Need free advice on getting sawmill business going

[Iocal junkman]

I may have more money than brains and truth be known I don't have much money.  But I went to a couple  of auctions and a cooks ac 36 40 hp followed me home. A short while later at second auction I bought a baker 3650e at least they took my money it is not home yet. I have 3 phase 480 volt power so thats no problem l need to get these going before moma finds out how much I spent! They don't have to turn a profit but eventually that would be the goal I got them cheap enough I think I could sell them for more in a post covid world if it came to that . So I want to start this thread casting the nets wide for your thoughts on starting a sawmill business ask me any questions if you want . I have support equipment and access to semi loads of low grade logs and can sell all the pallet lumber I can possibly cut but if I told you you can work all the hours you want at this job it pays minimum wage.?..well I'm hoping to do better niche markets ect. My entire life i have worked hard labor jobs so that doesn't scare me . I am excited let's see where this goes thanks guys!

[WV Sawmiller]

   Congrats on the sawmill purchases. Where are you located? That makes a big difference in the answers we may suggest. Are there other mills in your area? Which niche market are you interested in anyway? Are you looking to get into a portable milling business or setting up a stationary operation? Have you ever run a sawmill or worked on one? I'd suggest you see if you can visit other similar mills in operation. Maybe spend a day or two off-bearing and watching and learning.

   From all I have read the pallet industry is a very low margin operation.

   Let us know more about you and maybe we can provide some recommendations even if it is in the form of lessons learned and things not to do. Good luck.

[alan gage]

Congrats! I would recommend starting with lots of research right here on this site. If you wonder about the pallet market do searches about sawing pallet wood and you'll fine lots of great advice from guys who have made it work and guys who haven't. Same for framing lumber, hardwood lumber, and about anything else you can imagine.

I'm sure you'll get a lot of good advice in this thread but there's a lot more that's already been said in the archives.

Good luck!

Alan

[mike_belben]

man i like this guy already.   ;D

[moodnacreek]

Sell those and get a circle mill or better yet buy the lumber and resell it.  There was a very active member here who did low grade for pallet. He went through 2 small band mills and now runs a Hurdle.

[Jeff]

Outside of fire, I'd say pallets are the number one destroyer of a sawmill business.

[mike_belben]

what if it was sawn from bolts of free wood loaded into a scrag gang?

[Ricker]

Quickest way to make a million bucks with a sawmill is to start with 2 million.

[YellowHammer]

The short answer is yes, you can make much more than minimum wage with a sawmill.

The thing that makes a sawmill operation successful is not the equipment, it's the owner.  Don't get me wrong, the right equipment is crucial, but the wood should be tailored for the market, and the market should be known before the wood is cut and sawn.    

Part of the most difficult part of making money with a sawmill is selling wood.  Since that's where the money comes in, marketing is something that always need to be a very top priority.  Theres a place down the road from me that has 2 million bdft on the yard any one timer and every single board has beed sold before it is sawn.  

 

[Bruno of NH]

I would stay away of pallet lumber.
Find other outlets that pay better.

[Ron Wenrich]

First thing you need is a market for the product.  If its pallet, find out what they're paying and their specs.  When I sold pallet wood, it had to be 4 or 6 inch 4/4 separated by width and length.  I also could sell 3½ x 6" cut plump.  If that's your market, you should be able to end up with a pretty good idea of the purchase price.

Next you'll need to know how much your logs will cost, and how much they'll supply.  Know if they're talking about $/Mbf, their scale, or tonnage.  I know that when I worked at a mill that bought low grade logs, there was a considerable amount of junk.  Crooked, poorly trimmed, too big for most mills, etc.  They were being given logs that other mills wouldn't take.  After you have that number, you'll know how much your resource cost.

Subtract your log cost from your selling price and you'll know where your mfg costs lie.  The question is whether you can make any money at that cost level or that you're willing to work at that level.  Mills that I've analyzed consisted of breaking costs down to either a daily, hourly or even a minute basis.  Depends on how deep of dive you want to do.  

Insurance is an annual cost, for example.  You will have to make sure that factors into your cost analysis.  You'll pay that whether you make sawdust or not.  There will be costs that are only incurred when you're cutting, like fuel, blades, labor, etc.  You need to know all those factors.  Factor in your maintenance costs and depreciation on equipment.  

You will also need a decent idea of how much you can produce.  The lower your production rate, the higher you mfg costs.  If you're happy with the numbers, then your good.  If you're not happy, then you'll have to either adjust your sales price by finding better markets, get better log costs, or get better production costs by either lower costs or higher production.  

[moodnacreek]

Grade hardwood mills can keep the price of pallet so low only they can do it. If they are boxing hearts [which have no value] the send them through a gang or gang of band resaws, bundle green and load 8000 bd.' plus on a trailer. That could be your competition .  It's kinda like sawdust or chips.

[Ron Wenrich]

In my area, nearly everyone boxes the heart for pallet cants and ties.  Less handling than the pallet boards.  Most pallet shops have their own equipment to break down cants to the sizes they need.  

I wouldn't say that the boxed hearts have no value.  If you produce a good product, you can find a market in decent times.  Prices aren't as good as grade, but, better than sawing low grade boards.  If I was looking at sawing pallet stock, I would be looking at cants and not boards.

[Percy]

Interesting thread...My 2 bits....When I first started milling logs, I bought the cheapest logs I could find and cut them into fencing and such for the local market. It was a tough road to hoe....had some good days....not enough of them.....then one day a guy brought me a few high dollar logs to cut for him. The boards he wanted me to cut for him were spectacular....by the time I was finished cutting those logs, I could have sold every piece  two times to folks coming by to pick up their cheap lumber.  Got me to thinking....after a while I realized the reason those sweet logs were so expensive was because you could make money with them...Every pathway in this business is different for everyone ...but once you get to know the business/markets/log prices/yadda, it is my opinion you can do better cutting high dollar specialty wood out of high quality logs....I can do ok cutting bridge timbers from standard  sitka spruce logs...but it took me several years to get proficient enough at it to where it was profitable....it's real easy to get caught in "The Race To The Bottom" with competitors.....For reasons I havent quite figured yet, Covid has increased demand for my products/services to where Im increasing prices to chase away the hoard of customers....Most of them agree to the price increase( I dont gouge but absorbing a bad log that you paid too much for is easier to swallow these days...). Regardless, if you choose to run these mills, you will learn alot of cool stuff and meet interesting people....Good luck!

[Mike W]

You've already gotten great advice from those whom responded to you, so with that said, I will just add:  You sound like a go getter, forget about actually making money with it, after all if you can make just enough to feed the addiction and break even, well hell, your ahead of most addicts out there in the world ;D 

[Sixacresand]

There are a lot successful sawmillers on the Forum.  As with all businesses, it clicks with some and the rest just get by.  

[WV Sawmiller]

I think we have another "One-Post wonder" here. If the new poster has not replied or commented in the first day or two he is probably never coming back. I see lots of these. I bet they almost drive Jeff to drink.

[Iocal junkman]

thank you for responding i am sorry for not getting back sooner but I have not been able to get on the forum not sure why it worked tonight  so here is some of what I learned i can get good cottonwood for 30 cents and mixed hardwoods pallet for 35 cents delivered on the doyle scale I have an advantage because no one will take these logs in my immediate area it is a good long drive to get to a mill that wants them also there is three large grade mills close by and this would be the stuff they don't want I could even be a hard ass and get it at a discount from this because of the distance to the other mills but would lose some loads and build some resentment i can get around a dollar a bf for finished pallets as much as I can saw as for a little higher value I can get good to very good tie logs white oak and burr oak  for 60 to 65 cents and cut trailer planking for 2 to 2.50 a bf with a more limited market take some time to get established ect. I have support equipment for the pallets but don't know about the employees i am in my early  50s in the upper midwest I won't be more specific just yet I hope to be running this spring i will post photos with my children's help and maybe gopro videos please give some more of your thoughts  thank you 

[Ricker]

Just thinking here as I have never been in the pallet business.  If you got to give .30 BF for the raw log and turn it into a finished pallet to get .70 BF over log cost it doesn't seem to be much money.  You got to saw the log, got to cut the pieces to length and then assemble the pallet, don't know who is paying for delivery. Plus i haven't figured in a penny for expenses, Blades, fuel, oil changes, nails, any helper wages etc.  

[47sawdust]

See posts #4 and #5.

[mike_belben]

@ricker

Pretty sure he is talking about sawing low grade logs into lumber to sell to a pallet building shop.  


IMO 35cents/ft is way way too high for pallet wood.  Thats what good straight tie logs with 2 sound single heart ends pays where i live with mills all over demanding them.  Theres a substantial old pallet mill about an hour north of me that i dont think offered any more than 20cents a foot and wanted some pretty good specs on logs when i called a few years ago.  It wasnt worth the bother to sort those out for that money and i did better making firewood at home.



If you really want to mill pallet, i suggest being willing to accept short boltwood coming in on 1ton trucks like the old days.  That opens up a market for the poor laborer with no equipment, covid has put plenty of guys out of work so the timing is good. The wood supply will be very cheap because youre the only buyer of bolts so you set the price.  but i think it will require a scrag mill or some form or chain fed twin circle mill and a resaw.  All it can cut is pallet wood and requires helpers.

[mudfarmer]

Closest buyer to me pays no more than $250/1Mbdft for pallet grade, 0CF 8-18" no seam no rot. Less desirable species they will only give you $150. The buyer does not pay the trucking!

If you are paying $350 delivered they are passing the trucking on to you, these other guys know a lot more about it but not sure that's how it normally works...

[hedgerow]

I know all areas are different. A guy I have known for forty years building pallets have been threw a ton of changes. Back when I met him and his dad they had a saw mill out at there farm and a pallet making business in the city. They were small farmers and did a lot of custom haying and sawing on a circle mill. This was out at the dads home place. I did some haying with them and the dad lived about four miles from my home place that's how I met them. Probably been twenty years ago the dad passed. Son ran the mill for probably another ten years. Sold the mill off the farm and quiet haying. I bought the farm and they sold the house and farm stead as a acreage. At that time the son said there was no money in sawing pallet lumber. Over the years they have changed the pallet business also. They used to have a ton of employees and built a lot of pallets and several semis and drivers to haul them. In the last five years they have down sized a bunch sold several of there buildings and are down to the current dad that is in his 60's and his two sons and are just building special shipping pallets for three local factory's in the city and haul them with his one ton and a gooseneck trailer. Last time I talked to him around Christmas he said its nice not to have a bunch of employees that wont show up and when they do they won't work. He said I am making more money doing less. These custom pallets are were the money is. They had been lucky and Covid hadn't affected them much. 

[Banjo picker]

Only time I would ever sell pallet wood is when there was a few small cants left around the outside of a cross tie.  The pallet plant is within 5 miles of my mill, and I haven't sold them anything in probably 10 years.  As Waytt Earp said in Tomestone "Theres no money in it."   At least that's the way it is here.   And by the way I run an AC 36....just with a bigger engine than you have. Tim

[Ricker]

That could be.  When he said finished pallets for $1.00bf, I assumed he meant a finished ready to use for shipping pallet.