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Thinking through a startup

Started by Horselog, January 19, 2016, 08:10:18 PM

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Horselog

I posted this towards the end of another thread, but thought I would put my next questions on a  new thread to bump it to the top again.

What are some examples of good places to find lumber markets?  I'm thinking of pretty much anything that might come off a sawmill, from low grade to high.  What are common places to sell to?  What are the least common?  For those of you who have done production sawing, what were markets that you wanted to sell to but couldn't for some reason?

Once again, to all with production experience.  How many guys did you have and what did they do for given production numbers?

Did you hire out all your lumber trucking?

And some general questions:

What were the 3 most important things you did that helped you be successful?

What are some things that you wish you hadn't done?

Lots of questions, I know.  Thanks for any help.
Benjamin Harris
Appalachian Mountains of Virginia
horse_logger@me.com

280 rem

Hi horseleg. I assume that your state would have a lumber or forest association that would have a directory of ppl who are buying commercially. The hardwood market report contains lots of ads, some of those can turn you on to other places looking for what you produce if they are not. Establishing the relationships to move all your product all of the time is the challenge. Your up against long established relationships with big producers than supply large quantities. You will have to produce a very good product and show you can be counted on to supply regularly. Selling lumber in good markets is simple, selling lumber in tight markets is a whole entirely different story, that provides different challenges and changes on your part.
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

280 rem

What level of production do you have in mind?
That will be the determinate of so many factors.
Trucks are an enormous overhead. If you want to sawmill focus your assets on that and let some else else own a truck and deal with that whole set of headaches and legalities. After trial and error you will find good dependable trucking companies to work with.
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

SLawyer Dave

I don't have any sawmill business experience, but I have started and successfully run a few businesses through the years.  I think the number one rule HAS to be that you have enough of a reserve/financial backing to be able to not make a profit for 2 years.  Its great if you can make a profit sooner, but most businesses don't.  The number one reason for new businesses to fail is under capitalization, (they don't have enough money to carry them through until they start making a profit).

Unless you are already independently wealthy, or have at least a high six figure reserve, the second rule is START SMALL.  Make your expenses/outlay as minimal as you can get away with.  Rather than renting the big commercial building on the major thoroughfare, find something a lot cheaper since your customer base is not likely to be "drive by".  Most people are not looking for custom sawing, so paying for prime commercial space will not generally pay for itself. 

If you don't have enough financial reserves to make Rule 1 work, then prepare for that.  Look for a part-time income you can have while you build the business to profitability.  Look for creative solutions that will reduce your expenses.  Maybe you can find a location where the owner/landlord is willing to take lumber or other labor/work in trade for rent. 

Take the time to define your market, so that you know who you are trying to advertise to.  Networking is THE BEST cheap advertising you can do.  If you are trying to do custom sawing for high end construction, then get to know those high end contractors and their foremen.  Take them out to lunch and bring pictures/brochures of what you can do.  Even if they can't put you to work right then, they probably know someone who can.  If you are looking to do custom sawing for landowners, then get to know the foresters and loggers in the area.  Same thing, trying to get them to set an appointment to see you can be a pain.  Offering to buy them lunch so you can see how you can help each other's business is mutually beneficial.  Not only are you looking for them to be a resource to you, make yourself a resource for them.  Just as you are hoping they can refer you work, let them know you want to be able to do the same with them, so make sure you also ask to see examples of what they do.  That way you can better advertise their business, and they will appreciate your interest in what they do.   

I believe 2012 was the first year more people used the internet to search for a business than some form of the Yellow Pages.  That trend will only increase, so make sure you create a good internet presence.  This is one of those areas where paying for someone who is trained and experienced in optimization of websites for search engines can be well worth the cost.  I have seen my own business search results go from middle of the pack, to being in the top two or three, simply by putting in specific "key words" that the search engines prioritize for.  Craigslist and other free advertising sites can't be overlooked either.  My property management business uses only our own optimized web site and Craigslist for advertising properties and ourselves.  Print adds are just too expensive to use anymore, and quite honestly, the return on investment just isn't there. 

Good luck.

Horselog

I'm sure my plans will evolve as I learn more, but I am currently thinking of the 10-12MBF/day production range with a thin kerf band mill.  And I am looking at production milling, not custom milling.

I am currently a logger, and have been for 13 years, so the log supply end of things is nailed down.  I'm definitely making a goal of doing very minimal to no debt, keeping the risk down, and gradually building bigger.  That's what I did with my logging, I started with 2 horses, a chainsaw, and an old beater pickup that someone gave me, to a small fleet of paid-for equipment and sizable yearly revenues now.  The sawmill business is different, and I'm trying to get a handle on the challenges that I will face as I move forward. 

I'm trying to see what types of markets are out there to get into, and then look at what type of equipment will be necessary to supply those markets.  I'm somewhat aware of trucking challenges, but it's good to hear someone else say that it makes more sense to hire it out.

Let's hear more!
Benjamin Harris
Appalachian Mountains of Virginia
horse_logger@me.com

280 rem

That's a fair amount of production! No 2" or smaller band will get you to that production. Maybe something running 4" or wider. A circle mill would and if you want thin kerf open the log with a circle mill, then send to a resaw. You could start with the circle mill and add a resaw later as you can afford it and need it. Starting small and working your way up is great advice. But be careful in that as well. replacing equipment has lots of cost in depreciation and reconfiguring. I have been faced with that recently. Some things are better bought that with fit your needs as you grow, not need to be replaced to allow you to grow.

You had stated earlier in the other thread to try to talk you out of this.......heck no. Jump in! The world is full of people always talking about what they should have done.
Want to learn about something........put your money into it.....you'll learn it real quick
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

280 rem

What kind of wood and the quality of it will dictate the markets you need to start looking into. Produce good quality and prove to be a consistent producer of that quality, don't trying pushing below quality and below specs on your buyers. Is how you'll have build to relationships with them. Unfortunately you'll find the big suppliers get catered to a lot of times and they can market stuff you might not be able to. As a smaller producer I have focused on high quality and had good luck with that. Attention to quality has gotten me some orders for things that I can get a premium on, that makes a huge difference
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

YoungStump

 Market wise the grade market is probably going to be the biggest market to get into for your better quality material but then you need a place to go with your lower grade from low quality logs and the center of the logs, railroad ties and pallet cants are probably two of the biggest low grade markets.
Right now grade is pretty easy to sell but that can all change real fast, producing good quality lumber and developing a good relationship with your buyers will go a long way towards helping you sell lumber when the markets tighten up vs. being one of those guys that flip flop all over the place looking for a couple pennies a foot more.
Echo Enterprises 45HD2 production series band mill, Cook's Edger, sawing mostly pallet cants, rr ties, and grade lumber.

Ron Wenrich

Our typical run was to cut grade off the side cuts, and when you get to low grade, put it into the largest size of blocking you can make.  You need a low grade market.  Ours was to make pallet stock.  Typically it is now a 3½x6.  You need to separate by length.  We separated our logs by species and length, so that helped us all the way through our production.  Ties are more profitable for the dense hardwoods.  We also cut switch timbers, which are 7x9 10'-23'.  The long ones pay the best and 10' ties are often worth more cut back to a 8'6" tie.  Do the math.  You cut your custom orders out of the low grade unless they're paying more.

If you are doing any sort of production, you can cut for several markets at one time.  Typically, we would make a call and find out what a buyer wants.  Some of our buyers were larger mills.  They have kilns and markets we can't service.  They could sell more lumber than they produced.  We also sold lumber to a cut up shop.  They pulled from several mills and sold panels to furniture and cabinet shops.  Those companies had moved away from buying lumber.  We also sold to a few brokers.  Usually their grade or prices wasn't as good.  Sometimes we had to separate the grade and sometimes there were several thicknesses.  You'll make more money cutting 8/4 than 4/4, but 8/4 tends to be F1F & btr.

We also had a niche market in casket lumber.  We sold mainly our 8' stock that was basically a sound back select.  We pulled that from our production stream and put a lot of clear face #2 Com in the mix.  It is easier to cut, from a grade standpoint, and doubles the money of 2 Com.  You may even want to get into flooring, which is basically a 3 Com.  But, don't cut for it.   Again, you need to do the math. 

To be successful, you need to know how to cut for your customer.  Give them a quality product, and you won't have problems getting rid of grade.  My cutting was consistent and I had buyers come to me.  When the recessions would hit, mills would drop out of business.  Their buyers came knocking on our door.  Many were lucrative markets.  Don't squeeze grade by throwing 2 Com in the F1F pile.  They'll accept a bit, but if it's too much you'll be left out.  Also, make sure the lumber is well trimmed.  It doesn't need to be double end trimmed, as there is good lumber in those longer ends that get figured into the grade.  Don't skimp on thickness.  I cut my blocking 1/8" over and rarely had rejects in ties.  Know the specs and exceed them.  Its as good as buying insurance.

We also didn't carry any debt.  We started out with used equipment, some of it antique.  We went through our learning curve on that, then progressed to better equipment.  Go to a production mill and see what they're running.   They're your competition.   The higher your production, the cheaper your mfg costs on a $/Mbf basis.  I run a hand circle mill when I started and got 5-6 Mbf/day.  You can buy those for about $5k with power.  If you must carry debt, you now have a creditor that you need to service monthly.  That is what often takes mills out during a recession.  I don't think you'll get the type of production you want on a thin kerf mill.  You'll need 2, which means even more manpower.  The large production mills breakdown on a circle mill, then use wide bands for resaw.

We had control from stump to green lumber.  You seem to have the log buying end down.  Most of the production mills have their own crews.  Many also buy gatewood.  Since we did our own logging, we had our own trucks.  You can hire the trucking out.  We found it cheaper to haul wood both ways.  We had a load or 2 of lumber loaded on the log trailers at night.  The next morning the trucker took that to the market, then went to the woods for a load of logs.  We actually hired a couple of part time guys to fill in when we had extra hauling.  I've also been in situations where we would contract out all the hauling.  You just have to decide whether you want to be in the trucking business.  Ours started as a trucking business that ended up being a sawmill. 

I was a contract worker.  I worked by the Mbf, not the hour.  I also worked other mills when the opportunity came about.  We also contracted out our maintenance work.  The advantage was that the client got a higher quality of worker, which they paid for.  Our maintenance was done by a guy with a mechanical engineering degree.  He built equipment and would make whatever I needed.  These are the guys that are professionals.  Higher pay but better results.  The rest of your help you have to treat like family.  Pay well, but put them on a bonus system for production.  A guy won't mind busting his butt if he gets paid for it.  Otherwise they won't see any reason to work harder.

We did 2 things that we weren't successful at.  One was cutting on speculation.  We cut all our white pine into cabin stock.  That worked well when the market was hot.  When it cooled down, we ended up with a yard full of stock.  That's yard space that could have been better used.  Same went with cutting lumber and thinking we would get a customer for it down the line.  You can sit on that stuff for years and have a bunch of degrade while waiting.  Our philosophy turned to getting it in and out in the least amount of time.  Logs were fresh and the cash flow was better.

We tried to do some kiln drying using a vacuum kiln.  We didn't have much success with that.  Labor intensive and a different type of customer over the green markets.  Specs were even tighter.  You almost need another crew to do just that portion.  It could be profitable, but I wouldn't jump into that portion right away. 

Our mill production was 2½ MMbf with 5 guys.  We had 2 logging crews.  One was a single guy, the other was 2 guys.  We had 1 tag axle log truck that loaded logs.  Also had loaders on the landing.  We usually ran 2-3 truckers.  They would truck veneer, logs and lumber.  We also had a mechanic, at times.  They also would run the firewood processor if there was no trucking to do.  We bought most timber from consultants.   I believe they ran about 3 MMbf of timber and even bought a few pulp jobs.  The 2 man crew easily did 2-3 trailerloads a day.  Cut by hand, and one skidder.
Never under estimate the power of stupid people in large groups.

YoungStump

Quote from: 280 rem on January 19, 2016, 11:27:28 PM
What kind of wood and the quality of it will dictate the markets you need to start looking into. Produce good quality and prove to be a consistent producer of that quality, don't trying pushing below quality and below specs on your buyers. Is how you'll have build to relationships with them. Unfortunately you'll find the big suppliers get catered to a lot of times and they can market stuff you might not be able to. As a smaller producer I have focused on high quality and had good luck with that. Attention to quality has gotten me some orders for things that I can get a premium on, that makes a huge difference
Good advice. Us smaller guys can't compete in quantity so it's extra important to keep our quality up there.
Echo Enterprises 45HD2 production series band mill, Cook's Edger, sawing mostly pallet cants, rr ties, and grade lumber.

280 rem

Yes, exactly. And more of a challenge to keep the quality up as you increase quantity.
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

Horselog

Quote from: 280 rem on January 19, 2016, 11:17:27 PM
That's a fair amount of production! No 2" or smaller band will get you to that production. Maybe something running 4" or wider. A circle mill would and if you want thin kerf open the log with a circle mill, then send to a resaw. You could start with the circle mill and add a resaw later as you can afford it and need it. Starting small and working your way up is great advice. But be careful in that as well. replacing equipment has lots of cost in depreciation and reconfiguring. I have been faced with that recently. Some things are better bought that with fit your needs as you grow, not need to be replaced to allow you to grow.

You had stated earlier in the other thread to try to talk you out of this.......heck no. Jump in! The world is full of people always talking about what they should have done.
Want to learn about something........put your money into it.....you'll learn it real quick

Now I'm certainly no expert and I'm not speaking from experience, but based on the research I've done there are several thin kerf head rigs, most notably Wood-Mizer's largest and Baker's stationary (Baker even has a 2" band available) , that can achieve at least the 10MBF/day number.  This is of course with the proper support equipment.  I am planning on touring a number of different setups with different types of mills and trying to see first hand what is required to get those production numbers.  It may be that with a thin kerf head rig you need more manpower or something to get those higher numbers.  Now I stand to be corrected on that, I'm just repeating what I've heard.

It does appear that you can get into a decent circle rig significantly cheaper than a thin kerf band rig.
Benjamin Harris
Appalachian Mountains of Virginia
horse_logger@me.com

280 rem

Where have you seen claims of 10,000'/day with a WM or baker? There is no way a either of those could produce that kind of footage sawing grade lumber properly in 8hrs. The problem wouldn't be moving the wood, it's that 30hp electric pushing a 1.5" band can only cut so fast, the advantage would sure be with the baker at 50hp and a 2" and that it's built like a tank and would endure that use longer. But a 2" or less band could only be fed so fast before you would get inconsistent cuts through knots and other hard spots in a log and be ruining some lumber. I know of several thin band rigs in production, real life, they get no where near that level of production.
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

sandsawmill14

im with 280 on the production numbers those mills may have cut that one time but the average over year wont be over half that.   :)
hudson 228, lucky knuckleboom,stihl 038 064 441 magnum

Ron Wenrich

Look at it another way.  What size of log do you think you'll average?  For argument's sake, let's say that it is a 14", 8' log.  That will yield 70 bf of lumber.  To get to your 10 Mbf/day, you'll have to cut about 150 of those per day.  If you consider an 8 hr day with no downtime, you'll end up having to saw a log in a little over 3 minutes.  That is from the time you load a log until you load the next log.  Chances are you will never run all day without any downtime.  You have to change blades, move material, etc.  That reduces the time further.  If you think you can do that on a consistent basis, then go for it.

Customsawyer runs those kind of production numbers that you're looking for, and he does it with a thin kerf mill.  He cuts long crane mats and his final product is generally a 12x12 or some other heavy timber.  Your business plan is not the same as his.

Looking at Baker's stationary mill says that it can get 6-9 Mbf/day with 3 men.  Woodmizer has an up to 1,050 bf/hr on their LT70.  You're going to be hard pressed to get your production numbers with a single thin kerf band.  If you really want to go the band route, I think you're looking at a wider band.   I saw a Sanborn for sale, which uses a 5" band.  Production is said to be 7 Mbf/day, by owner and seems realistic.

Never under estimate the power of stupid people in large groups.

sandsawmill14

i know of a vertical band head rig with either a 7 or 8" ( i forget) that can cut 15-20mbdft a day but the logs are squared on a circle mill and only the cants go through the bandsaw it also has a 200 hp motor running it but that is still running 2 mills.  if you could get a job like customsawyer you might get to your number but thats the only way   a 12x12 timber 40' long has 480 bdft so they would add up pretty quick :)
hudson 228, lucky knuckleboom,stihl 038 064 441 magnum

Ron Wenrich

That isn't a band headrig, that's a band resaw.  It is typical configuration in mills using a resaw.  But, with those wide bands comes a millwright to take care of those bands through sharpening and setting of the teeth.  You might be able to send them out, but there is considerable costs in doing so.  It all comes out of mfg costs.
Never under estimate the power of stupid people in large groups.

Horselog

Thanks for all the experience shared here, that's exactly what I'm looking for.

To clarify, I'm thinking I would do (4) 10 hour days a week, and my logs tend to average in the 18" SED range.  That's based on measuring lots of logs.

I understand the basic principle of a resew, that it handles squared cants.  What exactly does it do or how is it set up different than a primary breakdown head rig?

I'm hoping that visits to a number of mills will help me gain more realistic ideas of production numbers.
Benjamin Harris
Appalachian Mountains of Virginia
horse_logger@me.com

ETSawyer

Resaw wether it be a line bar or horizontal is set up so that cants are fed but to but. Production being there is no dead time giging back from a cut. As one cant is being sawn you are turning/setting up your next cut. Board and can't separation is done automatically on most systems as is returning it to the saw. After this basic idea how cants are sent to machine from head saw and how products leave are really whatever works with what you have.

Some mills send all logs to resaw while some send grade to resaw and saw ties and 4x6 on circular head saw.  If running a circular head saw band resaw will increase yield because of thinner kerf.  A resaw added to a circular mill is a good way to increase production and yield, just starting out it is also another mill with its own maintaince and operation costs. Many resaw a can be added to an exsisting mill operation down the road once markets and capital merit   Hope this helps and good luck!

customsawyer

Prior to my cutting the big timbers I was cutting all grade lumber and would get in the 8000-9000 bf/day level of production. Now to get that level of production there were a few things working in my favor.
1. The logs were 28" dia. or larger before they came to me.
2. I took the grade down to a 7 5/8X8" cant that was then split in half for two 3½" pallet cants or a 7X9" tie.
3. All of the logs were cut to length when brought to me.

One of the things that I do that helps my production is to set up my mill to where I don't have to sort the logs. I have 11 different lumber sorts coming off of the end of my roller tables. This lets my men stack what ever I cut. One of the biggest waste of time is sorting logs so if you can set your mill up to where you never have to sort your logs it will help production.
Two LT70s, Nyle L200 kiln, 4 head Pinheiro planer, 30" double surface Cantek planer, Lucas dedicated slabber, Slabmizer, and enough rolling stock and chainsaws to keep it all running.
www.thecustomsawyer.com

Horselog

Quote from: customsawyer on January 26, 2016, 04:16:30 AM
Prior to my cutting the big timbers I was cutting all grade lumber and would get in the 8000-9000 bf/day level of production. Now to get that level of production there were a few things working in my favor.
1. The logs were 28" dia. or larger before they came to me.
2. I took the grade down to a 7 5/8X8" cant that was then split in half for two 3½" pallet cants or a 7X9" tie.
3. All of the logs were cut to length when brought to me.

One of the things that I do that helps my production is to set up my mill to where I don't have to sort the logs. I have 11 different lumber sorts coming off of the end of my roller tables. This lets my men stack what ever I cut. One of the biggest waste of time is sorting logs so if you can set your mill up to where you never have to sort your logs it will help production.

What mill do you have?  What support equipment do you have? Resew? Edger? Lumber handling?

What exactly do you mean by "set up my mill to where I don't have to sort logs"?  Are you referring to a location of the actual sawmill?  Or by "mill" are you referring to your general operation?  Or something else?

How many men was it taking you to reach those numbers, and what did each do?

Are you cutting hardwoods?
Benjamin Harris
Appalachian Mountains of Virginia
horse_logger@me.com

customsawyer

I run a LT70 with the log deck and a edger with a back-hoe for moving logs and lumber. There is several dead roller tables to help with the lumber flow. I have myself and two men. I run the mill, one man feeds the edger and the last stacks the lumber. When I am talking about setting up your mill I am talking about the whole operation. You will have to sort the logs by species but set your mill up to where you don't have to sort your logs by length. Even now cutting 40' timbers I have room for every length of lumber from 6'- 16'. I also have it set up to do one type of oak and pallet lumber. This lets me maximize my blade life.   When I put the blade on and it is the sharpest I will cut my more difficult to cut logs. As the blade dulls a little I switch over to something like Sweetgum or Sycamore. In cutting grade this would let me get over 1000 bf per blade. Now in cutting the big timbers I am able to get over 2500 bf per blade. The only way to get the numbers you are looking for is to keep the blade in the log. So look hard at setting up your operation to where you don't have to walk away from the controls very often. When I was cutting grade I would load up the log deck with enough logs to cut till lunch. At lunch time I would dump slabs and reload the log deck. Hope this helps.
Two LT70s, Nyle L200 kiln, 4 head Pinheiro planer, 30" double surface Cantek planer, Lucas dedicated slabber, Slabmizer, and enough rolling stock and chainsaws to keep it all running.
www.thecustomsawyer.com

280 rem

What species were these 28" diameter and bigger logs? What were the lenghts of them? How long was your log deck? Were you bundling the slabs or just accumulating a half a days worth somehow? Were the logs debarked?
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

customsawyer

All hardwood and at that time lengths was from 8' to 16'. Log deck is 20' long. If the logs were shorter than I would stack them two or three deep on the log deck. My slabs land on a home made set of forks that can be picked up on the front of the bucket of the back-hoe. Logs were not debarked.
Two LT70s, Nyle L200 kiln, 4 head Pinheiro planer, 30" double surface Cantek planer, Lucas dedicated slabber, Slabmizer, and enough rolling stock and chainsaws to keep it all running.
www.thecustomsawyer.com

280 rem

What kind or brand of log deck do you have? I've found that logs that size lowered my max production. Length helps greatly, but logs in the 20-24" diameter range was where I found the max output. As logs got bigger than 25" those wide cuts slowed feed rate, they were harder to handle turning, and no matter how well you thought you had them trimmed up, you found wide spots flared areas, or what not that would give you grief.
We saw walnut lumber for the same reason Willie Sutton said he robbed banks, "because that's where the money is"

Select 4221E, baker edger, cat 908 loader, Jd 548E, timberjack 230d, hood 7000 loader.

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