RR Ties and Amtrak NE Extension

[red]

 I read that Amtrak will be doing some Infrastructure improvements on the North East Extension from NYC to Boston and they will need 75,000 Rail Road Ties

Gene Wengert always said to keep your ear to the ground about when the railroads will be doing Infrastructure repairs and start cutting as many RR Ties as you can 

[ArkansasOaks]

Out of curiosity and so I can have numbers to plug into a business plan what are current tie prices? Or is it very regional? 

[SawyerTed]

For a business plan, it's very important to use the authoritative sources for market prices and trends. 

There are several market publications such as the Hardwood Market Report and TimberMart that collect and publish market prices for forestry products     If I'm not mistaken, there are a couple of industry market publications specifically for crossties.   

After having written a couple of successful business plans, I learned first hand that a banker is going to ask where you got your numbers.  "Some guys on an online forum told me prices." won't be a good answer.   

[Resonator]

So Ted you're saying if I tell them my business plan is: "I figure it out as I go along" that wouldn't fly?
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Don't know any prices on ties, but there have been discussions on here in the past about sawing ties, and trying to make it work money wise. From what was said in the past, you would need to have a good supply of logs and a production sawmill to produce them. Also you'd need heavy equipment to handle them, and a market to sell the jacket boards cut off the logs while getting down to the tie cant.

[SawyerTed]

So Ted you're saying if I tell them my business plan is: "I figure it out as I go along" that wouldn't fly? .

As long as you make the payments on time.. 

[Larry]

There is no way I could sell ties just because they have a minimum quantity that they will buy. I don't have the log supply, and far too lazy to hit that minimum on a regular basis. But I did find an alternative. A commercial mill a mile away would buy any amount I would bring. They had several other small mills that did the same and than they accumulated them into truckload quantities. Of course what they were paying was less than the railroad but it worked great for me. I could move or use the grade jacket boards and didn't have to mess with the low grade.

The mill changed hands now and I don't know if they still do it, but it might be worth checking around to see what ya can find.

[Digger Don]

I'd hate to rain on anyone's parade (although we could use the rain!), but are we sure all those ties will be wooden? I think some of the bigger high traffic lines are switching to concrete ties.  Don

[TreefarmerNN]

So Ted you're saying if I tell them my business plan is: "I figure it out as I go along" that wouldn't fly?
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Don't know any prices on ties, but there have been discussions on here in the past about sawing ties, and trying to make it work money wise. From what was said in the past, you would need to have a good supply of logs and a production sawmill to produce them. Also you'd need heavy equipment to handle them, and a market to sell the jacket boards cut off the logs while getting down to the tie cant.

I've never cut ties but know a few mill owners who have and do.  You're on target with the above comments.  The mill needs to be able to saw a minimum of a tractor trailer in a relatively short time and strap them for loading.  Transportation cost to a treatment facility also comes into play.  One mill owner I know is lucky enough to be close to a rail siding so he can load onto rail cars and cut transportation costs that way but a railroad car holds a lot of ties.

[SawyerTed]

I imagine trying to compete in the crosstie and structural tie market with a portable bandsaw is what the hot place below is like.

Ties are the leftovers after the meat has been taken off the bone.  The side lumber is the bread and butter.   I'd hate sawing nothing but 200-300 pound ties all day.  

[Resonator]

Yup, anybody thinking of getting into sawing ties, go down to a landscape supply business and lift one to get an idea how heavy they are. Now think of handling those all day...

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As long as you make the payments on time..

Interesting thing I learned talking to a pro sawyer last spring. At different times his business was in debt to the bank for large amounts of money. He said he learned that when your business is in debt to the bank for $100K, you will loose sleep at night worrying about paying it back. When you're $1 MILLION in debt to the bank, the banker looses sleep worrying about you paying it back.

[ArkansasOaks]

For a business plan, it's very important to use the authoritative sources for market prices and trends. 

There are several market publications such as the Hardwood Market Report and TimberMart that collect and publish market prices for forestry products    If I'm not mistaken, there are a couple of industry market publications specifically for crossties. 

After having written a couple of successful business plans, I learned first hand that a banker is going to ask where you got your numbers.  "Some guys on an online forum told me prices." won't be a good answer.

I wasn't very clear about what I meant. The plan is very much in the rough draft and chasing which path would be best in my area.  Don't intend on going through a bank so it will take several years to save up.  I have no intention on taking these numbers anywhere.  It's more of something to just plug in now before spending the money on hardwood market report. 

[SawyerTed]

Ah, I see.  Might be most important to determine how much it will cost you to make, handle and ship a tie.  

Then determine how much the market is paying closer to time of production.  

[longtime lurker]

Wood products are commodities and commodity prices fluctuate... and by the time you can save enough money to play RR ties the market will be difficult again. Just like setting up to service the demand for 2x4's in 2022... mills are coming on line just now to service a boom that's been and gone.

My two cents worth would be to look at the log supply you expect to run on. Once you know that you'll know what products you could potentially produce. Log supply and potential markets for the available resource will determine what equipment you need to turn logs into wood products with the right mix of efficiency and flexibility. Efficiency is the ability to turn the average log into a given product for the lowest possible cost because when you play commodity lumber  fibre efficiency doesn't rate a mention. Flexibility is the ability to make money from a range of potential products subject to market conditions because if your business depends on just one product you're either planning on being big enough to control that market or that market will control you.

But everything starts with realistic appraisal of the log  resource cuz ifn you can't get tie logs in volume then a tie mill and the tie market is irrelevant.

[cutterboy]

Yesterday I saw a flat bed trailer loaded with ties. I'm in central Massachusetts. It is not unusual to see trucks with logs and trucks with lumber here but I don't often see trucks with ties. We have a sawmill close by but it saws pine and those ties looked like oak.

[ArkansasOaks]

Where I live there's a lot of opportunity for getting tie logs. I'm at the tail end of the Ozarks.   There's already a couple of large hardwood mills north of me but online they seem to focus on flooring and low grade/pallet.  So that leads to the question is it worth it to chase these markets to the detriment of other sawing you're doing? Assuming a mill is already up and running.  And you know you can profit well.  Or is focusing on one thing more important?

[customsawyer]

I agree with Longtime lurker and I'm going to add some to it.
If you are going to give ties a go, you had better have your ducks in a row.
1. You need to have a log supply.
2. Have a market for the side lumber. This will more than likely be more profitable then the ties.
3. Ties are best produced as a side product not as a main product.
4. You better have a some good equipment that can run long, hard and fast.
5. I wish you the best of luck in that market, but you won't see me in it.

[longtime lurker]

Thing about markets like ties or utility poles or crossarms or shoring and cribbing, or bridge timbers is that- once you're established in it - you never have to advertise you have those products. You already know the various buyers, chances are you've even got a supply contract that requires you to punch out so many a month as a minimum. And a lot of the time it's low margin work but its pretty solid and you can write a budget around it. That just leaves you to find a market for your better grade jacket boards etc.
 An end dogging scragg and a multi head resaw is probably the best tie setup around... maybe a Hurdle with good resaws behind it but scraggs are pretty much perfect for the job

[Ron Wenrich]

I sawed at a medium sized hardwood mill, and I've been away from the business for a decade.  We had 1 logging crew that produced a couple of trailer loads per day.  The money logs were veneer.  The second cuts and veneer rejects went into the mill.  Production of 50-60 Mbf/week.  Ties were a part of the cutting patterns on most species.

Tie buyers come to the mill and grade the ties.  Depending on markets and demand, they use 7x9, 7x8 and 6x8.  I think the 6x8 is more of a subway use.  The grading of the ties involve finding rejects.  They'll reject for bark, wane, boxed hearts, shake, etc.  You won't be sending those to the tie yard.  If you do, you'll get a really low price for landscape timbers.  They also pay for trucking.  They don't have trucks, so you have to find the trucking.

The value of the jacket boards will depend on the market conditions.  When I was sawing, tie prices were pretty close to 1 Com prices.  I don't know if they've kept up to that price.  A lot depends if they need ties or not.  If they don't need ties, they drop the price and tighten up on the grade.  They'll also ration the amount they buy from a mill.

Hardwood lumber gets graded on the poorest side of the board.  It can look like FAS on 1 side and be 2 Com on the back.  You have to be able to read a sawn face to decide if you want to take another cut on a side - risk/reward calculation.  Decent logs can be sawn down to a piece of blocking.  The poorer the quality of the side lumber, the bigger the piece of blocking you want.  From experience, if you want to cut a tie into lumber, you can't have a low grade board in the mix.  My lumber loads were always light on 2 Com lumber and heavy to the upper grades.

From a business plan perspective, profit = Lumber value - log costs - mfg costs.  If you grade logs, then you would have an approximation of what log costs would be for those tie logs.  Not all logs are tie quality.  It would take less time to saw ties than sawing into lumber.  Its always a good idea to have an idea how much your mfg costs are.  Lumber value is more fluid.  We sawed for the wholesale markets.  If your markets are retail and you can get the higher prices, then it might be more profitable to saw for those markets, as long as you consider all the extra costs involved.

[nativewolf]

FYI in much of the USA the tie market is pretty saturated.  In Virginia the mills are on strict quota today.  They might be opening back up late winter/early spring but right now if you are not an existing client you can't even get a single tie in Stella in Virginia.  

Just a cautionary note from an optimistic guy.

[SawyerTed]

If I were starting a wood products business, (I did help my friend start one) I would be looking at where the raw materials are highly abundant and the demand is projected to be steady for the future.  

Fence posts and pilings are where it's at.  The pine supply is extremely high. 

A merchandising and peeler plant is do able.  A modern treatment plant will have all the business it can do.  Most industrial and agricultural posts and pilings are sold before they are debarked.  

[TreefarmerNN]

If I were starting a wood products business, (I did help my friend start one) I would be looking at where the raw materials are highly abundant and the demand is projected to be steady for the future. 

Fence posts and pilings are where it's at.  The pine supply is extremely high.

A merchandising and peeler plant is do able.  A modern treatment plant will have all the business it can do.  Most industrial and agricultural posts and pilings are sold before they are debarked. 

Certainly the pine supply in the SE is high, too high in some cases.  We have a local treatment plant and I don't know about the "sold before they are debarked" statement as their inventory of treated material visible from the road is extremely large.  They have much more material on site than I can ever remember seeing at that facility.  Maybe it's all sold but it's 2-3 times as much as they kept in the past and are running out of storage room.

[SawyerTed]

Not all treatment preservatives are equal.  What is allowed in residential/retail is not the same as what is permitted for agricultural and industrial wood products.  

Fence posts and pilings  treated with CCA (the old stuff) are in high demand.  

So much depends upon the material being treated and its usage.   While I don't know what's in their inventory, if it's for the residential and retail market they use newer preservation chemicals that are not desirable for agricultural or industrial applications.

[nativewolf]

Posts business is seriously in the toilet.  Brand new facility owned by serious pine logger in central virginia is up for sale.  He was producing "perfect posts"- super clean posts that sold for slight premium.  2 years old, 10 acres cleared, packed, gravel put down, buildings, new post peeling line, brand new doosan log loaders with heels (not common), they can't get post into treatment yards at scale required to keep this afloat and he does pine thinnings.  Basically his costs in wood is as low as it can be, pennies per posts.

Tie market in toliet is a big thing.  The one local mill that is still producing large quantities has a rail siding and is shipping out west where they don't have reliable supplies.  When AWP closed this spring that put the largest tie mill in the USA out of business and the market is still swamped locally.  I think that if the AWP was still producing than no single tie would have moved out of the VA sawmills all summer.  Every other hardwood mill is on quota from what I understand. 

Clinch river closed down in SW VA and has 5 mln worth of equipment that is now rusting.  2 major mills in Clinton NC just closed- they want 3 million which is for a setup 2x as nice clinch river.  I have no idea where they sourced logs in Clinton because I thought it was almost all converted to pine.

We are selling a few hundred acres of really nice loblolly pine plantations and mills don't want to write a check.  So, expect to see more mill closures.  I would not, under these circumstances, entertain any business that relied on RR ties as a market. 

Further, the industry has to replace all their ties on a regular basis and there is a large mostly steady demand that can only be put off for so long.  The new amtrack line may take some ties but it will be a drop in the bucket compared to the national network. 

[TreefarmerNN]

Not all treatment preservatives are equal.  What is allowed in residential/retail is not the same as what is permitted for agricultural and industrial wood products. 

Fence posts and pilings  treated with CCA (the old stuff) are in high demand. 

So much depends upon the material being treated and its usage.   While I don't know what's in their inventory, if it's for the residential and retail market they use newer preservation chemicals that are not desirable for agricultural or industrial applications.

A lot of the inventory I see is telephone/power poles and pilings.  Many of the poles appear to be 50-60'.  Someone said they are banking on the upgrade of power lines as industrial solar facilities come on line which require line upgrades.  Since I grow pine trees, I'd like to see them with little inventory and hungry for more logs, lol.