Reality Check for Urban Wood Sawmilling Idea

      What a cool idea — invest in some equipment, saw up "free" logs, and make a tidy profit. If it were only that easy. December 11, 2007

Question
I'm doing some research on getting into cutting and drying urban trees. I've done a little, but I had to outsource the sawing and drying. Logs just seem to come my way. Assuming the logs are free, what kind of cost per foot should I expect to have into the processing if I get set up to do it myself? I paid about $1/bf for the cutting and drying of the few logs I've had done.

I'd be looking at a stationary setup, electric powered mill, at least 36" capacity since city trees are big. I haven't done much research on the kiln yet, but I like the idea of converting a reefer or shipping container.

This would start out as a small operation since I'd be doing it solo, but if I can find a good market for the lumber, it could grow, since there is an abundance of these trees that usually go to the mulcher.

Forum Responses
(Sawing and Drying Forum)
From contributor B:
It's not the gold mine you picture. I think everyone who has ever bought a mill has been seduced by the vision you have. Here is a small sampling of what I have into milling at this point. This is just the larger items and doesn't include chain saws, peaveys, planers, maintenance, marketing, taxes, etc.

I have a grapple trailer to pick up logs. $17K used. You can use cheaper methods to get logs, but the tradeoff is time and labor.
I have a hydraulic mill that cuts 36" diameter by 20' long. $36K new. You can get cheaper mills, but the tradeoff is time and labor. An electric mill will be cheaper from the manufacturer, but you will need either 3 phase power from the electric company or a phase converter, either of which will negate the upfront cost.
I have a Nyle kiln. $8K by the time a chamber is constructed or container modified.
I have a flatbed dually to haul the saw and trailer. $18K used.
I have a Bobcat to move the logs, slab wood and lumber stacks. $14K used.

Urban wood is not free if you have to spend time and fuel plus have the right equipment to go get it. The cost of ruining a blade hitting metal in an urban tree may not seem like much on an individual basis, but you also have to consider the time spent changing the blades and removing the metal. If you think scanning the logs is the way to go, you'll be surprised at how much time you'll waste scanning logs and still not finding all tramp metal.

I'm not trying to talk you out of it. If you have a day job that will subsidize your wood hobby, go for it. But if you think you want to do this for a profit, you'll be better off paying the buck a board foot costs you are now.



From contributor D:
If you have someone who both cuts and dries it for $1/bf, keep him. Some who do urban trees have done quite well selling the lumber to people who have the trees cut on or near their property, even if they don't have an immediate need. Others do oddball stuff like thick mantles, etc. Marketing it is the key.


From contributor N:
Marketing the wood is what it all boils down to. You can spend $15,000 and be in the sawmill business, or you can spend $100,000 real easy. Either way, without a market, you are just collecting wood (that can be an expensive hobby). I have a lot less overhead than most, but I have paid for my choices in a bunch of extra labor.

I would look at the market end long before I looked at equipment and think about further processing of the wood (finished woodworking, buying a moulder). When you pick up yard trees, and I am speaking from experience, no matter what you have in stock, someone wants something else. You are handcuffed by your log supply most of the time to sell only small quantities to hobby woodworkers, use it yourself, or sit on a ton of inventory until you have enough to wholesale.

I am not saying you cannot find a niche and do okay. I've heard rumors of guys who make a living doing what you are talking about. I am also not saying you won't have a ball doing it, whether you make any money or not.

If you can get logs like you think, and have a guy doing you a good job for $1 bft, start selling that wood. All you are out is the other guy's processing fees. If you can turn a profit selling the lumber, stick it in a sock someplace until you have enough money to start looking at equipment. If you find yourself sitting on a bunch of wood you paid to have sawn/dried, that beats the heck out of sitting on a bunch of wood to sell... and a sawmill payment, upkeep (there are surprise things that pop up all the time, and can shoot a week's wages), insurance, etc. Less to worry about makes it more fun.



From contributor J:
If you have a great paying first job, keep it, then buy a mill (so you can support your milling addiction).

Some vital steps for setting up the business are...
What is your market?
What will your neighbors allow (saws running at 6am)?
Transport and lifting equipment.
County regulations.

Shop around to see what is available. See if it's something you can carve out a market for. Do it better than the other guy (and still make money). Find a need and fill it (some shipping companies need pallet wood). We have a manufacturer who buys all his lumber for various packing crates from a local miller. It's the miller's big dollars. How much time can you invest without harming the family life and your first business (the one that pays for your addiction)? Can you build something out of your own lumber, and make it profitable? Someone at WOODWEB was making benches out of his scrap, and selling them. Consider the idea of being properly insured, having workman's comp, and registering your trucks, etc. One insurance claim, and if they find out you're not properly insured, you will pay big time. So, keep the paying job until you work out your business plan, then bite off a chunk and go for it.



From contributor O:
We agree to all the above. You must be a borderline workaholic, have lady luck on your side, and just maybe you will come out a few bucks ahead. Don't rely on this for a living unless you have the connections. You can't produce enough at low profit margins to support a family. It is a hobby that pays for itself at best. Take my word for it.


From the original questioner:
Thank you for all of your bubble-bursting advice. I was due for a dose of reality. I will be doing plenty more research on the market for this lumber. I keep reading that there is no such thing as a free log. If it does truly fall from the sky and land near, but not on the mill, is it free then? Here in a large metro area, tree services have to pay to dispose of wood. There is no such thing as a municipal burn pile. There is a privately owned wood waste specific landfill. If I was conveniently located, all the logs I could handle, probably more, would be delivered by knuckle boom to my location. This eliminates the need for a lot of heavy hauling equipment. I might not even need a truck. I also don't have to spend any time out of the shop going to get these logs.

All that said, I am envisioning selling some lumber as a side component of my business of making furniture out of this wood. There are a great number of woodworkers around here, and there are only a few places hobbyists are able to purchase hardwood lumber. Most of these places are Rockler and Woodcraft, and if you've ever bought any wood at one of these places, you'd be happy to have another option. Retail doesn't even begin to describe their prices. But from what I'm hearing, I should stick with the outsourcing of the sawing and drying for a while. I suppose if I have this location where it is easy for the logs to come to me, it would be easy for somebody to bring their mill to me as well, and a truck to come take the wood to the kiln. Maybe I can do this without any of the expensive equipment?



From Professor Gene Wengert, forum technical advisor:
The idea of outsourcing the processing is a good idea for a start-up venture, as you do not have to invest any capital money before you know if your overall business idea is a good, profitable one, and also has acceptable cash flow to cover the slow times. However, once you know that the idea is feasible, a good business plan followed by capital expenditures would be the way to go. Always finance your capital expenses, so that you will have enough cash for business startup expenses and slow times. You can pay off the loans as soon as money starts rolling in.


From contributor A:
Okay, Mister Negativity is going to weigh in here again. Let me preface this by saying I'm not trying to talk you out of anything, it's just that I've been down the road you're looking. I've fallen in all the potholes and I'm flagging them for you!

Running a shop and selling to hobby woodworkers "on the side" is enough to try a Buddhist monk's patience. It's one thing to have a retail outlet with racks to let them look through to their heart's content and a clerk to check them out if they do decide to buy something. It's a whole different game if you have to stop a productive job and hold some numb-nut's hand while he spends an hour looking at every board, tells you in excruciating detail about a project he built from discarded pallet wood back in ' 72, then buys a $5 cutoff. At the very least, consider having a $100-200 minimum to weed out the time wasters. And no matter how much lumber you have in stock, everyone is looking for exactly the size/species/grade that you don't have. Must be some kind of Murphy's Law.

Also, since you've processed a few logs already, you probably realize that even the best of logs contain only a percentage of FAS material. You could soon be swamped with low grade lumber with no outlet. Hobby woodworkers would rather buy a wide FAS board and cut it into little pieces than buy a 1 or 2C board and cut around the defects. And they have no loyalty. They will burn $10 worth of gas to drive somewhere where they can buy lumber for $10 less than you would sell it to them. Go to any woodworking site and see how many gloats there are about finding cheap lumber. I better wrap up my rant before someone who has gotten lumber from me reads this!

Again, as others have mentioned here, what you propose has been done successfully, but if it were as easy as it looks, everyone would be doing it. I'm not knocking your ideas, I'm just giving you a heads up.



From the original questioner:
Thanks. I know it won't be easy if I do go down that road. I'm testing the waters now to see if I can unload some of the stuff I have had sawn already.


From contributor C:
Think about moving your low grade and tie cuts immediately to whoever pays the most in your area. This will give you cash flow. Find those people who need blocking. Sure it is low value, but you need to move wood. You will never be able to always get the highest dollar for each piece of wood. Sometimes you hit the jackpot, but most times you won't. Use the phone often, research all the markets, and saw for those who are buying. Stockpile only that wood that has the true potential of selling for high bucks - curly maple, burl, perfect clear boards, etc.

Market, market, market. When potential customers call, question, question, question. Find out their needs and do your best to meet them. Learn how to sell that customer. It takes as much education to find and deal with customers as it does to learn the woods and how to saw them efficiently.



From contributor W:
Very good reality check, like what has happened to me. Here's something to consider - about 20-33% of your milled lumber will be uppers, which leaves you with 2/3 of the material as lower grade. That's a lot of funky wood, even if you get some outstanding logs and a 50% high grade yield. A cool mill, Bobcat, 350, planer, and dry kiln will not make you a decent living unless you can sell the stuff. Be smart and listen to what these cowboys are saying. We've paid some costly dues trying to do what you describe. The wood's gorgeous, but somehow that doesn't seem to pay the bills. If you can keep it all in the hobby category until something develops, you'll be a lot happier than investing a lot of bucks and being discouraged.


From the original questioner:
Thanks. This has been very valuable, as I am only in the research mode. It is great to be able to hear others' experience doing what I'm proposing. I haven't spent any money (nor do I have any - I'm a woodworker, after all) on mills and kilns, etc. I've been stumbling on these big logs, hiring others to cut and dry. I've made some beautiful stuff and sold some wood and it's all been great fun. Can I make a living at it? I don't know, but I think it could compliment and supplement my work as a furniture maker - provided I don't go in the hole to continue it until I find a good market.


From contributor I:
I am in the same boat as you… possibly slightly further along. I recently bought a Wood-Mizer LT-28 to support my uncanny knack (or luck) of acquiring decent logs. I always considered making my services available to supplement my income, but not as a full time job. I simply love milling lumber as a hobby. As luck would have it, a coworker (and diehard woodworker) has a fully equipped shop at his home. That was all the incentive we needed to start a small business. We are currently taking the shotgun approach to developing our niche. I have an agreement with a local builder to supply me with logs that I can mill for lumber, and several custom molding and builder contacts that are interested in seeing what we can do. Granted, I haven’t made one singe cent with this mill yet (we are literally starting the market analysis for this business this week), but we are trying to cover our bases on all fronts (milling, hardwood sales, and custom woodwork/furniture). The idea of leaving my current full time job is not even an option. We are simply testing the waters to see what the client base looks like.

Finally, I put together a list of items that I needed to consider before I made the leap of faith (buying a mill), and what I have learned since then:
- Time away from family while developing your business.
- Having the support from your family to do this.
- If the business does grow, what will it take to leave your current full time job to support your new business? For me, quite a bit - no 401K, health benefits, pension. That is very difficult to walk away from.
- Cut for grade… Quarter saw whenever possible.
- Establish firm pricing guidelines and stick to them. Haggling by a potential client is not an option.
- Never believe the stories plastered all over the mill websites. “My mill paid for itself in one year,” etc. Yes, this could and has happened, but it is few and far between.
- Never let your love of woodworking become work.
- For me, woodworking is my way of getting away from it all… a break from work. What is that worth?

Bottom line, it is a risk. Knowing your limitations and mitigating risk is all you can do to cover yourself. Good luck!



From contributor A:
If you still want to try your idea, consider starting with a kiln instead of a sawmill. Something like a Nyle 50 or Nova (formerly Koetter) Timber Tyke. Continue to hire out the sawmilling, or buy green lumber from local sawyers. That way you can provide your shop with lumber and can test the selling of lumber to others without the pitfalls that come with a mill. Also, it's easy to find a milling service locally; it's usually much harder to find kiln services. I'm sure you'd have no problem keeping a kiln booked with others' lumber to round out runs of your own stuff.


From contributor F:
I keep my Wood-Mizer LT40 Super Hydraulic at a guy's property who owns a tree service. Talk about free logs! Sure, you're going to hit nails every once in a while - but then I have a field full of logs waiting for me to cut into boards. Can hardly wait! The kiln would be nice. I plan on building a solar kiln as soon as I can arrange it. You'll need a forklift or Bobcat-like thing with forks. Nice chainsaw. Big truck. That'll get you started. I've been doing this for nine years now. I do seriously need the kiln, though. And a shaper/moulder. That would totally rock.

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