Balcas; The Natural Leader

Balcas, previously Ballycassidy Sawmills Limited, has come a long way in its 60-year history. With the world looking towards a carbon neutral future by 2050, the company couldn’t be in a better position to capitalise on its existing growth, CEO Brian Murphy tells Emma Deighan.

Ballycassidy sawmills began life as a small processor of hard wood, but with increasing supplies of softwood on the island of Ireland, Ballycassidy incorporated in 1962, and changed its business to one that exclusively processes the softwood crop from Ireland’s forests. Brian says as the harvest from Ireland forests increased, so too did Fermanagh-based Ballycassidy.

“By the 1990s the company was increasingly targeting markets in Great Britain and it was thought appropriate to simplify the name. Ballycassidy Sawmills became Balcas in 1991,” he begins.

“The first real step outside of being a small, single site business was actually in 1988 when we bought a company in Kildare that provided a commercial timber drying service. Ballycassidy expanded this

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business and pioneered the manufacture of primed architectural mouldings from mdf in these islands,” he adds.

A series of acquisitions and sell-offs over the next few decades would turn Balcas into the major sawmill, and the carbon neutral energy provider it is today. Balcas sells timber to merchants in NI, the Republic of Ireland and Great Britain. “Many readers could very easily have some Balcas timber within their house construction, or in their garden,” says Brian, who joined the firm in 1992 shortly prior to it acquiring its nearest competitor, which was in the midst of an administration process.

“That allowed us to grow what was a modest business with a turnover of £8m in 1992 up to £20m by the mid-nineties. Balcas then went on the acquisition trail. It bought a pallet manufacturer in Co Antrim in 1995.”

“By 1996 Balcas had three sawmills and six different sites including a presence in Estonia. This scaling up, along with the talent acquired, has ultimately allowed us to consolidate into a more modern, larger company, that is full of potential.”

In the early noughties Balcas combined its three Irish bases into one at Enniskillen where its headquarters is based. From there it employed a wealth of new technology, that had originated in the US automotive sector, to build one of the most technologically advanced factories of its kind in the world.

“It was a £14m investment,” reveals Brian. “The technology employed is set up so that every log that the factory processes is scanned in three dimensions and an optimal solution is worked out in milliseconds so that the best value is extracted from the piece of raw material (in this case a log).”

New shareholders at different times

brought additional resource and skills that helped drive the company forward. Subsequent to the sawmill investment Balcas continued its journey, investing in Russia and exploring North America, and investing in clean energy from biomass. The company has now rationalised its operation into two strands. Balcas Timber is driven from the factory in Fermanagh; and Balcas Energy is an electricity generator in Enniskillen and at Invergordon in Scotland (producing 95,000 MWh annually), which also provides more than 200,000 tonnes of wood pellets into the UK heat market.

Today Balcas processes one million tonnes of logs every year. All of this raw material comes from sustainability-managed forests in Scotland and Ireland. By nature, that makes the firm one of the most eco-conscious around. “We see trees as a crop,” says Brian. “We harvest the timber and four more trees are planted for every tree we use.”

When the recession hit, Balcas disposed of its Estonian and Russian businesses, and also sold on its Kildare arm in a move to “put the focus on our core business, which has become commercial timber and renewable energy”.

Today Balcas generates enough electricity for over 30,000 homes, generating more energy than it uses. “We provide renewable, clean energy to the grid in Britain and Ireland. Of course that all adds up when it comes to our carbon footprint.”

With the government aiming for a carbon neutral society by 2050, Balcas needn’t feel the pressure. The business causes a net carbon footprint of “minus 500,000 tonnes” says Brian.

It is also contributing to schemes that are helping other firms reach emissions targets with its bark, sawdust and wood chip product supply. Wood pellets became part of the business in 2005 and since then that element of the business has displaced the energy equivalent of three supertankers of crude oil.

“Northern Ireland is a good market for us. Yes, we did have the problems with the NI RHI scheme because we were a supplier of fuel but we continue to supply in Northern Ireland.”

Referencing the controversial RHI scandal Brian adds: “People saw an opportunity and made significant investments. Arguably, some tried to take advantage. RHI was a scheme with laudable objectives but there was a mistake made in how it was structured in NI in that subsidy was provided for all of the hours of the year. There is a similar scheme in the UK only it is capped after approximately 15% of time and that scheme doesn’t have the same runaway problem. Instead it encourages people to use clean energy, but that use of clean energy is not a profit centre.”

Business in recent times has been good for the firm. The most recent published results (2018) for the whole of the company show that turnover was up by 16% to £98m. Pre-tax profits also increased, by 138% to £5.5m and the expectation is that Balcas has a fast-growing opportunity to further boost its growth.

Looking back at 2019, Brian says “We’re a £100m+ business in terms of turnover. This is approximately half and half energy and timber revenue. We have a strong shareholder and the team that runs the business is very committed to trying to get better all the time. There is continuous improvement.”

Opportunities for growth could mean that the firm’s 380-strong team, as well as 300 indirect employees can increase and the investment in skills will allow the firm to safeguard its future talent says Brian.

“We’ve pretty good employment in Co Fermanagh. More recently it has been the General Operative positions that are hardest to fill. I am an optimist, and I think that’s a measure of the success of society. The general workforce has become better educated. We have to invest in looking after our people, like every other firm that requires those skills.

“Over the years we’ve gotten better at supporting our own team and we put a lot of effort into employee equality, welfare and education. The nature of our workplace has changed too. It is now largely automated and we have posts like data scientists, computer technicians, mechanical and electrical engineers and a strong programme of engineering. We put a lot of effort into making sure we have a workforce that is equipped for the future and one that embraces technology,” explains Brian.

Looking to the future of the company, he adds: “The quantity of raw material from sustainable forests in Ireland is expected to double in the next 15 years so it’s important that we continue to improve our own business so that we can pay a fair price for raw material, and meet grower expectations.

“We are also trying to promote the use of wood pellets to the general populous and also to large industrial heat users. Presently we’re supplying dedicated heat to four large distilleries in Scotland. In the future we will look to increase this with industrial firms that have meaningful heat requirements.”

Beyond the drinks sector, Balcas presently is providing heat to a multitude of other sectors including one of the UK’s largest grocery chains.

“It’s available, it’s economical and our annual sales displace 100m litres of oil per year. We’re very positive about the future and we see a lot of growth in the sector, not just for the firm but for our employment and rural economies. We will be part of the solution of decarbonisation and we will keep pushing the story that it’s there today and there’s an opportunity.”

“That allowed us to grow what was a modest business with a turnover of £8m in 1992 up to £20m by the mid-nineties.”