Paying operators

[Gouterk]

Hello, brand new poster here. A little background for reference. My husband and I own and operate a cut to length Logging operation in MN. My husbands been cutting since he was 16 but we've been cutting as a couple since 2010. We hired his brother in 2016 to run our forwarder and just this year we hired on a second operator to process wood. All together we have 2 processors and 2 forwarders. My husband processes and I run forwarder part time. Unfortunately we had a difficult winter and were constantly plagued with breakdowns. Currently both of our operators are on a salery base pay plus bonuses. But as you can imagine we ended up eating a lot of none production hours and paid out for people to sit at home. We're almost wrapped up with this cutting season and know we need to overhaul the way we're paying  people. So I guess my question boils down to, what's an affective way to pay operators ? How do you account for all the variables we deal with in the logging industry ? Would absolutely appreciate hearing some advice and insight on the topic. 
Thanks! 

[starmac]

That is a tough one for small operators, you almost need to have some other way to keep them busy if they are on payroll.

[Southside]

Welcome to the Forum Gouterk,

Simple answer is they need to take ownership in their jobs.

What about coming up with a production / income scale that works as an incentive to get the operator to work like it's their own company they are working for.  Figure out what a fair / typical week of income in typical conditions would be and the production for that machine.  Then develop a scale that pays for production, adds some for quality so they don't just go for volume, and an incentive for fuel or waste savings within BMP guidelines that you establish.  Say stumps no higher than X, damaged leave trees under Y %, etc.  Allow so much daily time for maintenance which will encourage them to actually pick up the grease gun and check the oil,  when they realize that by paying attention to what needs fixing before it before it gives out they get to earn more income, they will pay attention to what is going on.  At the same time you earn more income as now you have a sort of partner out there in the machine and not just a warm body.    

Now things will break down that nobody expected and that needs to be addressed.  But when a hydraulic hose is showing cords through it and the guy just keeps running until she throws oil like a geyser then he has no ownership in what is happening, especially if he can go sit home and get paid anyway.  But the guy who has taken ownership in his job will call you and tell you that you need to get a 1" hose, 48" long with JIC fittings on both ends when he notices she is going to fail and it will cost him income.   

Employees who have a sense of ownership take pride in what they are doing, it builds self esteem, and makes things a lot more enjoyable.  

You can even add in a year end profit sharing program when certain goals are met, this profit program has to come after equipment needs, etc for the company are met, don't starve your iron to make it happen. 

[snowstorm]

i see your picture is the one in timberline magazine ............

[TKehl]

I'll throw out a different view.  If I'm on someone else's equipment, I run it like it's mine or better.  I also work like I've got ownership in the company identifying and correcting issues and inefficiency.  If you told me we were shifting to a more production based pay structure AND I was on equipment with frequent breakdowns, I'd be dusting off my resume REAL fast.  If they are good, ask yourself if you can afford to loose them...  May make sense to add a backup piece of equipment or upgrade.

Now if you suspect intentional equipment abuse causing breakdowns, the answer is REAL simple there.  Equipment that sits looses less money then one being abused.   ;)

Most people fall somewhere in the middle of this range.  Then Starmac has already offered the solution.  Maybe have them cut firewood.  The owners of several area shops also have farms and if things are slow, they put their employees on fence rows and such.

[Firewoodjoe]

You can't exspect someone to work production pay if it's not there fault for lose of production. Salary + production I really like. We all gain we all loose but it also shows you want them to make a wage  while things are rough.

[chevytaHOE5674]

My old boss offered to pay me based on production. I told him sure that would be great, but everytime I have to stop producing because of a breakdown, parts run, make a hose, or even general maintenance then I start my time clock and bill him for my time as a mechanic. And a road mechanic gets paid pretty well....

He quickly realized that is was cheaper to keep paying me salary as he was and find things for me to do in the downtime.

[log cutter]

 In my area we pay operators by the hour or by production. A good operator will make around $25 to $30 an hour. If they mechanic they get paid their hourly rate and if they sit they can draw their unemployment from the state.

 Some outfits pay a bonus on production but you have to walk the strips to make sure the operator  doesn't high grade the strip. Nothing worse than going back over a job and finding piles,bundles or logs that have been left. 

 I have a friend who didn't think he could afford $30 an hour for a processor operator . He finally bite the bullet and hire one and the operator double his production. So the moral of the story is some guys at $30 an hour are bargains and some guys at an $1 an hr will bankrupt you.    

[WV Sawmiller]

   Not an area I am active in but I always said the idea is not to cut costs but to increase profit. Sometimes spending a little more will result in much bigger profit in the end. We have all bought some special tool or piece of equipment to help us work faster and better expecting for it to more than pay for itself in the long run.

  In the opening thread he she said he she was paying salary plus a bonus so I assume there is already an incentive for the operators to produce more. A different way to compute the bonus might help production and reduce expenses and down time.

   You might sit down and discuss with the operators and just explain the down time is killing you and ask their suggestions on what they/you can do to reduce the maintenance costs and down time. That is getting them more deeply involved. Since it looks like one of the operators is family I assume he is already willing to speak up if he sees a way to help.

[nativewolf]

Great to see you on the forum, not enough women in forestry much less logging.  

Not much to add other than perhaps the salary structure isn't really the issue but equipment budgets might be.  I'd redouble efforts to get ahead of things during the summer, all filters, fluids, greasing, cleaning, etc.  

Comments on finding other activities is also good advice, we move people around all the time. 

It's the weather related issues that hurt us the most.

[Gouterk]

Thanks for all the feedback! Its great to get the insight from those who understand the industry, and who don't mind a women logging ;) ... I definitely get where your all coming from. Its a difficult business just from the sheer amount of variables we all deal with. Our goal is to pay our operators well for good work and have them benefit from the success of our business as well. Our experience this year has been a salary doesn't produce the motivation to put in the extra hours needed after lost production but due to breakdowns our production based bonuses were never met either. So whats a fair and balanced approach to paying for downtime ? Its our Fabtek 153 that caused the bulk of our production loss. Its on the brink of being rebuilt at this point haha. 

Im starting to entertain the idea of a back up processor. Can anyone speak to that specifically ? 

We've also been discussing the idea of diversifying to take some of the pressure off wood production.  What are some profitable tie ins to logging in your experience ? 
Hope you guys can continue to weigh in, really appreciate the insight. 

Thanks  

[Gouterk]

i see your picture is the one in timberline magazine ............

Yeah that's us, didn't expect to be recognized :D 

[Gary_C]

m starting to entertain the idea of a back up processor. Can anyone speak to that specifically ?

I've never run a Fabtek 153 but people I know that have run them consider them to be a maintenance nightmare and they don't measure worth a crap. However all processors take a lot of maintenance and having two machines is usually twice the trouble. I think you would be better off to upgrade to a newer, better machine with less maintenance downtime.

I've run a Valmet 546 (hose eating machine and maintenance nightmare) and now run a Ponsse Ergo that has served me well. I do know that Ponsse has a high number of good used machines for sale due to very high sales of their new Scorpion machine. From my perspective, the Ponsse's are much better on breakdowns but they all take some maintenance along with the hard use.

[snowstorm]

i see your picture is the one in timberline magazine ............

Yeah that's us, didn't expect to be recognized :D

how is the barko working out for you? sometimes its better to have more than one iron in the fire. i plow and sand 31 miles of road. it can be very stressful but its also a very good cash flow business.  the check comes every month and it always cashes 

[CX3]

I'm still a firm believer that a guy working alone for himself can make more actual profit than a big company with new machinery cutting a hundred loads a week.

There are lots of guys around here feeding their families well with just a skidder and a saw. There are no processors, forwarders, etc.

Somebody said it best in another post. You have to find the profit. Some expenses are a bargain others bankrupt you. Good topic.

[Grizzly]

Salary to me equals fixed monthly cheque with no connection to production. As a manager I was paid a salary.
Hourly = paid for each and every hour on the job regardless of production. As a lumber yard worker I was paid hourly.
Commission = production or performance based pay. As a salesman and as a truck driver I was paid on this basis.

Some of you have been truck drivers paid by the mile and have also worked the woods. I've hauled logs but never run any harvest equipment. When paid by production I always made better money. Always. I was given responsibility for a machine and made sure it was ready for work each and every day which included contacting a shop for work I could not do and scheduling work into my existing runs. Like has been said I was given ownership and I accepted that role and made money with someone else's piece of equipment. The only reason I made money is because I was making the owner money. Now after all that; here is the question. Does performance based pay not translate into the wood harvesting world? We had a lot of variables in trucking too.

[snowstorm]

I'm still a firm believer that a guy working alone for himself can make more actual profit than a big company with new machinery cutting a hundred loads a week.

There are lots of guys around here feeding their families well with just a skidder and a saw. There are no processors, forwarders, etc.

Somebody said it best in another post. You have to find the profit. Some expenses are a bargain others bankrupt you. Good topic.

i may have agreed when i was your age. when you get to 50 or 60 things change

[TKehl]

Does performance based pay not translate into the wood harvesting world? We had a lot of variables in trucking too.

I think the biggest difference is equipment availability.  Worst case on a truck if it will be down a while is to pick up a loaner.  On our farm if the baler shoots **** right before a rain, I have five neighbors on speed dial.  However, as the equipment gets more specialized, there are fewer options and frequent breakdowns when pay is production based will cause the best people to leave first.  

Not saying it can't work 100% production based, but takes a sharper pencil...  A lot of people out there live paycheck to paycheck and will take lower pay as long as it's steady.

[starmac]

Grizzly I can't answer that question, but have always worked based on production, whether working for myself, be it trucking or turning wrenches, I wouldn't take an hourly job. I did work hourly in construction for a number of years, and even while I wa super, I might as well have been working on production, as that is what my wages were derived from and if the production hadn't been there neither would I have been, it is what makes the world go around.

I worked 12 years for one smallish construction company, and was guaranteed 40 hours a week, but only once that I can remember did I not work over 40 hours, and that was during one of the big floods in 79, and even then the only reason I didn't put in my 40 hours was I was on an out of town job, so couldn't be diverted to anything else. 

[Grizzly]

I think the biggest difference is equipment availability.

Yeah. Some difference there. I never had access to loaners and such as I worked more like an owner/operator. But you're right, it is a difference.

[Firewoodjoe]

Just cut your salary amount back. Say $300 a week then the rest production. Anyone who pays 52 weeks a year no matter the situation should be considered a good employer. And your employees should recognize the fact your trying to give them pay even if it only keeps the wolves off the door. Then when your rolling good they'll be more appt to work more hours to make up for there time off.

[chevytaHOE5674]

My trouble with running somebody's older processor and being paid based on production was the owner couldnt/wouldn't fix things himself and didn't have the patience to trouble shoot things himself. We had our share of breakdowns and I did almost all of wrenching (think crane removal, boom rewire, uprighting flipped forwarder, rebuilding hydraulic cylinders, replacing injectors, welding, etc). Had I been paid production there is no way I would have spent all that time working for free as nothing was being produced. The weeks when we ran without any issues I would have surely made better money on production.

I was paid "salary" I guess being I got an equal check every week but I didn't get paid when we were off for spring break up, I had to collect unemployment. Some weeks we only put in 30 hours others were 60+. I used to track my hours just for my own knowledge and overall I averaged just over 40 hours for each week I got paid. I used to bring bent/worn bars and broken chains home and fix them on the short hour weeks, also would change oil/brakes/u joint/ball joints etc on the work Truck to make up hours when needed.

[Gouterk]

Currently our pay structure is a base salary averaged out over 12 months and payed out once a month even during our down season. Like I said before we just aren't seeing the extra effort when things are running smoothly. Also my husband ends up shutting his machine down all too often to help with repairs and trouble shooting that people don't want to take ownership of. I realize some of this is a management issue and people need to understand the expectations of the job. But obviously we haven't given enough insensitive to take more responsibility for the loss of production. We're just in a whole new ball game and haven't quite hit our stride yet. Starting to miss the days we ran chainsaws and we're debt free  :D

[Gouterk]

i see your picture is the one in timberline magazine ............

Yeah that's us, didn't expect to be recognized :D

how is the barko working out for you? sometimes its better to have more than one iron in the fire. i plow and sand 31 miles of road. it can be very stressful but its also a very good cash flow business.  the check comes every month and it always cashes

The Barko has been working out well for us. It's had its issues too but overall I would say we don't have any regrets. Our area suddenly has almost no one running a lowboy moving equipment for guys. We're really considering buying our own truck and getting in on the market. 

[chevytaHOE5674]

How many months or weeks do they work a year? And how did you arrive at your base salary? There must be some expected minimum yearly hours you want the employees to work?

Are they putting in those hours and the production just isn't there?