Selling Forestry

[Ron Wenrich]

Here's my opinion.  You are going to do way better forest management work than 90% of the consultants that tell you can't.  They hate competition.  It seems you have a firm grasp of the consultants that perform the same practices as a good deal of the loggers and sawmills.

When they talk about ethics, I can point to several that are below that.  I know of lots of sales that never see the bidding process.  I see lots of sales where there are no small diameter sawtimber, let alone pulpwood. 

I think you have the right idea on how to go about doing the forestry work.  You really have little competition, since most of the consultants are out looking for the next job.  And, they're competing with all the mills that have their own timber buyers. 

But, you're not the atypical forester or logger.  I do know of a few loggers that have forestry degrees.  Many are technicians.  You're more of a hybrid.  Your brand of operations have a higher degree of sustainability than do most of the others. 

How are you running your operations?  Do you take a commission, or are you buying the stumpage?  If you are outside the realm of "normal" operations, it may hurt your business.  Landowners aren't that quick to change.  Make sure you're on the PA forester list. 

One thing you might want to do is to contact the local newspaper.  Tell them what you're trying to do and see if they won't write up an article on you.  Tell them how you're working outside the box. 

[WDH]

Some of the very best professional loggers that I interact with are Foresters.  But, they are not consultants.  They buy timber and harvest it.  The landowners they deal with do not pay a "consultant" fee if they sell timber to them.  In that sense the Forester is acting as a logger buying timber to harvest to deliver to markets, and after the purchase, any gain on the timber goes to the Forester/Logger.  So, you can be a Forester, and apply that knowledge as a logger in a business.

Or, you can be a Forester and apply that knowledge as a consultant.  You can advise landowners for a fee based on the time you spend, or you might charge a % of the value of any timber sold.  You represent that landowner to all other interested buyers.

What might be tricky, is to represent a landowner as a Consulting Forester, charge him a fee or % of the timber sale for your services, and then sell that timber to yourself as the Logger.  In my opinion, that would be a Conflict of Interest.

So, I would say that you can do both consulting and logging, you can only wear one hat at a time when dealing with an individual landowner.  You can represent the landowner as a Consultant to all the other interests and buyers in the market, or you can represent only yourself as a logger buying timber. 

[Ron Wenrich]

Would there be a conflict of interest if he marked the timber, charged a fee for logging, and then a commission on the products that were sold? 

I know consultants that have tried to go that route by having the timber logged by someone else, then trying to market the logs.  The theory is that you'll make yourself and the landowner more money with the value added of the logging, and the better prices for logs than for stumpage.  They usually get burned since their marketing skills in logs aren't that good. 

[jrdwyer]

"In my opinion, a lawyer cannot be on both sides of a lawsuit, and a consulting forester cannot be on both sides of a timber trade." (Tree Farm Business Management, James M. Vardaman, Copyright 1965)

As long as you are only paid by the client for the services provided (no kickbacks or gifts from log buyers at the end of the year), then there would be no conflict of interest.

But if you go this route and charge a fee for logging and a commission for selling the logs, then why wouldn't you also charge a fee for marking the timber (assumed use of scientific forestry practices). Or would this be a loss leader like with some procurement foresters? I have walked through may stands previously marked by timber buyers who told me later that it was a waste of their time because the landowner did not accept their price after marking and tallying. If they are on salary, then they still get paid. If they are a small logging outfit, then it really was a loss.

Most foresters believe the education and experiences necessary to properly mark a stand of timber and carryout a good timber sale are worthy of compensation. I always charge the client a back out fee when I have marked a stand of timber and it does not sell for whatever reason. Of course, there is no backing out after the trees are cut.

I also advise the client on appraised timber value before putting it up for sale. I sell only by lump sum for marked or cruised timber and so there are no hard feelings from the client after the sale. Avoiding surprises is a good thing and I believe this is the main reason share logging has such a bad reputation (other than outright theft or really bad logging practices). I have done the stump/top timber inventory for the little old lady who was promised $3k or 50% of log value and got a check for $3K when the stump appraisal showed $27K for the logs. Lawyers are always involved at this point in time.

I met with a retired lady and her unemployed son the other day and I was third in line after two loggers. I sensed that she had already made up her mind (not really listening to what I was saying/quickly cutting me off/looking for free useful information), but I gave it the best sales pitch anyway. She ended up choosing a share logger who will cut it by diameter limit. The stand has not had harvesting activity for 70-80 years and now will be cut hard for cash.

She likely won't compare what she gets for the timber to other tracts sold by sealed bid for similar timber. She didn't even second guess herself after I explained that all state and federal timber sold in Indiana is done by sealed bidding. I have realized that some people are not interested in forestry and quickly make decisions based on a few opinions of neighbors or friends. Many people don't plan ahead with trees or forests. This stand has mostly yellow poplar and red oak that should have been cut 10 years ago. I move on to other, more receptive, landowners.

[SPIKER]

One thing that I remember back in school as an FFA student was getting some proper forestry technique in class from our instructor, he had a degree in forestry so we all had a heads up, he also took us out to several stands to grade we built cruising sticks as well prior to use   was a great course of study as an add on to the standard class info...   Our group of kids went to state finals almost every year while I was in school even though my poor finances kept me from being able to attend a good number of the off site classes it was great way to get more info out into the area while helping us kids out...   

Not sure about other stuff .

Mark

[PAFaller]

Couple of things on my end. Most of what I am looking to do is utilize pulpwood and scrag, and essentially buy it by the ton. There is a lot of time consumed in marking and tallying low-grade material, but I offer competitive rates. They aren't real high, but neither is the delivered price at any of the paper mills or pellet manufacturers. As for sawlogs, i prefer to contract myself to the landowner. Essentially I take a flat per thousand rate to cut skid and market sawlogs. Being in the logging business and moving timber to these mills already, I've never really had issues getting competitive bids on logs. Its always worked out well too, as these mills pay for all logs before a single one gets removed from the sight.
 I truly believe this is one of the fairest ways to go, but I am sure others will argue. I charge a rate higher than any mill pays their contract crews, but then again I am doing the road bonding, doing the marketing, and know without boasting too much that I do a neat job. I also feel that marketing logs brings the most accurate  value for each piece, and every stick of timber is paid for. I dont usually charge for the first visit, as most guys dont and I am afraid that would be a turnoff. Landowners that I know are interested in long term management I do offer to write them plans and chare accordingly. I dont charge comission on any jobs unless I am not going to be doing the hands-on work.
 The main reason I started this thread was because I feel as my ideas may have come off wrong to a couple of landowners, so any input on how to refine the sales pitch would be appreciated. Thanks, Greg

[Tom]

PAFaller,
I've found, in most of my contact with the public, that people are looking for knowledge, neighbors, honesty, humility and sincerity.  So many customers are turned off because what they see is brashness, heavy fists, this-is-how-it-is-or-else attitudes and the inclination that every last penny is being swept from the table.

So, putting your knowledge aside,  You have to sell yourself.  That doesn't always mean convincing them that you are so smart, as much as it is convincing them that they want you around.   Just think of what it takes to be a friend.  You have to be willing, first of all, to give someone your time.  That means doing things for someone who is a customer or a potential customer that lets them know that they are special to you.

I'm not saying this because I'm a goody-goody-two-shoes, 'cause I'm not.  But, I would make one or many trips to look at a saw site if they had a question. I took every opportunity to let them know that I thought they had pretty wood and I could hardly wait to saw it.  If they needed help moving something,  I helped. Even after the job was completed, I went back and visited.  I still have customers from over 10 years ago that I stop to see when I'm in the neighborhood.   I've even straightened stacks of stickered wood, or helped the elderly woodworker search for a special piece.  It made me feel good to see them smile if I turned into their driveway.  It still does.

There is so much more to selling oneself than doing a good job.  It's what is called in economics as "good will" and it has dollar value, though many don't acknowledge it.

So listen to Ron and these guys about getting each job, but pay attention to the long term advertisement of yourself as well. You don't go out there and BS a customer more than one time. Your best sales tool is your presence and smile.  You will find that they aren't just hiring your marking tape and skidder, they are hiring you.

[tughill]

PAfaller, your sales pitch and business practices seem reasonable to me.  I'm not a forester, but grew up in my grandfather's sawmill, which was a commercial operation, but small. (Handset circular mill, pretty much retailling to local customers)  So I'm pretty familiar with logging, loggers, and the like, and have done a bit of logging here and there, mostly to help out people who wanted their own logs milled, or for the sawmill when we were 'in a pinch' for some wood.

I think you are just running into the lack of knowledge that Tom has described.  Also, the 'little old ladies' don't know you from any of these other guys, and without any knowledge, how can she know who to trust?  Probably older people who are likely to own land are not looking years ahead, because they will not be around that long, so $$ in hand is primary focus for them.

My question is this:  what sort of deals do you guys see from loggers working on shares?  Here in upstate NY, this is very common practice.  I was approached a few years ago by a logger who wanted to cut the woodlot on a piece of farmland I owned and his deal was his share was 60% of mill slip, he kept all firewood (free, no payout to me).  I honestly hadn't been in that woodlot much, didn't know what was there, and when I asked if the skid roads would at least be fixed up at the end (he wanted to log in the springtime, and this is riverbottom land, so it probably would've been a mess), he was really hesitant.  It sounded like a bad deal for me, so I passed, and since have looked through the woods a bit, and there's not any huge value there.  (lots of multistem red maple, some decent ash, some beech).

So what is a 'normal' share percentage for logger and for landowner?  The other thing that put me off was that he wanted to diameter limit cut, down to I think 10" DBH.  I know more about proper forestry now, and I'm glad I didn't have him cut.  Doesn't it seem like shares is especially unfair to the landowner if there is a large amount of veneer or good sawlogs?  It would be a much bigger payout per MBF, thus bigger payout per man-hour, machine-hour, or trucking time/expense.  A low grade cut, like doing TSI or precommercial thinning would seem to be unfair to the logger, by this same rationale, less payout per MBF or cord, more cost in labor, expenses etc. per gross fiber value.  Why do these guys even work on shares then?  I think I can answer my own question, probably to avoid putting $$ out, and shares would seem to work if you were doing diameter limit cutting- take the best, leave the rest.

Personnally I think there are two keys to selling forestry.  Tom hit on the first...and thats to make a name as a forestry guru/fanatic/supporter, or whatever you want to call it.  Do a lot of helpful stuff, educate people, etc. (which will probably not directly bring in any $$, but hopefully boosts the profession, and you in the long run).  I met a young forester in northern central PA years ago who was brokering timber, and would hire woods crews to do the cutting, but buying the stumpage himself.  He told me the secret of his success (I can't say I know him so how successful he really was, who knows) was to be nice to people, find out what their goals were, write up management plans, and cruise timber for cheap or free, help them layout sugarbushes, whatever, and then ask if he could buy their timber, and actually manage the woods long term.  He said explaining that he wanted to stick with them and buy their timber every 5 years or so would be better for him and better for them, than just cutting every stick right now, and having no residual income stream.  Made great sense to me.

Second is marketing...if you are just another guy who shows up with a pickup loaded with fuel tanks and chainsaws, what sets you apart from the last guy that showed up with a pickup load of fuel and saws?  Do you have a brochure, business card, website, list of references? And if you do, great, make sure potential clients know and get this material.  Hopefully this marketing stuff talks about forestry in general, as well as you and your skills.  Whoever said that landowners need to calm down and read over your proposal and marketing stuff later on was absolutely right.  Its a big decision to market logs that have spent the last several decades growing and once they are gone, it's gonna be a while before they grow back.  So it's kinda overwhelming, I think, for people to talk to a forester/logger and make some decisions right there on the spot. 

Another thing to think about is...what image do you show to potential clients...do you show up in an old beat up truck wearing greasy carharts, without having shaved in the last month?  I'm not the most clean cut guy in the world, but I'm not trying to sell myself either.  I can definitely say that if two different loggers showed up on any of my neighbors doorsteps with equal sales pitches, the guy who was polite, clean shaven, with decent clean clothes (you don't have to wear a blue suit, but greasy carharts aren't gonna help), not smoking a cigarette or cursing, and all that sort of thing...has a much better chance of cutting some trees the next day.

just my .02$

[Tom]

I'll have to agree with that. 

[Ron Wenrich]

Selling on shares is just an invitation to allow highgrading.  They're going to take the trees that have the most value, so they get the largest paycheck.

I like PAfaller's idea, but I might think of going one more step.  Organize the landowners into a cooperative.  It looks a little bit more legitimate if you're an organization than being a one man show.  You can offer your services, or get more like minded loggers to log by the Mbf or ton.

The logger's advantage is they don't have to bid on sales, and have no money tied up in standing timber.  Prices can go down or up while the money is tied up.  The logger would also have a steady income and would be able to plan his jobs much better.  

The landowner's advantage is that their ground wouldn't be highgraded.  They would also get the highest amount for their timber.  That $2/bf red oak veneer wouldn't give the landowner $1/bf, but $1.80/bf.   The downside is that the landowner would take all risk on value.  That unseen stuff on stumpage can kill a guy.  Landowners would also have a better woodlot in the long run.  

I remember talking to a guy I graduated with from Penn State.  He asked me how well I thought the industry is treating the landowner.  We both agreed that they are getting the short end of the stick.  It makes little difference who was involved.

I tried the cooperative angle a number of years ago.  I wanted to get it started with the Grange.  I figured farmers would be easier to talk to about crops.  Consultants nipped it in the bud.  

[tughill]

Very interesting idea Ron!  I'm assuming when you say consultants, you mean consulting foresters?  So under your COOP model, the forester would work on commission for the coop, or would he be paid some salary from the coop?  Basically you are making a group of landowners of smaller tracts into a larger timber company, and following the model of how a large company forest would be managed right?  I wonder how this would work when the landowners have different goals, one guy wants to make $$ another manage for sugarbush, another for wildlife?

Please tell us more about the coop model...I think it's workable, especially in areas where there's lots of private timber in smaller tracts...like you said gaining critical mass is tough, but I think appealling to farmers might work.

[Ron Wenrich]

There are several different ways of setting up coops.  I was shooting for one similar to the Swedish models.  25% of Sweden's sawmill production comes from forest coops.  They own everything from land to the mills.  My model would have gone the extra step to some sort of secondary processing.  Firewood, fuel chips, lumber could all be set up as long as there is large enough landownership base.  Dividends would be paid based on the amount of land in the coop. 

For a smaller type of operation, landowners can become an organization and conduct their own timber sales.  They don't have to hire a consultant on commission.  Let them bid on the jobs and just do the timber marking.  When they mark and then market the timber, they have a financial interest in the sale.  That allows bias in the timber marking.  Not all consultants do it, but there is always that temptation.  Other consultants can be hired to conduct sale inspections. 

Another type of coop could have their own loggers.  This is pretty much how PAfaller would come into the picture.  Landowners would contract the marking, then contract the cutting, and either allow the logger to do the marketing, or market on their own.  All they need is a concentration yard.  Using this method, its a short step to the secondary markets.

Landowners could have a lot more power in the forest industry if they wouldn't continue to play the part of the pawn.   Right now, they continue to stumble through forest management through ignorance.  Then they start getting advice from a lot of different sources.  Consultants, procurement foresters, state foresters, neighbors, relatives and the net are all sources.  Confusion eventually sets in and they get too scared to make a move.  They know that cutting timber is a final solution...there is no going back.  So, instead of making a wrong decision, they make none.  If they own the management end, then they can eventually own the marketing end.  But, they need to organize.

Coops would also be a really easy way to market carbon credits.  I'd be more than happy to talk to anyone who is interested in making something like that happen.

[PAFaller]

Ron, you make a really good point. I actually have ancestors in Sweden so I have researched their forestry models a bit, and your ideas sum it up well. My wife and I keep talking about taking a vacation to that part of the world and observing how they do it, but I think shes worried I may not want to come back

I think your ideas are well thought out and would likely work with enough support, but the stubbornness of people usually gets in the way. On top of that, and its been stated before, is that there are too many people trying to get one up on the next guy in this business. Until I moved to PA, I had never seen so many people working against each other in one industry. When the mill needs logs they are your best friend, but they will bid outrageous on the next sale just to keep you in your place. The consultants talk of how they can get the most money, but then take a healthy commission and rarely check back in to see the job is done correctly. Furthermore, it seems as though many would rather bad-mouth the other players instead of promote themselves and let the landowner choose. Thats one reason I am not to in to politics, I hate the low blows and unwarranted jabs that go with it.

My frustration stems from my desire to change things, but maybe this issue is as complex as world peace I dont know. How would one person go about altering the publics perception of this business in a favorable manner? Its hard enough for me to sell myself and make landowners see the benefits of good management, but I think there is a bigger underlying problem. I fear that attempting to change the standard diameter limit cut philosophy would be welcomed as much as the antler restrictions on deer!! Those who know different already practice accordingly, but they are certainly the minority. I dont see the feasibility of an organization or round-table discussion with loggers, sawmills, and foresters all deciding to play nice and get along. It may happen for the hour or two of said meeting, but follow through would be nonexistent. This is probably getting away from my original post, but I think its a topic worthy of discussion, especially considering the less than ideal economy we face today. sorry for my long-winded venting, but I am sure some of you wiser gents have some ideas on this.

[SwampDonkey]

We've had private woodlot associations for 30 years or more and forest products marketing boards for about the same. It's been successful in helping people with markets, but not so successful on the management end other than bringing silviculture to woodlot owners for establishment of the next forest. From what I can recall about assisting a woodlot owner with incentives to do the proper thing with managing timber, in the form of wood bonuses and plans, most would head off in the opposite direction. They would follow through on management long enough to get their assistance or bonus and turn around shortly and cut the guts out of the place or flatten it at the highest bid. Why would they do it any different when the government promotes clear cuts and forest cover conversions to softwood on crown. The markets dictate what you can afford to spend doing out there. The timber has to support the activities, from building road to paying the man to work.

[Ron Wenrich]

The timber in our area can support forest management.  But, too often landowners gut the stand on the advice of forest professionals.   Slash for cash.  In our area, we have the mindset that only sawtimber is a commercial product.  The only improvement cuts I've seen in many years are those that the paper company has done.  We only have one paper company in the area.

Doing what PAfaller wants to do is exactly what the forests need in many areas.  We've been depleting the resources for way too long.   The genetics will eventually catch up to us.  I keep on watching the average sawlog size get smaller.  Some woodlots need to get a rest.

The biggest part of selling the plan is marketing.  To do effective marketing, you need to figure out where you can get the free stuff and to your market.  For the most part, long time owners aren't a good source.  They aren't going to change their ways.  New owners are easier to educate.  But, the problem with a one man show is that it takes away from your working time when you market. 

It all starts with a plan.  It has to be attractive to the landowner where he is willing to allow another person to manage their resources.  I wonder if you could do that type of work and have the first refusal rights?  If someone decides to sell their timber to someone else, you get the first chance at it.  That way, you don't do all the work and someone else gets all the gravy.