Question
I have spent hours reading this forum at my day job, dreaming of the day I can finally do what is my passion (sawmilling). For those who say the young generation doesn't know what quality is, you are partially right, but there are some of us that do. I am under 30 years old, and worked with my father part time on an old Frick handmill for about 15 years. We started with a new state of the art bandmill, but quickly learned cold PA winters and dirty logs make sawing slow and painstaking on such a setup. We purchased a new (used) automatic mill about 2 years ago and it sits unused since the cost to install at this time can't be justified with the economic conditions. We still saw every day off from our regular jobs making pallet material, mine blocking, and some grade lumber.
I told you that to tell you this. It's disheartening to think the lumber industry is falling by the wayside. Just a few years ago we couldn't cut enough lumber, now we almost have to beg to get rid of it. I don't feel sorry for myself, but I would like to think that someone with the determination to get out there on cold mornings, get slapped in the face with sawdust, and make quality wood, could make a half decent living. That's just not the case right now. If I won the lottery today, I'd open a cabinet shop and could make the nicest cabinets around for less than half the price of Lowe's or Home Depot. Things got out of hand with high prices and now we are all paying for it. I would love to find some niche market to do custom sawing for. It would be nice for people to realize the value of small sawmills.
So for anyone who thinks the young guys are messing up this industry, it's just not true. I can talk white oak vs. red oak with the best of 'em, know a veneer log when I see it, and fix anything that breaks. The big problem I see is the export of logs. I think all of us in the lumber industry need to get on the government to disallow this. I know a lot of good people in this business on hard times. Guys who were once bragging profits are now asking how they can stop the bleeding. For the future of the young sawmillers, something must be done, because we are out here.
Forum Responses
(Sawing and Drying Forum
From contributor B:
Stop dreaming and start doing. If getting the government to do something or disallow something else is a prerequisite to you making your dreams come true, you'll die disappointed. You've partly given yourself some good advice - you'd love to find a niche market - good start - now, what are you doing about it? At least you haven't totally given up, you're thinking, that says something - good luck.
I worked in architectural woodshops for about 5 years, and quit 3 years ago to do this full time. It was the best thing I ever did, and I only look back to think I would do it all over again. I am not getting rich, but my business is steadily growing because I do not quit. I started with the last paycheck from my previous job, and was very fortunate for my parents to buy my 5,000 dollar mill instead of an expensive college education and a desk job. I was by no means born with a silver spoon in my mouth, and my parents are now paid back.
Living at home in the very beginning was not possible, and driving 50 miles everyday two ways was time and fuel consuming, so I quickly left on a whim, a prayer, and a dream to make it happen no matter what. Now I have a nice apartment, 7,000 square feet of shop and storage space, large used equipment that is paid for, 40,000 board feet in inventory, and about 75,000 board feet being processed annually, still on that hand crank sawmill. I owe nobody money, and I do not even own a credit card.
I only withdraw salary when I need to buy food or pay my rents, and the rest stays in my business account. I barter whenever possible to save and avoid tax. It's all a matter of how bad you want it and how far you are willing to go. I love the fact that I get to wake up everyday and do what I love and I feel like a millionaire for it. America would be a better place if people learned to follow their dreams.
I think it was a bit foolish to purchase a mill that you could not afford to set up. I run a manual hand crank mill and saw around 500 board feet a day, sometimes 1,000 or more if the cuts are thick, because I can handle it. I will purchase a new mill when the money is earned to step up, and only then. Kind of old fashioned, but it works. Your financial method parallels the way this government is being run, spending money that you don't have. You may have the money to get it, but if you don't have the money to run it, or even set it up, what is the point of making yourself struggle harder than you have to? Working hard with steady growth is the only way.
I agree with what contributor B said, but you need to have dreams in order to accomplish them. If you quit somewhere along the way because it became too hard, then it was not the dream for you.
If you think it's possible to build quality cabinets yourself that are cheaper than Home Depot or Lowes, think again. If you won the lottery and did this, you would quickly lose all that you have invested in.
If I won the lottery I would buy a reliable truck so I can get to work everyday, buy a dust collection system for my mill so I breathe less junk in (wearing a respirator 12+ hours a day is not enough), save the rest, and keep on doing just what I am doing.
My business is doing fairly well considering what is going on out there. Three other sawmills around me have gone out of business in the past year, yet I am surviving just fine. It's all about attitude, knowing how to sell your work, how far you are willing to go, and how hard you are willing to work. If a niche dies out, find another, and never stop being an opportunist. Many people have told me location matters, but 75% of my work is out of state.
Good luck - I don't want to hear about another shut down mill, or that it's not possible to survive. Starting out with large overhead is being in over your head.
I'm throwing in the towel, I'm done. I'll keep my sawmill equipment and maybe saw some logs now and then. But for right now, I'm looking for a job so I can pay my mortgage and my taxes.
Anyone need a sawyer, edgerman, forklift mechanic, hydraulic grease monkey, salesman, entrepreneur, bookkeeper, sawdust shoveler, cant slinging, chainsaw filing son of a gun that can outwork 3 men half my age?
Contributor T, I applaud your hard work, your attitude, your perseverance. I've read through your post a few times and I can't get the numbers to add up. If you are sawing 500-1,000 bd/ft a day, seven days a week, then why aren't you doing more than 75k board feet a year? The total should be more like 175-350K bd/ft.
Also you should realize that in NJ you are able to tap into a city area retail market and the lack of much real log buying competition from other sawmills. Good luck to you and keep going - most people your age don't know how to work.
There are many large close sawmills in PA, but not in NJ, for good reason. The local laws are absolutely ridiculous and out of control. My one month's rent for just my small tiny apartment could pay for one year of property taxes on 30+ acres in Virginia. I am located in a flood zone, and the DEP has given my company numerous total BS issues, which eventually led us to trim 16" off the bottom of our mortan tin building so the flood water can flood through, if it ever even happens. NJ is hell, and I hope to make some money here and get the heck out! I'd rather live a happy life in the middle of nowhere, grow my own food and be self sufficient, than be in a state sized city full of rule and regulation.
Log markets do exist here, with most of the logs selling to northeast PA. Prices on perfect walnut and cherry logs are in the vicinity of $4.50 per board foot in log form right now, so it screws with lumber markets severely. Red oak is even going for $1.30 right now in veneer logs. When these logs are turned into veneer it multiplies the veneer log price by about 30x in order to make the board foot price match the square foot price, so these veneer mills can afford to pay these kind of prices.
The city areas around here hold some very rare woods worth a small fortune. I have done quite a bit of work for Central Park in NYC, and there are 4' in diameter Siberian elms, 5,000+ pound burl logs, and all kinds of other enormous rare species like it is going out of style in there. The problem there is that they are under quarantine so nothing goes in or out, and if it falls on the ground it gets chipped and must return to the ground from where it grew.
I don't see many log trucks moving, but the coal trucks and the coal trains have been running around the clock around here in WV. The chip mill has shut down, so that closes the door to sell the low grade logs.
But I've never had a day job, and somehow I figure out how to get by and pay the bills and I'm 60 years old. Just about everything I have sold is to someone out of state.
Also, in regard to building cabinets, it's ridiculous to think one couldn't make a profit if they had the resources to start. I am not saying it's a foolproof plan either. I built my whole home for under 50K, and it's appraised over 4 times that. 99% of the material came straight off the mill. There's value in small time sawing, and the hardest part for me is that it's not recognized.
We wouldn't have a credit crisis if people would wake up and spend their hard earned money sensibly, and at the same time help out their neighbors. I enjoy reading how others are dealing with these hard times. We are not giving up, but not about to put all my eggs in one basket. I can say this - firewood has been a real hot commodity recently. We sell a pickup load of slabs (full length) for 20 bucks and can't keep enough on hand. Next year might bring about the purchase of a firewood processor to get rid of junk logs and tree tops since we cut our own timber 99% of the time. Good luck out there.
I bought some standing timber this year and so far I haven't found a buyer for it.
I do believe that we will see an increase in the housing market by summertime and this means that furniture, flooring and cabinet manufacturers (who have reduced their lumber inventories) will be scrambling for lumber.
Further, did you know that you can ship 1 ton of freight over 450 miles on 1 gallon of diesel fuel on a rail line, versus about 10 miles for 1 gallon, 1 ton on a highway truck? From an energy standpoint, this means that the government will be encouraging rail growth (and the price of fuel will be doing that also), so RR ties are going to be really big. But, if this is a new market for you, ties do have quality requirements, so do your homework before sawing.
Incidentally, a bit of trivia: What type of motor powers or turns the wheels on a diesel train? Answer: Electric. The diesel engine generates electricity that powers a motor that turns the wheels. Also, did you know that high speed rail lines have ties much closer together than the rail lines that we might have walked on as kids? Finally, did you know that one trucking company has bought two trains? They are able to go coast to coast much cheaper and with only two days longer transit time (and maybe faster in bad weather) than highway trucks.
A friend I know had one of those firewood wrappers and he sold a bundle for $1.50 each to a guy in Chicago who bought $30,000 worth all at once. Also, the logs he uses for firewood came from a log yard were the logs were old and dried out.
Why should I sell my high quality timber here in the US for less than a foreign company will pay? The government should not be able to tell me who I can sell to and who I can't.
It is always tough being in the commodity business. FAS red oak is FAS red oak. If there is too much and supply goes up, then price goes down. Right now, supply outstrips demand by a good bit. Mills will fall by the wayside, loggers will do something else. Supply will come down to meet demand. At some point demand will increase, those positioned to meet demand will make a nice profit. Same goes for other species. The trick is to be ready when opportunity hits.
You have to prepare for the future. If you guess right, you win. Guess wrong and there will be more equipment for sale. That is capitalism. Outwit, outplay, outlast the competition.
Your comment about a commodity market is accurate, but I encourage people to look outside the commodity box and try to make their lumber better through better packaging, better delivery, better MC control, better color, etc.
The sawmilling business has been profitable in the long term, but cash flow is often very poor. That is why I encourage companies in the lumber business and even secondary manufacturing to make sure that they have plenty of cash (which often means a moderate debt that uses equipment as collateral). As you know, the banks, employees, fuel companies, electric companies, tax agencies, etc. ask for their money every month, even if your sales are poor. The bank will not finance an operation based on lumber inventory, even if KD lumber. So, as we probably both appreciate, these wood manufacturing companies must keep a supply of cash for the slow times.
Nevertheless, there are a lot of lumber sales occurring now, and if your lumber is better than the competition's (out of the commodity box), you will be able to sell and also ask a better price too.
Now, some have said to not borrow money and just grow your business from nothing but sweat. Does not work! As an operation grows, at first there are some little steps, then they become large leaps. So much coin has to be earned for each thing and each thing has to produce so much to make it happen. Case in point is me.
Bought a mill in Feb 2001. Borrowed $21 grand. By April people were calling me for sawing and my sawmill was born. Worked 3 days a week and all bills were paid, so I worked 6 and made some coin. But I raised my expenses as well and came to a point where I could not do all the work myself and was wearing out my equipment faster. I was putting back about $125 a week of profit. Just think, in just 4 years I would have my mill paid off and could buy another with cash. Hired one hand so I could make more profit each week. Had to produce more, so bought a larger tractor and edger and production increased. Small steps done, now for the large leaps...
When custom sawing, there is no problem just sawing 500 to 1,000 bdft a day 2 or 3 days a week. But if you want to saw everyday, you will either have to log or buy logs. If logging, you are not sawing. Both take equipment and so now, one or the other is sitting still. Hire help. Now you need more logs to make more lumber to pay for more help and equipment.
So me and one hand saw 2 mbdft a day. That is around $700 a day in logs. Need a 2 week supply on hand, so that is $7,000 in logs lying around. You sell your week's sawing and make $6,300 - $3,500 for logs - $450 (blades/fuel, etc.) - $600 for hand (taxes and such) - $450 equipment payment - $500 transportation cost - $250 rent/land payment = $550 profit or your wages. Do this 50 weeks a year and you save it all, you will be able to buy another piece of equipment and hire another hand in 2 or 3 years. But the steps keep getting larger. When you saw 3 mbdft a day that means you need $10,500 in logs and will hang more out waiting for payment. You will also have to go to tractor trailer load of logs to keep volume up, so more equipment. Now we need to hire another hand and get a larger mill so we can produce 4 to 5 mbdft a day or a tt load of logs a day. Now we have close to $18 grand just laying on the ground and have close to $16 grand out floating around waiting for payment.
Right now I have 5 hands and we produce somewhere around 600,000 bdft a year. There is, at any given time, 10 tt loads of logs, and close to 65,000 bdft of lumber laying on 30 acres of land next to a busy highway. Sales are around $350,000 yearly and owe about that much. If I could get another $750,000 I could reach 2 million bdft annual production and have income around $1.2 million. If I save all my profit it will just take me about 25 years and then I could expand. Or if I could borrow the money and make payments I would expand now and be done with payments in 10 years. If I was 23 and sawing with a manual mill producing 75,000 bdft a year and never married or had kids, how old would I be before I could reach the 2 million bdft a year club? That's a lot of sweat.
Unless you were blessed and born rich, there are very few things that you can just fall into without borrowing money. Businesses are built by borrowing money or selling stock. Most are large before they can sell stock. It takes money to make money and you can sweat all you want, but it will not get you nothing but tired. I am proud to know that a few brave souls are trying it.
Second type of borrowing is for capital expenses. If I buy a planer for $10,000 and it can plane 30 board feet per minute at $.10 per board foot to make S1S, it doesn't take very long to pay off the machine. It also pulls in customers because planing is a service that others may not offer.
This is how jobs are created.
The reason to get an education is that the return on investment is supposed to be high. People put money in stocks to get a good rate of return. Lately not such a good decision. Contributor A and I built our businesses using borrowed money with the hopes that return on investment will be worth it. We both know that there are no guarantees. But I know I love the thrill of the ride. If you are an entrepreneur, you know what I mean.
So meanwhile, down in the mud at my sawmill, the lumber has piled up. There's no point in borrowing money to buy more logs; the market doesn't want what I can produce. The local big mills are buried in their own production. It's all sitting there, the mill managers are hoping it's aging like fine wine and not rotting.
So the financially weak will go bust, the well financed will survive, eventually the lumber will all be sold and the process will start anew. The big difference now is the globalization of markets. Our lumber industry will still be around, but on a smaller scale. Profits will be harder to come by. The small operator will be squeezed. If any of us could really predict the future, we'd make a killing in the stock market and laugh all the way to the bank.
I only work in very special markets that the larger companies cannot handle easily, and this niche market is working fairly well right now bringing in decent money. It is hard work and a lot of sweat, but I am healthy, in shape, and can see an excellent future based on this sweat that you guys seem to fear. Maybe you would rather sweat when the big bills come in and the high dollars are tight.
Basing a business on borrowed money may work for many, but tell me how I could ever do that? No bank out there is going to give a small business loan to a 23 year old with no credit (or even with good credit), based on a $200,000 lumber inventory, and a $15,000 log inventory. The only thing to do is keep growing the customer base, the inventory, the shop, and slowly work into a no-debt company. It is very straightforward, no BS, old fashioned, and yes, based on sweat. Someday this will change and I will have earned a much larger mill, but it will be paid in full, earning profit the very first day it is run.
I know a lot of older business owners out my way. Million dollar cabinet shop owners, tree services, construction workers, architects, home builders, and other contractors. All of them have stories like, I started out in my parents' garage with a pickup and a chainsaw, or washing dishes in a bathtub because they had no kitchen.
Working on sweat to pursue a dream may be one of the hardest ways to do something, but it is the best way to learn how to do the best with what you have, and truly appreciate what you have. It is much more doable than most people think because they are afraid of work, and would rather work on borrowed money with high risks.
A manual mill would never work sawing RR ties at cents per board foot, but this is not the case at all. I am by no means saying everybody should go sell their big mills and buy a manual, but it is possible to grow from a manual mill, and start a successful company. I am well ahead of where I was two years ago, and at this pace alone, I will do just fine.
The opportunities that came along were due to knowing others and traveling and studying the markets. There were opportunities galore, and many I could not take advantage of because I was not prepared to go in that direction or it did not fit in with what I liked to do. You bet you have to put the sweat into it.
I read last night in "Southern Lumberman" that in 1907 the government said production of lumber in the US was just a tad over 40 billion bdft. In 2008 it was 40.9 billion bdft and they are forecasting 35 billion bdft for 2009 and a decline for the fourth year. And I want to expand.
I started to calculate a little of your math, and got lost in the way you phrase the numbers according to their expense right away. If your logs cost about $700.00 per day, and you make your minimum per week of $3,500.00 from selling your lumber, you're only matching your log expense, considering you're working only 5 days a week.
Contributor C, the first mill I ever ran was a 1982 LT-30 which I resurrected in a junkyard, and it had electric forward reverse - what a luxury!
I rebuilt whatever it took on that mill to get it running and functional. He was so happy that I made the thing run, I was sawing logs of his in trade as a kind of barter. He made every log he could get his hands on into firewood, so I was sawing walnut, cherry, osage orange, and other really wide boards like there was not much of an end to it!
It was a small step up from the mill I have now, and I still say that an eclectic forward reverse is a luxury. You hydraulic guys sawing hundreds of thousands of BF per year just to make ends meet are so spoiled!
Imagine if there was an internet 150 years ago and the guys logging by hand with misery whips, axes, donkeys and mules could speak. If this economy keeps getting worse and worse we just might go back far enough to revert to this. Finding sawblades would be hard enough, but who would make the files to sharpen them? Laugh all you want, but who knows!
I have read through contributor A's last post a few times, and I am still a bit blurry on his phrasing.
"That is around $700.00 a day in logs... You sell your week's sawing and make $6,300 - $3,500 for logs - $450 (blades/fuel, etc.) - $600 for hand (taxes and such) - $450 equipment payment - $500 transportation cost - $250 rent/land payment = $550 profit or your wages"
Still sounds like 700 or so a week for logs, and between 6,300 to 3,500 a weeks sawing. Okay, now that I wrote it out myself I think there should have been a period after $6,300, and then a new sentence for $3,500 for the logs.
Yes, I know the numbers are hard to grasp sometimes. We saw hardwoods, southern yellow pine and eastern red cedar as well. In SYP we did over 900 tons of logs which produced around 250,000 bdft of lumber. So if I seem a bit strange or in a bit of a hurry, it is because I have to keep a lot of this in my head. As I walk across the 30 acres I have to gauge the logs on hand with the orders in the office. Then I saw for 8 to 10 hours a day and then work another 2 to 4 hours after we close and everyone goes home. My desire is a lot like Sam Walton's. Just like Wal-Mart, there will be one of my sawmills in every town in the US. Then watch out World!
This has been an interesting read. Here in Canada I don't have access to hardwoods like you guys do in the US. I figured out pretty fast that I was not going to compete with Canfor's 600 million board foot per year SPF mill, so I go for the specialty markets and direct to retail. Thankfully they have not invented a scanner or optimizer that can read cedar, so I can still make a buck or two with sweat and the skilled eye of a sawyer.
Contributors T and A both have the right idea, as both approaches work. The small player has good personal contact with the customer and can cut custom orders; the larger player has the ability to deliver truckload quantities into the wholesale market and can make money on volume. At the end of the day, it’s about what makes you happy.
