Sunday, March 28, 1999

Mulch man's idea born of bad luck, great timing




BY JOHN ECKBERG
The Cincinnati Enquirer

        Five years ago in May, Irvine Industrial Inc. was sliding toward the yawning crater of bankruptcy, and its 35-year-old president was understandably and significantly desperate. A forklift and heavy-equipment distributor, Irvine could not compete with discounted prices quoted by larger firms.

        “They'd give their forklifts away to get the service agreement,” President Les Irvine said. “I had to make my money selling forklifts. But I had developed some relationships, and these guys were coming to me and saying, "Les, we'd like to do business with you, but your forklifts cost too much.'

        “Then they'd point out back: "If you really want to help me, get rid of that pile of pallets, that pile of wood out there.'”

        The offhand observations about some busted pallets set Mr. Irvine down a new business course, and five years later, the company he founded has become a premier regional provider of playground and landscaping mulch — almost all recycled from old wooden pallets.

        In the beginning, Irvine Industrial planned to haul away junk pallets cheaper than anybody else by grinding them down. Because pallets were mostly air, hauling them to landfills was expensive. Mr. Irvine's idea was to take away twice as much material as other haulers, but do it in half the space and at half the cost. He would send portable grinders and trucks out to industrial sites, crunch it up, haul it away and bill the grateful owner.

        It seemed like a great idea. He went to 10 banks for a loan. Ten banks said nice idea — and then those 10 banks wrote him 10 rejection letters. Eventually, Mr. Irvine found a willing lender in the Bank of Kentucky, and before long, forklift sales were a memory.

        “The key ingredient to lending money is still the character of the individual,” said Bob Zapp, president of the Bank of Kentucky, the Florence-based lender that offered credit to the company.

        Within a year, however, the company received even more staggering news. The firm's primary landfill owner told Mr. Irvine in 1996 that it could no longer accept material.

        The landfill news was a lousy turn of events. “He said, "Les, you've dumped your last load here,'” Mr. Irvine recalled. “When I lost my site, I realized I had a problem — a big problem. It was not a good day. But as I look back, I realize it was one of the best days I have ever had.”

        No landfill meant his staging area in Blue Ash soon had a huge pile of mashed wood on it. “I watched our pile grow and grow, then got the crazy thought: Wouldn't it be neat to turn around and sell it?” Mr. Irvine said. “Now, our challenge is to find enough wood material to satisfy the secondary market.”

        Since the landfill closed, the wood-recovery firm — iron nails are removed with magnets on the conveyors — has expanded dramatically in southwest Ohio and now has an arm that serves Greater Cleveland from a base in Medina.

        Knowing that he would have to make regular, probably weekly trips to Cleveland, Mr. Irvine taught himself to fly and is now instrument-certified. He can make it to the Medina operation in about 75 minutes.

        Growth has been steady and rapid. Revenues have doubled every year since pallet grinding began in 1994 — at first from payments made by companies happy to get rid of an unsightly waste, then from consumers happy for high-quality, affordable playground safety surface and hardwood chip mulch. About 200,000 cubic yards of mulch will move through Irvine Industrial this year.

        Mulch is big business in America, with an estimated $500 million sold annually, according to the National Bark and Soil Producers Association, based in Manassas, Va. The industry will grow by $25 million to $40 million annually — about 5 percent to 8 percent — for the foreseeable future. That's down from the 25 percent annual rate of the early 1980s, but it's still significant.

        What Mr. Irvine did not know when his company began grinding pallets — but he would soon learn after a couple of trips to the World Wide Web — was that a pair of trends had created a big need for mashed wood from junk pallets. At the time the company made its transition, a baby boom was under way in America. All those kids meant homeowners would soon be buying playground equipment by the millions: swing sets, climbers and slides.

        “There is no trade association,” said Barrett Brown, vice president of CedarWorks of Maine, a manufacturer and marketer of residential play equipment that distributes to 50 states and Europe, “but it is safe to say that the market is rapidly growing. There is no question that the baby boomlet has been a driving force. Many people deferred having children, and they now have sufficient disposable income to buy quality play equipment.”

        At the same time, schools were installing custom-built climbers and slides. Because playgrounds need a soft substance underneath to protect against falls, Irvine Industrial figured out that its material was perfect.

        “I think before you get into something, you need to be a student of the game,” Mr. Irvine said. “I soon realized that to fulfill our company's potential, I'd have to get into the ins and outs of what exactly is a playground-duty surface.”

        He contracted with a third party to test the material for head-impact criteria. The ma terial met guidelines established by the Consumer Product Safety Commission, and suddenly, a market beyond selling bulk to landscapers of office complexes, banks and fast-food restaurants had opened up for the firm.

        Now, for every cubic yard that sells for landscaping, another two cubic yards is headed for a playground or walking trail. The company, which employs 15 people at its Gilbert Avenue offices, in Medina and its Warren County grinding center, has registered the name of the material as Playground Turf and is a major supplier to municipalities in the region, including Cincinnati, for playground coverings.

        “Our Playground Turf is a tremendous product,” Mr. Irvine said. “It keeps children in a safe environment. It keeps wood out of the landfill. You wouldn't believe how many people put up $6,000 swing sets in their back yards.”

        The second beautiful thing about mulch, at least for suppliers such as Mr. Irvine, is that it disappears. According to the U.S. Department of Agriculture, more than 2 billion tons of topsoil erode annually, and mulch heads down the drain right alongside the topsoil. As every landscaping homeowner knows, it is almost mystic the way mulch disappears.

        And at $14 a yard, Mr. Irvine figures that the mulch can keep right on going. From two dump trucks and a chipper in 1994, the company has grown to six pallet chipper trucks, eight pallet chippers, five tub grinders, six front-end loaders and six delivery trucks.

        And then there is Bonnie Lou.

        Out back, hidden behind a couple of large piles of shredded wood, sits a baby blue 1964 Ford F100 truck with a Brewer asphalt sign on the side. It is rusty and has not moved for a while. The plates date to 1986. Bonnie Lou is a four-wheeled talisman from another time in Mr. Irvine's life. It was his first truck. His father, Lee, bought it for him, and for years, Mr. Irvine and his brother, Dana, used it to haul sealer around that they swabbed on driveways.

        Every tar splash on the side bed was theirs — it is a visible reminder of sweat, toil and hope. The truck allowed Mr. Irvine to pay for his four years at Miami University, where he majored in marketing and finance, and he keeps Bonnie Lou around for the sake of nostalgia — certainly not for function.

        Bonnie Lou is there to remind him and anybody else who passes across this mulch yard in Warren County about the roots of entrepreneurship — how it is frequently a businessman's force of will meeting opportunity and luck.

        “The motor still runs,” he said, his hand resting on the edge of the beat-up bed. “I had to keep Bonnie Lou around.”

       



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