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.

[swampwhiteoak]

Mechanized logging is a rarity around here.  Actually, there is just one company that runs cut-to-length and he's based 3 hours away.   Equipment is very impressive but it seems to break down quite a bit. I'm skeptical that those harvesting systems work well with larger hardwoods.  Perhaps someone with more experience will comment.

Most guys here have a faller, cable skidder and a loader.  Occasionally a grapple skidder.  I saw dozers a lot in KY but not much up here.

[Tillaway]

A typical high production ground out fit around here runs;

A timbco feller buncher or two.

Two or three grapple skidders or grapple 528 cat high tracks.

A stroke delimber

A shovel (knuckle boom) loader.

Typical truck load is 5000 +/ - feet short scale scribner.

They will produce 8 to 13 loads a day.

A hand faller will usually cut around 15 to 25 MBF per day.  This of course depends on tree size (in big wood they can cut over 100MBF).  They work 7 hours per day and the going pay rate is $42.50 per hour.

[L. Wakefield]

   OK, MY head's spinning, alright. I got the answer, now I just have to understand it and that's goona take some calclatin . 'It sounds like a lot'. I think I know what a buncher feller is- is that the thing that grabs em and looks like a big log snips? But is a 'faller' a machine also or is it another way to say a 'feller'? Or a feller that's also a 'feller'?

  For all that we have the big woods up north, I can't say I've gone up there to study them in action. I know they have all the state of the art equipment to leave the lot looking like it's been Hoovered. Not a scrap left. Whole mountainsides like that in places. Scary.  lw

[Bud Man]

 7 HRS. x  $42.50 = $297.50 / DAY X 5 DAYS / WEEK=$1487.50   X  52 WEEKS ==$ 77,350. AND NO EXPENSES, NO INSURANCE, NO HEAD ACHES, NO SUITS, NO TIES, NO HOMEWORK, AND AN AIR-CONDITIONED AND HEATED ENCLOSED CAB WITH STEREO HEADSET     I DON'T NEED MY OWN MILL !!    WHERE DO I SIGN UP     I'M ON MY WAY

[Corley5]

The preferred equipment around here for hardwood is a cable skidder and a forwarder and two or three bigger chainsaws.  Cable machine for hilly jobs and the forwarder for flat work.  The big producers who are doing chips or pulp are generally into it pretty deep.  HydroAxes or Timbcos, big grapple skidders, dozers, and trucks.  I wouldn't sleep well at night.  When I was just out of high school I cut lots of short wood and hauled to pallet mill.  I cut mostly 50" but the mill sometimes wanted 42", 46" or 48".  This was the low overhead way.  A good saw and old 3/4 ton pick up with a flat rack and you were business.  A good strong back helped but after a while it went bad .  A lot of beer money was raised this way.  All the short wood mills are closed here now .  We used to have two of them.  One was sold and converted to a hardwood mill and the died from mismanagement after the old guys passed away .  A son inlaw got the mill, got an intial order with the stipulation that if the quality was good they'd have a contract.  They didn't build them right and lost out.  Last I hauled there I got $65.00 a cord for 50".  Three cords a day minus twenty bucks for fuel and we were drinking beer .

[Gordon]

There are many people that are great loggers, or equipment operators, but not well schooled in business. This is why alot of businesses fail not just in the logging industry but many others as well. Then there are others that just survive and some that make a killing.

It always seems that when work slows it's always the employees that suffer first with cut backs of one kind or another in hours per week or benifits. Afterall that is one of the biggest pieces of the pie that you can cut a piece out of. It's a variable expense unlike the equipment that is a fixed expense.

The same holds true on any industry that is "equipment heavy". Think about it construction, farming, mining and logging all can have high equipment costs. The key is to be able to not only keep that machine working, but at a profit. The more overhead you have the more difficult it becomes to make a profit. Keep it small and keep it simple at first, grow slowly and you might be in it for the long haul.

It's sad to see a person go under because of poor business decisions and loose everything they have worked for. Save some money during the good times for the bad times cuz bad times will show up sooner or later. Draw out a good business plan, don't just shoot from the hip. Make goals and try to keep them. Man the grass isn't always greener on the other side of the street.
Gordon

[Tillaway]

Bud Man,

You supply saw, gas, oil, chains, wedges, jacks, ax and a drive your own pickup for that rate.  You also work about 5 to 8 months a year 6 days a week.  I can talk to a friend that cuts here if you are still interested.

A friend of mine cuts in Oregon for 22.50 hr.  He supplies saw, pickup and other tools they supply all fuel, bars chains and oil.  They usually work 6 hours, 5 days a week up there year around.

Feller buncher operators get around $15hr, sometimes a little more.  Delimber and loader operators get around the same, more if they are the side rod.  Skidder operators make less.

LW  The Faller (busheler, chopper, cutter) uses a chainsaw.

[Frank_Pender]

Here is the setting:  I have seventy acres of prime Douglas Fir, with some small stands of White Fir thrown in ( Grand Fir) some small amount of very nice Oregon White Oak (perhaps 15 truck loads)  that is real nice merch.   I get and order for some Douglas Fir dimensional lumber.  Let say, 2,500 bdfit of a mix of 2 x 4's and 2 x 6's all 8'.  I am out of logs in my yard for the order and in order to fulfill the order must harvest some of my own trees.  The going market for my quality of timber is $575 m Scribner scale for long logs (32').   When I saw other peoples Fir logs I charge $210m.  The primary question her is:  What do I charge for the finished sawn lumber per m?


      Woodmills, I tought for 30 years here in Dallas, Oregon. and just retired three years ago.  I use to cut a 100 cords a year myself and teach full time also.  Ten years ago I began modifying the production of firewood to lumber with the purchase of my first Mobile Dimension Sawmill.  I still have a few older time customers for firewood, to the tune of about 10 cords.  That is all.  I keep most for myself, for the house and the Kiln operation.  As to the logging end of things, I leave most of that up to some of my ex-students.  I find them jobs and they in return pay me a commission or I take it in the form of logs or burl.   I just put a job together for one fellow and he bagan today.  The chip and saw market of paying about  $54 a ton.    Last year we were at $62 a ton.  We have to haul about a 2 1/2 hour turn around per load.  the land owner will get $12 per ton.   remainder to the logger. For the sawmill logs were will be getting
$550m.  We are using a feller buncher processor on 35% or less terrain.   This is a thinning only job, so we will be there for only a couple of weeks.  And I have another lined up after
that.  I like to keep my students working long after the 7th grade.

[Bud Man]

Didn't menchun all dem kom-la-kshuns    n yer teaser post, I'll jest stay hear at Mickey-Dees    n keep on wrapping de's burgers and smiling 2 folks as da cum n da dor, let me kno if n any op-nens cum up fer my tipe qualerfur-kshuns  

[Cedar Eater]

If all I do is lay down 6' cedar logs and 8' posts, I can probably fell, limb and buck one cord per 4 hr. day. This is in winter, in snow, in a swamp, at my age (44) and with a small chainsaw (Stihl 017 - just right for this kinda work). Making logs from trees is only a part of the story. My actual productivity (from tree to mill) averages one cord per week of 4 hr. days. My rolling stock gets stuck and breaks down routinely . I slow down when my body tells me to. A trip to the mill takes a whole 4 hr. day and I can't haul more than 1.75 cords. This makes my hourly rate about $6.50 before expenses. Clearly, I wouldn't do this work for a living, but I have no problem doing it for a few months per year while it furthers my land stewardship goals.

I can lift and carry or throw a 6' cedar log. I can skid two behind me with a nylon tow strap. I can boost my productivity by limbing where I fell and then skidding the whole pole (sometimes several) to the landing behind my tractor for bucking. I can reach the landing with my truck and trailer, but I can pull the trailer with my tractor and have less chance of getting stuck. I don't envision ever averaging more than 2 cords per week without a coworker and more productive equipment. A coworker would more than double the productivity, but then there would be liability and all the other issues of employment that a lone tree farmer can bypass. I can't imagine getting a hydroax or timco or even a grapple skidder into (and then back out of) the swamp. A cable skidder might be the way to go, but they aren't cheap. I could mount a winch behind my tractor and that might be my next equipment upgrade. I don't want to have to work 10 hour days or have trouble sleeping..

[Corley5]

Cedar Eater,  Have you looked into a Farmi or Fransgard skidding winch?  We've got a Fransgard 4000 that we use on our 180 Massey Ferguson and have used several winters on a friends Kubota in his cedar swamp.  It makes life, especially in the swamp, much easier.  That little Kubota with front end loader, tire chains and the winch is really good in the swamp.  Throw down some boughs and freeze a trail as you go.

[woodmills1]

I'm with the cable winch crowd.  my grapple trailer has one driven by hydraulics, its not fast but does have pulling power.  on the largest trees i have it will pull most of the tree to the road after a log or two is cut off.  really saves wear and tear on the tractor if i can stay off of the forest floor and on my woods road.

[Cedar Eater]

Thanks Corley5. I found the Fransgard at:

http://www.logloader.com/winches/

My tractor would use the V2800. If I could get one for about half the list price, it would be a no brainer. At the list price ($1975), I'd have to do some serious figgerun.

I found the Farmi here, but no prices:

http://www.cscparts.com/wwe/farmi.html

[Frank_Pender]

I know this is a bit off of the logging economics but does deal with the whole of the processing of wood fiber.  I got a call yesterday (Sat. Mar. 23)  from a fella that wanted me to dry him 20m bd.ft. of Douglas Fir.  the ol' chash register went ching, ching.  The brain said stop.  At volume I would be 10 months drying his lumber.   Question: Does one begin to think of expanding with that kind of inquirey?   Probably not.  But it would be nice to be at 5m or 6m per run of drying.  

[Bud Man]

Sounds like the right time to add another or enlarge present KD process and with a tight contract for 20mbf this customer will pay for a chunk of it, and with new Tarriff --  KD dimension lumber prices going up as a result, sounds time to put pencil to paper  "Opportunity Could Be Knocking"     CHING...CHING....CHING    

[Ron Scott]

About $500,000 worth of mechanization working in a first thinning red pine. Timbco Feller Buncher and Fabtec Forwarder.

[L. Wakefield]

snip

That little Kubota with front end loader, tire chains and the winch is really good in the swamp.  Throw down some boughs and freeze a trail as you go.

snip

  That Kubota is the one my husband is trying to talk me into. I'll put it in the mental file that you make a favorable comment here. You're talking 4wd, right?   lw

[Cedar Eater]

Watch it lw. Those Kubota guys are as bad as the Husky bunch. When you want a compact diesel tractor, shop around. John Deere, Kubota and New Holland make pretty much equivalent tractors, but the minor differences can get you. I do things with my New Holland that I've been told would break a green or orange tractor with equivalent horsepower in two. The New Holland has a stronger and heavier frame and that can be especially important with a 5 ft wide front end loader on a 4 ft 8 inch wide tractor.

I'm not saying the New Holland is perfect. Limbs have deliberately jumped up and knocked the hydraulic oil filter off my tractor twice and it dumped the whole reservoir (> 5 gallons) both times. Those dastardly buzzards get away with it because the designers at New Holland gave them the opportunity. It coudn't possibly have been the fact that I take the tractor where no tractor was designed to go.

I'm not saying Kubota or Deere are inferior, just different. All three dealers will tell you their strengths and gloss over their weaknesses. You owe it to yourself to consider all three and then get them in a bidding war.

[woodmills1]

don't leave out the newcommer kioti.  i am really impressed with my lk3054.  works and doesn't complain.

[Gordon]

Jeez guys just kuz I own a Kubota and saw logs with a Husky that can't me me all bad can it. Well my winch was a Norse and I"ve been very happy with it over the past few years.

One small note that is a very important one. Skidding logs with a farm tractor can be very dangerous if your not real careful. Also some modifcations should be done to the tractor to make is safer in the woods both to protect the tractor and the operator.

Here is a link to a post I put in the knowledge base. It's about using a farm tractor for logging.
http://www.forestryforum.com/tips/tips.cgi?display:1003448235-25674.txt

Gordon

[Corley5]

Kubota's seem to be pretty good machines.  We put tire chains on the rears of the one I speak of.  With them and its four wheel drive it'll climb just about straight up .

[PeterRennie]

My take on the economics of logging.

Win the lottery.

Log until its all gone.

[Tillaway]

Peter,
Kind of like Farming and Fishing.

[Corley5]

An old farmer by Gaylord was fortunate enough to have a couple oil wells on his farm.  When asked what he was going to do with the extra money.  He said he'd be able to afford to keep farming

[psychotic1]

Want to make a small fortune in forestry??


Start with a large one.