The economics of logging

[Cedar Eater]

I'm looking at a recent copy of an equipment advertiser called the "Green Sheet Logger" and I just can't understand how anybody can make money logging. That equipment is expensive! It seems like you need the heavy equipment to be productive, but if there's any anology to heavy landscaping equipment, by the time you get logging equipment paid off, the maintenance and downtime from breakdowns is eating up all your profits. Fuel costs alone must be a fortune. I guess my cedar logging falls into the barebones category, but I can't see how a startup company could ever hope to turn a real profit. Maybe it's the sawmill guys making all the $$$.

[Corley5]

I agree.  I'd have to figure a way to live in some of that stuff if I bought it.  Most of the big operators around here trade their stuff in on new stuff before the warranties run out.  They never plan on paying anything off just keep financing or leasing.

[Jeff]

You didnt even touch on insurance, the real business killer right now.

[Bud Man]

All aspects of work and play have become segmented with manufacturers, marketing , and  advertisers coming at each of us with a better mouse trap to apply towards our chosen trade, profession,  hobby or pastime----"Ain't Life Grand and Complex"  could give a guy a head ache if he wern't up to the task !!

[Ron Wenrich]

So, in what business isn't the equipment expensive?  You must be able to produce, and have a sharp pencil.

I was doing some consulting work for a logger.  He had a brand new $100,000 loader.  The salesman talked him into buying it since his knuckleboom was always needing repairs.  He even gave him 5 years to pay it off!

I did the calculations on his loading costs to be about $50/Mbf.  Most guys were logging and loading for that price.  He went out of business due to his inability to comprehend costs and the ability of the salesman to sell him a piece of equipment that was not needed.

Mills make all the money?  Every business revolves around one simple equation.  Profit = Selling price - operating costs - raw materials.  You get to pick and chose which one you can minimize.  Markets usually dictate selling and raw material prices.  You have to bring your operating costs in between the two to stay in the black.

Most loggers don't make money doing the logging.  Their profits are made in how well they can market their logs.  A lot of that is dictated by how well they can buck their logs.

[Bud Man]

If you don't have a sharp pencil  , whatever you lot, you better get used to window shopping and day dreaming . Last time I saw a fatted cow on the way to the market the only thing that looked marketable was his ribs, which I like, and his hide and hooves. Already got plenty of shoes and don't use much glue, but I might buy a nice leather jacket if the price is right !!     Since I got a mill ordered, I better sharpen my pencil   and see if I can make part of that bundle of profit and hope I don't end up like that logger    and fatted cow   , belly up and broke.

[woodman]

  Profit I thought this was a fun thing to do . Cut wood sell wood go to the bank give them money . Cut wood sell wood go to the bank give them money. Cut wood

[Bibbyman]

Our business plan is short and simple.  

Make a little money and try to keep most of it!

[Frank_Pender]

Nitches, nitches, nitches, nitches.   Be flexable, be flexable, be flexable.  I even  pass out busniess card when I am in a lumber company.     I was in Home Depot to get some wireing a few days ago, and passed out 6 cards to electrictions and contractors.  I got two call within two days.  One for a free tree (nice Oak) if I wanted it and the other for a special exposed header rough cut.  Pennys to dollars, I thought.

[Tillaway]

I had a chance to meet some one that was operating three cut to length sytems.  These cost about $800,000 each  Needless to say he didn't sleep much at night.  It costs about $30 a ton for him to put the logs on the truck, he needs to average 90 tons per day per system.  If he is lucky, he will get $45 per ton at the mill.  This means he has only $15 per ton for trucking.  He better hope that he is real close to the mill.

I have scratched a pencil pretty hard on logging around here.  It will usually only pencil with used equipment putting out about an average of 10 loads per day.

It used to be that you had to average about one load per man day to make a profit.  Some still use this as a rule of thumb in these parts.

[L. Wakefield]

   Not trying to be funny here- I think that's a useful figger- but- a pickup truckload? A logging truckload? Are you talking logs or cordwood?  lw

[Bud Man]

My pencil came with a tiny eraser, had to go back to the office supply store and buy a bigger eraser.  

[Jeff]

Good point L. And I imagine an average load form California is different from here. I would guestimate that an average Michigan load of logs is about 18 cord. And that ranges widely and wildly. We have pretty relaxed load limits compared to other states, and tend to haul bigger loads. You see so many loggers go out of business it makes you wonder if the business is more about how to creatively finance then how to harvest.

[Texas Ranger]

In Texas, loggers make about $22 per ton, or better or worse depending on the deal.  at that level they make about $600 per load, if lucky, 3 to 5 loads a day, or up to $3000 per day in the piney woods.  The land owner makes about $40 dollars a ton for the same wood.  The more ya haul, etc.

But the cost of equipment is what causes a lot of that equipment to show up on the used equipment lot when the economy hickups.

The economics are:  you can make money if you work hard, don't over spend your credit, and have a working wife.

[L. Wakefield]

   18 cords per man-day...No wonder you are talking about large equipment and extreme financial difficulty. I can just see one guy with a chainsaw trying to knock down 18 cord. So I have to ask...how much wood would a wood chuck chuck...**NO**.. how much can one guy cut in one day? Leave er lay strewn about like pick up stix- just how much can you get down in 1 day?   lw

[Jeff]

The question in this age is not how much can one man cut, because chainsaw felling is a rarity in this age. Its how much wood can the machine cut. I don't know that answer. Ron Scott might have a good idea. We need some loggers on this board. Not sure they can afford computers though

[Ron Wenrich]

Very little is being cut by machine in my area.  Everything is by chainsaw.  The landscape and ownership patterns ain't too good for machines.  

How much can a logger log?  Depends on the size of trees.  If you cut small trees, it takes a lot more time.  

The contract loggers in our area cut about 50 Mbf/wk on a Doyle scale.  Some may go even higher, but some mills won't keep a crew that can't cut that amount.  Most crews consist of 2-3 guys.  Their equipment is a chainsaw, skidder and a loader.  

Most truckloads are around 3500-4000 bf, depending on species and if the cops are weighing.  

[Ron Scott]

It's a vicious cycle. The more and bigger the equipment the logger has the more and faster they have to produce. Then they quickly fill up the mill yard, meet their quota and the mill wont't carry the wood inventory,  the mill then drops their prices and the logger must slow down or stop production. However the large payment on the equipment doesn't go away.

I work with small, medium, and large producers for this area, small ones producing 10 cords or 5-7,000 feet/day to those that must produce 100 cords or 50,000 feet per day to just meet their payments.

The large ones scare me and I don't know how they sleep at night, especially during the spring break-up period when production often must slow down due to road and weather conditions for hauling. They are the ones that also need much more watching in the woods for quality work since they must move so fast, they can't rest their equipment or personnel very long.

Yes, logging is a tough business and we need some "hard core" loggers on the forum. Those I talk with just don't have the time, though I did talk with Jeff's boss the other morning.



I prefer the medium size producer for more consistent production and quality work. Provide just enough wood to keep the wood working daily where they keep purchasing the product.

[Jeff]

You talked to Tammy? Really? Who else? Did Jake say he was my Boss? I'm walkin...  O.K. Noe more postin about Jeffs Boss here.

[woodmills1]

about 10 years ago i was a small firewood producer doing 100 cord/ year myself all at retail as a part timer.  i looked at where i wanted to be in 10 years.  mechanized and cut to length was making its first big inroads here though it is older by far.  with my sharp pencil (dixon ticonderoga with gum eraser ) i soon new the payments on a million or so of equipment would keep me from any sleep let alone restful.  so i hit on a combination of a reasonable wood lot with a mix of trucked in logs.  working alone or with an occasional helper part time using a combination of contract cutting at home and out, along with one or two contracts for wholsale lumber, retail small sales and value added planing and moulding.   so far all equipment has been purchased used and i have made decent bucks spending about 18 to 20 work week a year part time while teaching high school.  june 2002 i try it full time and will add 100 or so cord of retail firewood from my own wood lot.  we are getting 200 bucks per cord after mother nature drys it out.  for me this scale works and i am havin fun and sleepin well.