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Selling wood to the world
by Stephanie Hemphill, Minnesota Public Radio
May 19, 2005

Brothers John (left) and Nate Rajala show one of their most successful products, flooring and paneling made from tamarack. (MPR Photo/Stephanie Hemphill)

The next time you pick up lumber for a remodeling project, you might be holding a 2x4 from New Zealand, or Brazil. It may be surprising that a bulky thing like lumber could travel halfway around the world and show up on the rack at the same price as lumber cut locally. One family-owned lumber business in northern Minnesota thinks it's figured out how to compete in this fast-changing, complicated market.

Deer River, Minn. — Iver Rajala immigrated to Minnesota back in about 1900. He hacked a farm out of the north woods, and in the winters he worked as a logger. Now two of his grandsons, and seven great-grandchildren, run the business.

One member of that fourth generation, Nate Rajala, has been working here since he was in high school. Now he's in charge of the kiln that dries the lumber, the veneer mill that slices thin sheets for plywood and furniture, and the factory that makes parts for cabinets and doors.

Nate's brother, John, says they decided to expand their business by turning raw lumber into manufactured products about eight years ago. Now he knows it wasn't the best timing.

"It was right on the cusp of the globalization of those industries," he says. "We knew it was happening, and we felt we would get to the niche market sooner than we did."

The Rajalas used to ship entire truck loads of hardwood like oak or maple to an American company that would turn it into furniture or cabinets. That was fairly simple and dependably profitable.

But now, in the new globalized market, most furniture factories are in China and other Asian countries. So the Rajalas ship their hardwood to Asia.

The mill used to supply basswood to venetian blind factories. Now there's only one American company making venetian blinds anymore. So the Rajalas ship basswood to China.

John Rajala says the lumber industry has changed more in the last 10 years than in the previous 50. The Rajala business is smaller. They've had to lay off nearly two-thirds of their work force in the last year. It was hard to do, but it kept the company alive.

Now the family has come up with a new idea, and this time they're hoping the timing is right.

They're trying to promote wood from northern Minnesota as something special. It's an image -- a picture of the north woods, with beautiful forests, hardworking people, and high quality products. The brand is being introduced this year as True North Woods.

"I think that this is going to take," says John Rajala. "And this is exactly a part of the solution towards a region finding what value it has in a new global economy."

Rajala's not just trying to sell lumber, but some Minnesota ideals.

Those values include environmental protection, and decent wages, and laws to protect worker safety. John Rajala doesn't complain much about this aspect of doing business in the U.S. But he does point out that the high expectations of American citizens and consumers can make his products more expensive.

"We want to walk through the forest, we want it to be pretty, we want it to look natural," he says. "And we want to build our 4,000 square foot home and have beautiful flooring, trim, paneling, and cabinetry. And we're making that work. But it's expensive."

It's hard to compete with the low wages and weak environmental laws in Asia.

University of Minnesota professor Jim Bowyer is doubtful that a brand like True North Woods will help.

"What consumers have tended to do is buy the lowest-price thing they can find," he says. "Or they will pursue quality wherever it's made, rather than a brand like that."

Bowyer says an effort that might work better is forest certification. That's a world-wide movement to promote careful management of forests and sustainably-run businesses. It's been growing for the last 10 years, but it only accounts for less than ten percent of the wood on the market.

But the Rajala family is optimistic. With the perspective of four generations in the same business behind him, Nate Rajala says he looks ahead.

"I'm hopeful that in 10 or 20 years, many of the countries around the globe, their standard of living will improve, to the point where they enter the market for luxury goods," Nate Rajala says. "And I would call a raised-panel door a luxury good in many ways. In that point maybe we can get some prices up. But this plant can't wait 15 years."

So the Rajalas are trying to stay nimble, making new products, and reaching out to consumers with their True North Woods brand.