# a possible profitable situation



## Treecycle Hardwoods (Aug 1, 2013)

I have been on the hunt for some ash logs that will yield 100% clear lumber for a steam bending customer of mine. I was striking out going thru my usual tree company sources so I crossed the line and started calling loggers. The first call I made was to a logger 3 miles from my sawmill. He said he had some lying on the other side of town but they were owned by a much larger mill 3-4 hours north of me near Green Bay WI. The logs have to lay where they are until mid October due to a quantine in place for EAB. I asked the guy if the mill would be interested in selling me the logs to get my needs met and then I could saw the lower grade stuff for them and then ship it to them in lumber form (which is ok) He said he would check with them but it sounded like a good idea because it is never good to leave logs lay for a period of time for risk of bugs, degrade, etc... 

For those who own mills and saw for other larger mills what do you normally charge them for milling either per 1000 or per BF? IF I remember right Mizer does it or has done it before but I can't remember what he got paid to do so. I can make money charging .35 per BF to saw and have a capacity to do 260,000 BF per year sawing 5 days a week (1000 BF per day) What type of terms should I walk away from doing this type of work? 

Greg


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## Kevin (Aug 1, 2013)

I can't really answer because I've never had the desire to have that business model. I bought a circle mill (to *be* the big mill) to cut ties because ties were highly profitable back when I bought it, but then discovered my FBE patch and never set the big volume mill up. I think you have to sharpen your pencil to see what the minimum BF charge you can tolerate is with the profit you want, then try to negotiate a higher BF price with the mill since they'll almost certainly be lower than what you come up with working it out on your kitchen table. In the end, large mills have a max they will pay and you'll never get them to come off of it. You just don't want to be under it so let them make the first offer and then throw your kitchen table price at them and see what they say. It's out of my area of experituse dealing with a larger mill like that but that's how I would probably approach it. :i_dunno: 




Treecycle Hardwoods said:


> ... it is never good to leave logs lay for a period of time for risk of bugs, degrade, etc... ...



Especially ash. This may give you some good negotiaitng room with them because ash degrades faster than most other species.


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## Treecycle Hardwoods (Aug 1, 2013)

I could break even at 17.5 cents per BF but who wants to do that:i_dunno::i_dunno:

I have a really good employee but at the current level of business I am doing I can only keep him employed part time. My fear is that he will end up leaving because of that. He is a really talented woodworker and has taken to the mill very well. I would like to have him work full time and this may be one way I can make it happen. I am with you Kev never really thought of dong millions of BF a year but if I can do 260,000-500,000 and keep a good guy on the team and still have time to do all the fun stuff like I have been I think it is a winning situation 

If any members have engaged in this type of business activity I am interested in talking to you about your experience and what you got paid to do it.


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## jimmyjames (Aug 1, 2013)

For me to mill 1000' myself and stack and sticker it everyday, pay for the fuel, that sure sounds like a ton of work for $350. I would think you'd get burnt out quick doing that, it would be different if the lumber was from logs you own and you would be selling the lumber to the mill, or lumber you'd sell elsewhere.


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## Treecycle Hardwoods (Aug 1, 2013)

jimmyjames said:


> For me to mill 1000' myself and stack and sticker it everyday, pay for the fuel, that sure sounds like a ton of work for $350. I would think you'd get burnt out quick doing that, it would be different if the lumber was from logs you own and you would be selling the lumber to the mill, or lumber you'd sell elsewhere.



I see your point..... I have a guy to run my mill for me and I could pay a cheap laborer as an assistant based on my .35/bf goal and still make money above that to buy some of those crazy quilted logs like you have


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## NYWoodturner (Aug 1, 2013)

jimmyjames said:


> For me to mill 1000' myself and stack and sticker it everyday, pay for the fuel, that sure sounds like a ton of work for $350. I would think you'd get burnt out quick doing that, it would be different if the lumber was from logs you own and you would be selling the lumber to the mill, or lumber you'd sell elsewhere.



I don't mill but I think like Jimmy. I would just suggest you factor in... If you make this guy full time will it cost you more in insurance? Benefits? Workman's Comp Liability? What is the probability of long term? If you make him full time for a couple months and then cut him back, you have a disgruntled unit... Out of that $350 what is left for you? Did you factor in blades, fuel, oil, cost of operating and maintaining equipment to move 1000 BDFT a day etc...? Just sounds like a whole lot of effort for $350.


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## Treecycle Hardwoods (Aug 1, 2013)

NYWoodturner said:


> jimmyjames said:
> 
> 
> > For me to mill 1000' myself and stack and sticker it everyday, pay for the fuel, that sure sounds like a ton of work for $350. I would think you'd get burnt out quick doing that, it would be different if the lumber was from logs you own and you would be selling the lumber to the mill, or lumber you'd sell elsewhere.
> ...



I have thought about most of that except the part about the slow down. That part is a work in progress.


I sell insurance for my day job and know exactly what it will be for the insurance on the workers comp. The general liability is based off sales I would have to dig out my policy to see the exact rate per 1000 in sales but it could be estimated in fairly close numbers based off the current rates I am paying. I have a skid loader already along with a pettibones forklift both can lift 6000 lbs each. Blades are $19 each when I buy 10 at a crack ($7 to resharpen) 

As for the disgruntled employee should things slow down..... I am exploring whether or not it would be appropriate to seek a contract to saw xx number of BF/yr, month with an old college professor. I have kept in touch with him over the years. He has commisioned me to make several pieces of furniture for him along the way. He was a controller at miller/coores for 25 years and has helped me to get the biz going and functioning more profitable with less work. So far everything he has urged me to do has yielded positive results. One of the biggest things he wanted me to do was get talented reliable employees.

If I was successful in getting a contract that would give more structure to the situation that would keep the guy going for a period of time. If I fail to get a contract I would explain the situation to him and see if he was comfortable. He works for me now part time I am fairly confident he would take the full time gig as he has been looking for full time work as it is. That is the main reason I am looking for more work is that I do not want to loose the employee as he is pretty talented and reliable.


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## NYWoodturner (Aug 1, 2013)

I think it is absolutely awesome that you are even considering taking this on in an effort to give a good employee full time work. That is what makes the world go 'round my friend. Hats off to you . 
Your math is based on 52 weeks per year. Does your set up accommodate that in the winter time and did you factor in additional heating costs if your expanding shop hours. Yur up there in crazy cold country 
I hope I am not coming of wrong - I am sure you have thought all of this through. Just trying to help in case exuberance is starting to eclipse clear vision... It happens to really good folks trying to do really good things for other people all the time.


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## Treecycle Hardwoods (Aug 1, 2013)

NYWoodturner said:


> I think it is absolutely awesome that you are even considering taking this on in an effort to give a good employee full time work. That is what makes the world go 'round my friend. Hats off to you .
> Your math is based on 52 weeks per year. Does your set up accommodate that in the winter time and did you factor in additional heating costs if your expanding shop hours. Yur up there in crazy cold country
> I hope I am not coming of wrong - I am sure you have thought all of this through. Just trying to help in case exuberance is starting to eclipse clear vision... It happens to really good folks trying to do really good things for other people all the time.



Combating the cold has been a project in the works for some time. As of may this year my sawmill is indoors. I have been absent from the milling section for the most part because my mill is been occupied with plain ol pine logs making material for the building. So far I have 60-70 logs into the building and another 20 or so to cut and finish things off. The gas and electric service went in this week. I have a few more odds and ends of things to finish before the snow flies again. I will have the mill hooked up to a dust collector before winter as well. Based off the CFM of the collector the air in the milling portion of the building should be sucked out every 5 min. Hopefully that will keep us with fresh air but if not I can always open the doors a bit. 

I always appreciate constructive feed back I like to cast a large net of opinions when engaging in large projects like this. It helps me to catch things I missed and affords me the opportunity to change the game plan to a better one. Thank you much for the input.


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## Mike1950 (Aug 1, 2013)

Being in business for 25 yrs- one thing I learned- and I mean the hard way- bigger is not always better. Employees can be like diapers- necessary but not all that much fun.:dash2::dash2: I would bid high- if you get it- good-you make money- if not it will not be the last opportunity. just my 2 cents worth which is worth about a nickel 99...........


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## gvwp (Aug 1, 2013)

Treecycle Hardwoods said:


> NYWoodturner said:
> 
> 
> > I think it is absolutely awesome that you are even considering taking this on in an effort to give a good employee full time work. That is what makes the world go 'round my friend. Hats off to you .
> ...



Don't count on milling indoors with a gas or diesel sawmill without a large door open. This is exactly where my operation is now and its just not possible with the engine running long hours. Even milling inside a 12000 sq ft building with dust removal the fumes build up fast. I am desperately wanting to upgrade to an electric mill but we have no 3ph power in our area so to do so I either have to generate it or convert it. Both methods are expensive. The latter is ok for 230V but for the bigger 480V means more money to convert. A genset big enough to run everything takes 5-7 gallons of diesel an hour so its a problem. Also keep in mind all that waste. Where is it gonna go? Sawing 260000bf will create an absolute mountain of sawdust and lets not even talk about the slab waste. Its takes up a LOT of room. Markets for all of these things exist but just keep in mind there is a lot to think about.


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## SDB777 (Aug 2, 2013)

I certainly don't mill in the boardfoot count your talking about! I charge $0.345/bf in hardwood on the Doyle scale....
Then again, we are in completely different zones of the country a folks don't make the same cha-ching(or get taxed the same), between here and there. So a grain of salt is necessary.


Good luck in your adventure!!



Scott (it's a hobby for me) B


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## Treecycle Hardwoods (Aug 2, 2013)

gvwp said:


> Treecycle Hardwoods said:
> 
> 
> > NYWoodturner said:
> ...



I was hoping that the dust collector would cycle the air while whisping away the sawdust. If that doesn't work we can always crack a door open. As for the waste thing I have a short term solution that is working well for me but that model may not work long term. If I get backed up I would invest in a tub grinder and make some of the waste into mulch & continue to sell firewood to the campground a mile from the mill. The sawdust is another thing all together. I have some low areas on the property to fill in then after that I was hoping to have a pellet compactor to make the dust into pellets for wood stoves. Conveniently for me it gets cold up here in the winter and some people still heat with wood/pellets. I can trick them into hauling away my waste products by telling them I am giving them what they want at a steal of a deal


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## rdnkmedic (Aug 2, 2013)

*Don't count on milling indoors with a gas or diesel sawmill without a large door open*

Couldn't you vent the exhaust through the roof or a wall? Chimney?


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## Treecycle Hardwoods (Aug 2, 2013)

rdnkmedic said:


> *Don't count on milling indoors with a gas or diesel sawmill without a large door open*
> 
> Couldn't you vent the exhaust through the roof or a wall? Chimney?



Maybe but unlikely the motor moves with the saw head so a tube that could handle heat and be flexible would be needed to make something like that happen. 

That is essentially the principle in a dust collection for the mill. Get several segments of flexible collection hose and run in over head on a cable or old garage door track. Attach one end to the mill and the other to a fixed pipe on the other end. A sawmill across the county from me does it with the old garage door track method.


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## Kevin (Aug 2, 2013)

I wouldn't dare sign any kind of contract with anyone, until you have your feet on the ground in this new type of business model. You'll have your hands full just figuring out what works and what doesn't - and that covers a LOT - along with dealing with the unforeseen delays, breakdowns, and family responsibilities all of which will come at you seemingly at the worst times during the contract. But on top of that, you'll have the contract itself which can hang like the sword of democoles over you while you're trying to juggle all of the added responsibility and pressure that comes with going into a new venture like this *during the learning curve*. 

I might sound alarmist, but what you're planning is not a minor shift in your business strategy but pretty major leap. The volume you're thinking is low, but even if you only cut 1000BF a day, everyday, you're going to see that it's a whole new ballgame dealing with all the ancillary issues. Don't sign a contract until you have your operation running a little while. Mill spec wood if you have to but get at least a month or two of milling your target volume everyday under your belt to see if you can even do it. If you can, try to get contracts because by then you'll know your ability and limitations and can negotiate contracts based on reality and not projections.


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## Treecycle Hardwoods (Aug 2, 2013)

Kevin said:


> I wouldn't dare sign any kind of contract with anyone, until you have your feet on the ground in this new type of business model. You'll have your hands full just figuring out what works and what doesn't - and that covers a LOT - along with dealing with the unforeseen delays, breakdowns, and family responsibilities all of which will come at you seemingly at the worst times during the contract. But on top of that, you'll have the contract itself which can hang like the sword of democoles over you while you're trying to juggle all of the added responsibility and pressure that comes with going into a new venture like this *during the learning curve*.
> 
> I might sound alarmist, but what you're planning is not a minor shift in your business strategy but pretty major leap. The volume you're thinking is low, but even if you only cut 1000BF a day, everyday, you're going to see that it's a whole new ballgame dealing with all the ancillary issues. Don't sign a contract until you have your operation running a little while. Mill spec wood if you have to but get at least a month or two of milling your target volume everyday under your belt to see if you can even do it. If you can, try to get contracts because by then you'll know your ability and limitations and can negotiate contracts based on reality and not projections.



I really like and appreciate your advice Kevin. I don't know how the contract thing is approached by the bigger mills or even if it would make sense for me. I was hoping one of the woodbarter members had worked with a mill under contract to see how it worked for them and what type of expectations they large mill would have for a small guy like myself. Who knows maybe they would call and need 10,000BF as part of a large contract within a week and catch me in a spot where that is not possible without some major overtime. Like you had alluded to family issues and other engagements that were planned may cause lots of stress in situations like that. 

When I reached out to that local logger he rattled off 3-4 jobs he has lined up with this large mill all of which are in the same county where I am at. My gears were turning that maybe there would be trucking savings for them by having the logs dropped by me for milling and then ship the lumber. The urgency of preventing ash logs from sitting to long may also work in my favor. I will explore this opportunity and see where it leads me. I read somewhere once that a small sawmill operation's greatest strength is its flexibility to take the odd jobs that bigger mills can't. That is an opportunity cost I need to weigh carefully before making a final decision on getting into bed with something like this.


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## Kevin (Aug 2, 2013)

Just remember that the milling is the easiest part of what we do. All the stuff before and after is where your money, time, and energy are spent. I don't have to list them for you I'm sure. I'm also sure you'll succeed because you always approach things logically and I've watched you over the past 6 or 7 years whatever it's been and I know you'll figure it out - you always do.


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## Treecycle Hardwoods (Aug 2, 2013)

Kevin said:


> Just remember that the milling is the easiest part of what we do. All the stuff before and after is where your money, time, and energy are spent.



Ain't that the truth. Neither the logs or the mill talk back or complain. They are always on time, and don't mind if you are in a bad mood and if you are they somehow cheer you up and put a smile on your face by the end of the day.


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