Economics of Sawmill Operations
This thread takes a close look at some hard numbers for logs and various sawn lumber products, and teaches some valuable lessons about how sawmills can make money, or lose money. September 6, 2010
Question
I've got a large amount of white oak available to me, in tree form. I can get these delivered in log form, for $300/m.
Sawing costs me:
14 cents/bf for flat sawing
16 cents/bf for quarter sawing
Drying costs me:
4/4: 18 cents/bf
6/4: 20 cents/bf
8/4: 24 cents/bf
I'm in northern Wisconsin. Can I make any money if I buy this white oak? If so, how would you cut it? I've got about 50,000 BF available to me at that price... Red oak also. I see WoodPlanet has hundreds of oak RFQs, but I have no idea what they are willing to pay.
I am willing, and have the hardware to plane, straight line, and rip this stuff, too, plus two low cost laborers available. I'm not afraid of putting in some time to custom mill the boards to spec. This is not my primary income. I'm looking at this as potential side cash.
Forum Responses
(Sawing and Drying Forum)
From contributor F:
In Ontario I am getting $800 per mbf for pretty well all hardwoods in log form. Checking with some of the Ontario wholesale buyers would give an idea of what they require and pay. The Canadian markets are usually 12 months slower in recessions and are the same recovering after the U.S. Shipping may cost a bit.
From contributor W:
What is the quality of the logs you can get for $300/m and what scale are you going to use to measure the logs? Are they all butt logs 12' long and 16" diameter and bigger with no pin knots? Or are they all tie grade 12", 8' 8" long? I'd say buy a load, saw it up and see what you get out of it before you go overboard on anything. If you can't make money by selling green lumber, you are probably not going to make any profit selling kiln dried either.
From contributor J:
You will have $.62 in each foot log cost plus sawing and drying! Counting wear and tear you will lose money!
From the original questioner:
Per BF:
Logs: .30
Cutting 4/4: .14
Drying: .18
Total of .62/BF of 4/4, kiln dry lumber.
I don't think you meant .62 plus sawing and drying, did you? That .62 includes sawing and drying.
From contributor G:
I'd double check your drying costs on the 6/4 and 8/4. Depending on the MC going into the kiln, it could be quite a bit higher than that. Those are long charges.
From contributor A:
About half of the wood you will just saw and lose money on. About 1/4 of the wood you will just saw and dry and break even on. The last 1/4 you will make good coin on. The trick is to know what to waste time and effort on and when to cut your losses. You will have to make railroad ties, which will break even for you, and the pallet wood will lose you about $200 mbdft. Do not count on overrun to make up the difference. But yes, you can make money doing it. Where you make the most money is qsawing and retail selling the lumber.
From Professor Gene Wengert, forum technical advisor:
Contributor A has some good words of wisdom. I would emphasize that you can saw all day and not make money. You only make money when a product is sold. So you need to make the products that someone will be interested in buying. Drying costs can be substantially reduced by proper air drying, compared to drying green from the saw, but only for certain thickness and species. It would sure be easier to make money if lumber today sold at 2005 prices. Unfortunately, today we are looking at 50% lower in some cases and I am not sure that we've reached the bottom yet.
From contributor G:
Depending on your expected sale price and yield, your entire list of products can be viewed as profitable. I would have never thought in 10th grade that the algebra I was learning was going to be as important as it is in developing pricing strategies. The key is a history of yields, markets for all of the products, and re-pricing your products as they come out of your conversion centers (in this case sawmill) to a new replacement or market cost.
Try not to think about how you lose money on some items, but rather (and this is simplified)...
Revenue = x% Green Boards to be dried (and then further broken down by grade) x (market values) + (y%) ties and other green products, etc. x market prices + (100-x-y%) x dust waste, etc.
On the cost side, you need to make decisions all along that take into consideration the sell vs. process further options. Having said this, you need to know what you are going to do with all the products. I agree with a previous comment about understanding the grade and quality of the logs. Are the veneer logs included? If so, will you saw them or call in a veneer buyer?
I disagree that the money is made in quartering and selling retail. If this were the case we should all buy green quartered lumber and sell it off onesie, twosie style. A log is worth what a log is worth. A plain sawmill, quarter sawmill, and a veneer mill will ultimately determine the value of a log based on what they will yield.
No easy answer, but if you have an expectation for each item, and what you will do with it next, you can place a value on each item and then make a determination on whether it is a risk worth taking or not.
From Professor Gene Wengert, forum technical advisor:
Indeed, when you look at the overall process, it can be profitable. However, we want you to consider that some grades and procedures result in less profit than other lumber grades and sawing (edging and trimming) procedures. In doing this, one sees that certain grades of lumber are very profitable and it is those grades that need to be optimized and produced correctly. At the same time, looking at lower grades that are not profitable can result in better decision making. For example, No.2B Common soft maple is nearly impossible to sell. Hence, when sawing a log, it might be better to consider making a 4x4 rather than produce low grade lumber. In other words, one can look at the overall results and see a profit; one can also dissect the process and see where non-profitable events are occurring.
In my sawing class, I present several examples of what lumber a log of a given size and grade will produce (volume and $$) in order to estimate the profit and the amount that can be spent to purchase a log. I also analyze whether to saw a cant (depending on cant prices) versus lumber (depending on lumber prices) from different logs. Likewise, I look at the potential for sawing versus selling a veneer log.
Where our industry really runs into problems is when the lumber prices are falling while log prices are not or are not falling as quickly (or logs and timber were purchased via a contract at a higher price months earlier). Log costs in the past have been 70 to 75% of the total cost for a hardwood lumber mill. If the lumber prices drop, the percentage of log cost goes up, using up the profit.
As best we can estimate, today hardwood lumber usage is down 33% and lumber prices are down as much as 50% (or even more in a few instances). Sawmill closures are common.
From contributor S:
If I could get white oak logs delivered for $300/th, I would buy it all day long! I have markets from sel. to 3 com.
From the original questioner:
I was kinda hoping to get replies like that last one. I'm surprised most people aren't jumping on that same sentiment... Are most that niche specific?
Contributor A, were you referencing the prices I listed when your formulated your reply? Are you suggesting I'd need to find lower priced logs, and lower cutting costs than I showed, to profit with ties?
And yes, the drying prices I gave are accurate.
From contributor A:
"I would have never thought in 10th grade that the algebra I was learning was going to be as important as it is in developing pricing strategies."
That quote from contributor G may look good on paper, but I took all levels of calculus and differential equations in engineering school. And here where the tooth hits the wood, sometimes the numbers are inverted, or better stated, perverted.
It is a simple fact that no matter what, when you saw some wood, you lose money on it. Some you will just break even on, and if you are good and watchful, you can make money on the rest. It is the wood you make money on you need to watch, and it is the wood you lose money on you need to watch even more. This is a business of millions where every penny counts. I sell pallet stock for $280 mbdft, but paid $350 mbdft for the log. I sell rr ties for $520 mbdft and have $500 mbdft in them. I sell green log run lumber at the yard for $600 mbdft but sell FAS KD S4S for $1500 mbdft that I have $1150 mbdft in. Right now margins are very tight and this is the reason I get 4 to 5 flyers a week for mill auctions. There were 5 mills running here, and now only 2. I know of 10 in the region that have gone under.
Yes, I used your numbers, which are not much different from mine. You just need to account for handling cost and the time your coin is tied up. You will need to learn to read logs and watch your sawyer to make sure you are getting the best cut and edging.
From Professor Gene Wengert, forum technical advisor:
For grade logs, $300 per MBF is a great bargain and, because you do not get something for nothing, I wonder what is going on. If they are low grade logs, then the price is more reasonable, but you will also find that you produce 2/3 or more of No.2 Common. Trying to sell 2 Common at a profit is tough. In fact, the low grade markets are very slow today (cabinets used to buy this grade, but cabinet production is way down with the low housing starts and the increased cabinets from China) and oftentimes the markets today do not want it dried, nor do they want it stained... You have to have a market ready when you saw it.
I wonder why someone would sell logs at such a low price. At the least, they should have a competitive sale and take the highest bid. Has anyone scaled and cruised the stand?
From the original questioner:
Why am I seeing so many RFQs on Woodplanet for #2c, if that market is slow?
From contributor Y:
If you're using Woodplanet RFQs, how much are they willing to pay, who pays the freight? Those are killers on any deal. We are hauling softwood lumber and make more on the freight than the lumber.
From Professor Gene Wengert, forum technical advisor:
#2 Common lumber is still used for cabinets and flooring, so companies are interested in buying this grade, but volumes are small. (Sometimes they want #2 Common and Better with lots of better.) However, they will buy the lowest cost supplier if they have several bids. Hence, the price will be low. Also note that they buy FOB their plant, so you have to include transportation cost, giving you a net lower price.
As with any purchaser of lumber, getting paid can be an issue. Many buyers of t/l lots will regrade the lumber and determine the value and then issue a check in 30 days, but not for any lumber that they claim is below grade or out of specification (too thick, for example). A lot of companies today are slow payers. For export, you can expect to find that quite often you never get paid... but low grade export is rare.
I looked at WoodPlanet and saw that some folks wanted KD. I did not see many No.2 Common hardwoods green.
From contributor S:
If you're sawing for pallet or tie customers, you're dying a slow death, period. The questioner wants to know if sawing white oak logs at $300/th is worth it, and the answer is yes. Even straight sawing, not going for best grade, you can make money.
Will you sell truckload quantities? No. Then you aren't competing with all of the other starving mills. Put value added to work here. Market your products as finished - flooring, v-match paneling, trim, cabinet stock, etc. It might take longer to move your wood, but the price will be a whole lot higher ($2-3 bf).
I've never cut a tie or pallet stock. We turn all low grade into flooring or paneling; we make money the niche way, not the high volume way.
Last month I was looking for white oak logs. #2 were selling for $650/th. Northern Wisconsin, the sawmills don't want to buy logs, no markets. My guess is this wood is available because the logger had a pulp market but no log market.
From the original questioner:
Yes, I do plan on going after the niche market. I am willing to perform value added. I've sold some smaller quantities as a test, and for the higher quality boards, I'm usually getting $4-$6/bf (sometimes even more). For the lower quality, I'm getting $2-$3. Both requiring value added... but nothing very costly. I certainly won't commit to the entire 50KBF being offered to me, but I'd like to hit my markets harder, and see what they can withstand.
From contributor W:
There isn't any information provided about the quality of the logs, so how can anyone determine how much profit can be earned by sawing them?
From Professor Gene Wengert, forum technical advisor:
Let's assume that we have enough 15" diameter logs, grade 3, to give 1050 BF of lumber (Scribner Scale 1000 BF). This lumber, 4/4, will be 37 BF Select and FAS, 178 BF of No.1 Common, 402 BF of No.2 Common and 433 BF of No.3 Common.
What prices should we use (f.o.b. buyer) for green lumber? Perhaps $775, 500, 300 and 225, which includes 100 miles of transport. So, the log above will produce (37 x .775) + (178 x .500) + (402 x .300) + (433 x .225) = $ 335 of green lumber. I am assuming that one could actually sell No.2 and No.3 white oak. When you subtract the log costs ($300) and sawing costs ($140), we are in the hole by $105.
Had this been a No.1 log, we could have made money with lumber worth $560. A No.2 log would be profitless. (This means that the lumber produced from a No.2 log would be cheaper to buy already sawn than to saw it yourself. Plus, by buying the lumber, you could avoid buying the lower grades that do not sell well even after drying.)
Bottom line is that we do not know enough to be certain, but at $300 per MBF, it is hard to believe that these are quality oak logs. You need to know the quality of the logs (and their size) plus have markets for all grades that are active and will allow prompt selling.
From contributor G:
Gene, great breakdown. While the likelihood (if this is timber in the woods) is that there is a distribution of different grade logs and not all low end, this certainly paints the picture of what can happen with a load of logs.
This also goes to the importance of taking good notes and records of what goes into your mill and the yield it leads to. Every successful mill that has brought me on consult has had detailed log reports of inputs and corresponding lumber, cant, and ties reports on the output. It has been their own private jackpot of information to use when purchasing logs out in the woods. It may not change what their competitor is willing to pay for a job, but it will limit what they think will provide a return.
Gene, what have you found to be the best published or available references that are used to help sawmills determine the grade distribution based on log size and grade, other than their own private history?
From Professor Gene Wengert, forum technical advisor:
The US Forest Service had 1000s of logs sawn at regular mills and developed expected yields. It is available at the link below, but it does take a while to load.
Hardwood log grades and lumber grade
From contributor A:
If you take the break down that Doc gave you on the grade yields, you will have a good idea how much junk 50 mbdft of logs will produce.
"This also goes to the importance of taking good notes and records of what goes into your mill and the yield it leads to."
What contributor G says here is very important. You have got to know what you are having sawn and what it produces.
Three hardwood mills that I know went out of business here had put in log scanners. Quantity of products increased but quality dropped. One of the auctions I was at I noticed bundles of 4/4 x 4 oak lumber waiting to be shipped. These were very nice clean boards. Do you know why they were some of the nails in the coffin of this mill?
From the original questioner:
Gene's calculations were done on green lumber, which is not the product I plan on selling, primarily due to the results of the numbers, like Gene just showed. I think I have an advantage, with the low drying costs I noted. Again, my test marketing/sales have shown I can get $4/bf for select, $3 for #1 and $2 for #2 and #3, with minimal value added. And those are minimum prices. Run your calculations again. Now where do we stand?
From Professor Gene Wengert, forum technical advisor:
You are certainly fortunate if you can get $2000 per MBF for KD No.2 Common (I assume 2A) white oak. As the going wholesale price for the same product is under $500 per MBF, why even worry about sawing and drying? Just buy wholesale at $500 and sell retail for 4 times. Likewise, SEL and Btr in white oak is not going for much over $1200 wholesale and you are able to sell it retail at $4000. In fact, you best not tell anyone where you can get such good prices and not let your customers know that prices are lower elsewhere.
With the numbers I presented, why even saw logs? Instead buy lumber from someone else and make the most money running a kiln and a retail yard.
From Professor Gene Wengert, forum technical advisor:
I just contacted a company in New England that will sell No.1 Common KD 4/4 S3S oak for $1.60 (F.O.B. their facility). They will sell under 100 BF to T/L lots.
From the original questioner:
And that's exactly what I have been doing prior to being offered these WO logs. Since I'm not actually doing the cutting and drying (instead a good friend), I'll cut my costs wherever I can, and these WO logs, cut and dried, are lower than average wholesale. With my friend, I'm getting #1c KD s4s, for about half of your quote in New England... especially since I have no delivery cost with mine (my $300/m included delivery of the logs to my sawyer).
Running a retail yard requires commitment. Lumber isn't my full time job - basically a hobby that's gone wild. I make too much money at my full time job to consider quitting it.
The market I sell my wood to allows me to hit it hard when I have the wood, and back off when I don't have the time. The orders really pile up when I'm too busy with my full time job, but people are willing to stick with me and wait, since my prices are so good. My customers have very few (most have none) other places to get what I deliver. And with my low costs with drying and cutting, and logs, you can see that even when others try to compete, they can't... due to price. I certainly pass my low costs on to the customer, and that drastically thins out the competition.
Yes, I could hire people... but we all know the headache that brings on.
From contributor S:
Why are you guys comparing green wood prices? He's not talking about selling green. I won't buy grade sawed lumber period; too much waste involved. If he has a target size when sawing, you don't have the waste factor to deal with. Hence more board footage is used in the final product.
I have no problem buying woods run logs. I get my yields that the log gives up. The bigger mills, over time, have painted themselves into a corner by grade sawing and grading their lumber. They now have limited their markets. If they would offer a grade of wood, say character, which has some of all grades, in nominal sizes - 4", 6", 8"... I've been doing this for years and can sell all of my wood.
The questioner has the capabilities to offer a more finished product. You guys can't compare it to the bigger mills just offering kiln dried lumber. It's called niche marketing.
Do I want to sell a truckload of wood for say $700/th or value add to make a product that will sell for $2500/th, knowing I'm only going to sell in lots of maybe 500-1500 b.f.? I'll take the latter anytime. And if the questioner is only doing this part time, why not sell less for more? Hell, I buy woods run basswood for $300/th and make money. So why not oak?
From contributor G:
He may not be selling green, but what does kiln dried come from? Green. He's got logs, but he has a sell/process further decision to make when operating a sawmill.
Imagine I had customers for all the parts of a cow. I also had access to a herd. It may or may not be that I am best off killing, butchering, and selling the parts. Perhaps, if my real niche is selling steaks, I could just buy the steaks and let someone else deal with the hoofs, bones and hide.
At the sawmill or in any manufacturing facility, to do a proper maximization of profit, you need to consider an alternate usage or alternate supply chain to produce your item.
The point is, if he can buy green or kiln dried for less than what it would cost him to get the logs to that stage, he should do that and save his time and energy to market at the higher price.
From contributor S:
I agree 100%, but if you're selling a product that finishes at 5" wide, how can you determine your cost if you're buying grade sawed random width? Each bundle will give you a different answer. Then what do you do with all the lumber that won't make 5''? The wider boards you can rip down, but your waste factor will be higher. Now you're sitting on your money until you have a market for your narrow stock.
We saw our hardwoods either 6" or 8". Once it's dry I can make 5" floor or v-match the 8". We can make 7" floor or rip in half for 3" floor or trim or whatever, or just sell lumber. I have not had good luck buying lumber on the open markets for the above mentioned reasons.
My customers come to me for more reasons than just wood. God knows we aren't the cheapest. It's the small things that bring them back. Jockeying lumber is not like selling pens, where you know your exact cost. I still say if you're selling a finished product, sawing it yourself is the way to go.
From Professor Gene Wengert, forum technical advisor:
Please note that the mill in New England that I quoted will sell less than 100 BF quantities. Another mill that buys green lumber and dries it is Willis Lumber in Washington Court House, OH and their prices are also about the same as I mentioned. All these are KD prices, not green.
Here is the problem with lower grade logs, which I quoted earlier. Forty percent of the lumber produced from a log is No.3 Common, which is seldom kiln dried and would be very difficult to market in small quantities. Note it was stated that there would be very little value added processing... no planer, etc. I agree that value-added and niche markets are the way to go. One might spend more time and effort in niche marketing than in sawing and drying. I have worked hard to find niche markets that use No.2 and No.3 Common red oak and they are few and far between. (One good value-added product for low grade lumber is character flooring, but you would need flooring machines to plane, t&g, and cut to length. Again, you have to sell this to make money and the market in Northern Wisconsin is small. There are already suppliers for such flooring in Madison and other larger cities.)
Next problem is that 35% of the lumber is No.2 Common, which again is hard to move in small lots and even larger lots. It has a very low value (mainly because lots of mills have plenty of No.2 Common available and need to move it). Many No. 2 markets are for green.
Finally, I quoted green prices to show that it is sawing that is non-profitable. It should be easy for everyone to use (for No.1 and Btr and maybe No.2 Common) the drying costs that the questioner gave ($.18 per BF) and then figure about 6% volume loss due to shrinkage (1060 BF green becomes 1000 BF KD) and 5% loss in value due to degrade (although some data shows white oak loses about 8% or even more). And then there will be storage costs for KD lumber, so $.20 might be a better number to use.
Remember that the questioner is in Northern Wisconsin. There are not many people within 150 miles (or even 200 miles perhaps) and wood using industries are even more difficult to find in that region today. Transport to Minneapolis, Milwaukee or Chicago would be exorbitant and would have lots of competition.
Note that WoodPlanet has some requests for No.2 Common, but their prices are traditionally low. The questioner mentions them in his original note and states he does not know what they pay. He does state he knows prices he can get (apparently for small quantities) in a later message.
From contributor S:
I'm located in the "dead zone" of northern Wisconsin! Last year (2009) we made and sold 400,000 sq.ft of hardwood flooring that we sawed using all woods run logs. Most of my customers want the character wood (#2-#3 grade) floor. So as most mills couldn't sell wood to save their soles, we did okay. Just because most everyone takes the freeway, does that make it the best way? Maybe the bigger mills need to rethink the way of doing business in this new economy.
So the lower grade lumber that the bigger mills don't dry because of no markets, we dry and make flooring and sell for $2.95 and up. It's not worth doing? Please explain.
Small mills like mine shouldn't even be compared to what the bigger ones do. We aren't designed to be high volume to turn a profit. Most people on this site are small, so you're not comparing apples to apples. Also the bigger mills that have stayed busy during this downturn probably have value added capabilities.
From Professor Gene Wengert, forum technical advisor:
Contributor S, you have changed the rules from your original posting. You did not mention processing after drying or the cost of doing so. I agree that character floors are excellent... Just put one in myself in my home. The original question was should you buy the white oak logs. White oak does not make as beautiful floors, compared to red oak. Red oak looks better.
My point was that sawing low cost logs can lead to uneconomical operations and that it would be more economical in many cases to buy the green grades you need rather than sawing it. That is why I gave green lumber examples.
It is the final processing that will make you the highest profit and such a profit can cover up the losses in sawing.
From contributor F:
I am still wondering on the grade of the logs. The questioner can buy them in tree form and have them cut and delivered for $300 per thousand. If they are in tree form, can you smorgasboard the cut? Take only the select logs. Is the logger experienced? Anyone can holler "timber" - it is the cutting to length that also determines the grade of log.
I agree with Gene. A market has to be available so that once the material is cut and processed, it is sold. In today's economy we have to think in reverse. In good times we could cut lumber of all sizes and grades and a market or sale would follow. Now we have to find a need and then find the logs and material to fill it. In past messages I have questioned building inventory for the future. Not all that is cut can be stored. We have to make a living and sell as much as possible, but perhaps some that can not be sold at a reasonable price could be stored. Insects seem to be the one big factor.
From contributor S:
You assumed I just sawed and maybe kiln dried. The questioner mentioned he can add value. With that, he can make money buying his logs at $300/th. Gene, as always it's great to discuss topics with you.
From the original questioner:
I'm confused. Why is it even being suggested that I buy green lumber, when my logs are so cheap, my cutting and drying are so cheap, and there's no delivery cost?
And contributor G writes: "The point is, if the questioner can buy green or kiln dried for less than what it would cost him to get the logs to that stage, he should do that and save his time and energy to market at the higher price."
Keyword is "if." But it's not gonna happen, because my costs are so low on the logs, cutting, and drying. Also, I do run my boards through the planer, before I add a little more value. I consider that minimal processing.
I cannot smorgasboard the cut. None of my stuff is pre-sold. But it all sells. From the sounds of things, contributor S has a good handle on how this has worked for me.
From contributor A:
Here in north central Arkansas, hardwood saw logs are going for $36 a ton. On average they say it takes 8 ton for 1mbdft, so that would be about $288 mbdft. I pay $45 a ton but am pickier on what I take. I only use about 350 to 400 ton of oak a year. My WM gets about 250 bdft per ton of logs.
Why would I buy lumber when I could get logs and sawing so cheap, you ask? It is called turnaround time on investment. If you can sell the wood, why spend $1,000 on logs and sawing and wait 90 days till you can make your profit, when you can buy $1,000 of lumber today and have your profit next week and start over again? I buy lumber from other mills all the time and if I could get money to expand, I would buy a lot more. Why? Turnaround time on investment. Why do I saw? I just really love to saw. Matter of fact, I am fixing to go out and turn on the lights and try to get in a few more hours today and make a few more qsaw red oak boards.
From the original questioner:
Very good point. I really respect your dedication to need for sawdust!
From contributor W:
Go out to the logger's worksite and take some photos of the logs you can get for $300/m. Put them up here so we can look them over. Include diameter measurements and shots that show the ends of the logs. Most of people here know profitable logs when they see them.
From contributor S:
If I could buy sawn lumber the exact sizes I need every time I need lumber and it was cheap, I would do it, but since I can't, that is why I saw lumber!
From contributor F:
I would think one side of buying green lumber now is to reduce inventories. I know that sounds like I am talking out of both sides of my mouth at the same time, as I have suggested us smaller guys create some inventory for the future. However using up green inventories and adding value by drying, planing, etc. will spread the work around plus reduce inventories, which will eventually create demand and improve prices.
I agree that we do not have the info on the situation to make a proper decision.
Can the land be leased for a period of time to allow some market recovery? It is the market that dictates whether money can be made. I have at present cuts of downed trees given to me and I know on some of it I will lose money.
Your market is the other factor which I cannot get a flavour for. If it is small orders based on past sales, I think you are not going to make money on any sort of volume.
Unfortunately I agree with Gene that we have not seen the bottom yet. Government stimulus packages run out this summer. We have had reno tax cuts this last year which are running out. Inventories are high. Things will get better, but how long will you have to sit on unsold product?
From Professor Gene Wengert, forum technical advisor:
Please note that my posting on uneconomical sawing was for low grade logs. Medium logs will be better and higher quality logs will be great profit makers (if and when the lumber can be sold).
Also, note that the questioner says he can sell upper grade white oak for $4000 to 6000 per MBF and low grade for $2000 to 3000 per MBF. At those prices for KD, planed white oak lumber, assuming that the market in his area is large enough to buy 50 MBF, he will make plenty of money with any grade log. However, I venture that most people cannot get such good lumber prices, especially for No.2 and 3 Common; for these low grade $200 to 250 would be more common.
From contributor E:
Where do you get logs sawed for .14 bft. and dried for .18bft? I sure would like to find that place!
From the original questioner:
I view my low cost for sawing and drying as one of the benefits I have in allowing me to undercut my competition with my final products. That's just another reason I'm not interested in buying lumber already cut and/or dried. I'd love to share the source, but I'm going to have him pretty much buried with wood to process!
From contributor E:
What kind of saw does this sawyer have? Must run at 300 feet a minute. What does the kiln run on?
From Professor Gene Wengert, forum technical advisor:
Using a DH kiln, it is possible to dry most 4/5 and 5/4 hardwoods, using air drying first on the slow drying species like oak, for under $150 per MBF (or $.15 per foot) and some species under $100. The data for such is in "
Drying Hardwood Lumber." Two big items in drying are energy cost and degrade, both of which are under the control of the operator. Stacking costs are typically around $25 per MBF ($0.025 per BF). The cost of $180 per MBF would be for contract drying rather than doing it oneself and I have seen higher (before the economy dumped).
From the original questioner:
Gene, thanks for the good info on quarter sawn vs flat sawn. That will be great info for me to have and pass along.
The sawyer uses a Wood-Mizer. I think it's an LT40.
When drying, first he fully air dries all lumber, then puts it into his wood fired kiln to get it to 6-8%. I recall seeing some sort of baffling system in his kiln that distributes the heat well. Lumber has been excellent that I've gotten dried by him. The cherry especially. Many people commented on the richness of the color, as well as the ease to work it. I sold the cherry as soon as I marketed it.
I interpreted richness to equal darker than most lumberyard cherry, and ease to equal softer, easier to cut, plane, sand, and drive a nail into than most lumberyard cherry. Scroll sawyers especially loved this "slow baked" cherry.
From contributor E:
I live 75 miles north of Wood-Mizer's headquarters. Have seen their mills in action, even the LT40. This sawyer must be either superman or just plain nuts to saw for .14 bft.
From Professor Gene Wengert, forum technical advisor:
The color of cherry is determined by the initial drying stage, so air drying in this case. The softness or similar terms are based on the tree itself and whether the wood has been over-dried. Apparently this person is very careful to avoid over-drying. The drying cost that he charges you is reasonable, as he has to make a profit, and as you carry the inventory costs and degrade costs. I assume that he does not charge you extra for stacking. Note that by air drying, energy costs are very low in any system.
From the original questioner:
He's certainly not superman. Nor would I say "nuts." I'd call him very, very frugal... and far from greedy. As Gene said, his price is reasonable. Correct - he does not charge me for stacking.
From contributor F:
I guess my other concern would be if something were to happen to the individual that is doing all this work for gas money and a sandwich. I think I would be putting key man insurance on him; he is as big a factor as the price of the logs.
From contributor E:
Reasonable and frugal are not the words I would use! How about dirt cheap?
From the original questioner:
I know, I know... With his rates so low, I'm tempted to tell him to keep cutting and drying, nonstop for me.
From contributor S:
Your sawyer is really not out of line with his prices. Our custom price for sawing is .20, kiln drying is .20. Far as putting insurance on your sawyer? What good will that do? If he dies he's still dead, with or without insurance. There is no doubt in my mind you'll make out just fine with this project.
From contributor E:
You can saw 1000 bft. for $200.00 for anyone, don't have to be a relative? Where are you at? Do you make gas and lunch money doing it?
From contributor S:
I will even saw for you, and afterward you can buy me lunch! Whether I saw by the tach hour ($70) or by the bf, I make money, average of 475 b.f./hour. If your saw is working 8 hours/day, 5 days/week, you have clean wood to cut, you sharpen your own blades, you can read logs on the fly, your mill building is laid out for the least amount of steps, how could you not make more than gas and groceries?
From contributor W:
How many helpers does it take to run 475 bd/ft an hour all day long on a Wood-Mizer?
From contributor F:
I wonder the same - how many employees does it take to cut, trim, sort and stack at 475bdf per hour? The old rule of thumb for circular mills was 1000 bdf per hour and 1000 bdf per employee per 8 hour shift for an 8 woman/man shift. There of course was a lot of waste in the sawdust pile, and of course many variables like size, quality of logs etc. It was just a rule of thumb.
From contributor S:
We have one person besides the sawyer. We don't grade saw, so that saves time. Don't do any sorting or trimming. Slabs go into slab racks, lumber gets stickered in another pile, all gets moved with a skid loader. We mostly saw 16' logs on the mill using 1-1/2 x .055 blades. Change blades about every 500 b.f. or so. Sharp blades always gain footage.
Your formula used for circle mills seems way off. Before I went to bandmills, we had a circle mill. Three guys plus the sawyer. We would cut 10-12,000 b.f./day. Yeah, you were tired at the end of the day, but I guess that's why it's called work. The key to any operation is having everything move smoothly, with the least amount of steps. Every move needs to be in a positive direction.
From contributor F:
As I said, we have a lot of variables. We were cutting small logs down to 5 inch tops and 8 feet long into studs, etc., ends trimmed, etc., mainly softwoods trimmed, stacked, and sorted. The planer would size and grade. Ends had to be trimmed, no spears allowed for grading.
I have wondered as to the comparison from circular mills to band. I appreciate your input as you have had both. Do you just cut hardwoods? We have an old McCrae with an Oliver (Canada built in Orillia, On.) edger, 120 h.p. diesel, 54 inch blades. We run mainly softwood, much the same as a scragg mill, 2 sides on the carriage and through the edger. Cutting larger logs leaves a lot of waste in the sawdust pile.
From contributor S:
We cut all species. Maybe a little heavier on softwoods. Man, I liked the circle mill. We had a vertical edger built for it. Your first cut was slab, second you were cutting lumber. You would swing in the edger and in the same pass be cutting the bark edges off either 4-6-8" depending on the face opening. The big downfall was the saw kerf, 3/8" during the course of a day - wow, a lot of sawdust.
From contributor F:
Yes, it is quite a rush. I had thought of trying to convert to a vertical band blade, just in one direction. I don't know what it would take. The sawdust is a bummer in larger white pine for us. The small logs aren't so bad.
From contributor C:
So you have a market that is willing to pay absurd prices, considering-the-current-market-prices, yet you state: "I see Woodplanet has hundreds of oak RFQ's... but I have no idea what they are willing to pay." I say go for it.
From the original questioner:
Yes, I seem to be able to get good money, but in relatively low quantity. That's why I looked at Wood Planet, to see what people were buying out there. But it's full of RFQs, no target prices, so I'll just stick with my market. Besides, from what I'm reading, and from what you are echoing, the prices I'm able to get blow the rest away. I'm very happy selling 5 to 10 hotdogs at $5/ea. rather than 80 to 100 at $.50 ea.
From contributor S:
It never fails, a topic always to turn food. From wood jockey to wiener peddler...
From Professor Gene Wengert, forum technical advisor:
You did say that you had a "large amount" of white oak, so I believe many of the responses were based on the idea that you wanted to convert this large supply into money over a short period of time. Your latest posting indicates that you are willing to sell a small amount for an excellent price. Small quantities and high prices seem to go together; likewise, larger quantities are sold at lower prices. Larger quantities tend to be graded and the quality is within a narrow range.
