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Author Topic: Market Slowdown  (Read 15487 times)

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Offline Ed_K

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Market Slowdown
« on: December 08, 2006, 08:25:46 pm »
 The housing market is down and all the steps back to the tree are too. What are you or your company doing to get by?
 I run a timberstand improvement co. Dealing with low value products is a hard sell. So I started emailing my congressmen and representitives to find out what can be done to push biomass energy and use more of the low value wood. I'm not getting very far tho. Its an approach of what can you do for me that I hear back  :( .
 More ideas please.
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Offline Tom

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Re: Market Slowdown
« Reply #1 on: December 08, 2006, 08:43:46 pm »
Those desk jockies probably don't know what you are talking about.

Your Mayor won't either, but he might be more interested in being taught.

Sometimes the best thing to do is take things into your own hands.  If you have a Businessman's club or anything similar, join it, attend and get envolved.  You may be able swing business your way if you rub shoulders with the other businesses in the area.  If nothing else, it helps to build a name and be recognized.
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Offline Ron Wenrich

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Re: Market Slowdown
« Reply #2 on: December 08, 2006, 10:43:19 pm »
You will get nowhere with the politicians unless you are well connected or are bearing gifts (cash campaign contributions).  You may fare better with local governments if you are bringing cash into their towns. 

Local governments are really hard up for cash.  This comes from tax revenues and can be either real estate or income.  That's why developers are welcome with open arms.

The original question is what are we doing to get by.  Well, we aren't waiting for the government, that's for sure.  We are going out and doing the work that's needed.  We don't rely on low grade wood for our sole income.  We are pretty well diversified into all grades.  So, the downturn isn't nearly as severe.

As for biomass, I don't know if you can make it fly.  I've tried in the past, and have been successful, but only if you have a secondary steam user.  On the one project, its cooking tomatoes and producing electricity.  But, it was done with the help of low cost sawdust.  I think you are looking at 10,000 tons/Meg of electricity on an annual basis.  The one I worked on was 21 Meg.  I did the resource study and helped locate markets.

The problem with the slowdown is that energy costs are going up, and the amount of biomass available goes down as production shrinks.  It can put you in a bind real quick.

The best markets for low grade continue to be hogged material for bedding and mulch, fuelwood, scragg mill wood, and pulpwood.  Pellets might even be a better match then biomass.  But, that's expensive to build and is rather energy intensive. 
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Offline Cedarman

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Re: Market Slowdown
« Reply #3 on: December 09, 2006, 06:20:02 pm »
In one sense our business improves as people lose their jobs.  In our area more of them fire up the chain saw and cut cedar trees for income.  A chainsaw, pickup and they are in business. We struggle in good times with enough logs to saw.  Sales do not change much at all.  I get more people coming through looking for jobs though. I purchased a belt sander to give our T&G an even better appearance.  Want to stay in front of the competition.

I am a member of Indiana Forest and Woodland Owners Association.  We give pact money to those state senators and reps that are in position to influence forest issues in committee.  Giving this money gets us their ear.  We want them to be as informed as possible to help them make the right decisions.  Enviros have been doing this for years.  We got a right to practice forestry law enacted which superceded a local ordinance and lets land owners now cut their trees without getting permission from the enviros.
I am in the pink when sawing cedar.

Offline SteveB

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Re: Market Slowdown
« Reply #4 on: December 09, 2006, 07:29:38 pm »
Energy might be a way for the forest products industry to diversify.  THere are projects being talked about but not sure if much more than that is happening.  I know in northern ontario there's talk about a california based company setting up some type of biomass energy plant. 

In renfrew in eastern ontario there's a company called Ensyn (not sure of spelling) that converts wood waste to a liquid oil type product.  I beleive they make resins and fuel from the stuff.  I think that plant is pretty small scale using a small amount of wood from red pine thinnnings, and they are adjacent to a flooring plant, so I think they get most of their material from the plant's sawdust/scrap. 

I listened to some guys from upper new york state talk about bio fuels from wood, and I think they have at least one plant in operation, but I think they get most of their feedstock from alder or willow plantations (can't remember which one).

The Ontario government is also looking at developing mobile units that can process roadside delimber slash into bio oils (fuel) from full-tree cutovers.  I don't think they've gotten very far on that one.  I beleive one stumbling block is that unlike the wood from crown land, the waste isn't allocated to anyone yet, so no one has rights to it already.  As I understand it, any new opportunities like this have to be offered to first nations people before anyone else, so there's capacity building and negotiations to be done.  Even though it's MNR (gov.) heading up the project, I think the ones working on the project are facing regulatory challenges as they're heading into uncharted territory.

I know that Maine has several wood burning energy plants that were mothballed after the energy crisis of the 70's that have been fired up again in the last few years.  I know that low quality wood from western New Brunswick makes it's way to Main to help fire these plants.  That's Swampdonkey's neck-of-the-woods, so he'd be able to comment on it more.  There's also an article in the latest "Canadian Forest Industries" that talkes about a contractor that sends chips in that direction.

Where I work the pulp mills that are still alive are looking pretty eagerly for wood these days.  With a bunch of Quebec sawmilsl down they have lost some of there usual chip supply.


Offline jrdwyer

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Re: Market Slowdown
« Reply #5 on: December 10, 2006, 04:10:47 pm »
A nearby hardwood grade sawmill/drykiln  has gotten into kiln dried firewood bagged in plastic and sold at local retail outlets to move low grade material.

Wood pellets are pretty strong right now with a major expansion by a company in the northeast buying raw material from British Columbia recently announced.

Wood for energy seems to have more support in Michigan and the northeast than around here. When a local grain mill recently announced the idea of turning off the natural gas to dry grain and instead use wood chips and shredded tires for fuel, the environmental and labor groups strongly opposed it. Reasons for opposition- union  pipefitters maintain the natural gas pipes, tractor trailers with diesel engines delivering chips causing air pollution, overall increase in regional air pollution, and nearby residents concerned about dirty emissions. I have not read what the IDEM ruled on the proposal, but it really astounded me the level of opposition to a small scale heat/energy plant using raw material that would otherwise end up in the landfill.

I do think that decentralization of heat and electricity production will increase over time as fuel prices rise and new utilization techniques come about. I know that a lot more people in my neighborhood are burning wood this winter than 3 or 4 years ago.


Offline Phorester

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Re: Market Slowdown
« Reply #6 on: December 10, 2006, 06:01:38 pm »

Are the wood pellets the ones for residential pellet stoves? Do you know what species of wood they make them from?
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Offline SwampDonkey

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Re: Market Slowdown
« Reply #7 on: December 10, 2006, 07:05:44 pm »

I know that Maine has several wood burning energy plants that were mothballed after the energy crisis of the 70's that have been fired up again in the last few years.  I know that low quality wood from western New Brunswick makes it's way to Main to help fire these plants.  That's Swampdonkey's neck-of-the-woods, so he'd be able to comment on it more.  There's also an article in the latest "Canadian Forest Industries" that talks about a contractor that sends chips in that direction.

It's a Quebec based company (Boralex) in Fort Fairfield, Maine and I think one other in Maine that was sold to GP in OldTown. A lot of hog fuel from saw mills like Frasers, Crabbes and Irving heads that way. Some of those companies own mills in Maine also. I think they take 200 truck loads a week at the 'Fort'. They also own Biomass energy plants in France to.

There was an article last month about it in Atlantic Forestry Review. The Price of Power

Pre-commercial thinning pays off. :)

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Offline Corley5

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Re: Market Slowdown
« Reply #8 on: December 10, 2006, 08:16:14 pm »
As published in the Gaylord Herald Times

"BAGLEY TWP. - A wood pellet manufacturer with a ready European market announced Monday plans to purchase the idled Georgia-Pacific (G-P) Gaylord particleboard plant and create approximately 100 new jobs.

President and CEO Chris Delusky of Upper40, a sustainable wood products company, who was in Gaylord Monday, said the transaction is expected to be completed by mid-December and he hopes to re-open the facility and begin production of wood pellet fuel by the end of this year. Initially, he said, there will be an immediate need for 40 employees to get the plant up and running. Within the next year he envisions expanding the workforce to approximately 100 with hopes of further growth in the near future.

G-P spokesperson Melody Root confirmed Tuesday it had entered into an agreement with Upper40 for the sale of the Gaylord plant. "We're very happy to hear that there will be new jobs coming to Gaylord."

"Finally, something positive is happening in Otsego County," was Bagley Township supervisor Bill Giles reaction Tuesday to the impending sale of the G-P plant. "After so much recent economic bad news this is a step in the right direction. Hopefully it will have a trickle-down effect for the chip suppliers and other businesses that relied on Georgia-Pacific and help our economy here."

"We are going to get up and running quickly," said Delusky. "From what we can project, we have the customers in Europe and expect to begin shipping 60-90 days after startup," said the CEO, who has been with the family-owned Detroit hardwood mill-working company Public Lumber Company since 1994. This is the first business venture for Upper40, which Delusky indicated is being backed by GE Commercial Finance. He declined to comment on the purchase price of the G-P facility on Dickerson Road.

"We're excited about this venture and look forward to locating in Gaylord," he remarked. "This will be a good thing for the community. It took a long time to negotiate a deal with Georgia-Pacific but we now have a definite agreement," Delusky said. The transaction will include purchase of all 914 acres of the plant, including the N-4 facility which had been closed prior to G-P's decision to cease all operations in Gaylord on March 6.

According to Delusky, pellet production would take place in the area where particleboard was produced and Upper40 would be looking for someone to use the N-4 facility.

Otsego County Economic Alliance Executive Director Jeff Ratcliffe - who Delusky said "has done a great job of answering our questions and providing assistance in helping us to make the decision to locate here" - said the Alliance had been working with Delusky to bring the wood pellet operation to Gaylord.

"What this means for Gaylord is we're going to have a large employer back in this plant now that the property has been purchased and will make it a more accessible property for other potential businesses," Ratcliffe said Monday. "Chris has a strong business sense. They have been one of the prospects we have been working with from almost the beginning."

Delusky said earlier in the year his company had been in the process of planning a wood pellet plant in Manistee on the west side of the state, until he made an inquiry into purchasing some of the equipment at the closed plant in Gaylord. "As we walked through the plant a light bulb went on in my mind," Delusky said of Upper40's decision to locate in here rather than Manistee. "We could see that it would meet our need to produce pellets. The kilns and dryers and other equipment were already there."

Further investigation into the G-P plant convinced Delusky it would be a good fit for his new company. "The way the plant was set up and the care placed on maintenance of the facility after it had closed, all fit well into our business model."

Delusky said the supply network already in place for wood chips as previously established between local chip suppliers and G-P, as well as "an inexhaustible and highly sustainable product," were major factors in choosing Gaylord.

Delusky also cited tax abatement incentives through the recent designation by Bagley Township of the G-P plant as an economic development zone for potential businesses locating there, as another factor in his choice.

"Truck and rail transport were also a huge reason for locating here," he said. "We have a great place here to move our product and get it to the ports we need to use in shipping to our customers in Europe."

As to who will actually be working at the new wood chip plant, Delusky said that has not been determined but he expects to hold a meeting for former G-P employees to tell them of Upper40's plan and what their needs will be.

"We don't expect we will need as many production workers. It's not like particleboard production, which tends to be more labor intensive than making wood pellets," he explained.

Delusky said he would be looking for workers skilled in areas such as maintenance, milling operators and office and management staff. He added that any prospective employees would need to register through Michigan Works! at 111 Michigan Ave., stressing the company would not be accepting applications at the G-P plant. "We expect that sometime after Thanksgiving we will be ramping up and looking for those workers we will need to get this operation up and running.""

This is good news for the area but what about a domestic market?









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Offline Tom

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Re: Market Slowdown
« Reply #9 on: December 10, 2006, 08:19:28 pm »
That makes me happy all the way down here.  8)
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Offline jrdwyer

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Re: Market Slowdown
« Reply #10 on: December 10, 2006, 10:14:02 pm »
New England wood pellet is the company that recently announced a major expansion. I believe they mostly get regional raw material, but the Palmer reload and packaging facility in Palmer, MA is supposed to be getting pellets by rail from bettle damaged forests in BC. Here is a link describing them:

http://www.pelletheat.com/about/index.php


Offline Cedarman

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Re: Market Slowdown
« Reply #11 on: December 11, 2006, 06:51:12 am »
Last Sept. Cedarworks, the company that bought most of our cedar for years quit buying. Subbed all the work to the Amish and China.  I quit supplying because the price went down not up.  Cedarworks is now building 3 pellet mills. 

By the middle of next year there looks to be a huge increase in pellet production.  Is there enough market to suck up these pellets?

Remember last year when pellets were scarce and the price high.  Will there be overproduction and the price plummet?  This scenerio has happened many times before.  Only those that can live through the price crash will survive.

Hate to rain on the pellet parade, but there are an awful lot of companies jumping into pellets.
I am in the pink when sawing cedar.

Offline SwampDonkey

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Re: Market Slowdown
« Reply #12 on: December 11, 2006, 05:29:22 pm »
My folks looked into a pellet stove 6 years ago. You could get all the pellets you need, but they were expensive. It's kind of new for this area, so you just know it's going to be costly before you ask.  ::) It would have been cheaper to burn stove oil. They installed a propane fireplace for backup (never gets used) and a Heat Pump which is cheaper to run and the electric bill for the whole house is way cheaper than using oil or propane. Are pellets putting out more BTU per pound that regular ol' firewood?

Ok, just visited a few websites for some info:

Weight
pellets: 40lb/ft3 minimum standard (10 % MC)

air dry hard maple or beech (20% MC) 48lb/ft3

BTU's
pellets: 8000 Btu/lb

air dry hard maple or beech: 6000 BTU/lb (20 % MC) In drier climates it's closer to the pellet figure at 10 % MC. The MC of your stove wood also improves when stored in a heated basement that continues to dry your wood. So, depending on your situation you could pretty much assume the same BTU's.  ;)

1.3 x difference

Price
pellets currently ranges anywhere from $120-200 per ton

stove wood ranges from $45-80 /ton very much dependent on pulpwood market in my area

factor 1.3 x into stove wood price because of difference in BTU. $59-104 / ton


Corley!!! Bring me some stove wood.  :D :D :D

From my stand point, I get all my wood for the season hauled into my yard, takes me 3 days to get it stored into the basement all ranked up and I haven't got to go shopping for 40 lb bags of pellets as the need arrives. Also, I haven't got all those heavy plastic bags to dispose of and as everyone knows, I hate plastic.  :-X :-X >:( >:(

Pre-commercial thinning pays off. :)

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Offline Nora

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Re: Market Slowdown
« Reply #13 on: December 11, 2006, 07:21:26 pm »
Here is a link to a calculator that will help you decide whether it's more cost efficient to heat with wood pellets, electricity or oil - from the Pellet Fuels Institute.

http://www.pelletheat.org/3/residential/compareFuel.cfm

There are enough issues for the politicians to play with, but there are a lot of groups working behind the scenes on biomass for energy. Right now, the forestry part of the equation is under-represented, but here are a few hopeful examples:
http://www.fuelsforschools.org/
http://smallwoodnews.com/phpBB2/viewtopic.php?t=123 (this one is about whole tree pellets)
http://smallwoodnews.com/phpBB2/viewtopic.php?t=228 (about making ethanol from wood chips)

We try to keep the latest information posted on smallwoodnews.com.

Nora


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Re: Market Slowdown
« Reply #14 on: December 11, 2006, 07:31:01 pm »
About 20 years ago in Northern MN, there were a few schools converted to burning pellets (I may be off a few years there). It has been a continuing and interesting thing to do, and does rely on some help from the Fed's to get and keep the ball rolling. Grant money is an important part of the equation, as well as tax incentives from locals wanting support for local businesses.
I've been surprised that wood pellets haven't made bigger inroads in the fuel supply part of the economy. Gathering material from the forest is likely a tough thing to do economically. Not as easy as pumping the black liquid 'gold'.  :)
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Offline Ed_K

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Re: Market Slowdown
« Reply #15 on: December 11, 2006, 08:09:08 pm »
 Corley 5, if the plant in Gaylord is like New England Woodpellets they won't be able to keep up  ;D . Newengland has the bagging plant is going and the owner is talking of another plant somewhere in New York now.
 I read in the newpaper that the Russel Ma. chip burning plant currently in the permitting stages is getting a lot of flack from the NIMBY's whining emissions and trucking. I tried talking to the politicians about changing a currently burning coal plant to change to chips,but you need to personally know the plant owners to get anywhere  :( .
 As for moving low grade wood just to a landing is costing me $12.60 a ton and buyer want to pay $12. This is just like trying to milk cows for a living.
 Oh, their paying $279. ton for pellets here.
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Offline SwampDonkey

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Re: Market Slowdown
« Reply #16 on: December 11, 2006, 08:30:45 pm »
There are a couple characters here trying to promote using wood for gasification. One of them worked for me and spend more time running all over the place promoting it and stirring interest then he did spinning the blade on his saw some weeks. I think it's gonna be a hard winter for him, because it affected his pay cheque at the end of the week.  ::) Anyway, the plan behind this scheme includes 'gathering' waste wood thinned from stands and gathered by machine. I would really like to see his math and figures on costs so I can review them, because I can't see it being profitable or cost effective energy production. The idea of gasification isn't hair brained by any means, but the means of procuring the energy source and maintaining a steady flow while keeping a handle on costs is a little scary. I can't see it getting too far. You need good sized wood, not pole wood, sticks and brush. I'de rather see a bioenergy plant set up to take poor wood. We have thousands, if not millions of cords in the woods that pulp mills won't even take from private woodlots, let alone sawmills. Stuff like culvert logs, pasture spruce, pocket rot, hemlock shake wood... to name a few. One problem I can see is stands would have to be managed to leave some of this stuff for birds and wildlife. But, if done proper we have so much of it that it shouldn't become an issue. A proper management plan needs to be followed. Not every stick standing is meant to be perfect, although it would be nice. ;) Another problem is the pricing, it's going to have to be less value than the pulpwood market or the mills are going to be screaming and the whole thing will be shut down by industry lobby, simple as that. Why will the mills be screaming? because people will ship their good pulp with the poor stuff to the power plants, because it costs money to separate the stuff. Yes, they already have to do it and aren't being paid for the junk now, so if they can get something.... it's better then nut'n.

Pre-commercial thinning pays off. :)

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Offline Ron Wenrich

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Re: Market Slowdown
« Reply #17 on: December 12, 2006, 05:58:10 am »
You will hardly be able to out compete coal.  I tried in a few spots, and coal quickly cut its cost.  Coal also has a lot more btus/ton than wood, so there is a storage and delivery issue.  Coal is deleivered to yard by rail, and is a lot cheaper to transport than trailerloads of wood.  Not, that it can't be done, just that its difficult.

The largest problem with chip wood is the high moisture content.  That moisture has to be driven off somehow, or the available btus aren't as high.  Hardwoods have 8000 btus/lb for dried wood.  Those btus start to go down as the moisture content goes off.  Some of your available heat will have to be used to drive off the water.

What we used in the one plant was a fluidized bed boiler.  Material is reduced to a pretty small size - about like sawdust.  It is blown in and kept in suspension.  Ignition is above the boiler floor.  Moistiure content is not as much of an issue due to the high heat factor.



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Offline SwampDonkey

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Re: Market Slowdown
« Reply #18 on: December 12, 2006, 08:27:20 am »
They pretty much put the 'kye bosh' on the rail system here and tore up the tracks and let the ice jams tear out the bridges.  ::)

My whole take on the biomass energy issue is wood utilization, it's not about competing with coal or oil. It also reduces the total dependence on something that has to be brought across borders and is diminishing in abundance. It's also about generating some cash flow from a product that costs $$ to separate from the pulp and logs that mills won't buy and can't use. I've seen whole loads of wood go by the marketing board window and said to myself, that'll be sent back to the waste pile.  ::) Now if we had some place that could use that wood, then the logger as well as the public can benefit from it.  smiley_lit_bulb. In every annual meeting I've attended for the last few years I here the question: "Where can I get rid of my junk wood?" No one has yet answered the call.  :'(


The heating plant for instance in Fredericton, provides heat for the entire University and it's residence buildings as well as the Regional hospital. They save $$millions a year in heating costs. What are they using? Hog fuels from sawmills. Been using it for years.

Pre-commercial thinning pays off. :)

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Offline jrdwyer

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Re: Market Slowdown
« Reply #19 on: December 12, 2006, 11:35:37 am »
SwampDonkey,

An air exchange heat pump in New Brunswick? Does it have to go into straight electric resistance heating below 20 degrees F? I know our Carrier electric heat pump does well down to about 20 degrees. Our total electric bill only gets as high as $140 during the coldest winter month. The electric rates is $.08/kwh. Our average size house is moderately well insulated, but it does need some new windows.

Speaking of heat pumps, a company called Hallowell International out of Bangor, Maine has just come out with a supposedly much better heat pump that is suitable for northern climates and will also reduce electical demand in milder climates due to greater efficiency. Here is the link:

http://www.gotohallowell.com/

If this product is as good as promised, then it could mean a big shift away from natural gas heating and also the need for more power plants. Maybe the new power plants being proposed could be designed to efficiently burn a variety of fuels and not just coal? Based on this recent article, the US power industry is stuck in coal mode:

http://www.usatoday.com/money/industries/energy/2006-12-12-coal-usat_x.htm