MADISON, N.H. (AP) – In late 2003, things were bleak for the 40 employees at the Madison Lumber Mill. Part of the mill had burned down, and owner International Paper was looking to shut it down.

Enter operations manager Jim Smith and sales manager Kim Moore, who bought the mill and led employees through a cold New Hampshire winter, running the sawing operation, rebuilding a burned-out planer building, and expanding and modernizing the business.

Now, with 50 employees, they are succeeding in the worst economy in their lifetime by listening to customers and nimbly changing production and sales plans – again, with the help of employees who have made sacrifices to keep the mill humming.

The adrenaline started pumping when Smith and Moore took over, rebuilding the planer building, where rough lumber is planed to a smooth finish, installing state-of-the-art equipment and expanding.

“Everyday we’d come in and say, ‘What do we have to do today?”‘ said Smith, now the mill manager. “We’d write 25 things down, then say ‘What did we get done?’ and ‘Now what are we going to do?’ and that went on for a year and a half.”

It started again when the economy, and housing market, tanked last year, slamming the lumber industry.

“We sat down and made a list, ‘What do we have to do?’ – looking at the worst and chopping down through that list every month,” Smith said. “We never got to the bottom of the list, obviously. We are still here.”

The list to cut costs included shorter vacations for senior employees, staggered break and lunch times to keep the planers running, turning lights off, “and countless little things that add up to big things,” Moore said.

Smith, 56, and Moore, 49, have been with the company more than 20 years. They credit their employees, some who have been there for 30 years.

“I think the key is mostly having good people who work hard every day, thinking about how to make improvements,” Moore said, now president and sales manager. “It’s better to have an old, rundown mill with good people than a brand new, shiny mill with people who can’t operate it.”

The difference is that Smith and Moore care what their employees think, said Jeff Jones, who has worked at the mill for 19 years. “I think they do recognize our efforts and our ideas,” said Jones, 46.

“It’s everyone’s ideas. Everyone comes together and puts something together to make it work.”

Smith and Moore said their employees’ flexibility helped the company adapt as people moved away from building homes to more affordable remodeling or fix-up projects.

The mill also listens to customers, Moore said.

“The salespeople go back to the plant and say ‘Can we make this, this and this?’ and if you can, you have sales,” he said.

The mill makes finished white pine, mostly for paneling, siding or trim, but has expanded to garage doors, windows, doors, log homes and other products.

Largely because of their management style, the New Hampshire Timberland Owners Association recently honored the mill with its Outstanding Forest Industry award. It recognizes superior management, efficiency and productivity, quality and marketing of their product, and an impressive safety record.

“It’s a real success story in that you have two individuals who took a mill that was about to be mothballed, or sold, and by their bootstraps, kept it going,” said Executive Director Jasen Stock.

Stock said the lumber industry was stressed before the recession because of an influx of imported wood. The housing slump made a bad situation worse.

“What Kim and Jim have been very successful in doing, due in part to the way they manage their business, is they’ve positioned themselves to be able to weather this storm, do some of the unique orders and some of that niche work that has been able to keep them going.”

Moore said sales have increased from $5 million before the ownership change to $50 million now.

As with most lumber mills, Madison Lumber made major changes over the past few decades to be more efficient, selling wood that once was discarded to make paper, pellets or fuel, Moore said. Wood shavings are sold to horse farms. Bark is sold and so are ground-up pieces of wood that go into press-board, a replacement for plywood. The plant also burns its own sawdust, replacing a thousand gallons of oil a day, to make heat that dries lumber.

“There is nothing that comes off the log that isn’t used for something,” Moore said.