$12.00 logs

[ARKANSAWYER]

  Talked to a logger in MO. this morning and he was a telling me that the local mills that are still open are buying logs at $12.00 each.  They have to be cut to length and tie quality over 12" dib.  It is the same if they are 12", 20" or 30" all logs are $12.00 each.  Since they can not sell the side wood for money (FAS red oak is $500 mbdft) they are not paying for it.  A 7x9x9' tie is $25.50.  He said that mills that debark and chip are chipping some mighty thick slabs.
  This is a very sad sign! 

[Tom]

And if they are not cutting the side wood, they aren't taking much advantage of the market.   They should be cutting that side wood and drying and storing it for better times. Somthing tells me that they probably are and are just poor mouthing to the producers.

That's the same that has happened down here when a fire burned through thousands of acres of plantation.  The mills quit buying and got real persnickity with the loggers about what they would take when there was a large fortune of wood available  that could be cut to 2x ??, 4x4, 6x6, treated and stored for better times. Treated wood last a long time and they could stack it to the sky.

The mentality seems to be the same as some people treat a paycheck.  It has to be spent before the next one comes in or they might turn into a pumpkin.  No matter how big the check, it has to be disposed of, unil it almost gets to be a job in itself.

Offering no money for logs is cutting their own throat.  If they run out of money to buy logs, they should e offering loggers chits, or making them a "partner" in that load.  What they might find is that their resources might dry up when the loggers go out of business and the woodlots quit selling wood.

Many mills get the idea that they are the driving force of the industry.  They aren't.  The  industry needs all of its working parts to make one institution.

Railheads and independent truckers might see the opportunity and open up the market by taking the logs to a place were they can be sold for a profit.   We also went through a time when there were collection points along the rails here, where loggers could sell their logs when the mill was being difficult.

[Ron Wenrich]

You can only stack and sticker so much wood.  For one thing, you have a lot of money invested in a commodity that has no or little market.  That lumber sucks up your operating capital, and then you have the degrade problem and carrying costs.

Let's say you can weather the markets by stacking and stickering wood.  What is the market place going to be like on the other side?  Is red oak going to go up in value, lose value, or stay the same?  Right now, I'm thinking red oak is going to probably stay the same.  It happened to maple and tulip poplar back in the '80s and '90s.  Oak surged ahead and left the others standing still in price, if you could find a market.  My bet is that the cycle for open grained wood is probably at an ebb.  I wouldn't be gambling on tomorrow's markets with today's money.  Pine and hardwoods are much different markets.

You can only buy today's logs for today's markets.  If you want to speculate, that's a different ballgame, but you're still buying at today's market price.  Seems like its $12/log in Arkie's backyard, which isn't a bad price for a small log.

[okie]

Hey Arky, WHere at in Mo is this guy at. I have been trying to find a logging company in my area that is not owned by the few mills around here.

[Tom]

You can only buy today's logs for today's markets

.

I find that spending someone else's money is easy.  Still, there are markets, I'm sure.  It might even be a wash to sell some of that stuff.  It might be that holding it is a gamble.  But, I've grown up in time when an employer tried to protect his employees.  If he didn't, he wouldn't have them when the jobs did show up. 

My Uncle was a building contractor.  I've known him to find all manner of work for the men in his crew to keep from putting them on the street.  I've seen his masons and carpenters clean his pool, straighten the shop, mow the yard, clean tools, rake job sites and any manner of job to keep them available.  The salaries cost him dearly, but returns were great.  When he did get that job to build a house, he had the men to do the work.  Loyalty is earned.

[Bibbyman]

On our last trip to the tie yard,  I asked the buyer if any of the mills supplying him ties had went out of business.   He said three, as I remember.  He also added that another was all but out of business as they had eight trailer truck load of lumber setting with no market.  You just can’t keep paying people to make lumber you can’t sale.  And a mill that can turn out 10-25mbf of lumber a day can’t live without some place to go with it. 

Even as small as we are,  we couldn’t stick, stack and store much more lumber on speculation that there will be a market someday.  We would run out of under-roof area to store it in a few days of sawing.  Without some return on the side lumber, we couldn’t afford to buy more logs.

[StorminN]

I believe part of the problem would also be that if they did mill, stack and sticker all that wood, and inventoried it for a year, the government might just charge them taxes on that inventory...

-Norm.

[Tom]

Well, I guess I'll just have to bow out of the conversation. I've depleted my industry positive outlook and have nothing else to offer at the moment.  It certainly looks to be a sad state of affairs.  Have you fellows decided to get out of the wood business yet?  It sounds as if you should because it looks to me as if the industry is gobbling itself up. 

[Chico]

Along with all these probs you would also have a glut of products that would only extend the bad market . You have to do what it takes to weather the storm I'm sure that all the mills keep as many people as poss but there comes a time and place where survival mode comes into play and If a worker could find a better situation for himself I'm sure he would do what he had to do as do the companies. I've been on botth sides of this coin and no one likes to tell anyone that their job is gone but at times it is a ness evil and as in anything it will be survival of the fittest and if you have sell logs at X dollars to survive then thats what you have to do I've seen times as I'm sure others have where chips were the only thing keeping a business going A. because they could move it fast and get the cash in their bank B. there was no market for the lowere gradw lumber and even some of the higher grades You just have to do what it takes .Sorry for the book
Chico

[Bill_G]

Let's not forget the bank/credit issues. Can the mills even borrow money for inventory? I'm sure some have had their credit lines slimmed way down or shut off completely. Tough times...

[Chico]

Very true statement Bill G I've been trying to get some folks together to buy up some stumpage to hold on to but same story Everything they have they're sitting on not only because of the credit line decreasesbut also afraid of any sign the banks could take as a sign of weakness to decrease it more and these aren't marginal accounts these are strong credit worthy businesses. Just a sign of the situation I'm afraid
Chico

[littlechub]

its a sad state of affairs. i spoke to my nephew who works at a pretty big mill in southeast missouri. he said the tie market was going wide open but they were moving massive amounts of woodchips. they have numerous chip trailers and saw till they run out of trailers to fill then shut down.

[ARKANSAWYER]

  Okie the Logger was in Mt View MO.  He has been bringing me large pine logs just to be able to sell them.
  Here we have lots of ice storm damage and more and more timber flooding a already full to the levy market.  I turn away an average of 10 truck loads a day.  Most everyone is on a quota at the pulp mill and most sawmills are running at half speed or shut down.  I have two loads of pine (67 tons) sitting here that is not paid for.  The logger said they can rot here just as well as on the deck in the woods.  If I could saw and sell, then pay would be fine with him.  He cut them and then the pulp place shut down for two weeks.
  One logger here took his newer skidder to a sale and then took his older cable skidder and a truck and trailer to a scrap metal place and took $60 a ton for them.  Said he was done.  He said that 50+ years logging was enough for any one.  It was a sad day to see such a fine man just give up.  He has sure helped me when I was just getting started.
  Now we are sawing full tilt and have plenty of orders.  Just some people are slow to pay and just about the time things are looking up we get a ice strom or a week of bad weather.  Why just this morning we spent 1 1/2 hours picking up lumber blown over by the storm last night.  But we had power when we came in and still got over 4 mbft sawn.
   Now the GOV could buy up the surplus wood and then give it out to the citys and states to use on projects.  Just like they do the peanut butter that the USDA gives away.  They could take the wood and rebuild New Orleans or something like that.   I would bet that the GOV could build some homes and let Fanny Mae loan money to people who have no way to make the morgage because they have no jobs.  Right now I would even let them pay me to saw out the lumber then dump it in the burn pit and burn it to keep the market up.  You know like buying oil and dumping it back in the ground. (strategic reserve)  
  I have even thought of trying to sell it as "locked up carbon" for business that need "Carbon Credits".  All I have to do now is figure out what the DanG a carbon credit is.  I looked in the book that came with my Visa card machine but it does not list it.      

[cheyenne]

I looked at 125 acres to buy 5 years ago before I bought the place I have now. Well 75 acres of it was all storm damage and a mess. All junk. The guy wanted $125,000 for it. Well somebody bought it and has been trying to market it as a timber investment & producing forest through a timber forest marketing realtor for $1,995,000 Well I ran into the owner the other day & he said if I wanted it he'd take $50,000 for it. No thank you. I wonder how many people have been hosed on this deal or deals like it. To this day the property has not seen a chainsaw. ....Cheyenne

[Ron Wenrich]

Well, I guess I'll just have to bow out of the conversation. I've depleted my industry positive outlook and have nothing else to offer at the moment.  It certainly looks to be a sad state of affairs.  Have you fellows decided to get out of the wood business yet?  It sounds as if you should because it looks to me as if the industry is gobbling itself up. 

No need to bow out of the conversation.  Most of the small mills are running on a reduced schedule just to keep the guys working.  We haven't missed many days of work, and the owner wants to do right by the men to keep them working.  But, eventually you have to change your work schedule to match the markets. 

Its kind of like driving on the Interstate at 70mph, then getting off and driving 25mph.  You're moving, just not as fast; although it feels like you've stopped.  Those that can make the adjustment keep on moving.  Those that can't crash and burn. 

[Ironwood]

Tom,

 I hear what your saying, BUT unless you are a very small operator w/ substantial margins (if, and when it will sell) you can burn up one #$^% of alot of time sticking, stacking, and generally messing around storing inventory. It really has to be worth it (margin wise).


               Ironwood 

[Bibbyman]

Tom,  I think our discussion here relates to what is happing overall to the sawmill business that produces basic commodities;  i.e railroad ties, grade lumber, pallet stock and resaw cant, etc. that are produced by a large number of mills and end up in a lot of places.  I see this business is based on constant volume with constant prices and profit.  When prices and volume drop below production costs, there is no profit left.

What to do?  A mill may have a large inventory of logs and or timber bought.  Would it be better to just close the doors?  Or keep sawing even at a negative profit margin?  But there has to be a place to go with whatever is produced – even if some of it does not make a profit.

This doom and gloom may not loom over the guy that custom saws or produces specialty items for local markets.   

Mary and I are in a better position (I think.  I hope.) because we are a small operation with a great deal of flexibility.  We can custom saw customer’s logs, we can fill custom orders directly retail, or we can produce these commodities. 

Fortunately,  we have some loyal repeat customers that we can maintain or old prices.   We produce some special items for them and we’ve developed a good working relationship with them.  We hope they continue to see the value in giving us their business. 

[Cedarman]

For todays market, there are too many trees available, too  many loggers, too many  production facilities and not enough demand to absorb the lumber that is produced.  As long as this is the case, price will be low and demand low relative to supply.   There has to be many doors shut before supply goes down to meet demand. Down the road whenever it happens demand should increase.  Now is the time when relationships established over the years are the most important.  This is the time you decide to shut the doors and use up the capitol you have stored to start a new business or keep spending the capitol in hopes to get to the other side of the recession.  Tough choices.

Put a pencil to storing lumber.  Exactly what does it cost to but an FAS oak board in the shed on stickers with treated ends?  What will it cost to hold that board for 1 year, 2 years. What will the price need to be at the end of 1 year, 2 years to break even?  What are the chances that the price of oak will be high enough to cover those costs?  If the economy booms by 2 years, how fast can the wood industry gear back up to meet the new demand?  If it lags, your oak will pay big dividends.  If it doesn't recover in 2 years, we got a whole lot of bigger problems than what to do with a stack of stored wood.

[kderby]

I am going to stop milling and build my self a couple of sheds..until the money runs out.  I have the carpentry skills and tools to do it.  Most people do not.  I am amazed when people will go to Home Depot and buy a particle board shed for three thousand dollars.  They put it on a credit card.  They could have bought a nice hammer, saw and nails.  Buy lumber...local... and they would have a shed and the tools to build another one.  I actually miss the days of the tarpaper shack.  What will bring functional utility into fashion?

My brother restores antique barns and I have seen sheds that were moved three times and had a century of service life.  I have the opinion that our culture has lost the skills needed to utilize lumber.  I have lumber that would be furniture and lumber that is barely good for a sub floor.  I need some skilled practical and creative carpenters.  I am considering offering a "shed builders workshop" to utilize lumber and create some skilled workers.  I have stopped buying logs.  In order to firm up the log market, perhaps the loggers need to build a few sheds.

[WH_Conley]

You sure hit the nail on the head there. The first house my wife and I lived in was a "Tar paper shack". We were as poor as church mice, but we were warm and happy.

Have 2 brothers for neighbors that are excellent carpenters. They learned using lumber from their Daddy's circle mill, it don't cut real good either. When they are done you don't know if the lumber came from a sawmill or the box store.