would you do it?

[MotorSeven]

I don't think anyone here is telling you not to do business with the guy(although I would spend some time "checking him out"). We are giving you suggestions to modify your "plan". Like Majic says, the decision is yours.

My thoughts are not to buy new: If you buy new you have a bunch of depreciation if you have to sell the equipment down the road. You can buy two used LT40's in good shape for the price of one new one, then if you ever have to sell you won't loose your shorts. Same thing with a tractor/loader. Markets right now on heavy equipment is at all time low...there are good deals everywhere. Heck, you can even lease a loader machine to get you through the first couple of months. Once comfortable...buy.

As mentioned the weather is a problem. Do you have a building to operate in or store lumber? Mill sheds are a must for a full time operation and they take time to mill/build. 

Opportunity is knocking, we just want you to cover all the bases before jumping.

[ellmoe]

   Having only one customer is a no-no to me. I'd want close to twice the $.17/bf you mentioned. Less than that, I am sure I'd be broke within the year. Maybe somone else could live at that rate, but not me.

Mark

[FeltzE]

If this is inappropriate just flag the post.

What is the "commercial rate for sawing"  Not that I ever found a "commercial mill" interested in small jobs.  We by "commercial mill" standards are a legitimate business but not "commercial throughput"  sawing only 1-2mbf per day and not sawing daily. We operate at a contract rate of .21 when sawing for others.

I can't imagine expecting the 3500+ft per day on a 1 1/2 inch bandsaw not that it can't be done. But why operate with no margin for expansion, surge or down time?

Eric

[customsawyer]

I was not offended in any way. I was saying that there is some of us with different levels of experience and I don't know of any that is sawing as cheap as what you are talking about doing. I am cutting in a very similar job as what you are looking at except for the fact that they are paying me more and expecting me to do less than what this man is asking of you. As to the production of a LT70 there is no problem getting that level of production as I have produced that much in a week on several occasions. Remember the milling is the easiest part of the work. The hardest work comes in all the other things you have to do to be able to mill.  If all you have to do is mill that is one thing but when you have to unload/load trucks and deal with all your waste plus all the other things that comes with milling I would not be shocked if you don't have equal amount of hours in doing all the other things as you do sawing.

[Cedarman]

So far everyone is looking at pricing from the sawing end and what breakeven costs are.  Take a look from what the final product is worth to your customer setting on his truck.  What is he getting out of the product?  What are his costs of drying, grading and shipping. What can he pay to have the wood sawn to his specs?  If you can get some sort of handle on this, you may be able to figure how much you can ask.  If his margins are small, you will not be able to raise your price.  If he has big margins, then you might share in the wealth.  Research all sides of this business. 

[dunmakinbabies]

So far everyone is looking at pricing from the sawing end and what breakeven costs are.  Take a look from what the final product is worth to your customer setting on his truck.  What is he getting out of the product?  What are his costs of drying, grading and shipping. What can he pay to have the wood sawn to his specs?  If you can get some sort of handle on this, you may be able to figure how much you can ask.  If his margins are small, you will not be able to raise your price.  If he has big margins, then you might share in the wealth.  Research all sides of this business.

Yes margins are tight, I tried to negotiate more money today with no prevail! But here are some numbers he gave me. Pine $150 rock maple $300 per M3.Ok so here is the break down, Thats for the logger, sawing fees, grading/ drying and trucking to kiln. NOT ALOT TO BE SPREAD AROUND! For those who dont know there are 423 bdft in a M3. Than after that he pays $60 per M3 the ship it to India. Than he makes $25 per M3? If my math is right thats a little under .06 a board foot. I guess what it comes down to hes not making much either so no one else will in the process.
     I knew the numbers were tight thats why i asked you guys what your thoughts were. Now weather these numbers he gave me are the truth or not is yet to be known.
     There were many sleepless nights for me on this matter. But thanks to you all ill sleep well tonight. Originally when I got the idea to buy a mill i wanted a smaller hydraulic mill. Planed on working mostly by my self and my oldest son when he could. I think, no i know thats the rout im going to take. Keeping it simple and maybe work it into something bigger. I will say it truly amazes me the wide range of rates that have been thrown around here in the past few days.
      It has been a dream of mine for years to own a mill and i will have one before the grass is green. hopefully! I have found some smaller markets locally and living in a small town word gets out people have been askin me when i can saw their logs. So we will see where it all goes.

[shelbycharger400]

for one... i think the numbers he gave you were false, not shure on the other numbers but i know it costs way more than $60 to ship a container.
heck it cost 50 bux to ship 60 lbs from here in mn to tennessee.
big companies can survive shipping and only making a few cents on the dollar.. when you take it times say
3500 board feet per day times 365 times 6 cents equals to $76650
I know he is shippin way more than that.  id say proceed with caution, they will only tell you what they want you to know

[Ianab]

i think the numbers he gave you were false, not shure on the other numbers but i know it costs way more than $60 to ship a container.

Not necessarily. That's $60 per M³.  How many M³ can you cram in a 40ft shipping container? Then it's $3-4,000 to get that moved to pretty much any major port in world.

Based on that his freight numbers are along the right lines.

This is how even cheap stuff like construction pine can be shipped from NZ to the US, probably for less than it can be shipped 1/2 way across the US.

Ian

[DouginUtah]

But thanks to you all ill sleep well tonight. Originally when I got the idea to buy a mill i wanted a smaller hydraulic mill. Planed on working mostly by my self and my oldest son when he could. I think, no i know thats the rout im going to take. Keeping it simple and maybe work it into something bigger.

You are lucky Dun. You have learned one of the most important rules of being a sawyer. Sometimes you have to say NO.

[dunmakinbabies]

Ian, you can fit 22,000 bf in a 40 footer. 52m3 x 60= $3120 per container.
70,000bf a month=165m3 x 60= $9,900 a month for shipping to India

[Ianab]

Ian, you can fit 22,000 bf in a 40 footer. 52m3 x 60= $3120 per container.
70,000bf a month=165m3 x 60= $9,900 a month for shipping to India

Yeah, that's the sort of numbers I was thinking.

Ian

[Kansas]

I think that is making a correct decision. A smaller hydraulic mill, maybe used is the ticket. Meanwhile you can research markets a little. Find out what maple and any other species are bringing from loggers. You might be money ahead to put in a smaller kiln and retail some. We sell hard maple for 2.80 a ft. Even if your area doesn't support that price, you would still be money ahead.

 The figures you provided indicate around 71 cents a board foot. Minus the 6 cents is 65 cents. I would think a decent maple log would cost 30 to 40 cents delivered to your place. The math don't add up.

[stavebuyer]

I think you made the right call. I don't think .17 will come close to covering the expenses of operating a stand alone bandsaw mill and support equipment. The large bandmills mills that saw 50,000'+ in 8 hours can't run on that margin. With the overrun on a narrow kerf mill added in thats the exact reason you were offered a 5 year run.

You may have made a good connection in the process and I woud think more along the lines of possibly selling him lumber. Your plan would come a little closer if you could benefit from the mills over-run.

[FeltzE]

Lower profit margins require higher througput to make you your dollar, bigger equipment, faster saws, fewer employees. Over all higher effeciency.

Banking on just one income source is dangerous, (I'd need a backup plan) If he slows down you can't make payment and payrole.

Our local commercial sawmills have been closing for the last 10 yrs here in NC, although there are some north of me they are much further than they used to be.

Eric

[Norm]

A couple of times I've jumped in with both feet on a new business, each time I went belly up.

When I did as your going to do I've succeeded. Good luck. 

[alpmeadow]

Gee this was a good post with alot of solid input.  I believe the right decision was made with this support.  We have too, a partime custom milling LT40G28 hydraulic WM operation.  Between custom vs commercial milling operations there are alot of pluses and minuses, and it needs to add up cost, time and revenue wise.  Handling yard operations with storage, (un)loading, side lumber, waste byproducts etc are usually cost and time items that are not often fully accounted for, which we are still wrestling with. We custom cut fir, cedar and pine sourced from our own woodlot.  Recently custom cutting for local building contractors, has worked, knowing that they have to be competitive and profit too.  Keeping it simple, parttime and flexible has worked for us.  Cutting approx 30 m bdft last year has been a good year for us.
Thanks again for being woodwise.