Another SYP Sawmill Out of Business

[FeltzE]

I went to the auction of Ward Lumber Co. yesterday. Really an eyeopener on what sawmill equipment is capable of and what prices are for commercial equipment.

The sawmill that went out of business was geared to finished SYP products. The mill layout was a 2 floor operation with all breakdown on the 2nd floor all waste carried out on the first floor, The mill was fed via a rosserhead debarker  which sold for less than $1k thru a metal detector (sold for $14.5k) then via a chain conveyer  with 3 kickers one off the mill and 1 ea to the 2 break down head saw green chains. One head saw was a 54inch circle mill the other was a 6" band headrig each selling for less than $1500 the head rigs fed cants to another 6" head rig resawing the cants via a turnaround into boards which were fed out of the mill to  a 150 foot green chain /sorting deck all sorting out there must have been manual labor.

Key notes to me were the 30 unit chip bin sold for about $7000, the big chipper wasn't  expensive either, I thought the electrical panels and starters accross the board went for more than the motors they drove.  green chains and turnarounds went for a little above scrap value in the big mill probably because it was going to be quite a project to remove them and drop them from the 2nd floor decking. I didn't get the price of the old planer mill but some of the heads sold for as much as $1100 a pair, rolling stock sold for market value across the board a nice CAT 9XX series with forks and holddown went for 41k  the steal of the day, a (I think it was a ligna ) HUGE gang resaw sold complete for under $7000 easily a 100k machine if you needed one.

Why some might ask am I posting this? A couple of reasons...Well I think many of us small operators are hooked by cool (thin kerf) modern insta-business solutions for $30+K. Although we ar buying a turnkey ready to use solution we can also do quite well if we get out and look around. (Want a good frick start up mill with air/electric setworks 54" mill mellot log turner for under 12K call me I have one hydraulic drive included)

Second is the concept of sawmilling as a business. I recently visited DanG and Quality lumber (MFG of molding related products not sawmilling) of course Ward lumber, and Squires lumber (Hardwood MFG of stock for the furniture industry also auctioned off this past yr) I also keep track of some local small mills like mine in the local area. We small operators with a less than 10,000 bf / day capability should not expect to compete with commercial production or retail sales. Is it possible yes, but with other problems like wharehousing and material handling. The real deal for our small mills is the NICHE business, finding the onsite business where we can make our profit margin working hourly or by the foot, salvaging low quality timber and selling a variety if lumber products like wide knotty pine, or figured hardwoods. I know there are operators out there who are doing just fine operating a stationary electric or gas bandmill producing grade hardwood for wholesale. I would venture based on my watching the posts of sawyers over the past few years that they are the exception not the rule. You can't expect to buy a sawmill buy your timber and wholesale your lumber and still make it in most markets. Doable but tough.

I am sure that I've raised some hackles with my comments but as always no offence intended and jump with your comments and replies, after all this is an open forum


I would further note that the "thin kerf" savings of bandmills is not a key issue when not operating high volume sawmilling. Yes you will recover more lumber but still I can saw a 1 inch mark leaving 7/8 lumber loosing that 1/8 kerf but billing for 1 inch of lumber, I could also saw in many cases a 1 inch mark leaving a 3/4 inch thick board loosing a 1/4 inch kerf selling based on the 1 inch board. Is that going to work in wholesale lumber for commercial retail ... no but for property owners building barns and outbuildings in many cases yes. Lumber thicknessis based on the customer needs and the product you negotiate.

Shoot me...

 ;D
Eric

[dewwood]

Eric,

Excellent comments and reporting of auction results.  I agree with you, there are a lot of good pieces of high volume equipment out there for the discriminating buyer.

My thougts are:  the high volume machines generally speaking take more than one person to operate and a much larger investment in support equipment and inventories.  Also a much larger physical layout is required for the larger production equipment and supporting yard and equipment.  The small bandmills will not compete with those large mills, they are not designed to.  If you take the approach of looking at it in a bd ft per man day in terms of production I think you will find that the small mills will come pretty close to the larger mills in output per man per day.  One man with a fairly decent bandmill can produce 1000 to 2000 bd ft per day.  A large mill can produce from 10,000 to 30,000 bd ft per day but how many men and pieces of additional equipment are required to achieve this level?  They are designed for different end users.  

I have noticed that the small mills can frequently enhance their operation but adding the occasional piece of equipment more traditionally found in larger mills.  A good example is an edger which can add to production and can be purchased for a fairly reasonable price.

Maybe we are saying basically similar things.  Each operation is different and each operation has different needs.

Just my thoughts

Dewey

[Norm]

Not at all FeltzE, I thought you made some excellent points. When I was looking at mills to buy I knew nothing about milling lumber. The wm was less intimidating to me than a circle mill. Thin kerf was not the deciding factor, reliability and ease of use was. After having one for a few years I realize it's limitations, and mine. Making money in this industry is tough, but as they say if it was easy everyone would be doing it. Is there money to be made, sure but it's hard work and like all business' you have to be sharp to do so. I came to the conclusion our market here in rural Iowa was high value hardwoods. I try to make sure what we cut for resale is worth the effort. My buddy brought me out 1000 bd ft of the nicest hackberry logs you've ever seen but they sit there uncut, I have never had anyone contact me for the lumber why cut it. White oak around here is cheap but advertise q-sawn white oak and you'll get calls, the same with red oak, cherry and black walnut are next in demand for us. Then there's the specialty stuff. I have started to cut more wood at 8/4 and above, figured wood cuts are another demand item. Wide slabs with one live edge are good for mantles, have you seen the wood that taxidermists use for mounts? Try them for some small pieces that won't make grade. Dan Morris (wv hillbilly) does great work with slabs that I would use for my fireplace, instead he turns em into works of art.

I guess my rambling here is bigger is not always better, employees, government red tape, taxes, payroll and reported income make being a small guy a great place to be.

[HORSELOGGER]

Shoot ya?   No way, heck I'd like to shake yer hand :D I have read your posts on the recent woodmizer mill thread and thought that you were very reasonable sounding there as well. I appreciate your post here also, and agree with what you have concluded re: kerf issues and the wholesale market for small scale operators. While a few here SEEM to be "making" it just fine buying logs and selling wholesale, closer reading and further questioning will reveal that they are doing some retailing or other types of work to make a living or have a working spouse or maybe a retirement check.I really cringe sometimes in reading some of the posts that could leave the immpression that all a guy needs is a certain bandmill and easy street awaits. I believe here as on most forums like this, there are always a significant amount of people that just "lurk" or read only, and never post untill one day another new mill owner shows up all excited announcing they have just purchased a new mill and will soon be asking tons of questions, etc..Then they many times are never heard from again. I wonder... what happened? My fear is that things have not gone as they may have led themselves to believe they would, and maybe they took some bad advice as gospel and the reality was a big downer. Its a sobering thought to me, realizing that on a open public forum like this, what I post may in some small way, influence some ones thinking on a large dollar purchase that will affect his family finances in a big way. Any individual , of course has the final resposability to gather all the info they can before they spend the money, but I think the info on this forum is pretty powerful for some people that are starting down that road. Nice post Eric.

[FeltzE]

Dewey,
Several yrs ago probably about 5 the owner of a local production hardwood mill hired me to come to his farm and saw onsite with my WM about 11000 feet of misc SYP cutting to recover lumber after storm damage. We had a good chat about milling as I am always inquisitive on how, what, and whys about sawmilling and bigger operations. He commented that we were as productive as his headrig figuring man days per thousand, I was working with one helper sawing an average of 2200 ft in an 8 hr shift. I have written on another forum that the single biggest expence around sawmilling commercially is all the other support equipment. If a sawyer is going to keep the blade sawing for 7 out of 8 hrs even on these portable band mills they need significant handling capabilities, ranging from DanG's "hootie-mobile" to heavier lift yard capable forklifts. And don't underestimate the cost to put a roof overhead not only to house the mill during inclement operations but to house and airdry lumber.

I've had the opportunity to demonstrate portable band sawmilling to 2 serious folks and they both bought mills similar to mine although newer models with more gadgets. There is nothing wrong with the band mill concept except in my opinion they tend to promote it as easier than reality. I still have the offer out for anyone who wants  to buy a mill to come spend a day with me. Free saywer training includes a safety brief, cup of coffee, several hours of proper stacking/stickering techniques followed by lunch (on me) then sawmill operation 101 including how to saw, stress releif, plain sawing, edging and inadvertant wavy cutting. We finish the day with a brisk review on shoveling and sweating. Great program all free... Training open only with prior coordination and normally only saturdays.

Comments on one man operations: Several companies would like you to believe that their mill is the best at one man operation. I have operated a circle mill alone, as well as band milling alone, reciently I was able to see a mobile dimension operate too. The MD had great hands off operation, in other words you could engage the cut or return and take your hands off the mill to stack lumber minimizing your extra labor needs. My 96 WM has only hands off in the cut, the return is spring loaded to off, and i have to travel with the head. This makes it much more difficult to operate alone. They are now offering remote setworks with board drag back but I am not sure they have a hands off operation during the gig back. The swing blade saws you have to push and pull the head so there is no hands off time. My old circle mill was hands on both on the cut and gig. But all can be operated by one man it just takes away from your capability keep the saw in the wood because you still have to clean up the debris, boards, slab, and stack, Then move your bundles of slab, and lumber away from the mill and restage more logs.

Probably the best way to establish a sawmills capability would be to use a "man day" standard cutting specific kinds of logs and lumber eg. 12-20"x10' clear pine and 4/4 plain sawn lumber. Yields and average of XXXX bd ft.


Off rambling again I am .   :

[Ron Wenrich]

On our medium sized mill, we get about 2500 bf/manday sawing grade oak, and 3000 bf/manday in tulip poplar.  I have sawn upward of 4000 bf/manday.

As for expense, the higher the production, the lower the unit costs.  I can saw from $100-150/Mbf.  Even considering the thin kerf savings, it is very hard for the smaller band to compete in the circle mill marketplace.  

We buy standing timber by competive bids (so we are paying top dollar), maintain 3 logging crews, do all the trucking, have a 2.5 MMbf hardwood mill and a firewood operations, all on 4 acres.  We sell the lumber on the wholesale market, with hardly any retail work (and we really don't want it).  And we make really good money.

The things leading to the sucess of the business is that all management is working management.  There is no one in the office.  Money is never borrowed.  Timber and equipment are paid with cash.  We produce a top notch quality product and don't nickle and dime our buyers.  We are loyal to our buyers and they are loyal to us.  Even during down markets, we can always sell what we produce at a profit.  We don't hang onto a piece of lumber for a very long period of time.  We get it in and out of the door as quick as possible.

If I wanted to offer portable sawing services, then I would go the bandmill or swing saw route.  As said, it all depends on your niche.

[Bibbyman]

Mary and I have also attended a couple of these mill auctions.  It's a bit sad to see this expensive and in some cases, almost new equipment go for 1/10 of its new value.  The sadder part is,  it's still too big for our "Mom and Pop" business.  The last auction we went to,  we were looking to pick up a dust blower.  The smallest one they had had a 30hp 3ph motor hooked to it.   Even if I got it for a dollar,  I still couldn't use it.

I suspect the biggest problem is retaining a work force.  Maybe followed by regulations, insurance, energy costs and taxes, etc.

We recognize the potential to grow our business and have had opportunities to "lock in" to commitments to supply products for some local business.  We've avoided it like the plague.  We'd rather stay small and have a few good markets and be flexible enough to fill nitch markets when the opportunity arise.

[DanG]

Bibbyman, you said a mouthful when you said, "FLEXIBLE."  I firmly believe that is the key to making a small mill operation work.  I've been getting by, mostly, on sawing freebie SYP, and a little custom work for the nearby farmers. Then, yesterday, my son-in-law said, "com'on, we gotta pick up some logs from Uncle Jack's house."  We loaded up and went to his uncle's place, where we have picked up some pine before. When we got there, he had some BeeYoootiful Black Walnut logs for us!  Now that probably don't sound all that special to most of you, but it is a rarity around here!  Jack wants about 1/4 of the lumber, and we can have the rest, so I can add a bit of walnut to my meager inventory. That will be special to the local woodworkers.
For one custom job, I bought about 2MBF of juniper logs, for $500. The job will require about 450BF at $1BF. That almost pays for the logs, and I have 3/4 left to sell or turn into outdoor furniture.  
I also do a bit of other stuff. Eric seemed to like the mailbox post I made from horse shoes. I want to make some furniture from metal and wood, if I ever get around to it.
If all else fails, I can always sell rutabagas and watermelons, along with the Porter Wagonner look-alike gourds and pink flamingoes. ;D :D :D

[ARKANSAWYER]

  We all know what our mills will produce per bdft/hr and like Ron pointed out the number per man bdft/hr.  Now what gets these big mills is the coin invested to produce this.  Some of these mills cost millions of dollars and saw 150,000 bdft per 8 hour shift with only 12 people on the place.  Machines do the work and the monthly electric bill would pay for my mill.  It is the return on the coin invested that one has to look at.
  Taking this point is a cheaper manual mill  better then a costly diesel with hydralics?  Is one helper really needed?  The list just adds for soon you see where if you could produce a few more hundard bdft a day that would be gravy on the 'taters.   What is the bdftage per thousand dollars invested?  Now to be fair we are going to have to think of this as a full time sawing deal that you will do 5 days a week 50 weeks a year.  You will have logs in and trash and lumber out to consider.   So what does it really take to get your coin added to for the investment that is made?
  I have been working on a business plan to expand my operation.  I look at the amount of coin to produce 1 million bdft a year and the return on it.  Part of my expansion is to add kilns and maching of the wood for retail sales.  I look at the coin to process 250,000 bdft for retail sale and the retrun on it.  It looks like I should retire "Wanda" and go to drying school.  It is just that I really love to saw and will need a good supply of the cuts that I want.  You just have to know what the cost is and the return for it.
  It is harder then it looks and just because you can shove more money in one end does not mean more will pour out the other. :  I am doing my taxes for the year so soon I will know if I will be in business much longer. ;D
ARKANSAWYER

[DanG]

You'll be here, Arky.  You love it too much to give it up for mere money. ;D

When Eric spent the day with me, he was telling me about some guy that was talking about "successful businesses."  It seems this guy believes that a business is not successful, unless it has several employees making money for the boss, while he sits in the shade with a glass of lemonade.  My take on this is, if my business were that way, I'd have to deem it a total failure.  I left my job to be independant. I want to be free from bosses, and, like it or not, employees are bosses. You gotta pay them when there ain't no work, and you gotta take care of them.  To my way of thinking, a successful business is one that accomplishes what the founder set out to accomplish. Nothing more, nothing less.  I'm fortunate to be in a position where I don't have to make a lot of money. If I get $800-$1000 per month, I'll be better than ok. More than that will get me a better motor home. ;D   I really hope things don't get too busy, so I can take the time to build a house, and enjoy these last few years of my life. I'll not be a slave to money, or health insurance, or an ostentascious lifestyle. I just want to be happy.

[FeltzE]

Usually I can get a little bit of an argument running but it looks like I failed at this one. Everyone has excellent points and unless I'm reading the posts wrong we are all in general aggrement about sawmilling.

I've cut back my operation due to my full time employment but yesterday I cut 1mbf of poplar and pine alone and only worked half a day. And cut that out of free timber. Thats my niche!

It would be nice to develop a knowlege base document which would encompass the issues and concepts of starting and operating a small business.

I think I can start a good argument another day about sharpening... ;D

 8)

[Tom]

Just goes to show we'd rather discuss issues than argue.

Arguing always seems to make enemies.

[Minnesota_boy]

I suspect the biggest problem is retaining a work force.  Maybe followed by regulations, insurance, energy costs and taxes, etc.

 

I think that one of the major challenges in running a bigger sawmill is retraining rather than retaining.  People come to work the first day ready to go so you give them an entry level position.  At noon they go to lunch and just keep going.  Perhaps one in 10 has the ambition to keep working there long enough to advance to the next level.  Of those, several will be looking for better employment or just "chasing the rainbow" and will quit to go to work someplace else.  It's tough to make a business work with that kind of turnover.

[Frickman]

I've noticed two trends in sawmills around here, they are either getting very large or very small. With a large mill you can be a lot of things to everybody and have the critical mass to do it. Per bf sawn alot of expenses are reduced, such as office expense and insurance costs. Also, the big mills are getting every penny they can out of a log, including sawdust. I know a big mill owner who said his profit comes from residuals, chips, bark mulch, sawdust, and firewood. Lumber sales pay for the operation, and he lives comfortorably on the leftovers.

The very small one and two man mills have been successful because as already mentioned you are very flexible to serve niche markets the big boys don't want. Also your overhead is typically low, reducing the expense per bf sawn.

The mills in trouble, that you see all the auctions for, are the medium sized, family own and managed operations. They're being squeeezed from both directions and are operating on very thin margins. Those without a strong managemnt team are going by the wayside. I see this as a sign of a healthy economy. The market determines the most efficient allocation and use of resources and these companies might not have made the cut.

[Ron Wenrich]

You need 3 things to run a sawmill operation:  timber, capital and markets.  Without any part of the triad, you're toast.  I've worked with mills that have been lacking in one of those areas (usually capital) and its always a struggle.  

Medium sized mills are having problems due to the competition for stumpage.  Its been a normal business practice to drive all your losses to the stump.  That can't be done anymore since there are more people beating the bush for timber.  

Medium sized mills refuse to get a grip on their numbers.  Some logs aren't profitable to put on the headblocks.  Do too many of them,. and you're out of business.  You must control your costs, but you have to know which costs are ones you can afford to cut.

Small mills drive their losses to the customer.  Marketing to the wholesale trade does not allow that.  You can call that flexibility if you want.  I call it picking and chosing your market.  If you can do it, that's great.

You guys talk of employees like they're the plague.  I've worked for a variety of mills, loggers and the like.  Some guys treat their workers like a piece of equipment, some like family.  Being treated like equipment is no fun, so you better pay me some big bucks to keep me.  Treat me like family and I'll work cheaper.  Loyalty is a two way street.

A good employee can make you money.  I like to pay by the hour, and add a bonus for production.  A guy will bust his butt a little more if he gets paid for it.  

[C_Miller]

Ron,
  That pretty much sums up the mill I'm working for now multi-  genrational family owned and operated. It seems we are under capitalized and can't find timber.  The timber we do find is too small,crooked or big. all are not worth sawing. and most down time now is caused by material flow, a log or board not staying on the line and causing jams and breaking things.
C

[DanG]

Ron, I have nothing, in principle, against having employees, but that is not the direction I want my business to take, right now. I am grooming my son-in-law to come in as a partner, at some point. If, in the future, he wants to grow the business, I don't object. For my part, I want it to remain a part-time venture, allowing some time for travelling, and other things I want to do. I have the capital to keep things afloat at a comfortable level, so I'm in no hurry to post big production numbers. I'm just feeling my way along a dim path in the moonlight, and will walk more briskly when the sun comes out.
I also have a grandson who is turning 14, this month, and several friends with teenagers that jump at the chance for a few hours of work, so I can get labor when I really need it. I don't have to pay them when there isn't any work, though, so I can afford to take time off when the situation warrants. ;D

[FeltzE]

DanG mentioned a quote I heard years ago on a radio business talk show, I'll abreviate and quote.

Young man- wanted to sell his profitable and successfull business.

Man- What is my business worth I've bought X$ in equipment which is all paid for and I'm busy as heck

Host - How many employees do you have?

Man - None. Just me but I'm very successfull

Host - Your  business isn't really a successfull business because one of the points of ownership is to manage the workforce to your profit and benifit...therefore although you are doing well as an entrapanuer you are not very successfull as a business owner ...

The young man didn't like what he heard from the host that day but there is some point in the hosts words. I have applied that where I can and have found that I am much more profitable per hour if I do hire a good helper and tackle better jobs. That is not to say that there isn't good profit and benifit(s)  when operating alone or when appropriate to a one man situation... I'd write more but got to run,

Ramble cut short   8)

[FeltzE]

Note another larger more automated sawmill is going up for auction this saturday 13 march Mebane NC, I think they are being auctioned by Tristate Auction Co.

 :-[

[FeltzE]

Here is the web site of the upcomming auctions over there if anyone is interersted

http://www.tristate-auction.com/

Disclaimer, I don't work for them or for that matter have any other contact with them other than I 'm on their mailing list

Eric

[Percy]

This is a good thread.
I would agree with prettwell all the comments made. Im a bit undecided about the advantage/non advantage of narrow kerf on a lower production mill(WM,Baker,TH.TK etc). A while back, I cut a load of small diameter Cedar into full one inch boards. At the same time, a D&L mill was cutting the same wood for the same project. My recovery was noticably higher than his and allthough it wouldnt have made me rich..heh...it was there.

On the mill closure thing, its different up here in Northern B.C. There are no mid sized mills, only big ones and little guys(us).  Within a hundred and fifty mile radius, there have been at least 5 large mill closures in the last few years. This is due to many factors(lumber tarriff wars(28%) with the U.S., low cost producers from other countries comming on line, we are just too expensive these days).

The niche/nitch/whatever comments are right on. Paying astronomically high prices for the absolute best WRC I can find and cutting clear boards out of it is much more profitable than competeing in the fence market with lower grade logs.

In the last year or so, I have learned alot, mostly from reading  the FF Forums.  ;D I think that the future is very bright for us smalltime operators. Instead of trying to compete with the lower cost countries for 2X4's, it seems that we are going toward a more value added approach to our North American log supply(some of the finest woods in the world)and that lends itself well to operations like ours...I think.