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What is your time worth?

Started by GeneWengert-WoodDoc, February 21, 2013, 05:33:04 PM

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GeneWengert-WoodDoc

When planning or evaluating a sawmill, we might have two different options that we want to assess.  To evaluate fully, we need to attach some monetary value to your time...your personal time and the production time of a mill.

For example, with hydraulic log loaders, we can load a log in 15 seconds, while manually loading might take 45 seconds.  What is this savings worth in time and money (not counting strained back muscles)? 

Or consider a sawing procedure that has you turn a log more often than you are presently doing.  This extra turning adds 90 seconds to overall sawing time.  so, what is the cost of spending this extra time? 

Obviously, the cost must not exceed the benefit.

So, at $18 per hour, your personal time is worth $0.30 per minute.  If your sawing profits are $180 per MBF and it takes 6 hours to saw 1 MBF, the mill's time is worth $0.50 per minute.  Plus if you figure that the cost to run the equipment is $90 per MBF, then the mill's operating cost is $0.25 per minute.  So, in this example (I used numbers that might not be close to yours, but they were easy to divide without a calculator), if a new procedure takes 90 seconds longer, that is an expense of (30 + 50 + 25 x 1.5 minutes = $1.57 benefit that must be shown in the lumber to pay for this time expense.

So, anyone have a ballpark figure on what a minute extra would cost in their operation?

Of course, if it involves safety, we would not make such a calculation, but would be safe at all costs.
Gene - Author of articles in Sawmill & Woodlot and books: Drying Hardwood Lumber; VA Tech Solar Kiln; Sawing Edging & Trimming Hardwood Lumber. And more

woodmills1

James Mills,Lovely wife,collect old tools,vacuuming fool,36 bdft/hr,oak paper cutter,ebonic yooper rapper nauga seller, Blue Ox? its not fast, 2 cat family, LT70,edger, 375 bd ft/hr, we like Bob,free heat,no oil 12 years,big splitter, baked stuffed lobster, still cuttin the logs dere IAM

woodmills1

and of course it keeps me in shape which the wife likes :snowball:
James Mills,Lovely wife,collect old tools,vacuuming fool,36 bdft/hr,oak paper cutter,ebonic yooper rapper nauga seller, Blue Ox? its not fast, 2 cat family, LT70,edger, 375 bd ft/hr, we like Bob,free heat,no oil 12 years,big splitter, baked stuffed lobster, still cuttin the logs dere IAM

Peter Drouin

Hi Wood Doc
When I make a new product I try to time my self, Like to day I made 1000 1"x1"x6' garden stakes. I have 5 hrs in it so far , tomorrow Im doing to sharpen  and wrappin them, so if I take my time and the price of the hard wood and divide the price I get for them that will tell me how much Im making an hr, is that right?
A&P saw Mill LLC.
45' of Wood Mizer, cutting since 1987.
License NH softwood grader.

drobertson

When I first started sawing in 05', I put the pencil to every lil aspect of the operation. After the first check came in from the flooring mill, I kinda scratched my head, then the second check came in, a lil more head scratching, and a lil frustrated, third check came in, got mad, through the pencil out and realized this was going to make money, just not what was expected.  Ever since, let things roll as they roll, and trust in the Lord.  I have had folks stop by and visit for over an hour, did this cost me money? maybe, and maybe it brought in more work for the future, david
only have a few chain saws I'm not suppose to use, but will at times, one dog Dolly, pretty good dog, just not sure what for yet,  working on getting the gardening back in order, and kinda thinking on maybe a small bbq bizz,  thinking about it,

woodmills1

Like today when I found the first eyebolt and took
DanG near too long to get it out, then found the second one in the second log with the expensive metal detector.


But,  big big but.!!!


I will get paid for 387 bd foot of sweet nice oak that was ordered
I will get $576 for the product delivered
I also have a bunch of 2 by blocking my friend the mechanic will love
as well as 2, 2 count them............... :P 2 x 14 x 16 foot that I will give to my farmer friend for his new dump truck (new to him)

My time is worth what I choose to spend it on, and we ain't starvin
James Mills,Lovely wife,collect old tools,vacuuming fool,36 bdft/hr,oak paper cutter,ebonic yooper rapper nauga seller, Blue Ox? its not fast, 2 cat family, LT70,edger, 375 bd ft/hr, we like Bob,free heat,no oil 12 years,big splitter, baked stuffed lobster, still cuttin the logs dere IAM

drobertson

I cut a few of those big boards for dumps, man them things are heavy!  the ones I sawed were 2-1/2" 
only have a few chain saws I'm not suppose to use, but will at times, one dog Dolly, pretty good dog, just not sure what for yet,  working on getting the gardening back in order, and kinda thinking on maybe a small bbq bizz,  thinking about it,

woodmills1

when you add in the weight of the eyebolts they really get heavy
James Mills,Lovely wife,collect old tools,vacuuming fool,36 bdft/hr,oak paper cutter,ebonic yooper rapper nauga seller, Blue Ox? its not fast, 2 cat family, LT70,edger, 375 bd ft/hr, we like Bob,free heat,no oil 12 years,big splitter, baked stuffed lobster, still cuttin the logs dere IAM

Delawhere Jack

Nobody told me there would be Algebra exams!!!!!!!! >:(

(Kidding Doc...)  ::)

Seaman

Interesting that you bring this up Doc.
I do mostly slabbing, and I know I am making money there. A new neighbor wants me to give him a " contract price " on cutting a few smaller poplar logs into building material for him. I am going to go scale them tomorrow, and figure it at .35 cent BF. He will drop them off at my place I think, but I am really wondering if it is worth my time.
Then again, you never what a small thing will lead too.
I guess everyone will have a different answer for your quiz, and maybe all be correct!   :P
Lucas dedicated slabber
Woodmizer LT40HD
John Deere 5310 W/ FEL
Semper Fi

ST Ranch

Gene - I have not done an actual cost breakdown on my mill operation, but your "random" numbers are not really that unreasonable [and maybe not that random].
What is interesting is you have given us a good tool to work with that is very simple.  The main cost variable really is the value of your product sold less the delivered log [i.e. your sawmilling profit]. If I am cutting farm boards and lumber, your number is OK, but if I am selling WR cedar or larger Douglas-fir timbers and planks, my profit about doubles to triples.
Interesting principle - the higher the value your lumber, the less time you should be a-wasting!
Thanks for the brain food. Tom
LT40G28 with mods,  Komatsu D37E crawler,
873 Bobcat with CWS log grapple,

outerbanxer

I'm new to the forum...so take that with a grain of salt. Been lurking for a whole lot of time, a good 6 months now reading about sawmills ever since I slabbed a sweet piece of red oak for a mantle and watched it check into junk because I didn't dry it properly...

I WANT to produce something for a living.  It eats me up inside. I constantly work with contractors installing cherry ceilings, red oak floors, ERC siding, etc...I was sitting next to a general contractor today and we were arguing how to install a $7000 fireplace...

Such thin profit margins....I make 50K per year with full benefits, I drive 2 miles round trip every day to work and work a 8-5 job that doesn't kill my back. I figure I make 37$ per hour with the 401K match and benefits.

If your telling me I can make 35K a year milling and selling what I cut, I'm all ears. I can make the health care and taxes and insurance numbers disappear on good years, and scratch out a living MAKING something people will use to build.

If not, then I'll go on not producing something for anybody...like my current job.

I'd much rather produce that 1400 BF 5/4 red oak that the GC paid $1500 to install.

Some of the posts you guys post are really scary from a "I have to feed my family" point of view.

jd_odell

For my business model (portable), I calculated the daily rate (based on 365 days not daily hours) for insurance, sawmill payment, sawmill operation costs (sawmill maintenance, blade sharpenings, diesel, oil, lube, etc.).  I then established my mill "set-up" fee, which covers the above expenses.  My mileage fee, blade replacement fee (if applicable), and my BDFT rate are pure profit for that day.  Obviously, some days will be more profitable than others.  Sometimes you get the bear, sometimes the bear gets you...

Ron Wenrich

Too many variables to make a blanket statement like this.  One thing that eludes most people is that no two logs are the same.  Its the same for outflow as inflow.  You only can get good data by doing time and motion studies along with yield studies, which very few mills conduct.

If I'm sawing long poplar, my costs are much less than when I'm sawing locust posts.  Why?  Volume per cut, average number of lines per minute, turning time, etc.  Sawing patterns greatly affects yield and sawing time.  Basically, you have to look at production numbers and unit costs.

I have kept production numbers for a good many years.  I do it on a daily basis, and I know that cutting certain products and certain logs are not cost efficient.  If you put things on paper and graph them out, you'll get a bell shaped curve that will tell you which logs are profitable to put into a mill and which ones aren't.  As a mill manager, your job is to figure out which ones they are and get them out of the production stream.  Small logs will kill most mill production as will logs that are too big.

Custom sawyers that saw by the hour only have to know their unit costs and charge accordingly.  Those that saw by production need to be a little more diligent. 
Never under estimate the power of stupid people in large groups.

LeeB

Ron, what happens to those logs that are taken out of the stream?
'98 LT40HDD/Lombardini, Case 580L, Cat D4C, JD 3032 tractor, JD 5410 tractor, Husky 346, 372 and 562XP's. Stihl MS180 and MS361, 1998 and 2006 3/4 Ton 5.9 Cummins 4x4's, 1989 Dodge D100 w/ 318, and a 1966 Chevy C60 w/ dump bed.

Leigh Family Farm

Quote from: jd_odell on February 22, 2013, 12:17:54 AM
For my business model (portable), I calculated the daily rate (based on 365 days not daily hours) for insurance, sawmill payment, sawmill operation costs (sawmill maintenance, blade sharpenings, diesel, oil, lube, etc.).  I then established my mill "set-up" fee, which covers the above expenses.  My mileage fee, blade replacement fee (if applicable), and my BDFT rate are pure profit for that day.  Obviously, some days will be more profitable than others.  Sometimes you get the bear, sometimes the bear gets you...

JD, what was your daily rate you came up with? And your mill set up fee? Also, why did you use 365 and not 351 (gives you 14 days of sick or vacation time)? Just curious...
There are no problems; only solutions we haven't found yet.

Ron Wenrich

Logs taken out of stream goes to a more profitable or a less costly product.  We take ours to pulpwood, firewood, or shaving wood, depending on species or markets.  What we saw for firewood, some guys would run over their mill.  We don't saw logs that make veneer, as they're more profitable.  We don't saw many cherry sawlogs, as other markets are better for the logs than our markets.  I know of loggers that leave stuff lay in the woods that don't pay to haul it out.

We do saw really big logs on occasion.  But, some mills won't pay for anything over a certain size.  Basically, the value for the logs go down due to the increased handling costs.  Production costs go up on big logs.
Never under estimate the power of stupid people in large groups.

bandmiller2

My hat is off to the members here that make a living sawing,its a tough row to hoe.Alas I'am just a "puttermiller" I do it because I love it, if not milling I would be watching Mash reruns or playing with the cat.Milling supports all my outher intrests and is a dandy excuse to have alot of machinery around.Seems strange worrying about every minute at the mill then kill hours at the pub,negitive cash flow. Frank C.
A man armed with common sense is packing a big piece

jd_odell

Quote from: kilgrosh on February 22, 2013, 06:56:32 AM
Quote from: jd_odell on February 22, 2013, 12:17:54 AM
For my business model (portable), I calculated the daily rate (based on 365 days not daily hours) for insurance, sawmill payment, sawmill operation costs (sawmill maintenance, blade sharpenings, diesel, oil, lube, etc.).  I then established my mill "set-up" fee, which covers the above expenses.  My mileage fee, blade replacement fee (if applicable), and my BDFT rate are pure profit for that day.  Obviously, some days will be more profitable than others.  Sometimes you get the bear, sometimes the bear gets you...

JD, what was your daily rate you came up with? And your mill set up fee? Also, why did you use 365 and not 351 (gives you 14 days of sick or vacation time)? Just curious...

PM Sent

Cedarman

What Ron says about big logs yells opportunity for someone with a mill capable of sawing those great big logs.  To me it bears investigating to see if that opportunity is truly there or is a mirage.  A portable mill that makes a circuit sawing what is kicked out.
Opportunities come and go.
Back when veneer mills kicked out all logs with metal, I made great money sawing them.  A full semi load would cost me $200 for logs and $100 for delivery.  When their debarker hit metal or they saw wire that log was kicked out.  I used a metal detector and usually found 95 per cent of the metal.  I still remember that one 20" x 12' veneer white oak that had only one 16 penny nail.  It paid for the other 3000' of wood.  They would also put quarter sawn backing boards of walnut, cherry, WO, ash.  Nice stuff.
Well they finally figured out how to do it themselves and that was the end of that.
My kitchen cabinets are perfectly quarter sawn cherry showing fleck.  Also my wainscoating.  Rare to see cherry with fleck as the wood has to be perfect quarter sawn.

Back to time study.  I just had a request to provide about 800 10 and 12' poles peeled.  We took 2 10 and 2 12' and peeled them noting how long it took to prep and peel the poles.  This gave me a ballpark figure for how much time.  Knowing the wood cost and labor cost let me do a better job making sure we make a good profit on them.  Without knowing how long it takes to peel those rascals, I would be in the dark.  Bidding too high, I lose the job.  Bidding too low and I lose money.
I am in the pink when sawing cedar.

Seaman

WAIT, WAIT <WAIT.........We'er supposed to MAKE money???
Dang, wish someone had started this thread long ago! :'( :'(
Lucas dedicated slabber
Woodmizer LT40HD
John Deere 5310 W/ FEL
Semper Fi

Magicman

Welcome to the Forestry Forum, outerbanxer. 

Quote from: outerbanxer on February 21, 2013, 11:49:31 PM
I'd much rather produce that 1400 BF 5/4 red oak that the GC paid $1500 to install.

Some of the posts you guys post are really scary from a "I have to feed my family" point of view.
Being able to produce quality lumber is the easy part, but even that requires sawing, drying, storage, and support equipment.  Finding, establishing, and maintaining a constant market is one of the challenges.  That along with having a reliable source for securing the proper logs.

An option is keeping your day job and starting a sideline business and growing into it.  That way you can tweak your operation and expand it as your market develops. 

Others will probably offer other ideas, and again, Welcome.
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

Ron Wenrich

I think we had a few guys that got into swing mills and had a circuit to other mills to saw those big logs.  I even thought about doing that myself.  Its a market opportunity, and a good niche.
Never under estimate the power of stupid people in large groups.

Cedarman

I first saw a swing mill at the Richmond trade show just after they hit the US.  It was sawing 4' plus dia. maple  that had big nasty knots.  One UGLY log.  It sawed just great.  It took 2 seconds for me to see the opportunity.  I remembered a local woods that had a couple hundred white oaks that the butts were about 4 to 5' long, 3 to 4' dia. and then went into doubles and triples.  All these butts were laying in a pile.  There were 1000's and 1000's of feet of 4 and 5' clear WO just laying for the taking.  If I wasn't so busy in cedar I would have jumped on it in a heartbeat.
I am in the pink when sawing cedar.

Brucer

Quote from: GeneWengert-WoodDoc on February 21, 2013, 05:33:04 PM
When planning or evaluating a sawmill, we might have two different options that we want to assess.  To evaluate fully, we need to attach some monetary value to your time...your personal time and the production time of a mill.

This is not a good approach. It tries to optimize one small part of the overall process. It may not even be the right part of the process to try to improve.

A better approach: find the bottleneck (or constraint) in the system. In a small sawmill operation there should be only one at any given time. It might be a machine, it might be a process, it might be the people, it might the log supply, it might be the market.

Once you've found the bottleneck, make sure you are getting full use out of it. The bottleneck should never be idle during the work day -- it should always be producing. WARNING: you have go be producing things that will sell in the short term or for which you have a firm order. Don't be making stuff just to keep your bottleneck busy (because if you have to do that, it probably isn't the bottleneck).

Every other part of the system should be geared to keeping the bottleneck operating at full capacity. It doesn't matter if other machines are idle part of the time. It doesn't matter if employees have to stand around for short periods of time because there's nothing for them to do.

Next step. See if you can offload some of the work assigned to the bottleneck. For example, if the sawmill is your bottleneck and you are edging on it, perhaps you could find another way to edge some of the flitches off the mill. But that only makes sense if the sawmill is actually the bottleneck.

Done everything you can? Then step back and look at the whole system again. Have you turned something else into the bottleneck? Then go back to the beginning. WARNING: Just because you made some changes that brought in more revenue, don't assume that's the best way do do things. Always go back to the first step with fresh eyes.

Never forget the goal. You want your business to make (more) money, now and in the future. That doesn't mean rip people off. It doesn't mean let quality go down the tubes. It means to run things better so you will generate more income without increasing expenses or building up inventory.

Quote
So, anyone have a ballpark figure on what a minute extra would cost in their operation?

Nope, waste of time.
Bruce    LT40HDG28 bandsaw
"Complex problems have simple, easy to understand wrong answers."

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