing with businesses in Mexico. If we provide the solutions that our suppliers need, there is no need for them to try and go around us to sell to our accounts. It is a win-win for all.”
According to Parsons, the same philosophy holds true with the company’s customers.
“Our customers understand where we source product. They also understand and appreciate where PG Forest Products fits in the relationship. Having our own yard so close to the border is valued very much by our customers,” he said. “On any given morning, you can see trucks lined up at our yard waiting to get loaded. Because of our close proximity to the border, these trucks are loaded up and cross the border on the same day. This is a huge savings in not only time, but also in trucking costs.”
Parsons said there is an effective synergy between the company and its Mexican counterparts, due in no small part to this advantageous physical location.
“Mexico is providing the manufacturing and the labor, and we provide the raw materials,” he said. “Most of the wood products from the Pacific Northwest and the inland mills makes its way down the I-5 freeway and eventually funnels itself down the 905 Freeway through the Otay Mesa commercial border crossing. It will pass us on the way into Mexico. We have a great launching location for the product to get across, and that is a benefit to both our suppliers and our customers.”
Although there has been a lot of political wrangling about the border between the two countries, as well as difficulties that emerged during the pandemic, Parsons said that operations continue to run smoothly, with “things moving back and forth daily.”
“A lot of the manufacturing going on back in the early 2000s left the U.S. and moved over to China. That meant long lead times with at least three weeks of shipping time alone from China to Long Beach. Several years ago, manufacturing began shifting business to Mexico, which was beating China at the manufacturing game,” Parsons said. “In China, the lead-time was at a minimum several weeks. Some of our customers in Mexico are turning around custom-made product in two to three weeks from order placement to product delivered to the consumer. We are becoming very efficient in what we are doing and how we are bringing it to the end consumer. As a result, our customers are succeeding and winning the game.
“Our part of this game is to keep costs low, which is often best done with properly purchased product, quick inventory turns, and low overhead in general,” he added. “When we successfully put all three parts together – supplier plus distributor plus customer – we find ourselves on the winning side of the game.”
That equation involves staying competitive. Parsons explained that the company has customers building furniture in Mexico that compete against product from China and Vietnam. By making products in North America, he noted, American dollars come back to the United States.
In terms of product makeup, Parsons said that PG Forest Products distributes a variety of hardwoods and softwoods, as well as plywood, OSB, and roofing products. For hardwood, Alder is the number one mover, followed by Poplar, Red Oak, Soft Maple, Walnut, Basswood, and White Oak.
“Both Poplar and Alder have very non-descript wood appearances with relative soft- to medium-wood densities,” he said. “As a result, they can be stained, painted, machined and finished in a multitude of ways to yield a variety of finishes and products.”
Parsons estimated that PG Forest Products ships between 25 and 30 trucks of various products per week at their main warehouse and another 10-15 trucks in direct shipments.
“In regards to volume, hardwoods make up approximately 20 percent of our business today. We see 40 percent going toward softwoods, 20 percent going toward plywood and OSB, 10 percent toward imported interior grade plywood, and the balance in other products,” he said.
The company utilizes outside storage for the different softwoods, five covered sheds for the hardwoods, and a smaller, fully enclosed building for high-end hardwood plywood panels and higher end hardwoods.
As with many other industries, the pandemic has had a negative impact on supply chains, but PG Forest Products has been doing well, due in no small part to the strong relationships it has built with its network of suppliers.
“Our good suppliers are taking care of us as good as they can, but they don’t have the inventory they had a year ago,” Parsons said. “There are some shortages, and we are looking for alternatives. Raw material costs have doubled or tripled in a relatively short period of time. There’s also been a real labor shortage at the border towns going on for a couple of years now. Before the pandemic, I had customers tell me that they are 100-200 people short.”
Even with the issues and the incredible pent-up demand for forest products, Parsons said that the leadership at PG Forest Products understands that they must look beyond the current boom times and focus on the long-term stability of the company.
“Right now, it’s busy, but we have to be smart. The game of being a distributor in this business means you don’t want to fall in love with your current inventory or your current ways of doing business. The key is to keep it moving; change and evolve where necessary,” he said. “What I do see is that we are a relatively small company; we have increased our market share and will continue to do so. We have a sister company across the border with retail yards and manufacturing/processing abilities. Due to labor shortages, we may get into more value-added and component products for our customers. This game is about being as efficient as possible in all aspects.”
As an example, he said many of the company’s suppliers understand this and are getting into component manufacturing.
“There are some great opportunities to capitalize on, which will be beneficial to everyone if we start looking at a game where we focus on what we are good at. I believe that the days are numbered where one can be just a straight board supplier,” he said. “We need to continually evolve and present ourselves as a solution. This will mean searching out new partners, solutions, and customers. In the end, this is still a great business to be in and there is a great game to be had playing it with PG Forest Products.”
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