Expanding a sawmill operation

      Advice on expanding an existing sawmill operation June 20, 2000

We have a construction and sawmilling business.

We were wondering if anyone has any advice on expanding the milling end of the business. We have put out flyers and advertised some, and would rather mill than do construction.

I've been involved in several startup operations. There are three keys to being successful. You need markets, capital and you need to be to have a dependable log source. Most failures come from the inability to locate sufficient logs at reasonable prices.

Capital will be needed to get your mill equipment to where it can produce at a decent rate. If milling costs are high, it will be hard to pass that down the line when your competition can produce material more cheaply.

Markets will depend on the type of operation you have. It may be hard to expand a hobby mill into a full-blown business if you are trying to cater to the local market. Most large mills cater to wholesalers, which means they have to move volume. The large mills and wholesalers will set the market price, and you will only be able to follow their lead.

Another option is to go into value-added. You can go to kilns, planers, molders, etc. and make a product. In my area, some have gone into log houses, flooring, doors, squares, moulding, even baseball bats. These can be offered on the retail market, especially if they are quality products. You can even offer installation, where the real money is (so I'm told).

Time to get out the calculator and a real sharp pencil.

I think that this question really requires many words and discussions that would be useful only if someone knew more about your business. In other words, you need to hire a consultant.

Perhaps the state forestry people or extension service has an expert, but they are not very common. Private consultants include Joe Denig at North Carolina State in Raleigh, and myself.

The first step is for you to develop a business plan that has your goals, objectives, future dreams, etc., along with some financial data. Many counties have business development people to help; in this effort you would get a consultant to look at prices, markets, etc., but the forest products end of things would only be a small part.

There is a good book on forest products marketing. Marketing Forest Products: Gaining the Competitive Edge, by Dr. Jean Mater, with M. Scott Mater and Catherine M. Mater.
Gene Wengert, forum moderator

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