 |
|
Converting Hardwood Logs to Kiln Dried Lumber
Fall/Winter 1995 (Volume 2) edition of the S&W Report.
|
Adding income to our sawmill - is there money to be made? How marketable is kiln-dried lumber?
It seems that the time has come to take a serious look at these two questions. First let’s look at the industry structure and see if perhaps the small band sawmill owner/operator can fit into this old and established marketplace.
Traditionally and presently, the lumber drying industry is largely dominated by large enterprises and corporations, which process large volumes of lumber.
Looking at the market from a financial standpoint, the hardwood lumber prices have always been stable, but they are priced in U.S. dollars, and therefore the pricing varies due to a fluctuating exchange rate. Presently, at 74 cents our products are very saleable to the U.S. and foreign markets.
In order for us to understand how the bandmill owner/operators may be able to fit into the marketplace, it is important that we realize how the lumber processing industry and marketplace is segmented into categories, and how each represents a processing or value added point.
The following is fairly descriptive of how the market is structured and where each party fits within the process.
Timber Harvesting:
Selecting the trees to be cut, felling them, skidding out to a landing site, and bucking the logs to length in preparation for processing at the sawmill.
Log Broker / Trucker:
Purchasing quantities of logs from the various woodlot owners and trucking them to their own or someone else’s large sawmill operation.
Sawmilling of Logs:
Storing an inventory of logs and then milling the logs into ‘green’ lumber of various grades and dimensions
Kiln Drying:
Unloading purchased green lumber, stickering for predrying and kiln drying, removing the moisture from the lumber, and grading and repackaging the kiln dried lumber for distribution.
Wholesale Distribution:
Accumulating a variety of species, dimensions and grades of ready-to-use KD lumber for sale and distribution to the re-manufacturing and product manufacturing market.
Re-Manufacturing Market:
Transforming rough-sawn kiln dried lumber into trim, molding, components, blanks, squares, and turnings.
Product Manufacturers:
Manufacture and assembly of lumber and hardware parts such as hinges, knobs blanks, turnings into finished products like chairs, tables, cabinets, toys, shelving, carvings.
Retail Distribution:
Retail stores that sell the fabricated, finished, and painted products directly to the consumer.
By looking at that processing and marketing structure, you will see that there are many operations and financial transactions that happen before the oak tree turns into a piece of furniture a consumer can buy. All these transactions between various processes means overhead and machinery costs, raw material processing costs, trucking expenses, and profit mark-ups for each and every enterprise or person involved.
Back to top of page
Portable Band Sawmill Acceptance
For many years now the portable band sawmills have come into the marketplace and have definitely become an accepted way to harvest and process lumber from the private woodlot. Resale prices are high, which indicates there is a need and justification for the machines.
However, the best any one of these machines can do is cut green lumber. We all know that green hardwood cannot be used by anyone in the hardwood fabrication and processing industry until it is dried to a state where the wood and cell structure will not crack, shrink, move or twist.
Before hardwood lumber like red oak, ash, walnut, basswood, becomes useful to anyone, it must be dried down to six to eight per cent moisture content before any furniture maker can turn it into a stable product.
Perhaps, manufacturing kiln dried limber is now the next logical step for a bandmill owner/operator to add value to green lumber that is already in his hands and over which he has control to perform further processing.
This is where the portable band sawmill owners and operators can find a niche in the marketplace. This is where he can make additional money and add value to his products by kiln drying the green hardwood lumber before it leaves his gate or back door.
Many people believe that the bandmill owners should be operating in a structure and format that is called “vertical integration.” By eliminating each person/company’s mark-up on that “processing” ladder, a bandmill owner/operator can convert a log to a ready-to-use product and eliminate quite a few middlemen.
Profits
Now we need to look at that big and important question. Is there money to be made in sawing hardwood logs and kiln drying the green lumber to a finished ready-to-use product?
It is a question answered before any one of us can make the decision to put down dollars for more equipment. We must all feel that an income will be generated and that at the end of the day there will be some profit left over.
What is profit as it relates to the lumber industry? In its most simple form, it is the money left over at the end of the month or year after all the bills have been paid. However, it can also be said, that it is the result of a quality product processed efficiently and marketed properly.
There are two ways of generating increased profits in an operation. One method is to become more efficient by producing more with the same equipment and people, and the other method is can be to add value to your existing lumber by kiln drying your hardwoods and retailing it at a higher price to other people and businesses in your area.
Available is a multitude of ways and means to arrange equipment and people so that incomes are generated. However, it is very difficult to put down on paper a direct equation of how much money can be made in sawing and drying hardwood lumber. That is a question only each individual can answer.
Back to top of page
Table 1 and 2 show what the various industries and market are receiving (fall 1995) for their products at each stage of production process as it gets closer to the consumer who, actually buys that cupboard, table, chair, or wall plaque.
Keep in mind that prices may differ from area to area.
|
| Table 1: One Inch (4/4) Red Oak |
| Grade |
Bush Run Delivered
(not scaled) |
Green Sawn 4/4 Lumber |
Wholesaler's Selling Price of RS KD Lumber |
Retail at Lumber Yard - Dressed Four Sides (D4S) |
| Select or Better |
$600 |
$1,630 |
$2,400 |
$5,200 |
| #1 Common |
$600 |
$1,200 |
$2,080 |
N/A |
| #2 Common |
$600 |
$750 |
$1,480 |
N/A |
| All dollar values are in CAN $ per thousand board feet (less planing for the manufacturer) |
|
| Table 2: One Inch (4/4) White Pine |
| Grade |
Bush Run Delivered (not scaled) |
Green Sawn 4/4 |
Wholesaler's Selling Price of RS KD Lumber |
Retail at Lumber Yard - Dressed Four Sides (D4S) |
| D-Select (clear) |
$350 |
$1,400 |
$2,350 |
$3,500 |
| Knotty Pine |
$350 |
$700 |
$1,050 |
$1,700 |
| All dollar values are in CAN $ per thousand board feet (less planing for the manufacturer) |
|
Back to top of page
Is Kiln Dried Lumber Marketable?
By selling green lumber hardwood lumber, you are probably limited to a few buyers that process and kiln dry larger orders and volumes of lumber.
With a read-to-use product that a woodworker, factory, retailer, wholesaler, furniture fabricator, etc. can use, you can effectively market to many more people and businesses.
However, in order to operate effectively and profitably within the wholesale hardwood lumber industry, the following product requirements must be met in every load of lumber sold:
|
| Grading |
- Grading to National hardwood Lumber Association Rules.
- Fair and consistent (non-biased) grading practices. |
| Dimension Uniformity |
- Accuracy of board thickness and width to tight tolerances.
|
| Cosmetic Appearance |
- Good and consistent colour throughout the package or load.
- Lack of mineral stain and other stains.
- Clear of sawdust residue.
- Uniform moisture content of six to eight per cent or customer’s specific MC request.
|
Lumber
Packaging |
- Lumber packs tightly banded and protected from the sun and rain.
- Packs 42-inches wide if sold wholesale.
- Lumber sorted by length and grade.
- Lumber packs labeled and identified.
|
|
You have probably heard the statement that the three most important factors in real estate are “location, location, and location”. There is also a phase in the lumber marketing industry. The three most important words in the lumber selling industry though are “presentation, presentation and presentation”.
Marketing to end users directly may involve taking advantage of publicity, doing direct mailings, developing customer lists, and organizing specific marketing efforts. For instance, when selling small orders, you do not always have to grade the kiln-dried lumber.
How well the lumber looks and how well it is packaged says a lot about the person who has milled and kiln dried that product.
The portable band sawmills are capable of producing lumber that almost looks as if it has been through a planer. Customers appreciate that very much.
The better the grade of the lumber, how much better the lumber looks, how more professionally the lumber is packaged, al lends in increased profits and you receiving more money per board foot.
|
|
|
|
|
