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I fell into a sawmill opportunity and would like some advice1/17
My best friend works for a guy producing fence panels. The owner has decided to offer to buy lumber from my friend if he can get a mill going. My friend lacks capital and approached me to partner up in this business. I am wondering how lucrative this sounds and if anyone has any advice they would like to share.
If we can actually produce straight lumber
According to the WI Forestry report white oak can be had for around $250 per MBF
What are your opinions of this opportunity? I am 24 and have no experience sawing. I have worked hard labor in the oilfield but that has dried up. If you were in my position would you invest a chunk of your savings into this?
Also would it be safe to say that a bandmill is by far the best option for 1 bys?
Thank you for your thoughts.
It could be a good start in a good industry. I think a bandmill is the way to go for this kind of thing. Does the lumber need to be dried? It probably does but that is a major consideration because that could mean a kiln and a sawmill. If air dried is acceptable, then you need a pretty good inventory. But still can be a good start. Of course, there are all the usual business concerns such as how stable is the customer and how reliable is your partner, how is log supply etc. etc. etc .
Thanks for the response. The lumber does not need to be dried at all so that's a definite positive. The owner has been in business for 9 years I think he said. and he said he spends about 400k in lumber a year. He came off as reliable and established to me. The DNR report on white oak shows a lot of trees in my direct vicinity.
I don't suppose there is anyone in western WI on here that would like help running there mill for a day or two?
Sounds like you need to work out a business plan. What about all the support equipment? Can you get that many logs? What if you get a rainy spell and no logs show up? What will you do with all the slabs and sawdust? Who buys the loader and forklift? Other equipment like a straight-line rip? Have you considered buying cants from another mill? What grade will he require? What will you do with all the low grade he doesn't want? It might be that you fell into something, but it may not be a sawmill opportunity. You have a lot to work out!!!!
Thanks for the thoughtful reply.
Support equipment- I have a 2.5 ton 20 ft flatbed so that should come in handy. I'll need a tractor with forks and obviously the mill. Probably a bunch of little extra things too.
Logs- This is the biggest question mark for me. I really have no clue. There are several local logging companies but Idk how to go about acquiring logs so gonna have to get in touch with them. There's a lot of tree services and firewood outfits to so those should be good leads.
Rainy spell- Getting ahead of production would be the goal here. Staying maybe 3 weeks ahead on lumber and keeping a month of logs on hand maybe?
Slabs and sawdust- no clue. There's a big mulcher nearby maybe they would take free slabs?
Straight line rip- don't know what this means so I'll have to research it.
Buying cants- I really like the sound of this. Could you ballpark on hat someone might pay for cants compared to logs? If it's close enough to make sense this would be awesome.
Grade- Looks to be low to me but I don't know anything about wood grading. I know the owner gets at least 10 percent unusable boards currently.
So first plan is to make contacts on logs while still looking for a mill.
I found a lt-15 near me for 6200 does anyone have an opinion on that size of mill for the production I would be shooting for?
Your most important number, when figuring our whether this will be profitable is your production rate. You need to know how many board feet per day you will be able to produce. That is what limit your profits, so that is what you need to figure out first.
Once you know that, you will know how many boards you will have at the end of the week, and you can figure out your net income from selling them at the rate your buyer will buy them.
Knowing how much you can make, you can then figure out how much your expenses will be. Logs are a cost. So are bands. So is fuel. And your time is a cost (although you may not think so yet, but you will need to be paid). Another cost is insurance. Others have mentioned the costs of equipment (This is an up-front cost or "initial investment" that allows you to be in business, but you should recover that cost over time... so it should figure into your calculations of profit).
Once you know what your production rate is (bf/hour) you can multiply that by how many hours per day you want to work. Say your production rate is 100 bf/hour. In an 8 hour day you can produce 800 bf. (I use this because this is roughly what my sawmill can produce when I am fully up to speed, and there are no mechanical failures, and I have logs ready, and bands sharpened, and fuel available, and space to put the lumber... that is.... ALL of that is set up PERFECT). Now, if you produce 800 bf in a day, and all of it is perfectly sellable to the fencing customer, and you sell that at .75/bf (use the lower number to be conservative)... you can pull in $600 in a day maybe 2400 / week if you saw 4 days a week.
Now subtract off your cost of logs.... 800 bf of logs will cost you about $200. I suppose white oak is readily available where you are, but that is not always going to be the cost of white oak logs. Just consider that. For a 4 day week, you'll need 800 worth of logs.
Now subtract off your fuel. 8 hours of sawing costs me about 10 gallons of fuel at 2 bucks a gallon so 20 bucks a day, or 80 bucks a 4-day week. Gas is cheap now, but won't always be so consider what happens when gas goes back to 4 bucks a gallon.
Now subtract off your cost for bands. 8 hours of sawing uses 4 sharp bands, which cost me about 100 for new, or about 50 if I resharpen. Bands are no good when they are dull, so you must keep them sharp. Either you will pay someone to sharpen them, or you will need to buy a sharpener (so add to your capital equipment cost). Figure about 200 for bands a week.
Now subtract off your costs for "Parts". A fellow sawyer says... "got a mill... you will need a welder". You need new belts, new hydraulic hoses, new carburetor, new spark plugs, new roller bearings, new zip ties, new jack stands, new bushings, new bolts and washers.... a sawmill EATS parts. This expense is hard to estimate, but from tracking this over time, my sawmill needs about 50 dollars of parts a week or so. (A $300 carb, for example, kept me running for about 6 weeks before the next thing broke).
If you have to "pay" anything else, you should add that up. If you have to pay for a helper to off-bear lumber, for example, how much a week do you pay? You may be able give slabs away, but you may have to drop them off yourself. The time you spend on that costs you money (and gas, and maybe a busted tail-light too).
Now... add up all those costs .... make sure they are of the same "timeframe": Dollars / week for example.
Subtract that from your 2400 you can make in a day. That's your profit margin.
Now, can you pay your rent, buy food for you and the family, make the car payment, health insurance, real estate taxes, tuition fees, and set a little aside for retirement? Only you can determine that, but be sure to figure it in.
Now, remember that 800 bf/day number. I got that rate of production after running my sawmill for 2 years and learning what I should do and what I should NOT do. I also took classes on forestry, log and lumber grading. I spend weeks watching how other sawyers do their thing. Also, learning about my sawmill, how to do things. How to repair it when I break it. Where to get parts. Where to get bands sharpened. You will need time to figure all of these things out. (Can you afford not to eat while you are doing those things).
You will not get 800 bf / day when you start. You may get 200 of usable lumber the first time you try and you might give up at that point. But you will work up to 800 bf/day, if you stick with it. But it may take a year or more before you get there.
You are definitely asking the right questions though.... keep at it....
Thanks for your reply Eric.
The food on the table aspect is not a concern for me right now. I have 3 months of unemployment coming in and enough savings to get by for a couple years. That's actually why I feel this is such a good opportunity. I've always dreamed of running my own business. I've always done shitty labor jobs too so I'd rather bust ass for myself than someone else.
Is your estimate of 100 bdft an hour with only 1 person? My partner and I felt that if we could produce 200 bdft an hour after 2 or so months we would be doing well. A day for us would be 12 hours as well. Were both oilfield guys and a 12 hour day is a normal day in that world.
I was estimating overall cost to be log cost plus 5 cents a board foot in machine and blade expenses but maybe I'm underestimating there.
To touch on the parts aspect I was looking at a new norwood hd36 today. I noticed that they have a 2 year warranty but haven't had a chance to look into how comprehensive that is. I like the ability to add hydraulics though.
Thanks again for your thoughts.
What does everyone think about the goal of 200 bdft an hour from 2 people with an hd36 or equivalent after 2 months of learning? Considering 2 laborours that don't mess around.
Do I understand that your buyer will take every piece of lumber, so long as it is flat when you saw it? How flat does he mean...if there is edge to edge bend (side bend or crook are other names), is it ok at 1" or 2"? If any warped lumber cannot be sold, what will you do with it?
Maybe you can visit one of his current suppliers to see what is going on?
I would be concerned that knotty, waney or pith boards would be rejected, even if straight. These pieces would have a value under $.90 in the final product, so why would he buy them at more than they are worth?
Does he want any grian pattern or maybe just rift and quarter
I believe 200 BF per hour is a lot of wood...this would be one piece of lumber every two minutes...as you do have to spend time loading logs not the mill, unloading sawn lumber from the mill, doing maintenance, doing paperwork, driving a truck load to the customer's location, changing blades, fueling, etc. will you get cash right when you deliver? What about pieces he rejects that you thought were fine?
Is someone else going to do the logging? Will someone else do the log procurement, finding and dealing with land owners? There may be a lot of white oak trees, but unless the landowner wants to sell and is willing to have you select only the white oak, you may have a shortage of logs.
Recently, I have seen white oak 7x9 ties selling around $35. This tie would produce around 35 BF of medium and low grade lumber, so when considering the cost of sawing, vs. selling a cant without the extra sawing, a tie at $35 is the best option. (Ties do have quality requirements.).
In this area of the South, I have seen some mills sitting idle because of the shortage of logs this month.
Note that if you have a separate edger, you may be able to hit 200 BF per hour.
The LT15 is real close to the bottom on production capability. LT15 might be a better choice, Woodmizer gives a production figure on there web site that's good for comparison and not to be confused with what you will actually get. Too many variables for a real accurate figure.
Before getting to excited try and find a second or third customer. Not all you cut will fit the one customers needs. Look for other baskets to put your eggs in.
Lots of waste from sawing so maybe selling fire wood as a second income source would be something to do?
And $250 on the stump is not $250 at the mill!
Steep learning curve, be prepared for that.
Well logs are the problem I guess. Calling around and I can't find much of anything. Apparently I'm a few hours north of WI and MN driftless area. Not sure what that means but apparently that's where the prime white oak is. Just looking outside I never would have thought logs would be an issue. Hopefully something comes up.
I agree that the LT 15 is small and low production...I think the LT 40-HD is a better size. Better resale too if you close up shop.
The driftless area is the area that was glaciated by the Wisconsin glacier 10,000 years ago. This last glacier went as far south as the Ohio River and as far west as WI...draw a line from Madison to Minneapolis and to the west of this line is unglaciated and so it is called the driftless area. Oftentimes I-90 is the border. This area also was not affected by prairie fires and plows, so we see a lot of oaks.
The DRIFTLESS area is an area that was NOT glaciated by the Wisconsin glacier....
Sorry for the omission.
I meant to say as an alternative to the LT15 you might consider the LT15 wide, wider cut and biggest engine you can get.
Also you need to be sure what size a 1" board is to the customer! Lot of difference between yield depending if the 1" is full sawn or cut to "nominal" sizes. Know what the end use is. Pallet stock is a lot different than furniture wood.
Eric said: "Your most important number, when figuring our whether this will be profitable is your production rate. You need to know how many board feet per day you will be able to produce. That is what limit your profits, so that is what you need to figure out first. "
What is everyone's opinion on the Norwood HD 36 with the 23 hp motor? I was figuring that would be the best bang for my buck production. If I could find a swing mill I'd consider going that route because I've read the production would be better.
I would describe the grade this guy needs as pallet grade. He ought to be able to buy nearly everything I saw.
His 1 inch boards are 1 and a 1/16
I have owned the Norwood HD26 for about 2 years now. I saw for my own use. I looked @ many mills before settling on the HD36. Support is outstanding & the mill is well built & engineered. I have had no problems & the mill cuts smoothly & accurate. Just my opinion. You may find another brand more to your liking. Do your research !!
Sorry...that should read HD36.
Any mill painted Carolina Panthers BLUE will be awesome indeed.
IF the logs are reasonable quality and all decked up ahead of time, I can do a little better than 100 bd ft per hour in hardwoods with my manual Norwood HD36 (no edger). I'm very happy with the mill & the service. As I understand your situation, an edger would be more beneficial than hydraulics, though hydraulics will probably be high on your list, as it reduces physical labor. Don't count on tree services-- too unreliable, and too much metal in the trees. Ask whether the buyer needs white oak specifically, or will take other species in the white oak group, which will give you more flexibility in buying logs. Don't figure on buying small diameter logs, since they will really cut your productivity. You're welcome to come down to southwest Missouri, if you want to work on my mill.