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Author Topic: Trying to understand logging economics  (Read 5758 times)

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Offline Howdy

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Trying to understand logging economics
« on: September 07, 2011, 01:59:49 am »
After watching the TV program Swamp Loggers my wife and I were trying to understand how the different interested parties made money.

I figure Corbet buys the standing timber for ~75% of itís true value.
Corbet then contracts Goodson Logging to harvest the timber.
Goodson then cuts and transports the premium timber to Corbet for their use.
Any less valuable timber (pulp wood) is transported to other mills.
Goodson makes their money by weight of timber delivered to the mills.
 
Who is paid for the pulp wood?

Is this even close to how it really works?

Offline madmari

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Re: Trying to understand logging economics
« Reply #1 on: September 07, 2011, 05:24:48 am »
Goodson recieves about $600/load to cut, pull, transport the wood to the mills. Way I figure it, he is getting the same for logs as he is for pulp. Corbett makes out on the logs and breaks even on the pulp. ????
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Offline Ron Wenrich

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Re: Trying to understand logging economics
« Reply #2 on: September 07, 2011, 06:43:35 am »
In the northeast, things tend to be different.  There are several factors that come into play.  Mainly its quality and species.  Low value species, such as beech, gum, or other off species have low value and can only be used for low value products like pallet wood or ties.  Higher value species have veneer value, and they pay for the bulk of the logging, milling and stumpage value.

Values during good times can be about $400-500 doyle scale for stumpage.  There will be an overrun between the tree scale and the log scale and the sawn board scale.  Pulpwood, when marked, is kept separate, and usually has a low value of only $10/cd in good times.  Pulp markets can be thin in my area, and much goes for firewood. 

Logging may be subcontracted out.  Prices vary, and is dependent on who owns the equipment.  That may be in the range of $75/Mbf+ or by the ton if pulp is included.  This is usually skidded to the landing and the mill provides trucking.  Trucking costs are dependent on how far they are from the mill. 

At the mill, logs are often separated by grade, length and species.  Veneer is sold to veneer buyers.  Prices vary by species and buyer.  Oak may be in the $1500 range and walnut may be in the $8000 range.  That's where the money is made.  It usually pays for the timber, logging, and trucking with a profit. 

Lumber is milled where it is sorted and graded.  Value is dependent on markets and the amount of defect.  Larger mills run much more through their headblocks and have a lower overall manufacturing cost.  Some mills can economically use the pulpwood, especially in softwood areas. 
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Offline HiTech

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Re: Trying to understand logging economics
« Reply #3 on: September 07, 2011, 07:27:04 am »
       In my area many get $185 per thousand to cut and skid. A buyer will come to the landing and mark where he wants the logs cut and grade the logs. You put the graded logs in a pile and they will send a truck to get them. You make your money on the firewood end of it. I am not talking large scale logging here...maybe 80 to 100 thousand feet a year. The rest of the year you have other endeavors. Many are semi retired and this gives them something to do. Many have farms and work in the woods in the winter. Supplements low milk prices. In today's economy every little bit helps. I have talked to some Big Producers and they say the chip market helps them out but places can only take sooo many chips so at times that market is weak. Also what used to take a crew of 4 or 5 guys all winter to do, is now done in a week or less with the big new equipment. I am sure this has something to do with log prices. Flood the market and prices drop. I just wouldn't want the payments on a $400 thousand piece of equipment...I wouldn't be able to sleep at night worrying about it. Like anything else in today's economy you have to be on top of your game to make it. It takes a special person to go Big and come out on the right end of the stick. I take my hat off to Bobby Goodson and his crew...they do a terrific job.

Offline duke

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Re: Trying to understand logging economics
« Reply #4 on: September 09, 2011, 12:29:04 am »
I have enjoyed watching Bobby and the Crew many a long winters night. It is good to see what a logger goes through to put food on the table.Its not all video games. Its called a fair days labour for a fair days pay. It"s good for the workers also to see what the boss goes through just to keep them all working and the payments he has on the equiptment that they use daily. Good on YA Mate!!!
 duke

Offline SwampDonkey

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Re: Trying to understand logging economics
« Reply #5 on: September 09, 2011, 02:20:02 am »
Most stumpage here is paid by the acre on private land, lump sum. Not too many loggers go around cruising timber on private land, only the ones that a bank wants to see numbers when they finance the operation. In the good times, stumpage has been as high as $2000/acre and in the average times $500-600/acre. This is just forest run, mixed species. There may be a cruise involved for said reason. Very little veneer, and logs would mostly be softwood. The hardwood logs and veneer would be a tiny volume and most won't bother with it. Most people don't let their trees size up for a veneer log before they want to cut them again. Our hardwood grows very slow. They said one time that 4" in diameter in 10 years if properly managed in NYS. Well it's not even managed for logs here. It's managed for firewood and pulp because nobody much thins hardwoods and when they attempt it, it is usually cut too hard. So left untreated it takes 60 years to get to 8". About the only decent hardwood thinning I could take anyone to see around here is one I supervised for a man who lives in Maine. And that ain't bragging. It was even-aged and thick. ;)

Pre-commercial thinning pays off. :)

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Offline WDH

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Re: Trying to understand logging economics
« Reply #6 on: September 09, 2011, 08:09:19 am »
Most of the timber that Goodsen is logging is on land owned by Corbett.  They contract for him to cut and haul the sawlogs to their sawmill where they saw, dry, and sell the lumber.  In some cases, Corbett Timber Buyers purchases timber on the stump from private landowners, and they contract for Goodsen to cut and haul the timber.

Corbett markets the other products that they do not directly use in their mill to third party markets.  They contract for Goodsen to cut and haul these products to the designated markets.  Typically, the logger is paid a certain rate for cutting and loading on a truck.  This is called the stump-to-truck rate.  Then, they are paid a trucking rate based on the distance to the mill they are hauling to on a $/ton-mile basis.  So, if the ton-mile rate is 12 cents per ton mile and the haul distance is 50 miles, the hauling rate is ($.12/ton-mile x 50 miles $6.00/ton) $6.00 per ton.  If the stump-to-truck rate is $12/ton, then the total rate that they get paid to cut, load, and haul is $18.00/ton.  In the South, 99% of the timber is accounted for by the ton as the loads are weighed rather than stick scaled.

Stump-to-truck rates often vary by product.  More might be paid to cut and load grade logs than for pulpwood as an incentive for the logger to do the best job sorting out the more valuable grade logs.
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Offline Raider Bill

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Re: Trying to understand logging economics
« Reply #7 on: September 09, 2011, 09:25:46 am »
I was watching a logging show the other night. They were cutting way up in Canada somewhere and chipping it on the spot then trucking to a mill.
Most of what I see [on tv] shows them cutting and transporting the pulp wood in log form. Why this way instead of chipping it on the site? What's the difference? Is it just the way the mill is set up? I also thought it was pretty neat the way they tipped those big rigs on end to dump the load at the mill.
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Re: Trying to understand logging economics
« Reply #8 on: September 09, 2011, 09:51:05 am »
Raider
Chips in a pile begin to heat and decompose. Less so if in the log form.
Some have tried to inoculate the chips so they go into a pile and the decomposition is controlled and aids in the digestion of the wood (pre-stage of making pulp for paper making).
That might be why.
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Offline chevytaHOE5674

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Re: Trying to understand logging economics
« Reply #9 on: September 09, 2011, 10:25:21 am »
Also chipping in the woods is another expensive piece of equipment that the logger would have to own/lease/rent/etc. They are expensive to run and maintain as the knives need changing frequently to maintain the proper chip specs for the particular pulp mill.


Offline lumberjack48

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Re: Trying to understand logging economics
« Reply #10 on: September 09, 2011, 05:16:00 pm »
A guy won a million dollars, his friends asked him what are you going to do now, will ,, he kind of hung his head in thought, then he looked up with a gleam in his eyes and said, I'm going to keep on logging on till I'm broke  ;D
Third generation logger, owner operator, 30 yrs felling experience with pole skidder. I got my neck broke back in 89, left me a quad. The wife kept the job going up to 96.

Offline timbuck2

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Re: Trying to understand logging economics
« Reply #11 on: September 09, 2011, 07:42:36 pm »
The economics of logging, easy. You work 12-14 hrs a day, 7 days a week, cutting and hauling various forest products that cost more to produce than you get.  You have 1-2 million dollars of equipment that is always breaking down and costs a fortune to keep running.  At the end of the month you don't have any more $ than you had before, but you like it!

Offline WDH

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Re: Trying to understand logging economics
« Reply #12 on: September 09, 2011, 09:01:15 pm »
Bill,

At the mill that I procured for, a large pulpmill, we had a woodyard with a gynormous chipper that made chips from logs.  It did not make sense to buy chips that were produced in the woods because they cost more than logs since the logger had to buy and operate the chipper.  The flail de-barker and the field chipper cost the logger well north of $500,000 plus the operating cost (they are fuel hogs), and that increased the cost of that fiber by about $3.50 - $4.00 per ton.  No need to pay the extra $ since we already had the big chipper at the pulpmill and were paying the staff to run it.  We could make the chips ourselves on a big scale for much less than the extra cost of the field chips.

We used 300 tractor trailer loads of wood a day, about 1,800,000 tons per year, so that extra $3.50 - $4.00 per ton was big money.

Very good question!
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Offline treefarmer87

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Re: Trying to understand logging economics
« Reply #13 on: September 09, 2011, 09:24:21 pm »
i know he is getting a good price for pulpwood. from what i hear the further south you go the more the price drops. i remember when i was working in sc., a good load of large tree-length pine (20"+) would bring $400 :o, 10 or 15 yrs ago it would have prob brought twice that much. i took three loads today and made about $140 per load. it is paying .95/100
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Offline WDH

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Re: Trying to understand logging economics
« Reply #14 on: September 09, 2011, 09:40:23 pm »
Pulpwood stumpage prices here are running at about $7.00 - $8.00 per ton on the stump.
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Offline John Mc

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Re: Trying to understand logging economics
« Reply #15 on: September 09, 2011, 09:46:02 pm »

The secret to making a small fortune in logging:

            start with a big one.

(stolen from an old aviation saying)
If the only tool you have is a hammer, you tend to see every problem as a nail.   - Abraham Maslow

Offline OntarioAl

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Re: Trying to understand logging economics
« Reply #16 on: September 09, 2011, 09:57:56 pm »
Howdy Folks
I just returned from my latest fire deployment (6th)and read this post and find it ironic that my task was to extinguish the waste left behind by the "bush chipping operations", think smouldering sawdust piles.
These are a blight on the land they deterioate very slowly and nothing grows on or near them they contain a very high percentage of bark , the cambial layer and wood waste. The effluent from these debris piles is dark and although I do not have a chemical annalysis handy I sure would not bathe in the stuff.
I am not a fan of in bush chipping for many reasons, one is, to keep costs down it requires a steady diet of large wood (potential saw timber veener blocks) any material under 4" never makes it to the chipper its beat to rats--t  by the chain flails
The contractors (and stumpage fees)are paid by the bone dry ton with deductions for fines, over size chip, slivers and bark (and if the bark content is too high it goes to the hog fuel pile and the contractor might break even on the cost of fuel to haul it)
The system is a bean counters dream come true and a loggers night mare If the true cost of recovering the debris was added in hauling logs or treelentgh to the mill would become very competative.
Oh yes how did I put out these debris piles? I use a large excavator(Komatsu 330) dug a hole large enough to bury them and sprayed water on the smouldering mass to cool it down and covered them with the excavated dirt.
Just like burying a campfire.
nuff said
Al
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Offline SwampDonkey

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Re: Trying to understand logging economics
« Reply #17 on: September 09, 2011, 10:33:18 pm »
In the 1980's early nineties, chipping in the woods made everyone with the equipment pretty much broke and acres and acres on public land were mowed and chewed up, logs and all. The hardwood was all being ported out by Koering feller forwarders, whole tree, tops and all. Nowadays it seems they still chip, but I think it is the get rid of roadside slash because the amount of land that was taken up for the slash piles in the past could be several acres when you have 1 mile of roads on a  block. The first 100 feet is usually a dead zone from machine travel just the same. But at least something can be planted there or grow from wind driven seed like birch or pin cherry release. Sometimes even spruce seed gets shaken out of the top brush. Pin cherry is always on roadside no matter what and also the dead zones of trails. It's only value is for wildlife. It grows rapidly and produces fruit within 3 or 4 years. I'm on a block now, that I never saw so much grey birch in trails and roadside and near damp places. And we are on elevated land, but it doesn't have much grade for drainage. It also rains 4 days a week. :D

I hate thinning pin cherry, just making sure that be known. Hard on blades and the lower branches are stiff and always swatting your face. :D ;)

Pre-commercial thinning pays off. :)

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Offline paul case

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Re: Trying to understand logging economics
« Reply #18 on: September 10, 2011, 10:20:44 am »
with the scenarios that some of you have come up with on stumpage prices anyone can see why it is important for the goodson crew to get that 100 loads a week. at $18 per ton cut and delivered to the mill equals about $480 per load. with a dozen people working and serveral diesel eating machines the margins must be real thin. how much do you reckon his insurance bill is ?  pc
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Offline 240b

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Re: Trying to understand logging economics
« Reply #19 on: September 10, 2011, 01:36:50 pm »
logging economics.... now thats funny. But seriously,  loggings great, you can always make ten dollars- if you are willing to spend twelve..

Offline treefarmer87

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Re: Trying to understand logging economics
« Reply #20 on: September 10, 2011, 02:56:51 pm »
and lets not forget break-down costs and quotas :)
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Offline madmari

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Re: Trying to understand logging economics
« Reply #21 on: September 10, 2011, 06:04:59 pm »
And rain/weather delays. And contract changes. Mill spec changes. Registrations, permits, road use fees. Chain, cables, filters, lubricants, parts (waiting for parts) workmans comp, tires, safety equipment...... OK, i'm broke.

  Doh! The insurance bill just came, and there's the fuel bill. Here's something from the tax department.....
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Offline SwampDonkey

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Re: Trying to understand logging economics
« Reply #22 on: September 11, 2011, 04:16:07 am »
Just thank goodness your not working for Irving, because all that equipment would be financed through them to get the job. Irving in NB pays the lowest of any mill on logs and pulp. The pine price wouldn't be too bad, if you didn't have to high grade your woods to death to meet their high end specs. ;)

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Pre-commercial thinning pays off. :)

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Offline lumberjack48

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Re: Trying to understand logging economics
« Reply #23 on: September 12, 2011, 07:01:09 pm »
Here i set in this wheelchair, 22 yrs now, and my mind has been kicking around putting a crew together this Fall
        What does it take to open a guys eyes, Its called Logging Fever and once you caught it you got it,, theres no cure.

When i bought a new skidder in 1968, i got $11.00 for pulp loaded on railroad car. I sorted all the saw bolts out, i got $18.00 delivered.
There was a mill paying $9.00 for tree length, i thought that was just a honest way to steal wood.

  I payed 50 cents a cord stumpage, $2.50 a cord for trucking

I can't remember if i was making money, but i can remember i sure thought i was.
       
Third generation logger, owner operator, 30 yrs felling experience with pole skidder. I got my neck broke back in 89, left me a quad. The wife kept the job going up to 96.

Offline SwampDonkey

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Re: Trying to understand logging economics
« Reply #24 on: September 12, 2011, 07:13:55 pm »
My uncle used to get $20 a day yarding with horse and had to walk 8 miles to work with the horse.

Dad loaded rail cars for $20/cord, but it was also peeled.

Grandfather cut and peeled 2 cords a day, no chainsaws then. $2 a cord.  And that wasn't cash, it was store pay only. And fishing rods where expensive tools. I have grandfather's old Orvis bamboo rod that was not cheap in the day and they are expensive now to. It was hardly used, like new. Spare tip to. It's at least 50 years old.

Pre-commercial thinning pays off. :)

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Offline lumberjack48

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Re: Trying to understand logging economics
« Reply #25 on: September 12, 2011, 09:18:46 pm »
Loaded and wired many rail cars of peeled pulp, we tried to peel a 1000 cords every spring, those were the days the whole family helped peel wood.
Third generation logger, owner operator, 30 yrs felling experience with pole skidder. I got my neck broke back in 89, left me a quad. The wife kept the job going up to 96.

Offline SwampDonkey

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Re: Trying to understand logging economics
« Reply #26 on: September 13, 2011, 03:52:23 am »
Yes, and around here the railroads were often run by timber barons. Irving still owns one, the Southern NB Railway. Old K.C. Irving had purchased it in 1945, which was built for timber extraction (1867) and northern settlement by  Alexander "Boss" Gibson who was also a cotton mill owner before the depression. Died broke because of the depression and also he gave his wealth away to the poor, especially those that worked in his cotton mills. Later years the railroad up the river valley had it's biggest customers from forest and farm products. All closed up now, what remains of it is the southern railroad from Saint John, NB into Maine. The CP leased all it's lines from them, and probably still do because I was fishing on the Miramachi one time and all the sudden new signs where hung, about not trespassing on the NB rail road lands. This was Irving's and I think they were afraid of camp fires. I always used a Coleman, but you could see fire pits around.

Pre-commercial thinning pays off. :)

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Offline Ed_K

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Re: Trying to understand logging economics
« Reply #27 on: September 22, 2011, 08:51:22 pm »
 I'm still trying to figure a profit.
 Cutting hemlock
 $186. mbf average
 $  22. ton pulp
 $  70. mbf trucking
 $  30. mbf daily-fixed cost
 $    2. mbf stumpage
When I got done I think I make $2.16 an hr
But I wouldn't do anything else.
Ed K