BACKBONE - Katahdin Cedar Log Homes
July 5, 2011
By Mike Woelflein for Maine Ahead
Logging in the Green
Katahdin Cedar Log Homes CEO David Gordon is a fanatic about going greener each year. In tough times, it's also been the key to keeping his business in the black.
Katahdin Cedar Log Homes CEO David Gordon describes himself as a "conservation freak." Turns out that's a very good thing in an industry hit hard when the housing-market collapse induced the recent recession.
Log home builders nationwide suffered a stream of bankruptcies and closures. But at Katahdin Cedar, diversification, cost-cutting, and efficiency measures - inspired by Gordon's environmental philosophy - helped the company stay strong, and the firm's 82 employees kept working.
"There's always something new going on here," Gordon says. "We're aggressive. We're constantly getting greener, in our manufacturing process and our buildings. We're always working to get more efficient. And we're always willing to try new things."
Gordon has long lived in a cedar log home, high on a ridge in Oakfield, about 18 miles south of the end of I-95. Through constant improvements, the house is almost entirely powered by wood (for some heat), a windmill, and a solar array. Now, he's selling the house to build the log industry's first "zero-energy" home, with no net energy consumption or carbon emissions, as a demonstrator for customers to drive future sales.
"Flash-in-the-pan green is OK," Gordon says, "but to have a real impact, you have to make it sustainable long-term, to work for the bottom line."
Sustainable sustainability is a key reason Katahdin Cedar Log Homes, founded in 1973 by Gordon's father, Foster, has thrived in the uneasy economy. David joined the firm in 1977 and became CEO in the mid-1990s. Along the way, he set a long-term goal for the company - to use no fossil fuels - and has taken steps toward that end, each with its own financial impact.
One of the first steps was to use as much of the tree as possible. From the beginning, the Fosters sold fencing to monetize smaller pieces of wood. In the last few years, their fence division has exploded - sales jumped 50% in the last two years, and were up 22% through May - as competitors have fallen by the wayside, victims of inefficiency and the Canadian exchange rate. In 2009, Katahdin Cedar Log Homes bought SWP Industries' Ashland sawmill, doubling the company's capacity. This spring, they instituted night shifts at their Oakfield mill and started up the seasonal Ashland mill three weeks early.
Katahdin's advantage dates back to an upgrade of their manufacturing process, completed in 2006. The computerized system handles marking logs, cuts, and peeling - all previously manual tasks - essentially doubling output, from one home per day to two.
"It's more precise, and it cuts our labor costs there in half," Gordon says. "Plus, it's safer, which helps cut workers' comp costs. Better houses, cheaper and safer."
Katahdin uses a biomass boiler, fed with hardwood waste, to heat six buildings, run drying kilns, and "defrost" icy logs. A nearly $1 million investment, it's cut the company's oil use by 93% and stopped them from having to truck away waste, saving $300,000 to $400,000 annually since 2007.
In 2008, the company introduced the Energy Envelope, a home insulation system. The next year, many log home builders were caught unprepared when federal mandates for building codes upped the requirements for energy efficiency in new homes, starting in 2010. Maine hasn't yet adopted those guidelines, but Katahdin's system exceeded the new standards, helping sales in many markets (the company sells mostly east of the Rockies).
"That really gave us an edge, because a lot of people had to scramble to catch up with us," Gordon says.
The latest green improvement is an ethanol distillery, which turns culled potatoes from Aroostook County farmers into ethanol for the company's trucks and other equipment. The waste from that process becomes fertilizer and cow feed for area farmers. The goal for this summer is to automate that system, so it can run around the clock and supply as much as 85% of the company's auto and tractor fuel.
Next on the agenda is to pursue electricity from First Wind's proposed wind farm in Oakfield, approved last year by the Maine DEP.
"There's nothing formal in place, but I'm encouraged that we'll be able to do that. I believe we can make ethanol and scale it up, for $1.50 or $1.60 a gallon," Gordon says. "I believe we can build zero-energy homes. We've done a lot of the things we've set out to do, and we'll keep doing them. And when the economy improves, look out."
In one exciting way, Gordon sees things getting better on that front. Sales in Maine, especially the northern and western parts of the state, are picking up in the first half of 2011. Rural areas of other key markets, such as the southeastern U.S., have also improved.
"This looks like it will be the best year ever for us in northern Maine," Gordon says. "It's getting better, and that's a very good thing."