Trouble fixing price for buying dump logs, thoughts?

[Kelvin]

Howdy all,

i know this is pretty basic but i've been having trouble figuring where i should be on these issues and whether i'm really making any money selling for what i do.  For instance we are getting slammed with dead ash, and we don't sell much as nobody really asked for it before the borer killed everything, though if you kiln dry it and sell it cheap enough you can push it out.  So what is too cheap?

I'm mostly a one man show with and LT40E15 that is slow and old.  I have a Nyle kiln that dries about 1500 bd ft at a time, and a storage barn for the dried lumber.  Recently i've been getting cheaper and cheaper on my lumber to increase sales, so i've been thinking of kiln dried ash selects at $1 bd ft. on logs we can pickup pretty cheap or free.  Can i make money at this?  Would you make money on that? 

When i do the math it gets pretty tight and i don't know if it leaves room to replace equipment like the tractor, truck, mill, pay the insurance man, the tax man and pay a helper $10/hr now and then.  I've met guys who won't mill anything they can't get at least $2 bd ft for.  That would leave off oak, ash, maple and elm for me.  I only sell cherry, walnut and quarter sawn oak for more than that, so maybe its economical to quit messing with the cheap stuff and spend more time and money chasing the logs i can sell for $2.50 bd ft?

I've recently been going over and over what i can pay for logs as i'm trying to buy firewood logs from a big landscape company that bought the rights to the waste logs from the large city i live near, and that i used to get for free for a few years.  (by bought i mean they got them for free by being the only ones able to take the 500 truck loads per year that are generated)  They sell split firewood for $60 a face cord you pick up, or they sell a container of firewood logs, maybe about 8-10 face cords that they dump in your yard.

I contacted them to see what they would charge me to pull out the butt logs and sell them to me for.  They asked me what i'm paying.  I told them i've been paying $.25 bd ft to tree service guys who drop them off at my place.  which i converted for them and said it was $45 a face cord in the log.  They said they didn't think they could make any money dropping them off put were going to try putting some that i picked out in a container and seeing what they get as they aren't quite sure about their volumes. 

Another trouble with the deal is their yard is about 30 miles via the freeway from me, or about 50 miles going around on small roads as my log truck is an old county plow truck that barely does 55mph and maybe not too legal.  Though i'm 3 miles from one of their satalite stores where they constantly drop off materials, so i mentioned maybe them bringing them there when they had empty runs.  Then they decided it was most sensible to just drop them off at my place, but then it became not cost effective.

So i'm stuck trying to figure out what i'm able to pay for this stuff.  What are the real costs of our type of business?  I can figure gas and hours, and materials, blades, insurance but what about some savings to replace equipment?  Reroof the barn?  Gravel for the drive, and the hours i spend mowing around lumer stacks and spraying roundup?  That type of thing?  Aren't i robbing peter to pay paul if  i can't make enough to replace my stuff i'm using up?

I have the feeling they are more professional at not only figuring what they need to make money, but what the customer is willing to pay ( the maximum!!!) and i made the mistake of saying what i wanted to pay.  Otherwise they would have had no basis for what they have is worth other than as firewood.  I've had folks do this in the past.  "how much will you pay me?"  I say something like $.50 bd ft Then they say "okay, $.75 then!"   While thats 50% more if you think about it, without even knowing what i'm talking about.  They had no idea, maybe i was high or low, but all they know is what i'm willing to pay, and there is always room for more.  Of course i would pay more, but i don't know if i will be making $8.50/hr instead of $10/hr? or $20/hr instead of $22.50/hr????  I know i've got to keep careful detailed accounts, but if i did that i'd be making $5 hr saw milling b/c i'd have to add another 3 hours a week to keep books.

This landscape company is big enough to not care if i buy them or not. I could use the added supply of certain logs like maple i'm slow to get that seem to come in from landscape trees for them.  They don't care that they have no value to sawmills, they know what they can get in a container delivered, and how much extra they want for dealing with me is anyone's guess.  It could be looked at that i'm willing to buy their oversize logs that the firewood guys don't even like, and i'm a guaranteed sale while the containers may be slow sellers, or cheap sellers.  I hate dealing with people that can just say "oh, we need more, this isn't working for us" at any point after you started planning on them as a source. They have to gamble at what i can pay, and if they figure too much and i go away, who really cares?  I don't think they are too worried about keeping me in business for the long haul.  One of their brand new tandem semi trains costs more than i'll make in a lifetime and they have dozens of them.  you can't believe their equipment...

Well i know i should be doing some paper work to figure out how much money i can pay for a ratty, dog eared, birdhouse pounded city lot tree, but it feels almost impossible to comprehend.  The lumber doesn't fly out the other end of the deal, but leaves in fits and spurts and for varying amounts, but always a little lower, a little stained, a little cracked and a little too knotty, ...not quite as nice as the other guy i was buying from for a nickle a board foot...   Well you get my cranky point.  I get squeezed on all sides and i guess i have to draw a line in the sand.  Or you pay the higher price and ditch them when something better comes a long or you go bankrupt, which ever happens first.

thoughts?  Sorry for long post but i know some of you are bored enough to read it.  I guess i could make it simple for them and buy their firewood logs on sight with my truck and drive it home on the freeway till either my truck blows up or i get pulled over and find out the rules of the road.
KP

[woodmills1]

I found for me it was better to pony up for good legal equipment and hook up with tree service that are there to make money on the removals not the logs.  It does seem to be working, but I needed to pony up more money to deal with all of the firewood I now get.  The tree services didn't used to give me firewood but they have gotten used to me taking the stuff away, so they no longer chunk it for firewood themself

for all of feb and most of march i lost money on my pick ups.  did get enough pine and oak to keep my regular contracts full

now last week and going into april I am inundated with good quality logs I can sell and much firewood.

I don't think i want to buy logs....but seems i don't have a problem buying the equipment to get "free" logs

[Kelvin]

Woodmills, Yes thats a good idea.  I wonder how large a piece of equipment it might take to move logs 30 miles cost effectively.  My F800 costs $1200 per year for PLPD (cheapest insurance i can find) Probably a forestry trailer, and large truck.  Maybe i can fix mine up better and be more road legal.  Get new tires...  Hmmm... that would be a good idea.  Maybe buy loade for my big trailer, new good sized one probably $12k though?
KP

[WH_Conley]

If I cleared more money on the higher price stuff I would go that way.

[backwoods sawyer]

Kelvin I think you summed it up pretty well in your post.
I buy Myrtlewood by the ton from a chip producer. They set the price and I decide if I want to pay it. They have been rather stable in there price for several years now. The big advantage here is I drive over and pick the logs out of there deck that I want, they will dig them out with in a few days and then I drive over and they trim the logs to length and load them on my truck. I get choice logs that fit my needs. I am due to get another load next week. They have other species that are nice logs as well but for me it only pencils out on the Myrtlewood as my returns are higher.

[Ironwood]

All I can say is, " let your market drive your needs/ expenditures" . The guy w/ the market is king, everything else is just details.

Ironwood

[Tom]

If they aren't anxious to sell and you don't have anyone to sell your added value product to, then why bother with them? 

I've sold a lot of pine for .50 a board foot when my sawing rate was .15 or .20 a board foot.  I just looked at it as paying myself for the sawing.  If the .50 cents provided me with .20 for sawing, it was as good as sawing for the other man, and I had some coin left over to cover the other expenses.   I had no need to buy logs.  If I was going to do this, the other fellow had to get his benefits from getting rid of the logs.  Why buy a pig in a poke. You're the one with something to lose, not him.  He already has a log, and maybe a market.  Find someone who has a disposal problem.

If you aren't doing anything anyway, how much is enough?   Would you compare this to the time you spent sawing and selling cherry, even though you might not have any cherry?   Or, would you compare it to making a little on the the side instead of watching television?

Trying to figure out what a man's time is worth is a difficult thing.  Some people would rather watch the TV.

[campy]

Kelvin:

We read about what is going on economically in your state of Michigan and it makes our ears tingle.  There are some bad economic times everywhere but Michigan is the worst right now.

If you buy better equiptment and better tires you will lose barganing position because people will think you are making lots of money.   I have very humble equipment and still crank out a lot of production.

I think a sawyer is a lot like a horse trader and negotiating skills will take you a long way.  I spend a LOT of time befriending and negotiationg my with suppliers and customers.  There are constant interuptions and I capitalize on most of them.  It is a giant poker game and I get better at it all the time.   It is an art to find out from your log suppliers who the next highest bigger is and I know lots of angles for finding that out.

Wormy Ash is a wonderful delicacy in my market.  The reason is because I treat it like it is caviar.   Worm holes cost extra.  

I recommend that you be very conservative and find uses for wood but don't give it away.  Maybe 1.75 rather than $1.00.   You don't have to put everything through the kiln.  That adds to production costs.  You can dry wood outside and it serves two purposes.  It is drying.  Perhaps the economic clouds will lift and it is like money in the bank.   You might have to kill off those borers though.  

You are a great inspiration to me.
Please don't push your self and stress yourself too hard.

I hope that helps.  

[MikeH]

Change your insurance to tree removal, put out a add and get paid to remove them dead ash. I had to do it to survive and wow what a different world, I love it.

[metalspinner]

I am just an outside observer of sawmills and the forestry industry as a whole.   So take these questions and statements with a gallon of salt. :

It seems to me that sawyers needing "smaller" volumes of wood have trouble getting it from larger outfits.  And that landowners with smaller properties have trouble getting service from larger outfits.  Why can't these two entities team up in a win/win situation.  Most urban trees are junk anyway with inconsisitant color, sizes, figure, availability, etc.  The occasional diamond does not make up for all the junk you needed to saw and deal with anyway.

As a small manufacturer, I have trouble sometimes dealing with larger metal mills purchasing the aluminum and copper alloys that I need.  They always want to sell me a tractor trailer load. :  So, I have to pay a premium for smaller quantities shipped a more expensive way.  The economy these past couple of years has only made matters worse.  That's the cost with being a small fish in a big pond.  But the end product is something my customers are willing to pay more for over what the big guys are making.

Like I said at the top, thought, these are just the ramblings of a know-nothing wanna be sawmill owner. ;D

[WIwoodworker]

There's more than one question in your post and they're all important.

Should you sell your lumber for less than you do now? It all depends on your market. If your market is higher volume users of lower grade woods then maybe if your cost structure allows it. So you'll need to know your costs.

I continue to find niche markets for all grades of lumber so I can sell everything I have. It's sometimes a bit of work because the orders tend to be smaller but you'd be surprised at what people will buy if you're tuned in to what people use wood for.

One of my new customers makes segmented vessels and sells them at craft fairs. His only requirement is that the wood can be planed to at least 3/4" thick and 1 1/2" wide. Lengths are not so much of an issue. He doesn't buy a ton of wood but he buys between 10bf and 15bf a week. That works out to at least 500bf a year or more. We could all use about 20 of these customers.

I sell it to him cheap because he uses up wood I have a hard time selling to other woodworkers. Cheap = $1 to $2bf. Funny thing is. I usually throw some stuff his way for free because I wouldn't be able to sell it anyway. Plus he sends other woodworkers my way so I'll end up making additional sales.

As far as what to pay for city trees? If you get to pick them then pay what will allow you to make money. But then you need to know your costs. If I didn't get to pick the trees then I wouldn't pay for them at all.

Good luck with your source. If you can find some middle ground where you can both make money it will be a good deal.

I'll give you a call today. I'll be in your neck of the woods in the next couple of weeks to pick up some lumber from another couple of mills and could swing up to your place too.

[Warren]

Kelvin,

A couple thoughts from my experience:

1) If you don't have a market for the lumber, even FREE logs are not worth what you pay for them after you consider your time and effort to pick 'em up, load 'em, unload 'em, move 'em, saw 'em, stack 'em, sticker 'em, move 'em, store 'em, move 'em again, fuel for the truck, fuel for the mill, blades, yada, yada.....

2) Gotta when know when and be willing to say "NO".  There is a large land scaping / tree service about 15 to 20 miles from my place that I contacted about buying logs from.  When we started talking price, the guy wanted more for yard trees picked up on his lot than I pay a logger for decent logs delivered to my place.  Every year he turns many nice logs into mountains of firewood.  But, if you can not make a profit, you will not "make it up in volume"...

3) If the big guys wont play, look for little guys.  Everyone listens to a radio station called "WIIFM"  What's In It For Me ?  So think about what you can offer to a small tree removal service that would benefit him ?  In my case I have a C70 with a hydraulic knuckle boom.  I work with a couple small tree services to pick up BIG logs that they do not want to have to block into pieces and then carry out, and then pay to landfill.   I can also pull up next to a fence and lift logs over the fence to save them from having to pack wood out of a closed in back yard with no easy access.  You got the idea.  Despite #1, sometimes you might pick up a log or two that you really dont need just to help out and ensure you get a call the next time.  Maybe saw some trailer decking or barn siding out of the "free" logs for the tree service guy to show your appreciation.  Back scratching works both ways....

-w-