Finlayson’s forefathers lead the way to success

by | Feb 15, 2022

Business: Finlayson Group 
Owners: Michael and Skene Finlayson
Location: East Brisbane & Summer Park, QLD
Buying Group: Independent Hardware Group (IHG)

Bon Accord Mill at Indoorpilly, Queensland in 1875
Charles Patterson and his two brothers set up the Bon Accord Mill at Indoorpilly, Queensland in 1875, laying the foundations for a successful family business that would thrive for decades to come.

“It is not just about business. It is about being involved in the community and looking after people.” 
Much of the Finlayson Group’s success can be attributed to its continual diversification over many years. As a vertically integrated business, the group sources its products from plantation resources and processes through its own sawmilling and manufacturing facilities, and supplies directly to customers through its product distribution centres. It is a model that other businesses have not been able to easily replicate.

The Finlayson business was initially founded by Charles Patterson in 1875 (current part-owners Skene and Michael’s great-grandfather) after Charles emigrated from Scotland. Charles and his two brothers set up the Bon Accord Mill at Indooroopilly, and as one of Queensland’s first milling operations, it quickly laid the foundations for a thriving family business that was to eventuate in the decades to come. 

After a fire ripped through the Indooroopilly site in 1884 the brothers wasted no time rebuilding and relocating to Toowong where the mill became a landmark for nearly a century. Several fires nearly wiped the business out on many occasions, but the family always saw these challenges as an opportunity and each time went on to rebuild with better equipment and upgraded machinery.

It was in 1961 that Charles Patterson’s grand-son, Malcolm Finlayson was appointed Director and continued to work his way up in the business before becoming Managing Director in 1979. 

Throughout the 1960s and 70s, third-generation family member, Malcolm Finlayson set the foundations for Finlayson’s to become an industry leader in timber. 

According to Malcolm’s son and current part-owner, Michael Finlayson, it was throughout the 1960s and 70s that Malcolm began to set the foundations as an industry leader in timber manufacturing and distribution.

“Dad invested heavily in technology including laser cutters and a fully-computerised joinery factory, while the company’s sustainably sourced Queensland hoop pine developed a reputation for colonial woodwork, mouldings and joinery,” Michael said.

Today the mill remains owned and operated by brothers, Skene and Michael Finlayson.

“The design of the business means we have not relied on others to determine our supply chain and success. When Skene and I entered the business in the late 80’s we quickly adopted a multi-channel distribution offer to spread the risk over the cyclic nature of our industry,” Michael said.

“We did not want to be exposed just to the building cycle from a trade perspective so we looked at exporting from our sawmills to get a portion of our cut overseas and spread the risk a bit. At the time the majority of our timber was going through the Finlayson trade retail business,” he said.

“We then opened a wholesale arm as well so we could sell to Mitre 10 and other trade merchants. In doing this, we aimed for a good split across the three – a third via export, a third being wholesale to other wholesale merchants and a third through Finlaysons.”

“While the export business has not been an easy project, we have looked at this as a long-term strategy. Today we are exporting around 35, 40-foot containers per month which is great business but for us it was about smoothing out those bumps when one market is going through a tough time,” Michael said.

Finlayson’s goes full-circle

After being part-owned by other shareholders for several years, in 1998 Malcolm and his two sons bought the business outright. It was such great timing when the business went full circle to be fully owned by the Finlayson family once again, Michael said.

“At the time Skene and I had enough equity in our homes to buy these three shareholders out – apart from Dad – and we did that over several years. Then it was just Dad, Skene and I as shareholders and directors and it was such a special time to be working with Dad for so many years before he passed three years ago.”

“Now both of our sons are working in the Heritage business and we are so lucky to work with them on a day-to-day basis,” he said.

Recognising the shifting market dynamics and the opportunity to grow the business, in 2020 the brothers entered into a sale agreement of its trade retail and installation businesses with the Independent Hardware Group (IHG). 

The divestment included two sites in East Brisbane and Sumner Park, as well as the flooring installations business which runs hand-in-hand with that retail trade operations.

“Being a vertically integrated group, and often competing at a trade level with our wholesale customers, we realised we could not continue to cover all bases. A decision was made to focus on the export, wholesale milling and manufacturing side of the businesses.” 

“IHG was just a great fit because they know the trade. Their people were also accessible, approachable and knowledgeable and that starts with Chief Executive Officer Annette Welsh right at the top. IHG has the scale, resources, expertise and capital to invest in the Finlayson business versus what we could have done as a standalone independent.” 

“The more my brother and I discussed the potential acquisition with them, the more comfortable we felt for our people first, and also the future direction of the business overall so it has been a great thing. Especially when you have 90 staff with over 10 years of service across the group, they are like family so it is not just a matter of selling a business and trying to make money. It is about the longevity of the business and making sure the people are secure and the business will continue to grow,” he said.

General Manager of Retail and Trade operations, Oliver Krumins has leveraged the strength of Finlayson Group as a timber distribution outlet to strengthen the IHG network, establishing hub and spoke arrangements to support other independents with supply. 

“IHG’s investment and strategic retention of its network not only drives growth, but it also allows us to support independents with another avenue of alternate supply-particularly stores who are looking to diversify and expand their range. Finlayson’s continues to support its loyal builder customer base whilst helping independents nurture and grow theirs. It is a win-win for the network,” Oliver said. 

“We then have our Finlayson’s installation business providing builders and the IHG network with diversified product offerings. We are currently updating our installation’s flooring showroom to be one of the largest, most up-to-date timber flooring displays in South East Queensland. This allows our customers, our suppliers and the broader IHG network to have a central selection showroom that we can all benefit from,” he said.

Today, Michael and Skene remain on the advisory board for the Finlayson trade retail operation while also continuing to run the remaining Superior Wood business – a plantation araucaria softwood sawmill located in the Mary Valley. 

“We also have Heritage Products – a joinery and timber value-adding manufacturing plant in Carole Park, along with a sandblasting and coating business – Superior Sandblasting and the Annandale Timber Moulding Company in Sydney, which is a moulding manufacturing business that sells direct to trade and wholesaling as well,” Michael said.

Business recognition

L-R – Brothers Skene and Michael Finlayson, bought the business with their father Malcolm in 1998.

In 2021 the Finlayson family was acknowledged for its leadership and internationally recognised product innovation when it was inducted into the prestigious Queensland Business Hall of Fame. 

Michael believes the long-term success of the Finlayson Group stems from the early mindset of his forefather, who not only worked hard to build the business but also ensured that everyone within it knew that they were an important part of the team and always had a voice no matter what their role was.

“From an early age one of the things our father instilled in us was that all staff were to be respected and heard. These simple principles have assisted us in recruiting the right people and we are fortunate to have long-term, loyal and knowledgeable staff whose focus is to keep our builders building. At our recent long service leave lunch celebration, we had 90 staff attend with over 10 years’ service across the group of companies, with around half of those over 20 years. You just cannot buy that sort of knowledge,” Michael said.

“The other stand out feature of Finlayson’s is our trade focussed range of products. We do not pretend to be retailers and get confused with this. We also have the largest stock range of mouldings in Brisbane. And of course, our relationship with Superior Wood and Heritage Products has kept product on our shelves for our builders throughout the pandemic. Having resource security has been paramount over the last two years especially,” he said.

Timber supply issues

On-going timber supply shortages have brought their fair share of challenges, according to Michael, but have also exposed the need for loyalty from the merchant to
the supplier. 

“The shortages have caused those merchants who just shop around and seek the cheapest price to be caught out. During this time, we decided to look after the builders who were loyal to us ongoing, big and small builders as they are both just as important,” he said.

“The pandemic has proven that resource security is absolutely paramount and loyalty throughout our staff, customers and suppliers have faired very well in all of this. This is particularly the case when it comes to the long associations that we have had with substantial building products and hardware companies. If you have not got this and you are just chopping and changing, I think you are in big trouble, and we have
seen this.”

“In the pandemic’s peak we received around 20 new account applications per week but we simply could not supply those accounts. As much as we would have loved to, we needed to look after the builders who have stuck with us through thick and thin and make sure they have material on site. Only then can we help as many people as possible to source supply,” Michael said.

Supply will continue to be an issue for some time, according to Michael, who said one only has to look to the US market that is forecasting building starts to be at 1.7 million
this year. 

“Nobody knows how long the supply issues are set to continue but with strong US demand coupled with ongoing supply chain constraints, we are still a long way from being out of the woods.

The Finlayson family was acknowledged for its leadership and internationally recognised product innovation when it was inducted into the prestigious Queensland Business Hall of Fame last year.

Future plans

Today the Finlayson Group has over 400 employees and a turnover well in excess of $100 million dollars.

“We have some great plans for both our Superior and Heritage businesses which all continue to grow. As horrible as the pandemic has been, it has been a wake up and catalyst for our customers to realise the importance of resource and supply security here in Australia. Many have been totally reliant on imports and while they are critical to fill in the gaps, having a domestic supplier and producer
is crucial.”

“We also have some very bold but realistic growth plans across the Finlayson Group. IHG have the capital to do this and the future is looking so very positive for all of our staff, customers and businesses going forward,” Michael said.