I'm asking for a little advice on trading logs for lumber. I've had several customers ask me to mill on "halves" where they deliver me free logs from their farm, and I saw up half for them and half for me. No money changes hands, they take their half pile home and I can sell mine. It seems like a fair deal to me, especially with walnut and cherry logs, maybe oak, but not for less valuable timber. Is this common? What am I missing? Curious to know if it should be a different fraction, or what?
Thanks
YH
How do you sort into each half? By log? by board? by board size? by board quality? by log quality? by species?
by log scale? by board scale?
So many ways to sort this out. But if you figure something that works for each of you, then no reason to not go for it.
How would you do it?
That was how i started out, it makes for good practice on learning the curve, but it is not profitable in the long run. Your time x fuel x blades = stack of lumber that you will move by hand at least 5 times before you sell it. Even though you have access to good hardwood logs try to get 60 percent and you keep the best 60 percent of each log. This what i have been doing lately but only premium logs. It works for me. The customers just bring more logs if they want more wood it will keep you busy if you can afford the cost of running your mill for lumber inventory.
I agree with redbeard, go with the 60/40.
Add to that, the customer helps by doing the off-bearing.
I do some that way. I look at the log do a rough scale and a guesstimate of quality and then go 50/50 by mill run sort if the wood is pretty good. 2 stacks, one his, one mine. Odd counts go to customer.
If the wood is not so great or the logs are small I go 60/40 customer paying for fuel and bands.
I'll do it on occasion, but in my instance it is usually a 75% / 25% mix. But then again, I'm quartersawing the logs...
I think it depends if you have a market for the lumber. Loggers do a 50/50 split for average timber, and sometimes even go with a 40/60 split for the nice stuff, with the landowner getting the 60%. But, they have an immediate market where they're selling to.
In your case, you're being asked to split the logs. The customer has his product, but you don't have a payday until the lumber is sold. I'd stay away from these deals since you have input all your resources and gotten little in return. There is no guaranteed payday.
I would do it if I was getting some good logs and they were the right species. I would only do this when I needed lumber, as I would be just a hobby sawyer and a hobby woodworker and then when I had my quota that's it until I scrounge for more. ;D
I will not do it any more unless its someone I know or like and its wood that I want. to many times I hear(well I gave you the logs and I got the crappy lumber) I would like to tell them that,s what you get out of crappy logs, crappy lumber :D. ONLY if it works for you. Tim
Another way to do it is actually put a $$ value on things, even if no money actually changes hands.
This is assuming then that you would actually buy those logs as part of your business anyway. Scale the logs and "buy" them by the bd/ft rather than a fixed percentage. It might work out as 50/50 if you would buy those particular logs for the same price as you saw them? More valuable logs, you can shift things to the customers favour a bit, assuming you WANT the logs. Less valuable logs, the ratio would go in your favour.
You still give the customer a $$ value for the sawing job, and offer a $$ value on his logs, and he "pays" by delivering "X" number of logs to cover his sawing costs. If the numbers don't match, in either direction, one of you writes a check to cover the difference.
It's really no different then you taking the customers cash for the sawing, then next day buying a load of logs from a logger with it?
But as Ron says, unless you have the market for the product, you aren't getting paid. If you do, then it could be cheap source of logs. The customer perceives it as a good deal, as he hasn't paid out any cash for his sawing. As long as you are getting useful logs for a good "price" then you can come out ahead. If it's wood that's going to sit around and rot, then you loose out big time.
Ian
If I can make a quick profit on it selling it green (cherry, walnut) or if I already have a buyer then I consider it. Otherwise no way. If I have to take it, dry stack it, move it, unstack it, kiln dry it, and everything else before I see a dime then I'm only losing money. Besides, who is paying for the gas in my mill, my car, retipping my blades, and the maintenance on my equipment? I am. I shouldnt have to wait 1+ years to get paid for sawing someone else's lumber.
I have been asked to to that several times...I always said no...I would if it were something I personally wanted...cherry, walnut, or really big cedar....other wise no way...
Tim
Im doing that right now with pine logs. Both the log owner and I are using it to build structures so it works out good.
There is definitely a tremendous amount of experienced advice you guys are giving me. I am listening. The one common theme that you guys are making clear is that this is a business deal and even though it's a trade I need to look at the real dollars and cents, profit margin and expenses. Odds are, except in rare cases, while the customer will walk away happy with a nice pile of wood, I'll be left standing there wondering why I sawed all day for a loss, and I'll be tired and broke.
Thanks,
YH
The touchstone of a fair deal is, are both parties satisfied...if it works for both of you, then yeah...go for it...
I won't as a practice saw on shares unless there is something I really want in the deal..pine, nahh....white oak...if it is spectacular...red oak, yeah...because I know a guy who will buy every scrap of red oak I can lay hands on...walnut, or cherry? Yeah, you got it pal....cedar...maybe...gotta shed full of it.
I don't sell lumber except an occasional bubba that shows up and asks for something I have...then I just throw out a price...usually squids wanting to make their shadow boxes or selected chiefs making their briefcases. No slug slime allowed on my mill however.
Do consider, also, what it will cost you to haul said lumber home.
Quote from: YellowHammer on November 01, 2011, 11:30:00 PM
Odds are, except in rare cases, while the customer will walk away happy with a nice pile of wood, I'll be left standing there wondering why I sawed all day for a loss, and I'll be tired and broke.
Yup - you definitely captured the gist of the situation. Very well stated too.
The key to the situation is, do you WANT those logs.
If he turned up with a load of logs, and the situation was, you give me $1,000, and I'll saw the logs for you. OR I'll give you $1,000 and buy the logs off you. OR I'll saw 1/2 and keep 1/2.
He need not even pay you in the same sort of logs. He wants pine sawn, you have no market for pine, but he has some cedar or cherry (that you do want) at home as well? Maybe we can do a deal here... As long as you know you can saw those logs, and sell them for $2,000... Then putting a dollar value on the sawing and the logs lets everyone know where they stand.
But if you have no particular use for the logs, then it's not a good deal.
Ian
You hit it bang on the head Ianab.
Need of product ar cash is the driving factor on milling for shares deal for me. If i dont have a need to fill it a cash deal, no questions asked.
I usually won't saw on shares but I have a few times, especially when they were cash strapped but only if they brought the logs to me. The easiest way was to have the off-bearer alternate boards, one for him, one for me. There are a lot of worthwhile considerations on this thread but it seems that the value of the logs should be a determining factor.
If you have no use for the boards or they are worth less than your board foot charge then it will cost you to saw for them. That is assuming that there are no extra costs such as travel involved. If you charge .40 per bf to saw but you wouldn't buy his logs for .40 per bf, then you'll lose money unless you adjust the shares.