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Author Topic: Charging a premium  (Read 2700 times)

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Online PAmizerman

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Charging a premium
« on: February 08, 2018, 10:30:23 AM »
So I just took three orders this week. They all want 1x10 for siding with 1x3 battons. I've been charging the same price per board foot no matter the width. I'm still sitting on over 2000 feet of 1x8 from last year that was side lumber from a 1x10 job. Nobody wants them. I was thinking about raising the price per foot on my 1x10 and even more for 1x12. Does anyone else charge a premium for the wider boards? It's all hemlock. If you raised you're price did you notice any difference? Or do people want what they want and still pay for it. I just don't want to lose any work over a price increase.
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Offline alanh

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Re: Charging a premium
« Reply #1 on: February 08, 2018, 11:02:37 AM »
I`m not sure about charging a premium but  if I had that many 8`s left I`d be thinking about cutting all those battons from them..talk them down to 2", no waste?

Offline WV Sawmiller

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Re: Charging a premium
« Reply #2 on: February 08, 2018, 12:05:59 PM »
   I see nothing wrong with charging a premium for special orders. The basic question I think you should ask yourself is:

   Is it going to cost me more to cut this wood? Will I have to pay more to get the logs? Will it take me longer to cut it? Do I have to have more help or equipment to cut this order? Do I have a market for any side lumber resulting?

   If the answer to any of the above questions is yes you need to calculate your extra costs and pass them along to the customer.

   BTW - If you are having a hard time getting rid of the 1X8's you might offer to change the batten size to 2" (if the customer can use that) and sell them at a discount. Could you cut them into 2-3" battens and get a 2" furring strip or 2-1" tomato stakes that you could sell to other customers or do you need any stacking strips from the 1" residue?

   When cutting 3" battens I find there is just about no waste off the log.
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Offline Mt406

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Re: Charging a premium
« Reply #3 on: February 08, 2018, 12:46:08 PM »
I have found I have to charge a premium. Case in point. The job I am working on now is 156 3 x 12 x16. I've had to dig a part 2 log decks a total of 3 logging trucks of wood to get logs and had to buy two more logging trucks of wood at a premium price. Normal price here is 85 a ton for these two loads I'm paying 120 a ton. As a result my log yard looks like Pick-up sticks from sorting wood and trying to keep them out of the mud which will take me more time to clean before I Mill so a premium is a must for me anyway. And as for cutting smaller one by threes or one by fours I no longer do that because of the time and waste my opinion would be to sell him the one by Eights at a reasonable price and let him rip them himself and install. That's just my two cents.

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Offline moodnacreek

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Re: Charging a premium
« Reply #4 on: February 08, 2018, 01:07:45 PM »
Each territory has it's own conditions. In my case 2x white oak or locust is the thing. Side boards; 1x6 8' and 16' no problem but 10,12 and 14' no can sell. I burn all the edger sticks and half the slabs and have to give away the saw dust. A little farther up state they can sell all the saw dust and if there is a pallet operation near by all the side lumber and maybe the slabs. So I charge all I can get for what is in constant demand or I can close. Don't bad mouth the other guy for charging more unless you completely understand that area.

Offline WV Sawmiller

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Re: Charging a premium
« Reply #5 on: February 08, 2018, 01:09:50 PM »
Scott and Moody,

   You guys make a real good point here about the 1X3 & 1X4's for you and what sells and does not for him. You have found they are not cost effective for you to cut and don't waste your time. Anyone staying in business needs to know what is profitable and what is not for his situation.

   My milling is largely a paying hobby - I expect to recover my costs plus some but it is not how I make my living so I can afford to cut some items others can't. My lumber sales are from trees I am salvaging off my place that would otherwise go to waste that i cut when I do not have a mobile sawing job to do.

    My suggestions on the 1X8s were just a proposal to get rid of some lumber PAMizernan said had that he said he was having trouble getting rid of. Actually, 1X8's are pretty popular here and I'm surprised they are slow movers but there are different markets in different areas. I can promise as soon as he gets rid of them someone else will come along wanting all he had had plus more. ;D
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Offline POSTON WIDEHEAD

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Re: Charging a premium
« Reply #6 on: February 08, 2018, 06:07:44 PM »
I would hang on to the 1x8's. They will sell come spring. Be patient.
Incidentally I've never like a 2 inch baton.  ;D
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Offline Peter Drouin

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Re: Charging a premium
« Reply #7 on: February 08, 2018, 06:17:08 PM »
My 6" wide pine will pile up some. It will move just slow. Someone will come in and buy all of it.

The whole thing is to keep the lumber in good shape to sell.
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Offline Chuck White

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Re: Charging a premium
« Reply #8 on: February 08, 2018, 06:27:39 PM »
I`m not sure about charging a premium but  if I had that many 8`s left I`d be thinking about cutting all those battons from them..talk them down to 2", no waste?

I don't care for 2" battons, and usually saw out 3", so I would maybe suggest sawing the 8" boards into 2.6" battons, roughly 2½", so 3 battons per 8" board!
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Re: Charging a premium
« Reply #9 on: February 08, 2018, 06:46:54 PM »
Well I worded that kind of poorly. I guess my question is do you have different price points for lumber based on width and how much of a headache does it cause you. Right now I only have two price points...dry and green.


Thanks for all the input so far. I really don't have an issue with the 1x3 battons. I take all the side 1x6 and 1x9 and saw them into battons. It usually works out pretty close for me. So all I have left is the 1x8.
I would not be too overly concerned about the Inventory but I'm pretty limited on space where I'm at now.
I was just wondering if price points might help me move lumber a little more consistently.

As far as cutting them into battons I just have a gut feeling as Soon as I do someone will show up and want them. And I really don't have to cause like I said I cut all my 1x6 into battens with zero waste.
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Re: Charging a premium
« Reply #10 on: February 09, 2018, 10:26:54 PM »
Most of my work is incidental and most of the jobs are under 1000bdft.  I have learned the hard way that you can get buried in unsold side lumber.  Because I am real small, I encourage my customers to buy my lumber by the log now.  They pick out the log and I sell them the log sawed at doyle scale  and all the primary and side lumber is theirs.  Keeps my pasture clear.   

Offline Peter Drouin

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Re: Charging a premium
« Reply #11 on: February 09, 2018, 10:38:04 PM »
Not a bad idea carykong.
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Offline redprospector

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Re: Charging a premium
« Reply #12 on: February 09, 2018, 11:43:22 PM »
I have a price break at 10” wide. I also have another price break at 20’ long, and then again at 24’, 26’, 28’, and 30’.
I’ve found that people are willing to use shorter narrower material if the wide long stuff costs more. They also still buy the wide and long stuff when they need it.
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Offline highleadtimber16

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Re: Charging a premium
« Reply #13 on: February 09, 2018, 11:51:44 PM »
Side lumber has always been an issue it seems. I've found the best way to deal with it, is to keep it clean, organized, and well presented. I have a 12'x20' shed that all my 1" and 2" lumber goes in. It gets pretty full in the winter, come spring it's mostly all gone, and I'm scrambling to keep it stocked. I charge the same price per/bdft whether it's a 1x4 or 1x12. If it is an odd size or something over 12", the price goes up. Sometimes I'll bundle up a lift of utility and put it on craigslist, it goes pretty quick.
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Offline PA_Walnut

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Re: Charging a premium
« Reply #14 on: February 10, 2018, 06:09:32 AM »
Not to derail the topic, but I'm about to saw a lot of board and baton for my own use. What size should I aim for on each?
Have plenty of logs to make what I want, but would like to handle it least as possible!
Thx
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Offline Ron Wenrich

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Re: Charging a premium
« Reply #15 on: February 10, 2018, 06:31:57 AM »
I have board and batten on my house.  Its an 1850s farmhouse.  I used random width boards and a 2½" batten.  That is what was originally on the house.  I used mainly 10" and wider for the boards.  Very little waste.  3" was used on the corners.   

 
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Re: Charging a premium
« Reply #16 on: February 10, 2018, 06:37:22 AM »
I saw a building with 4 inch batten and 10 inch. I drove by that for months before finally I saw someone out. I could not really tell the size of what he used,until he told me just driving by. All I knew was,I liked the looks of it.

                                                                                                                                             

 
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Re: Charging a premium
« Reply #17 on: February 10, 2018, 07:04:10 AM »
Looks like Hansel and Gretel should be coming out the door Ron, like something from a storybook. Pretty.
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Re: Charging a premium
« Reply #18 on: February 10, 2018, 01:00:50 PM »
I've been sawing out some white pine timbers for the last two months and making lots of side lumber. Saving 6" up to 12" all lengths. I have a customer who said he'd buy a lot of it for his 57' timber frame barn he's going to build for his sail boat.

He gave me a list of what he wanted first, so many feet at 8' length, so many feet at 10' lengths, so many feet 12' lengths. These feet are the distance down the side of the garage extension he's building between the house and the barn. It was easy to fill the 8' lengths order. The 12' lengths I just finished. Now he needs 30' of 10' long stock.

After the first delivery of 6", 8", 10" and 12" (mostly 8' long) stock he told me nothing smaller then 10". Which really sucks as three 8" piece make up two feet.

I'm stacking the 6's and 8's aside now, and trying not to make many.
I quoted him one price last fall. And I went up Dec 1st on all prices for everything.
I hadn't raised my prices since 2013 or so.

I hope I will be able to sell off these narrower boards some time.

I have considered upping the price due to the limit of 10" & 12" but I'll wait till he complains about some lumber.
He told me he only wanted lumber without any bug holes and some of these logs have been here a while. and have some blue stain and small bug holes.
And he doesn't want any "gray" lumber only fresh cut so it will all "weather" the same.
I had a farmer come in and he wanted 400 bdft of 10" and 12" stock and he said he didn't care about blue stain or small bug holes. I set aside 460 bdft for him. He has taken 200' bdft so far and said he'd be back soon for the rest.  So I am moving some of the lumber out.

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Offline brianJ

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Re: Charging a premium
« Reply #19 on: February 10, 2018, 03:34:49 PM »
Should I charge a premium?    Well I infer you have less of the wide 10 and 12 inch boards than medium or narrow boards and I infer people want the wider boards more than the medium or narrow boards.   Simple supply and demand.   Seems only logical to charge more.  I dont understand why you would tie yourself in knots trying to justify a higher price.   

Perhaps a more precise question is,  "How much of a premium are the wide boards worth? and possibly at which size do you start charging a premium.

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Re: Charging a premium
« Reply #20 on: February 10, 2018, 08:09:37 PM »
Should I charge a premium?    Well I infer you have less of the wide 10 and 12 inch boards than medium or narrow boards and I infer people want the wider boards more than the medium or narrow boards.   Simple supply and demand.   Seems only logical to charge more.  I dont understand why you would tie yourself in knots trying to justify a higher price.   

Perhaps a more precise question is,  "How much of a premium are the wide boards worth? and possibly at which size do you start charging a premium.
My only concern with a increase is because there are so many Mills out there and it can be a pretty cut throat business. I don't want to price myself out of my local market. I guess I just have to justify it behind my quality and speed of which I supply the lumber. I am self employed and have several options of income at this point but I'm trying to go completely full time sawing.  Picked up another job today. All 1x10.  As long as I can get the logs.
Thanks for all the input. I really appreciate it.
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Offline WV Sawmiller

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Re: Charging a premium
« Reply #21 on: February 10, 2018, 08:24:59 PM »
PA,

   I would not worry about pricing yourself out of the local market. Just go ahead and let the competition drive themselves to bankruptcy selling below production costs and you will be the only mill standing before long.
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Re: Charging a premium
« Reply #22 on: February 10, 2018, 09:08:04 PM »
Just last night I had a guy e-mail me looking for oak lumber.  I gave him the price, I get back a snarky e-mail telling me he paid half that at another mill, in doing so he adds in all sorts of optional language to describe my price. My response was that he "should go back to that mill".  Those types are everywhere.
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Re: Charging a premium
« Reply #23 on: February 11, 2018, 02:07:37 AM »
... do you have different price points for lumber based on width and how much of a headache does it cause you.

Yes. My main product is custom-sawn timbers, typically 8x8 and larger. 1" side lumber is an inevitable byproduct so I saw it into standard sizes and stack and sticker it. The widest side lumber I will normally get from a timber is 8". When someone asks for 1x10, they are basically asking me to saw material from the part of the log that would make a much more valuable timber.

So ... my price for 1x nearly doubles when the width is above 8". Your circumstances may vary depending on what you normally saw.

... My only concern with a increase is because there are so many Mills out there and it can be a pretty cut throat business. ...

That's why I have never tried to compete on price. I cut a quality product and have a set of prices that will let me earn enough to make it worthwhile to stay in business. The price for a given size reflects the cost of the wood and the amount of time I have to spend sawing it.

The only customers I've lost because of price weren't worth the time and trouble of dealing with.

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Re: Charging a premium
« Reply #24 on: February 11, 2018, 06:00:14 AM »
I charge a premium for width... it reflects the yield of the log and the grade of the log required to cut it, so I expect my customer to pay more for that product. Its all the same as length... 8' is easy, but 16's are harder and by the time you get past 24' they're a PITA...

What does the nearest box store/timber merchant charge? Same flat rate per BF for 3" as 12" wide? I'll bet they dont.

Worrying about what the guy down the road is doing is a real bad move: I'm the dearest mill to buy off in a hundred miles... and the busiest, and the fastest expanding. While they're worrying about me I'm worrying about punching out orders on spec and on time. That doesnt mean I'm way out the ballpark on price but I dont discount for nothing or no-one. I'll starve before I cut my own throat selling myself short.

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Re: Charging a premium
« Reply #25 on: February 11, 2018, 07:55:22 AM »
Everytime I have purchased lumber the price has always been higher for anything 10" and over.

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Re: Charging a premium
« Reply #26 on: February 11, 2018, 08:46:32 AM »
Picked up another job today. All 1x10.  As long as I can get the logs.

What are you leaving unsaid?    "Once I figure out where to get these better logs they will cost me more"   Of course that is just supply and demand.   

@Brucer   Nearly doubles for more than 8"    Yikes I would never had guessed it was that high a jump. 

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Re: Charging a premium
« Reply #27 on: February 11, 2018, 09:32:39 AM »
My Old Saying,I can make more money digging rocks. Than my FIL says,there no money in digging rocks. Catching on pretty quick,is my next remark.  ;)
You have to charge enough to make money,cut and dry. And I am not talking making only pennies either.
I can make more money digging rocks.  :D
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Re: Charging a premium
« Reply #28 on: February 11, 2018, 09:35:52 AM »
One of my first jobs was an order for 10" wide hemlock . I was so excited right up until I saw my over run pile growing faster than my order pile .  Then the guy didn't take all of the 10" wide stuff ! So yes I would charge more ! And I do . Not that anyone is lining up out my drive way to buy lumber but I am not a stock yard . I have learned over a few short years that pricing has to be in line with the job . Normal run stuff normal pricing , over size and specific order stuff commands a premium . I much prefer the portable situations were I just go and mill the customers logs into what they want and leave them with their over run . I tend to have good luck with the small amounts of over run on my own stuff ,but, like I said I am not a lumber yard .
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Re: Charging a premium
« Reply #29 on: February 11, 2018, 01:04:36 PM »
Brian, the reason it nearly doubles is that a wane-free 1x10 comes off the side of what could be a much more valuable timber. So I charge the same $/BF for the 1x10 as I would for a 6x10 or an 8x10.

Keep in mind that my main product is not boards or lumber, it's timbers. When I quote a price for 1x10 or 1x12 the customers get that glassy-eyed look :o, but when I explain why it costs so much, they nearly always understand.

What you charge for anything depends on your personal circumstances. What do raw materials cost, what kind of equipment do you own, what's your market, and so on. But at the end of the day you have to make money or you're not really a business.
Bruce    LT40HDG28 bandsaw with two 6' extensions.
"Complex problems have simple, easy to understand wrong answers."

Offline Dave Shepard

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Re: Charging a premium
« Reply #30 on: February 11, 2018, 01:49:16 PM »
 My prices are always negotiable. I will always accept more than I'm asking.

A friend of mine would get people like that when bidding plumbing work. He'd tell them to hire the other guy quick before he changed his mind.

Just last night I had a guy e-mail me looking for oak lumber.  I gave him the price, I get back a snarky e-mail telling me he paid half that at another mill, in doing so he adds in all sorts of optional language to describe my price. My response was that he "should go back to that mill".  Those types are everywhere.
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Offline Mt406

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Re: Charging a premium
« Reply #31 on: February 12, 2018, 12:05:33 AM »
I was standing out in my log yard today looking at the load of high dollar logs.
And though about this thread and took some pics.
In my area I don't get a lot of big trees or very stearate so when I get a call for wide or long I have to pay a premium.
Hears the difference between 85/ton and 120/ton logs.
 

  
These are the 85/ton only 30% were able to make 12 in wide wood
 

  

 
These are the 120/ton
 

 
65/ton lodge pole pine

For my operation i have to charge more for 10in and wider and longer than 16 foot.
I know what my costs are and I dont play price games.
And when thay try to say the guy down the road charges less I tell them thay better buy from them.

Scott

Offline Ianab

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Re: Charging a premium
« Reply #32 on: February 12, 2018, 12:25:03 AM »
That's a good example. If you have to pay a premium for the better logs, then you need to charge a premium for the better end product as well.
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Offline Stuart Caruk

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Re: Charging a premium
« Reply #33 on: February 12, 2018, 02:09:27 AM »
It's all in your log supply I guess. I rarely stick anything on my mill under 24" diameter. Typically the logs are almost to much to fit on the mill. The mills here won't take anything over 32" so I get a lot of huge butt cuts for cheap. I love the look of sawn lumber with few if any knots.

The side lumber is a byproduct for the beams I want. I'm just now trying to figure an easy way to make handling it profitable.
Stuart Caruk
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Offline Peter Drouin

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Re: Charging a premium
« Reply #34 on: February 12, 2018, 05:44:47 AM »
Mt406, Was the Pine all stained when it came in?
2008 LT40 super,2008 edger, Cat telahandler, JD 5410 And can cut up to 45' long
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Offline petefrom bearswamp

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Re: Charging a premium
« Reply #35 on: February 12, 2018, 08:45:20 AM »
$.05 more for 10 and up.
I have too much side lumber some from 2-3 yrs ago.
When you deal with quite a lot shaky Hemlock as I do you make a lot of narrow stuff even from big logs.
I will however be sawing all WP this spring.
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Offline Mt406

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Re: Charging a premium
« Reply #36 on: February 12, 2018, 09:30:02 AM »
Yes Peter
99% of my pine is dead standing at least the lodge pole Its beetle kill.
Pine beetle is totally out of control here some areas the forest is 90% dead.
I don't get much ponderosa pine hear I have a bout 3500 bf for my own siding to be cut it had some blue when I got it.
It now has a lot. My wife likes the look so it will work.

Scott

Offline Mt406

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Re: Charging a premium
« Reply #37 on: February 12, 2018, 09:42:47 AM »
Stuart
It is in the log supply.
Mills are the same here they will only take 30 inch butts.
If the logger get a bigger tree they dump the butt in the slash pile.
most forester wont mark big trees they leave them for wildlife trees
And they blow down in the first big storm.
I set my operation up to be able to handle the bigger logs.
I have a swing blade that doesn't get used much.
 
Scott

Offline starmac

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Re: Charging a premium
« Reply #38 on: February 12, 2018, 02:30:58 PM »
The sawmill here can only handle up to 25" butts, but they take bigger without docking us.
They cut them for firewood till they get down to 25", what a shame.
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