Developing lumber suppliers

Drum · July 17, 2004, 02:54:33 PM

This is my first message on the forum and I am new to the lumber business but have extensive business experience. I have been working with a retail / distribution outfit in West Tennessee that specializes in mostly kiln dried FAS grade lumber in 80+ different species. The lumber buyers at our business are older (70+) and rely on relationships established over a lifetime but I'm beginning to suspect they may be in a rut and perhaps haven't changed with the industry.
We move a lot of lumber but, because we carry so many different species, our order quantities (avg order quantity is probably 3,000 bf) are not particularly attractive to the mills (eg Frank Miller) we deal with. So it's almost like they are doing us a favor to deal with us.
Ok, now to my question and, please remember that I am new to the business so I may be misinterpreting the situation.
Would we be better off developing as sources smaller, quality oriented mills that might be willing to make the better cuts and locate the better logs for us? If so, how would you suggest evaluating potential suppliers?
Of course, pricing (and freight) is always an issue. Currently our margins are ok in the retail end of the business (although I think our quality could be improved) but we have many wholesale opportunities where we are just too expensive.
We might consider buying whole logs, green and or air dried lumber. We have an excellent kiln operation down the street and we have some room, both outside and covered, for air drying.
I realize I'm asking for a lot of education but I would really appreciate your ideas and suggestions.

Percy · July 17, 2004, 03:31:53 PM

heya Drum
Im up in northern B.C(Canada) so I probably couldnt help you out cept mebey WRC clears. Regardless, there are hundreds of millers on this forum(many close to you) that would love to have a stable relationship with a lumber buyer. I think you will get lots of response from this post. ;D

Fla._Deadheader · July 17, 2004, 03:56:36 PM

If you are interested in Sinker Cypress, give me an instant message.

Oh, almost forgot. Welcome to the Forum. You should like it here.

MemphisLogger · July 17, 2004, 05:05:16 PM

Drum,

I'll assume you're on Jackson? ;) If so, I'll let you in on a few personal observations.

BTW, I worked as Saturday help for awhile at that Jackson Ave. purveyor of fine woods--gotta a coffee cup from it sittin' here on my desk to remember it by.

First, let me be complimentary of your range of species--you're the only place within 200 miles that you can walk in and buy imported wood. ;D Unfortunately, you don't often have very spectacular pieces and when you do, they are priced VERY high. A larger selection of slabs, even natural edged ones, and/or carefully matced log sets would probably bring a lot of interest though they would take up space and may not move really quickly.

Being a self-employed woodworker, I've found your prices on domestic woods to be VERY high. Most of the cabinet makers I know go to Cirtain or Insterstate for their Birch, Maple and Oak and a lot of Cherry, Walnut and QS stuff is freighted in from out of state.

When I have purchased larger loads (200-500 bdft) of lumber from you for cabinet jobs, I was often disappointed by the results of your storage and handling--one time I had to buy 2 times over my cutlist (already factoring 20% waste) to get enough straight pieces for a bunch of 52" long 3/4" stiles. My advice here would be to STOP S2Sing everything to 13/16"! :'( All the furniture makers I know prefer rough lumber and rough cut their parts before jointing and planing which they will have to do regardless of whether you've S2Sed already. :

From my experience custom sawing and selling wood that I saw, what serious woodworkers in Memphis (the ones that are ordering in from out of state) desire is well matched and balanced wood. They don't want to pick though racks of mismatched, bowed and bastardsawn to find a few pieces that have similar grain and color. I'm sure that if you buy staright from the mill, there will be some naturally occuring order to the lumber, if you could keep wood from the same trees tgother as much as possible, customers will appreciate it. A lot of them that are ordering from out of state are buying from dealers that offer matched sets and logruns.

If someone comes by my place for 100 feet of something, but sees that it's coming out of a matched log set, he/she will almost invariably end up taking the whole log, even if it's several hundred feet more than they came for. ??? They'll even want/take the lower grade that came from the middle of the log if I sawed it through and through. I number the boards in each quarter when we QS and customers are thrilled by the ability to design pieces with bookmatched parts.

Definitely explore relationships with small mills--I'm sure the old man did when he was starting out. It's my impression that small mills will by nature pay more attention to detail and be more open to sawing lower volumes of specialty material (QS, slab, livesawn flitches, etc.)

If y'all started bringing in a more premium product, not only would your local retail improve, your regional wholesale would grow and you might realize opportunities for internet marketing. The "old man" doesn't realize this.

All that said, I've gotta tell you about the time I pulled up to pick up a router bit and happened to have 500+ bdft of 5/4 Walnut on my trailer. It was virtually all FAS, 12" to 24" wide and 10' long. The "old man" was out front and asked me where I got the lumber. I told him I just sawed it and, for a lark, asked if he wanted to buy it at a buck a board foot (I actually could have used a quick $500 for a chainsaw I wanted). He told me he already had a source Walnut and as if he thought I was peddling wood in his parking lot, seemed to suggest that I needed to be moving on. I guess he didn't see the bag, latest issue of Fine Woodworking and receipt in my hand.

Anyhow, if he had bought it at a buck a bdft and kilned it down the street, it all would have all ended up on your $8 and $12 racks.

Too bad (for you) the old man wasn't open to new sources--I just got done making a couple of entertainment centers (good for me) out of it.

Ron Wenrich · July 17, 2004, 06:28:07 PM

Welcome to the forum! We finally have attracted the allusive lumber buyer/

I've dealt with guys like you have that are buyers. Old guys that have been around the business for a long time. They usually know what works and what don't or won't. Make good friends with those old birds. Pick their brains for every morsel of knowledge you can. They have business longevity for a reason.

Now, that's not to say that their practices can't be improved upon. Sometimes they can, sometimes they can't.

It seems to me that your best bet is to buy lumber in trailerload lots. Reason: you'll be able to buy it a lot cheaper than if you try to buy a couple of Mbf at a time. If you start to buy specific grades, I'm going to want a premium. The more I handle, the more it costs you.

Since you handle a good deal of species, it might be worthwhile to go out and try to pick up those off species that mills have laying around the yards. For example, we don't generate much hickory or hard maple. We're real glad to get rid of partial lots of about 1 Mbf. Mixed truckloads of species can be a good buying tactic.

I'm not sure exactly the scope of your operations. Are you selling primarily to the retail market or is the bulk of your business supplying other businesses? That would make a difference on how you would buy lumber.

We have several operations that buy in trailerload lots of lumber, then seperate for different users. They usually kiln dry the loads. They then sell the smaller lots for a premium. Quality isn't an issue as long as everything is consistent. Cutting your quality too close can be a problem with some buyers. Your quality increases as you better maintain your inventory.

Kiln drying and lumber sales can go very well together. But, you need enough area to adequately air-dry and store lumber before and after the kilning process. That also means you need an increased lumber inventory. There are associated carrying costs.

Getting in logs to cut would be a big challenge to your organization. You have the problems of mill installation, log procurement, worker training, log procurement, residue sales, log procurement, and normal operations. Did I mention log procurement? I've seen too many mills go by the wayside due to not being able to buy suitable logs at an affordable price. Before jumping into that venture, make sure you have your ducks in a row.

At this juncture, I would think the best approach right now is to increase your quality control. You will probably get your biggest return for the least amount of input. Find out how much waste you have, and how to prevent it. Is it a purchasing problem or a storage problem, for example? Solve those problems first. From there, you can go and look at your other options.

Drum · July 18, 2004, 10:00:56 AM

Thanks for thoughtful, and thought provoking replies. It just further proves what a great resource this forum can be!
Please, don't take my, perhaps indelicate, remarks about the elder statesmen (or existing suppliers) in our business to be a sign of disrespect. They have also been generous with their time and tolerant of my ignorance as I attempt to learn the business. We all have difficulty looking at business with fresh eyes after we've been immersed in it for a few years. I'm questioning everything but in the end there may not be better way.
To Urban Logger: Thanks for taking the time for your comments! I'm taking them very seriously and will be exploring answers to those over the next few weeks.
To Ron Wenrich: I'm still trying to digest some of your comments. To give you a little more background, the business is mostly retail, selling to woodworker hobbyists, construction companies and large businesses, etc. We do a fair amount of business with milling operations, cabinet makers, furniture makers, etc. but we need to develop more of that business. I call this wholesale because the margins are lower with correspondingly faster turns.
Whenever feasible we do try to buy lumber in trailerloads but of course we wrestle with overstocking vs freight. You did make comments that might help us achieve more trailerload purchases. Do most mills have partial lots of species? What kind of operations are those that "buy in trailerload lots, then separate for different users"? What do you mean by the statement "quality increases as you better maintain your inventory"? I think we do a decent job with our inventory but maybe I'm wrong. I suspect most problems we have are related to holding lumber too long.

oakiemac · July 18, 2004, 01:21:53 PM

Welcome Drum,

As an owner of a small sawmilling operation, I would love to find customers such as yourself that would be willing to buy 1-3Mbft of a particular species. Right now I primarily sell to a couple of large concentration yards who kiln dry the lumber then turn around and sell it to companys such as yours. It would only make sense to cut out the middle men, then both producer and consumer would benefit. Many small mills can provide kiln dried lumber as well. Specialized cuts such as thick boards (12/4-16/4), quartersawn, highly figured wood, book matched, ect can all be provided by the smaller saw mills.
Again, welcome to the forum and don't be afraid to utilize the small mills.

Ron Wenrich · July 18, 2004, 01:46:16 PM

There's one company that is run by a couple of old guys to the north of me. The pay is slow, the grade is great, and the price is fair. You can do a lot worse. One guy went down and demanded payment for a load they bought. Of course, they paid him on the spot, but they never bought another board from him. Stable markets are a very valuable asset.

I do work for a medium sized hardwood mill here in PA. We do our own logging and buy timber from several different foresters. We cut what happens to be available. On some jobs, you'll get a few trees of several different species. If we held on to them until we got a trailerload of lumber, we would experience degrade due to the logs laying around.

We have found several different sources that will take partial lots. Its beneficial for us to keep our log inventory turned, and its beneficial for the broker. A lot of mills have the same problem, so the broker can combine those lots into bigger lots, which attracts more customers.

A lot of brokers will buy in lumber that is rated at 2Com & Btr. All the brokers in our area have their own graders and buy by their grade. If their grade is fair, they don't have too much problem. What they do is combine all the lumber and break it down further. There are some huge brokers doing this.

For example, tulip poplar has a lot of different breakdowns. You have some users that only want Saps, some only want 1 Com, some can use a sound back Select, some only want 7' & 8; (casket companies), some want 14'-16' F1F & Btr, some want 10" and wider. As you can see, a small or medium sized mill would have a rough time making that many sorts. All those sorts get a premium on the other end.

Most of the brokers in our area sound a lot like your operation. We also have a few large mills that compete with the brokers. The retail end of the business is usually a small component. Sales of small lots to cabinet markers and the like are more the norm. We have one county with over 200 woodworking shops.

Some operations will buy in trailerload lots, kiln dry, and use what lumber they need in their operations and sell the rest. Most often it would be a panel maker using the 1 & 2 Com and the uppers would go for a premium. Don't overlook the export markets.

Inventory maintainence is how well you handle your lumber through your operation. You will have a certain amount of degrade. If it is excessive, it probably stems from how you handle your lumber. Severe surface checks, stain, splits, and other defects may be a sign. You have to determine whether you think you can lessen it or if you just want it to be a cost of doing business.

Is the quality problem from laying too long or was it from poor manufacturing? When buying lumber, you write the specs. All my buyers want plump sawn lumber. Can it be remanufactured into a salable piece?

oakiemac · July 18, 2004, 04:53:55 PM

Ron, what is plump sawn lumber?

Ron Wenrich · July 18, 2004, 06:18:52 PM

Plump sawn means it is sawn a little heavier than NHLA specs. My 4/4 is sawn 1 1/8", although specs call for 1 1/16".

I have a 6/4 poplar account that requires 1 5/8" and an 8/4 ash & hard maple account that that requires 2 1/4". These last 2 accounts I got because the lumber is cut plump and I got them during a down market cycle. They pay well, and grade good. The ash grades on the best side.

Drum · July 18, 2004, 09:04:08 PM

oakimac: thanks for the encouragement. Also, thanks for asking about "plump sawn" lumber. That's a new term for me as well. Which species are you likely to have in your yard?
Ron Wenrich: Thanks again. You've given me a lot of food for thought and further investigation on my end. Do brokers generally operate locally, regionally, or nationally?

Ron Wenrich · July 19, 2004, 04:05:48 AM

Most brokers are local, having only one main office and one concentration yard. In my area, most of the large mills act like brokers and buy from the local mills.

There are a few that are regional. Baillie out of Buffalo has 7 kilns in 3 states. They move something lik 100 MMbf,.

I don't know of any national brokers. Most will either deal in hardwoods or softwoods. The large multi-national companies like Weyerhauser or Georgia Pacific would come to mind.