I would appreciate input on my question. We are contemplating putting in a high production oak mill. Railroad ties will be our focus. I log for a living and am basically tired of dealing with knuckle heads at saw mills. Let's run the numbers. Ties are bringing $22 a piece and the logs are worth $280 mbf. I don't know much about the lumber markets. Sawdust sells good to local pellet mills. Slabs are easy to get rid of as well. The firewood market is excellent here, I may saw thicker slabs and turn into wood as another option. I have lots of ideas but need some opinions thanks fellas
What would a "high production" mill be like? What makes it "high" or what production are you shooting for?
What dollar amount do you have in mind to get to that "high" production?
Circle blade or band blade? Or makes no difference, as long as you get the production numbers?
So, are you giving up logging so you can run this mill, or do you have a partner in this venture? 1 guy doesn't have enough time in a day to run a mill and supply it with logs to saw too. We need more info.
I say high production meaning more than a one man show on a small band saw. No offense of course. I would put in a circle saw. Its obvious I know hardly nothing about milling. I would keep my logging crew and hire help for the mill.
Some quick numbers are our logs avg 57 ft
.28 cents per bf equals 15.96$ to buy log
$22 per tie
$4.40 worth of lumber per log
71 logs sawn to break even per day ($740 overhead per day)
Other mills are sawing 200-300 logs a day
In my small head im figuring somebody's getting rich
Maintenance, bank payment on buying the mill, or, paying yourself back if you have the cash. I think you will find that the 200 tie a day people are not getting as rich as it sounds up front. As a disclaimer, I have an LT40, I am not trying to keep you out of my high production gravy train. I have tried to find a nice get rich scheme several times over the years, there is always something that is not apparent up front.
I have been sawing ties for years. When the grade market takes a dive the grade mills jump on ties, next thing you know the buyers are covered up and cutting people off. What if you have 1000 logs on the lot (2 weeks sawing) and get cut off. Are they paid for, line of credit costs you interest while they are cracking on the ends, ruining them for ties. Paid for out of pocket, you are losing your money instead of the banks.
Can you produce enough of your own logs to keep you going if the loggers don't want to fool with the knuckle head at the sawmill. ;D
I think every logger should sawmill for awhile, would be a good education as to what logs are needed for a specific purpose. The log always looks better to the logger than to the mill buyer.
Off the top of my head, I would say its an awful decision. I discovered something some years back. You can't do everything well. Oh if your big enough, you can do the logging, the mill, the whole nine yards, with all the right personell, all of who cost money. I just don't see if your figuring .28 cents on an oak log, that you can make it work for what you would be getting for the ties. That is such a razor thin margin. I cannot see anyone getting rich cutting ties. Any downtime for repairs, people standing around, it just isn't going to work. Not saying you shouldn't think about the sawmill business. But one thing I have always noticed. Loggers, and for that matter sawyers, always think the grass is greener on the other side of the fence. It ain't. Its a tough business. I don't know how many loggers looked at their check that they got for their logs and thought, I could do so much better by putting in a mill and selling direct. Its no where near that easy. Nor profitable as what you think. I don't want to discourage you. But think this one through very carefully.
I log and saw ties but definitely not high production. I have sawed thousands of ties but the time span has been decades. I think you have a good thing going though; the only time I get logs that will make ties consistently is when I harvest them myself. White Oak tops make great ties probably over 90% of the low grade white oak logs make good ties. Other species don't seem to work that way for me ,as you are taking off the last board to get to 7 inches you are praying " Please don't let there be a rotten center " . I use ties as a way to add value to my low grade logs , also my log buyer seems to be happier when I bring him good stuff .
(https://forestryforum.com/gallery/albums/userpics/10451/P1010039_28Small29.JPG)
Kind of funny I am that small one man operation with a band saw and I take no offence. Just sharing my tie experiences
You dont want to be like the mills around here, with piles of wood stacked up.
Im shure they paid a premium for them, with the market tanked, they wont break even if they do sell.
Don't know many people getting rich sawing.... ::)
But even a setup like Bill's there, although he can run it alone, would produce much more wood with a 3 man crew. That way the sawyer keep the blade in the wood as much as possible and never has to leave the controls. Another worker runs the loader, drops a new log on the loader, takes away the tie. Third guy offloads boards and firewood slabs, which are pushed straight into a chop saw processor without being handled again.
If you are running a large circle mill, you pretty much NEED the 3 guys there. If one calls in sick you are crippled. The band mill can be run short handed, even single handed if necessary.
But you have to think about the "what ifs". What if the tie buyer calls you and says "full for the month"? If you can move the guys back to logging work, and don't have crippling payments on the mill, maybe you can just shut it down for a couple of weeks. But is that the case?
Can you find good workers to run it? Can you afford to pay what it will cost to keep an experienced sawyer?
Now with the markets being down at the moment it might be the time to get into this. If you can make it pay in the bad times, you should be OK when the economy improves? And used equipment will never be cheaper.
But do your homework before you jump in. Too many overheads and a downturn in work in work can cripple you.
Ian
by starting out calling us knuckle heads. figure the markets out your self you seem to be smarter than us knuckle heads :(
I think you have got a pretty good Idea no one is getting rich in the wood business right now.
I think sawing is a lot more fun for me than logging and you may like it too. However as pointed out already, keeping help is a big deal. Another thing you have to do is sell that $4.40 worth of boards off that log and I havent found anyone buying all I could make or paying good for it lately.
However you may find a niche market for your tie logs while selling the good to someone else. I am not sure how much you cut a day, but 1 or 2 men on a band mill can cut 40 to 60 ties in an 8 hour day. That may not be 200 but could you supply 200 tie logs every day to your mill? Then there is safety.
Lots of stuff to think about and mull over. I have always thought it was eeasier to grow an operation rather than start big and loose it all.
Do you have a lead on a high production circle mill for sale? PC
Red oaks lumber I don't guess I ever called you a knuckle head so butt out you knuckle head.
Paul case...I do have one spotted from a guy that's retiring. I have homework to do that's for sure but my interest in this is definitely growing.
Everyone else thanks for the new thoughts I appreciate it
You won't do very well with a band mill and trying to get the production you need to make your numbers work. Here's the formula you need to work with: Profit = Lumber price - log costs - mfg costs. Lots of variables there.
Your breakeven analysis is where profit =$0. You have a known in the log costs. You're quoting the price of $280/Mbf. Is that Doyle, Scribner or International? You may need that info to figure out what size logs are uneconomical to saw and put them into a different product stream. Now your breakeven will look like Log costs = Lumber price - mfg costs.
The next variable is lumber price. The problem is that there are a lot of variables, and it varies from one log to the next. But, you're looking to get a log run type of average. If you're cutting ties, the value should be around $450/Mbf on oak, maybe a little higher depending on quality. You also have to figure in the value of your slabs and dust as lumber value. You will generate around 2 tons of slabs and 1 ton of dust per Mbf on a circle mill. Small logs generate a log of waste per Mbf than do larger logs. We chip our slabs and debark our logs. Our woodwaste value probably comes up to $90-$100/Mbf. Now we're up to about $550/Mbf for lumber value. Our breakeven for the mfg process would look like mfg costs = Lumber value - log costs. $270/Mbf.
Our operation has a 5 man crew with a debarker, automatic mill with vertical edger, chipper, sawdust blower, live decks, and green chain. Our power unit is an electric generator, and it drinks about 8 gal/hr. Still cheaper than getting it off the grid. Sawdust goes right into a tractor trailer and is taken to farms. If you're not doing chips, I would consider reducing the slabs to something that could be used for the pellet plants. Production depends on log size, species, and quality. Bigger logs cost less to saw. Our production is between 1200-1500 bf/hr. To breakeven on the $270/Mbf number, my costs would have to be in the $325/hr range. That number is easily made if you have the production. As production drifts off, your production costs rise rapidly and you get to a point where things are unprofitable.
If I was setting up a new operation, I would be looking at used equipment. I would have the woodwaste market taken care of. Same goes with the lumber end. I hear the Midwest mills are having problems with this. The biggest downfall of most operations is log supply. You apparently have that taken care of.
If you need any help on this, let me know.
Wow Ron, Great information! By looking at the % of the bottom line your waste wood contributes I leave a lot on the table with my small operation. I have been bundling hardwood slabs, but that is very time consuming to market. Do you have any suggestions on how a small operator might improve his margin on waste wood ? I sell my higher grade logs to superior hardwoods and they chip there slabs I wonder if they would take my slabs ? Is that ever done ?
Some places do take in slabs, but the problem with that is there is a lot of bark content. If its being used for paper, the high bark content is a problem. Unbarked slabs can be processed through a wood hog and used for mulch purposes. Too much bark will cause a problem with bedding, especially dairy cows. Some guys let their slabs pile up and then bring in a commercial operation to hog it up.
The low production really hurts your ability to cash in on your wood waste. You don't produce enough dust to make it worthwhile to blow into trucks. Same goes with slabs. In addition, you have to spend a lot of time and effort moving the material around, which adds to production costs. We don't touch our woodwaste. It costs us some money to truck it, and to reduce it, but its cheaper than the other labor that would be needed to move it around.
Gday
Ron gave you alot of good advice and Ill add to the others who have said its not easy but you can make a good living doing it ;) I would get a Circular mill as they will eat a band alive in this type of work circs are also more forgiving to people who dont quite have the sawing skills in a production situation ;) Its a big toss up you need good people if you are going to leave them to there own devices as they can cost you a lotta money real quick but you can also do that yourself by not being set up rite for the job :) ;) Ties will be your core business and main cashflow but you have to look strongly at what your getting out of your wing boards & waste and squeeze them for as much as you can get (ie Build Pallets instead of selling pallet grade boards )being close to a wood pellet market will be good for you along as you can hog it and sell it to the same customer as your sawdust ;) I am Just about to put in a Dedicated Sawmill just to produce Pallets and it pays here to do it even before adding Sawdust and Hogged Mulch sales to the mix But I am in a different part of the world to you and You will have to crunch the numbers to see where you are coming out with it Mate
Regards Chris
I do know where there is a mill that was foreclosed on, that may or may not be in your area, depending where you are. Circle mill. They did cut a lot of lumber back in the day.
meadows is right about the manpower issue. I have two businesses, and the second almost fell on it's face untill I took the time out of my primary business to be there myself and get it solidly off the ground. You have to have the motivated one (you) there to really get the ball rollin. If you can pull it off, then you should be in position to make some good money cutting out a middle man there. Good luck to ya,
South central mo, talking now, I have more than 40 mills in a 20 mile radius, You can cut ties, sell flooring grade lumber, 820 a thousand now, and make it, if you have the logs. Get a market for 4 X 6 cants. and you are in. The log price sounds the same for here. Volume is the trick. If you like doing the same thing. might consider getting a sawyer, it gets boring, and is slower than the circle mills I have sat in on. In fact, if you add the hours up, puching a clock for a local gas station might just pay more. But It is yours, right? that's what it is all about, You will need a crew, bunch of logs, did I say good crew, and more logs, and suffer through getting less than grade prices for the one inch. But If it is fun for you, then yea man! go for it. Then you can call the lumber graders knuckle heads, or theifs.
cx3, sorry about missing the small detail on the circle mill, there are some high end band mills that will do the job. I have seen them both, You can do it with a good crew, lots of logs, and sell the waste. No doubt about it.
Many have and are doing it, Material handling, trucks on time, no breakdowns are the key. I would say go for it. No mercy, long hours, and then at the end of the day you still have knuckle head loggers, the ones the big mills don't want, to deal with, have to go big. Pretty sure about that. Have a good week end, Brother, I am 100 Miles east of Springfield If you need some contacts or want to drop off some logs, David
easy math says ties alone wont make it
at $22 you need 12 and a half logs to make the value in ties of MBF
ties require medium log so thinking maybe 12.5 makes MBF
you are at break even minus saw cost
better sell some boards also or no vay cay next year
We've dabbled at making ties. Obviously with an LT40 Super and just the two of us, out production level was low. (But we kept all the money. )
We only tried it because our logger needed a market for below grade logs. That has been our major problem. Most of the logs he brought in to make ties would not make a tie. I even separated out logs that wouldn't make a tie and went over them with him. Made no difference. He continued to bring in junk.
A production killer for us is end trimming to length.
We've not made a tie in three years.
I will second what Bibby said.
Goes back to what I said, The log looks better to the logger than to the miller.
I still make ties, when I can't do anything else.
I appreciate this guys. I am in sparta mo just east of Springfield I forgot to mention that.
I will be contacting a few of you for a few personal questions if that's ok