Lumber: Quantity or Quality?

      The debate over speed or grade when sawing for profit. January 29, 2004

(Sawing and Drying Forum)
From Gene Wengert, forum technical advisor:
I hope that most of you agree that the primary purpose of a sawmill (run as a business) is to make money.

So, if I show you how to get 20% more valuable lumber from the same logs by rotating the log better, changing opening face sizes, etc., but it takes you 20% longer to saw, then things are even. Stated another way: If it takes more than 20% longer to make 20% more valuable lumber, then do not do it, as it is non-profitable; if it takes less than 20% longer, then do it as it is more profitable.

Answer: True or False?

Hint: Profit includes lumber value, processing costs and log costs. The example ignores log costs. If you saw 20% slower, you will get 20% more income, have 20% higher processing costs (processing costs are roughly 25% of your total sawmilling costs; the log is 75%) but your log expenses will drop by 20% too.

So, if you have $500 log costs and $150 processing costs normally and saw these logs in 5 hours producing $700 worth of lumber, then the profit is $50. If you change processing, you will take 6 hours to saw the same logs for $180 in processing costs, producing lumber worth $840. The profit is now $160. In the first case, profit is $20 per hour; in the second $27 per hour. So, even if it takes you more than 20% longer, it can still be profitable.

The second point is that when comparing mills, speed is often not a critical factor for profitability; quality of the product is often many times more important.

A similar case can be made for increasing the yield of lumber (by thinner kerf, smaller opening faces, better edging, more cants, etc.). Speed is often misleading when comparing mills.

From contributor S:
I agree. I think... That said, faster with high quality is the best of both worlds. Nonetheless, Gene, you've given everyone something to chew on!

From contributor G:
I like the way you think. Helps promote good business sense, more profit, and conservation at the same time. We need more of this line of thinking. Keep it coming.

From contributor M:
Ecologically speaking, slower with higher quality is best. But not of both worlds. Me thinks.

From contributor H:
Talking of opening face. Is it always better to take the narrowest width to make FAS? Seems like on bigger logs by slabbing just a heavier, even as little as 1/4 inch, the first flitch will be a lot wider?

From Gene Wengert, forum technical advisor:
The opening face width for a good face is 6-1/2 inches wide (minimum width along the length of the face somewhere, with other locations being the same or wider) and the face must be at least 8 feet long, although if you saw parallel to the bark, the face will be as long as the log.

For all other quality faces, the width is 4-1/2 inches and the length is the shortest length lumber that you can sell (often 4' to 6').

From contributor C:
Simply stated it is to get the greatest economic value from every log in the most efficient manner possible. This requires one to study other mills' efficiency and experiment with one's own equipment while keeping good records. Another philosophy of mine is that it is not how big a pile of lumber that you have at the end of the day, but how much money you take to the bank the next morning. Running a business is the science of continually working to get more output with less input. These are simplistic statements. But by keeping them in mind it helps keep one's goal in focus. Forums like this help immensely with filling in the details.

From Gene Wengert, forum technical advisor:
I would rephrase the above comment to: "You can saw all day, but do not make any money until the lumber is sold."

From contributor D:
I made my first sawing last week. A man wanted spec lumber for his house out of his timber. On Sunday we didn't work but people came to see what's going on. "We heard a motor all of Saturday..." Most people around here (Smaland, south of Sweden) have some woods, know "all" about sawmills and milling. The same people have not seen a sawmill with a 1 mm thick band ("where is the circle?!") and not a mill you can pull with a VW Passat! "You can't even drive a Volvo here!" It took some (a lot of) time but they even said that we used all the timber, "no sawdust and not much wood for heating."

From contributor R:
There is a breakeven point where the thinner kerf and slower speeds do not add up to more profitability or profits at all.

Things that can be excluded in the comparison of two mills is the log costs. Log costs are a constant, no matter what type of milling operation you have. Sawing times are relevant.

Profit=lumber value - log costs - milling costs. When comparing mills, you can use the formula lumber value (a) - milling costs (a) = lumber value (b) - milling costs (b). Log costs are the same for both operations.

I've watched the thin kerfs run and I've run some circle mills. Feed rates are about 2-3 times faster on circle rigs. That lowers my processing time by 1/2 to 2/3 that of a thin kerf mill.

My capital costs are higher on a circle headrig. I can make that up by increased production and drive my processing costs down.

Saw time helps to determine and measure processing costs. Only when your increased yields can capture the increased production costs will your argument have any validity.

On every mill, there is a breakeven analysis that should be run and maintained. Logs that are too big or too small or low quality should not be run. They are unprofitable. Kinda blows that conservation theory in the butt.

Okay, now I'll put on my flame retardant suit and let you guys have at me.

From contributor N:
Contributor R, give us some examples to back up your assertions. For starters, log costs are not a constant. In fact, they vary so wildly that it makes this type of comparison very difficult at best. Even if you compare mills based on a per unit of input, the scale used, the type and quality of logs, and the product produced can be very different.

You say capital costs are higher for a circle mill running 2-3 times faster than a thin kerf mill but how much higher, 2x, 3x, 10x, 100x? Are you comparing a band mill with one or two people to a large circle mill with all the equipment, inventory, and manpower to sustain 2-3x the production?

You do not need a flame retardant suit, just some facts to back up your assertions.

From contributor R:
If you buy a log for milling, then the cost is the same, no matter what type of mill you use. Log values differ by grade, location and species, but the same log will cost the same.

Mfg costs consist of labor, fuel, taxes, equipment costs, etc. As you point out, it will vary from operation to operation. Total annual costs can be driven down to a dollar per minute. That varies with annual usage.

The amount of time spent breaking down a log will determine the mfg costs per log, which effects profits. Taking this one step further, you get the $/Mbf for production costs. They will vary by log size, species and grade.

So, if we have a differential of $100/Mbf in processing costs, for example, then the total lumber value will have to absorb that cost. That's very possible in high grade logs, but harder to do in low grade logs.

Then you have production factoring into total profits. If mill (a) produces $50/Mbf less yield but produces 5x the volume, its daily profits may be higher.

Some logs are unprofitable to produce. They will vary on different setups. Some will be too large, some will be too small, some will not yield sufficient material to warrant the slower speeds.

You have to buy your equipment with your log supply in mind.

From contributor O:
Most mills around here are circle mills cutting close to 20m a day. The big mills have the bands.

From contributor K:
You know I always hear how much lumber is saved by running a bandsaw versus the 56 inch circle saw that I run on an old Fisher Davis Sawmill with a 471 Detroit power unit. I have friends who run bandmills and it constantly amazes me that bandmill owners don't want to talk about hitting a knot or two with a band and how it jumps around, cry and complain about dirty logs, frozen logs or sawing hickory. Yes, it's true, I take a bigger kerf, but I run carbide bits and I don't worry about dirt, frozen logs and I can saw hickory as easy as poplar. What a bandmill owner won't tell you is that, yes, they are sawing a smaller kerf, but if the blade is getting dull or they hit a knot, a planer will have to dress the board up more than a circle saw. Also, when I go to saw, I don't want to stand there and wait on a band saw unless I'm offbearing.

From contributor C:
There is very little wood knottier than eastern red cedar. We can clean up both sides to 3/4 when sawing it 7/8. We have planed circle sawn and it takes at least 15/16 to clean up. Mud, a good debarker in front of the blade takes care of that. Good, well-sharpened blades and a well-adjusted mill pretty much eliminates humped knots. And what happens to your circle saw when it hits a ceramic insulator?

There are trade offs to every type mill. It is up to the mill owner to be as educated as possible to maximize the mill's strengths and minimize its weaknesses.

From contributor N:
I did not intend to start another pointless discussion over whose mill is better. I run a Wood-Mizer and find myself bidding for stumpage or logs with the large mills and I confess to not knowing what type of mill they are using. I find they are willing to pay much more for stumpage or logs than I can or wish to pay. Hence I took issue with contributor R's assertion that log costs were the same. Also, if indeed there is some point at which speed will trump the thin kerf and 180 rotation improvements, then I would like to see the numbers.

For example, I get some red oak logs with frost cracks or seams through the logs. With careful placement of the opening face or quarter sawing, I get some very high quality boards with minimal edging required. I suspect that most large mills would not take the time to rotate to keep the crack on the edge of the boards and quickly move on to a better log. So I believe that I am more efficient with my lower log costs and better yields.

So show me there is a better way.

From contributor C:
With mega bucks laser scanning, 3D imaging, etc, the sawyer just watches the logs fly past. Technology is removing a lot of the human factor at the big mills in the need for fast flow through. Also, curve sawing lets them take a crooked log and saw with the grain, getting good yield. We compete with circle mills that saw mostly cants and push lots of wood through the mill. We went into niche marketing with a much higher value added by truly custom sawing to thickness, width and length. We pay the bills, but that does not mean our way is the best way.

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