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Figuring the cost per cord. Or trying to any way.

Started by B.C.C. Lapp, July 25, 2022, 05:46:43 PM

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B.C.C. Lapp

I was in another firewood guys wood yard a little while back.    Heck of a nice guy and we talked for quite a while.    He had a major league processor, a tumbler, a serious loader with a thumb and a bucket, a skid steer with a grapple, two huge open sided wood storage/drying buildings, net for walls to stop most snow and rain but let air flow through, a kiln, a dump trailer and that ain't all.  He also had about ten or twelve tri axle loads of poles on hand and at least 35 finished cords..
    This was with out a doubt the most well thought out firewood operation I've ever seen.  Also the best equipped by far.   This guy isn't mucking about.   And he buys all his firewood poles from local loggers or sawmills.   And he is getting just about the same price for his finish dry firewood that I am.  
And he is paying roughly the same for tri axle loads of firewood poles that I am.

   I opened this post telling you all about this remarkable  operation because this guy is operating in the same area I am.
  Which brings us "slowly and painfully for you guys I know" to my point. How the heck does he do it?

I get about 25% of my wood from timber jobs I buy and the firewood that comes off it is just a by product and almost cost free, almost.   Then I get about 25% of my firewood wood off my own timber land  and that cost is low. Just the cost of producing and delivering.   Then I get the other 50% buying tri axle loads of hardwood poles form other loggers and mills.    The profit margin on that stuff is tighter than a Dallas cowboys cheerleader shorts.
   Here lately I've been thinking on upgrading my equipment and expanding my firewood operation.  So I'm trying to come up with a average cost for producing and delivering a cord of wood.   It isn't as easy as it sounds.   Some tri axle loads are bigger than others, delivery's can be close or far. I do know my delivery cost because I know what it cost for the first 25 miles and I ad a fuel sur charge after 25 miles.
But there are many variables that I can't figure how to average out.      I keep telling myself if other guys can do it in the same market I'm operating in and they are paying for all their wood and I'm not then how can I go wrong.  
So does that hold water or am I missing something?
Listen, or your tongue will make you deaf.

doc henderson

I do not know how old a guy he is and or if it is a family operation.  he may be counting on selling the equipment when he retires and only using up the depreciated value of the big machine, and or selling to the next generation in his family.  I know farmers that expand, so all three sons can make a living from the inherited/bought out farm.  you need to look at the market and see what it can support.  If you go big, then you two may be competitors in the same area.  If fuel prices drop then maybe the demand may drop.  in this bubble, I hate to buy equipment, as there will be depreciation (paid the bubble price) when the bubble bursts.  My day job has nothing to do with this business so take it with a grain of salt, but it may help to see what the market will support, and do the math.  If you start adding employees ect., well then there you go.  if you are thinking about making a small operation more efficient, great.  the payment on a big machine comes around each month whether you sell a bunch of wood or not.  I wish you well. 
Timber king 2000, 277c track loader, PJ 32 foot gooseneck, 1976 F700 state dump truck, JD 850 tractor.  2007 Chevy 3500HD dually, home built log splitter 18 horse 28 gpm with 5 inch cylinder and 32 inch split range with conveyor powered by a 12 volt tarp motor

stavebuyer

I am doubtful that you are missing anything. You may very well have a better handle on cost's than he does. Cash flow above day to day operating costs can be misleading when you go to replace several Tri-axle trucks and a processor at the same time.


B.C.C. Lapp

Your both right in that equipment buying costs are a pretty serious obstacle right now.    I couldn't begin to compete with this guy. I wouldn't want to try. and there is more than enough sales for both of us.   My firewood equipment consists, at this moment, to two 3/4 ton pickups, a dump trailer, 5 chainsaws, one big box store splitter, a logging arch, two Kubota tractors with loaders, a Hudson logging winch and a logging arch, assort cant hooks pickaroons pulp hooks and PPE gear.

What I'm looking to upgrade is my splitter of course. Other than that I'm keeping on as I am.   I can pay up front for a splitter.  I'm not looking to go into dept for a processor or any equipment over $6,000.  
Listen, or your tongue will make you deaf.

B.C.C. Lapp

And yes Doc H, I am just looking to make my small operation more efficient and more profitable, not all that much bigger.   I'm a one man show and that's how its going to stay so I need to make more wood faster. The only thing I believe I can speed up is the splitting.  That's why I'm eyeballing a professional grade splitter and maybe later a conveyor.
Listen, or your tongue will make you deaf.

Corley5

Consider buying all your logs rather than producing them yourself and concentrate only on processing firewood.
Burnt Gunpowder is the Smell Of Freedom

doc henderson

Timber king 2000, 277c track loader, PJ 32 foot gooseneck, 1976 F700 state dump truck, JD 850 tractor.  2007 Chevy 3500HD dually, home built log splitter 18 horse 28 gpm with 5 inch cylinder and 32 inch split range with conveyor powered by a 12 volt tarp motor

doc henderson

Timber king 2000, 277c track loader, PJ 32 foot gooseneck, 1976 F700 state dump truck, JD 850 tractor.  2007 Chevy 3500HD dually, home built log splitter 18 horse 28 gpm with 5 inch cylinder and 32 inch split range with conveyor powered by a 12 volt tarp motor

stavebuyer

Not very many true "firewood only" operations around me as the selling price really doesn't justify it. Here it tends to work better for the tree service and lawn care types as a compliment and often a large splitter is better suited for the wood that they would otherwise have to pay to dump. Free wood and a cord or so an hour production with a 10K machine pencils out to keep an employee productive 40 hours year-round. Also, can work out for a logger who really has minimal additional cost to bring home wood to process as a sideline when they are waiting on parts or rained out of the woods.

A processor running purchased poles makes sense if you have the sales volume and can source the logs. That varies around here based on the pallet market. Sometimes they will just about give away pallet logs and pulpwood and other times the mills pay more than you could get out of the processed firewood. If you are doing your own logging you really need to consider if one part of your operation may actually be subsiding the other?

Being efficient at logging, processing, and delivery might be a tall order for a one man show as the equipment for each function will be idle one third of time. Given your particular set of circumstances I think I might shop around for a tree service to provide free or low-cost wood as in the future I don't see how anyone could afford to log poles and put them on the yard for less than $120 a cord and that leaves nothing for profit and stumpage.

If your selling price is $300 per cord and you can produce 2 cords of ugly yard tree blocks a day with a $10 k splitter upgrade you can increase your time available to split by not spending the time in the woods. Putting two cords at your "yard" from standing trees is really only paying you $240(value of delivered poles) and next to nothing compared to tree service dumped wood.

Paying $120 a cord for poles you will need a processor and an efficient loader. I would expect between logs/fuel/equipment you will be at $200 or more in costs per cord plus delivery expense. 

A tri-axle dump sounds like wholesale to me. Guess it varies by region but in my area anything over a cord is a tough sell, and partial cord orders are easier to come by than full cord orders. A ton or 1 1/2 ton dump truck is probably more profitable as the sales price is probably higher and the actual delivery cost probably not that much higher than running a CDL triaxle.

I'd work the phone and visit some tree services that aren't currently peddling firewood. Even with a box store splitter you will double your time available to split. Pick up the phone and order a new splitter when you can't keep up.

Too many get caught up in the trap of thinking buying a piece of equipment is buying a business. Buy equipment when the demand exceeds your capacity and pay for it with money you would otherwise be paying in taxes.

PoginyHill

Generally speaking, a lot of equipment will lead to smaller margins and the requirement to sell larger volume. Capital and operating costs require a significant revenue on a regular basis before the profits begin. Small operations can be profitable with much smaller volume, and really depends on what you expect for your hourly labor.
Kubota M7060 & B2401, Metavic log trailer, Cat E70B, Cat D5C, 750 Grizzly ATV, Wallenstein FX110, 84" Landpride rotary hog, Classic Edge 750, Stihl 170, 261, 462

mudfarmer

You have trucks and a dump trailer? Worry about a conveyor before a better splitter. I learned that the hard way and then from this site, stavebuyer has said it repeatedly. (I still do not have a conveyor... Justify this by the small amounts that I sell but it is a LIE and the conveyor is the missing link). After that read PoginyHill and stavebuyer's posts a bunch of times. And others, not just this thread. We are not alone, others have been down this road.

I just bought a timber wolf from a guy that bought a super split, he said he is charging 25% more than me and can't keep up. I can't keep up either 😂

In my case it is not firewood only, I have a day job or sometimes several, firewood is a byproduct of thinning and logging. Next year there is 100 cord Forester marked (call that 150 cord...) to log process and sell and I need to get my $#!) together. This is going to require a helper or I will drown 

barbender

I'd about guarantee you guys that are getting all of the "free" wood are not paying yourselves a decent wage while doing it. I've done it myself.

  If I didn't have the processor and was going the splitter route, I think I would keep around a consumer machine like the MTD like I used to have for busting large rounds. These type of machines are slow but they are all very powerful. That splitter never stalled once. I've stalled the splitter on my processor quite a few times. In addition to the MTD, I would get a Super Split kinetic. I've only watched videos of them, and read the opinions of owners on here but I really don't think anything else can match the amount of nice, clean firewood they will produce. Get yourself a conveyor to go with it, and you'll be making a lot of wood.
Too many irons in the fire

mudfarmer

Yes barbender I could make the same at Walmart but I hate them and then who would do the TSI??  :D

Ianab

Quote from: barbender on July 26, 2022, 10:30:52 PM'd about guarantee you guys that are getting all of the "free" wood are not paying yourselves a decent wage while doing it. I've done it myself.


That was my thought as well. Wood harvested from your own land isn't Free. You have time and equipment expenses to account for, same as if it was a commercial logging job. Only thing you aren't paying out is the stumpage, which isn't much for firewood grade logs.  (and probably trucking).

The other issue is that while you are logging, you're not processing firewood, so that equipment is  sitting idle. While processing firewood, the logging equipment is parked up. 

As you say, the margins on firewood are pretty skimpy if you have to buy (or even harvest) logs, but the other operator (and his equipment) are dedicated to full time firewood. While you can't sell product at a loss and make up for that with volume, if the profit margin is small, you have to move a lot of volume. Hence the dedicated machinery, and large drying capacity. Selling a quality product gets you the good repeat customers, that will pay a small premium for good service. You might miss out on some low ball sales, but as long as you are moving all your production, your pricing is low enough. 
Weekend warrior, Peterson JP test pilot, Dolmar 7900 and Stihl MS310 saws and  the usual collection of power tools :)

Spike60

Amazing how much good advice in just a few posts here. Almost hard to find stuff to add to it. :)

From the opening post, it sounds like the cost of wood for you and the guy with all the toys is about the same. Maybe the question to ask is what is the cost of all of his toys? And how much wood has he had to sell to pay for all of those goodies? There's a requirement for a full time woodseller to acheive a volume level that you don't need to reach for as your overhead is much lower.

Efficiency is nice, but the old saying that "growth eats cash" applies to any business. Lot of that equipment is nice to have, but ya gotta sell a lot of wood to pay for it. All well and good if the growth and costs have been managed properly. Can't assume too much debt along the way. Sounds like both of you know what you're doing in that regard.

$6000 target to expand your business is very reasonable. I agree that a spliter upgrade should be first, followed by a conveyor. With the 2 Kubotas, you can split right into the loader bucket, so loading the dump trailor isn't isn't much of a weak point other than you have to stop splitting to do it.

One thing to think about is to be honest with yourself about how much time you can devote to firewood with all the other logging and stuff going on. Delivery time is one that I see sneak up on a lot of guys around here. Especially when it starts getting dark early. :)
Husqvarna-Jonsered
Ashokan Turf and Timber
845-657-6395

doc henderson

a local tree guy has a brother that has trouble holding a job, so he is now the fulltime splitter.  I think many of us have a brother like that.   :) find ways to decrease handling as mentioned.  if you use crates, you can toss wood in then move with forks and even deliver in the crates.  used ones are for sale, but if it is your plan you can watch for them for free.  check with big road companies, or ag fertilizer places.  depending on demand they may be free.  you can get 12 on a car trailer if you want a bunch.  or maybe the conveyor is your next step to load into a dump trailer.
Timber king 2000, 277c track loader, PJ 32 foot gooseneck, 1976 F700 state dump truck, JD 850 tractor.  2007 Chevy 3500HD dually, home built log splitter 18 horse 28 gpm with 5 inch cylinder and 32 inch split range with conveyor powered by a 12 volt tarp motor

hedgerow

Quote from: B.C.C. Lapp on July 25, 2022, 05:46:43 PMI keep telling myself if other guys can do it in the same market I'm operating in and they are paying for all their wood and I'm not then how can I go wrong.  
So does that hold water or am I missing something?
Here's a statement that will get you into trouble quick. Over the years I pretty much always had a couple things going. I run trucks hauling fuel for 25 years normally ran five trucks and tanks. I worked nights as a mechanic during that time. One winter I had a company come in and cut the freight rate on me. I gave up some business and it hurt but I didn't need any practice. While I was trucking I was buying farms as I knew I wanted out of the fuel hauling business and my Mom that I hauled for some  would be selling her truck stop and retire. Moved into farming and working a mechanic job at nights. Bidding on ground to buy or rent is tough a lot of times folks have money from other sources you don't know about. I have loss rented ground before with rent wars. Same as trucking I don't need any practice. I sold some firewood for a while with a buddy and his two boys. For me the big part was I got my pastures cleaned up. We did ok no big money around here. He moved and his boys grew up. Today just getting my 10-15 cord for my Garn cut is enough. I do thing a better splitter and a conveyor would really help you out. Just remember no one needs practice. 

B.C.C. Lapp

Quote from: Spike60 on July 28, 2022, 06:31:28 AM
Amazing how much good advice in just a few posts here.
Thats a fact.   I'm writing some stuff down and looking at it in the pros and cons way.   Lot of good points made and there's a lot to think about. 
Listen, or your tongue will make you deaf.

barbender

Don't listen to me too much, but these other guys know there stuff. All I can really say for my business, is I haven't managed to get in over my head😊
Too many irons in the fire

B.C.C. Lapp

Listen, or your tongue will make you deaf.

Log-it-up

It's hard to compare with a feller that has fancy stuff, guys might be charging the same for finished product and paying the same or similar for raw material but with a wood processor it's is the game changer, where is it might take you two hrs to cut and load a cord of wood he's doing it in 45 mins so his he making more profit per cord sold no just producing more 

barbender

I will say, finally getting a processor has been a real game changer for me. 
Too many irons in the fire

moodnacreek

I believe most of the time these first class operations have another source of income. In my case it was my wife. Sometimes the guy has inherited or invested well in something you are not seeing and really likes doing wood.

stavebuyer

Many successful businesses buy "things" rather than pay taxes. I have spent more than my share rather than send it to the government to spend. Good way to build equity.

OddInTheForrest

Stuff like this really reminds me of why I am on this forum. A lot of knowledge around here.

My thinking on the subject has lead me to this. And by all means, I am in Norway, things are done a bit differently here.

I purchased my processor for around 80.000NOK (8000USD).
Atv : 60.000NOK
Trailer for atv : 5000 + winch and cables (2500NOK)
chainsaws : about 15.000 (By all means, buying small, trading up etc, its not really what I paid, but a rough value).
Small Eder Winch + rope : 25.000 total.
Van - Daily driver : 225.000 NOK
Trailer for van : Brother in laws, but its about 20.000NOK new.
Shitloads of rigging equiptment : Free from my previous offshore job.

Thats about 42.000USD all in all. Just for a hobby.
Brother in law has a NH4050 tractor that I use around the woodlot, so thats almost free.

I can alone process about 2 x 1000L bigbags/pallet-bags pr hour now with this set up. I can sell these for about 120USD pr bag wet, or 150-160USD dry. Just because of the electrical + gas/fuel prices here now. (For reference, its 10USD / Gallon today here for gas)

In my honest opinion, its not the time spent  in the woodlot thats expensive. Its everything else.

Say, a delivery run with the tractor, just in the country where I live, thats gonna take me 10-60 minutes, all given the distance. Should one charge for delivery? Can I make this more efficient?
Time spent in the woods, how much am I generating pr hour? How much will a tree yield, when split?
Time spent maintaining the processor, atv, tractor? How much will parts cost me?

My goal for this year was 50 bigbags. I am not sure I will make that, it all has to do with time.
Goal for next year is 300 bigbags, given an year around production. With the cost of heating using electrical power here, its breaking people just looking at the electriccal bill. I honestly think its the best time ever to have all this equiptment stood in the woodyard. 

The only question then, is my time. How much time can I actually spend in the woods? How much time can I spend processing? And how much time will I spend delivering?

The plan for me is to eliminate the delivery. Make people bring a trailer, load it up for them, charge them via my phone/app/invoice-program,and send them on their way.

I could then focus my time to production and woodyard.

The next question then is supply. How much more efficient would it be to buy a truck worth of logs ?
For reference : A logtruck here will cost me about 1750 USD + anything from 50 to 2500USD in transportation cost (Yes, I know, its mad).
It would give about 35 cubic metres of logs. That equals about 52 500 litres of split wood, if one adds the splitting factor of 1,5. So say, if Im lucky, I would get 50 000 litres of wood. That can be sold for 7500USD give or take. Then we add in the cost.

  7500
-------
-2000 (theoretical cost of logs)
-250 (cost of 50 bigbags)
-375 (cost of running processor - 15USD pr hour, 25 hours if working alone)
 
This gives me : 
4875USD. 
But there are many ifs here. I am not factoring in the time for me as a worker, but hey, its a hobby?

Not sure if anyone can use any of this info, but its at least what my honest ideas around the subject of cost versus run-time etc.

jimbarry

I am breaking down some of OddInTheForrest's numbers.

35 cu m = 9.6 cord of logs delivered

35 cu m logs produces 52,500 L (1,236 cu ft) of split firewood tossed in a pile.

1,236 cu ft divided by 180 cu ft (avg volume of a tossed cord) = 6.86 tossed cords. Round it to 7 cords.

Gross sales of USD$7,500 / 7 cords = USD$1,071.43 per tossed cord of split firewood.

Net profit of USD$4,875 / 7 cords - USD$696.43 per tossed cord of split firewood.

Factor in as many if's as you want, that seems like a very healthy profit... unless I misplaced a decimal somewhere :)

beenthere

Very interesting. 
Speaking of firewood, I've watched some video of the live view from engine pulling passenger train in the winter snow up the coast of Norway. One thing very noticeable was no smoke coming from houses along the trip. 
Cab Ride Norway : Trondheim - Bodø (Winter) Nordland Line - YouTube

There are several videos on such trains in Norway, and a real enjoyable way to see the beautiful countryside and villages along the way. 

Figured there was a ban on burning wood. But someone must be burning firewood, given OddinTheForrest's post. 
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

twar

Quote from: beenthere on August 10, 2022, 09:45:13 AMI've watched some video of the live view from engine pulling passenger train in the winter snow up the coast of Norway. One thing very noticeable was no smoke coming from houses along the trip.


Most wood burning in Norway is in a oven/stove, not in a fireplace, and a chimney/stovepipe is still required in most types of new houses to accommodate an alternative to the standard electric heating. So there is definitely not a ban on woodburning (though there can be at times locally in cities when the air quality is bad). There has been a push (with $ incentives) to replace old ovens (old=pre-1998 ) with new cleaner ones. Now, a majority of ovens in Norway are "new". There is not nearly as much visible smoke from the chimneys as there was 20 years ago.

Banning woodburning in Scandinavia would be like banning BBQ in North Carolina :D.

OddInTheForrest

Without doubt, the way things are looking now, Its a great time to be a firewood guy in my neck of the woods.
Sent an email yesterday, about getting a truckload of logs, but this seems to be rather hard to come by this season. So I guess its plan b - felling of Sitka Spruce. They tend to be loaded with branches, so it takes a fair time. But they give quite a lot of split wood. Big trees.

Ianab

Quote from: twar on August 11, 2022, 03:14:52 AMThere has been a push (with $ incentives) to replace old ovens (old=pre-1998 ) with new cleaner ones. Now, a majority of ovens in Norway are "new". There is not nearly as much visible smoke from the chimneys as there was 20 years ago.


Same here. 

All new wood fires need to be the cleaner "double burning" style, and a couple of cities have banned old open fires.   Christchurch used to be one of the worst air quality cities in the world as it was a flat spot between hills and an inversion layer would trap the smog in Winter. Dry wood in a modern fireplace makes minimal smoke. 
Weekend warrior, Peterson JP test pilot, Dolmar 7900 and Stihl MS310 saws and  the usual collection of power tools :)

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