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Dont know how to sort this one?

Started by hansbaba, March 07, 2008, 11:26:17 PM

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hansbaba

ok, here is the situation. I have been milling redwood for a customer. My average has been about 2500bd ft/day. This is a lot more than I am used to. It is amazing how much can be done with a helper pulling boards and a backhoe moving logs. Anyway. I was upfront with the guy and told him I will mill for a flat rate of $50/hr. I normally do by the bdft but it looked like a lot of rot and I didnt want to mill for free. As it turned out, I underestimated the log quality and if I charged by the bdft I would have made about $1000/day.  8). 50/hr is pretty *DanG good as well for me even though its less than half of what I could have done. Part of our arrangement was to trade or work out some sort of a deal with about 30 20' d-fir logs that he doesnt really want and I do want. My problem is I cant work out a fair way to do that. On one extreme I could tell him he should just let me have them because I am giving him such a good deal.(about $5000 worth of redwood/day). On the other extreme (Iguess) would be to trade 50/50 the material milled. This is sort of an uneven trade because the redwood is worth so much more than the fir. THe customer is really nice and seems willing to do what ever is fair, I just want to do that. I dont want to rip him off and I dont really want to work for free. Any milling advise??

HOOF-ER

I am guessing the loader  and the labor pulling were his? A deal is a deal. Personally I would stick to the agreement. I would figure my labor at 50 an hour and use that total to purchase the  doug fir logs at a fair price. You are sawing more quantity because of his extra help I assume. Value of what is being sawed is irrelevent. Does that mean you would saw for next to nothing if you were sawing cottonwood logs valued at $15/100 bdft?   Just my opinion. Maybe he will appreciate the job you have done and give you a good deal on the fir. ;)
Home built swing mill, 27hp Kawasaki

ErikC

  If he doesn't want the logs, he probably won't be that interested in the lumber either. Might be a bargaining tool. Maybe not charge for a days sawing on the redwood or something if he won't just give them to you? Just bringing it up again might be all the reminder he needs that he wants to give 'em to you. ;D 
  But I'd try not to sound like you think you deserve them because you are doing work under terms you yourself set out. A deal's a deal.

Erik
Peterson 8" with 33' tracks, JCB 1550 4x4 loader backhoe, several stihl chainsaws

beenthere

Quote from: hansbaba on March 07, 2008, 11:26:17 PM
ok, here is the situation. .............. I was upfront with the guy and told him I will mill for a flat rate of $50/hr. ................................what ever is fair, I just want to do that. .............. Any milling advise??

Fair is you will mill for $50/hr. seems to me...  You don't say how long you said you will mill at that flat rate, but after that time is up, then quote a new deal that is agreeable with you. Take the hit that you figured wrong, and correct it next time. At least, that is how I see it from what you describe.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

ARKANSAWYER


  Not sure of the Left coast but here in the Mid South in the woods a man's word is still his bond.  So a deal is a deal.  I saw by the hour and by the bdft.  It does not matter if it is walnut or junk pine the price is the same.
  If he is providing the hand and back hoe then your production would not be as high.  If not and it was not part of your first figure then you got call to refigure.
  If I read it right you could be making $0.40 bdft for sawing instead of $50 an hour.  What your really need to do is re figure you sawing rates.  Like on my WM LT 40 I saw on average 200 bdft an hour.  I get $0.25 bdft to saw so my hour rate is $50.00.  But on the LT70 we get about 500 bdft an hour so we charge $0.25 bdft or $125 an hour.  This may be a good learning deal for you but I would think that if you are covering the mill and your time alone then the deal is the deal.   
  Never look at what the other person is going to make off the sawing becasue it is not right.  If he builds cabins and rents them out and makes $200 a night for 150 nights a year does not mean you should charge him more then the ole man who you cut for that builds dog houses and looses $10 on each one.
  I bet the guy with the logs is saying "You know I could run that mill and save myself $400 a day and do a better job".  "Heck! I could pay for that thing by the time I was done and sell it and make money".       :o  :o  :o  :o
ARKANSAWYER

hansbaba

Thank you for the responses.
First let me clarify one thing.
I agree that a deal is a deal and I am not at all unhappy about the deal. If I had to saw for a year for the guy I would be happy as can be. I am not trying to weasel out of the deal by any means.
He is providing the backhoe and labor which is why my production is so high. I think hoofer probably has the best idea with scaling the fir logs and just purchasing them.
I'll probably just use a scribner scale and deduct from the total. The thing that is a bit odd though is right now d-fir is about 400/thousand from the mills yet it costs about 35-45/thousand milled up and for sale in the lumber yards. I guess the mills are just radically underestimating and making their profit that way.What scales are used out on the east side??

ErikC

QuoteThe thing that is a bit odd though is right now d-fir is about 400/thousand from the mills yet it costs about 35-45/thousand milled up and for sale in the lumber yards. I guess the mills are just radically underestimating and making their profit that way.What scales are used out on the east side??

A couple of other things to realize ....The large mills can have a production cost of less than $25 mbf,they make their profit on volume. The housing market is hurting the lumber market so bad there is an abundance of framing material, also driving down the price. Here on the west coast scribner is pretty much the law of the land, so it would be fair to use as a purchasing scale. That's what any other mill would buy on. And the high grades of fir or bigger timbers are worth a lot more than 2x4's so if they're good logs, you'll do alright.


Erik
Peterson 8" with 33' tracks, JCB 1550 4x4 loader backhoe, several stihl chainsaws

Left Coast Chris

Another double check is to contact some local loggers and see how much they would pay for the logs.   That way if the customer runs into some loggers in the future they  would verify to the owner that he got a fair deal and your reputation in the area would be maintained.   :)

You have to watch out for "sellers remorse" when he sees how nice the DF logs look on a trailer driving by his house.
Home built cantilever head, 24 HP honda mill, Case 580D, MF 135 and one Squirel Dog Jack Russel Mix -- Crickett

olyman

The sticker here, is that you thought there was a lot of rot--that right there is a hanger. As he is now getting a lot of bf, because of it. Which makes your rate very low. But only you know how to deal in this situation. No matter what anyone says. The only thing i would say next time, this much per hr, depending on any rot in log---or per good bf.

Captain

Hans, when log quality is in queston (rot, sweep, etc) the customer pays by the BF of the Log WITHOUT deductions for defect when I saw.  I usually quote log scale anyhow, and will sometimes barter with price when sawing a lot of large dimension stock.

Captain

fencerowphil (Phil L.)

Hans,

The last couple of jobs where I did any barter sawing, I went with 2/3 to me,
1/3 to log owner, rather than 50/50.  You are right to just make an offer on the DFir.  After all,
that is a separate part of the deal - a portion which you both left indefinite.

If he has an interest in some lumber out of it, however,  don't think you have
to go 50/50.  Of course, if the wood is fine stuff, then 50/50 can be a great deal.
For example, if he wants to do that with a future batch of Redwood.
;D

Phil L.
Bi-VacAtional:  Piano tuner and sawyer.  (Use one to take a vacation from the other.) Have two Stihl 090s, one Stihl 075, Echo CS8000, Echo 346,  two Homely-ite 27AVs, Peterson 10" Swingblade Winch Production Frame, 36" and 54"Alaskan mills, and a sore back.

hansbaba

thanks for all the replies.
Some good points were made.
I think i have a handle on how to go about this now.
thank you, hans.

KnotBB

Just a note on how the big mills do it.  When they buy 1000bdf of long logs they saw 2000 bdf out of it.  So if they pay $300/m log scale they actually only paid $150/m of finished lumber.
To forget one's purpose is the commonest form of stupidity.

logwalker

Quote from: KnotBB on March 09, 2008, 01:43:59 PM
Just a note on how the big mills do it.  When they buy 1000bdf of long logs they saw 2000 bdf out of it.  So if they pay $300/m log scale they actually only paid $150/m of finished lumber.

How is it they get so much overscale? I would expect some but not double. Joe
Let's all be careful out there tomorrow. Lt40hd, 22' Kenworth Flatbed rollback dump, MM45B Mitsubishi trackhoe, Clark5000lb Forklift, Kubota L2850 tractor

WDH

One reason is that the log scales are old and were designed way back when the sawing technology was a big circle saw with a big kerf.  While the log rules have stayed the same, the sawing technology has not.  In the old days, there was not much lumber yield from the slabs.  Now, the chipping heads get a board from each slab.  Also, there are computers that scan the exact shape of the log to assure the best yield.  The big mills have curve saws that follow the curve of the log, increasing yield.  It is technological advances that have caused a good bit of the over-run, not shady buying practices by the mills.
Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

Tim

On the stick scales, the efficient mills are making anywhere from 25 to 45% above the rule. Plus, a 2x4 in the store ain't 2x4 either. So... By being able to manufacture to a tighter tolerance, closer to the finished 1 1/2" x 3 1/2", they may be able to take a piece of strapping or another "2x4" out of the same stem. They are also calculating their efficiency including sawdust and chip as this is a product that can be sold as well.

The Ontario Government caught onto this some time ago. All the Crown wood is sold by the tonne now. This isn't a fair practice either as there is no consideration for defect as you run a transport load over the scales. Another reason why very few of us are making money in the bush in the Province of Ontario.

As most of what I'm buying is coming from private, I can still buy by Mfbm.

btw:You're gonna have to eat your error Hans, learn from it and turn it experience into a positive one. At least it isn't costing you $10 an hour to be there.
 
Eastern White Cedar Shingles

KnotBB

We'd better bless that efficiency, it's the only reason the American mills can compete in the world market, but they are exporting the technology as fast as they can find buyers.  And some timber is export limited without saw marks on it.  But just some,  no restrictions on privately owned timber that I know of.

So private timber owners can sell logs to offshore mills that allow those mills to buy new technology to get greater yield from logs to sell more boards on the world market that drive the price down so American mills have to lower their prices to sell product.  Less profit equals fewer mills equals less wood jobs equals more wood chips to make paper for export which equals higher taxes to pay more benefits to unemployed mill workers which drives wood prices higher at the box stores so they can pay for the government subsidies to people without jobs.  The remaining mill workers have to get higher wages to pay the same taxes which drives up manufacturing cost making American wood products less competitive closing more mills which equals...........! 
But the CEO and the CFO got a raise and bonus because they cut operating costs, government workers got a cost of living raise, and the farm subsidy increased to pay for more food stamps.
To forget one's purpose is the commonest form of stupidity.

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