Job Available....what do you think?

[TheLumberJack]

So I know a fella with 200 acres here in Western PA...90% of this land is flat and wooded with a mix of trees indigenous to the area....pine, oak, cherry, poplar, etc.

We've gotten to know one another and he's made me this offer:

"come on out and assess whats loggable and what the value may be. whatever you can profit out of it I'll take half."



Now, for a rook like me, this is a shot in the dark since I don't have a good understanding of valuating timber value (see other post).


Anyone advice appreciated.

 

[Burvol]

That's right. But....Is it good wood and how is the price right now?

 

[TheLumberJack]

Is it good wood and how is the price right now?

won't know about the quality of wood until I get there but I'm assuming in this thick of mature woods there has to be some quality pieces.

waiting on calls back from several mills to get prices...apparently they don't wake up at 5am like I do....



but overall does it sound like a fair/good proposition?

 

[Ohiowoodguy]

We have 1 honest outfit around here that will come and mark trees they want, and give a price for them from the landing. It may not be the highest offer, but it doesn't change when the logs get to the mill, and they always pay what they promised in a timely manner.
You could also skid them to a landing and then auction, but get payment BEFORE they're hauled.
The best thing is to get a professional consulting forester.
You're not gonna make much with lumber prices at rock bottom. Mills around here are either closed, or only taking veneer.

 

[treemandan]

won't know about the quality of wood until I get there but I'm assuming in this thick of mature woods there has to be some quality pieces.

waiting on calls back from several mills to get prices...apparently they don't wake up at 5am like I do....



but overall does it sound like a fair/good proposition?

I don't think the trees are up that early... even.

How are you moving the logs? You are going to have to cut out as many people as you can, so far it looks like half the profit is taken by the HO. Drop one tree and without a fast way to move it there you sit.

 

[Blakesmaster]

.
You're not gonna make much with lumber prices at rock bottom. Mills around here are either closed, or only taking veneer.

Yup. I ain't a logger but everyone I've talked to in that industry ( what's left of it ) says, "DO NOT CUT NOW." It's that way in NY, that way in OH, so I'd assume it's also that way in PA. Mills are closing, log broker's are selling trucks to weather the storm...it's BAD.

 

[TheLumberJack]

I just got off the phone with an old timer in the industry.

He's offering me $125 per hardwood 8'4" and up sections...min 12" dia (white pine $50)....sounds pretty good to me.

The only other offer I have is $75/$40.

 

[Billy_Bob]

The word "profit" can mean many different things.

I guess the best example is say a newspaper or pizza business pays someone "mileage" to use their car to deliver newspapers or pizza...

Say they pay you 12 cents per mile you drive in your car. And say gas costs 12 cents per mile. You may think you are being fairly compensated to use your vehicle, but not so!

When you use a car, parts wear out. Then these need to be replaced. And this costs money. So there is oil, tires, and then replacement of mechanical parts.

A more accurate cost would be your yearly cost to maintain the vehicle, then divide that amount to a per mile amount. So say you spend $1,500 a year on maintenance (tires, oil, replacement parts). And say you drive 10,000 miles a year. That would be 15 cents per mile!

And this is assuming you would have the car anyway for your personal use and you would have to pay for it and pay for insurance anyway, so this is leaving this out.

Anyway you would be losing 15 cents a mile with just paying for maintenance.

If you were to NOT drive the vehicle, there would be $0 maintenance costs.

Now if the newspaper or pizza business was to pay for their own vehicles, then they would also need to pay for the car and the insurance. Say they bought used for $10,000 and insurance was $600 a year. And they kept each vehicle for 5 years.

Then the cost for the vehicle would be $13,000 over 5 years for the car and insurance. Then driving 10,000 miles a year, just the cost of the vehicle would be 26 cents per mile! Say when they buy a new vehicle, they get $2000 trade in. Then that would reduce the 5 year per mile cost to 22 cents a mile for the vehicle.

So...
12 cents a mile for gas.
15 cents a mile for maintenance.
22 cents a mile for the vehicle.

So if they pay you 12 cents a mile when you use your car, it is clearly not covering your cost to operate the car! And it would cost them 49 cents a mile if they provided the vehicle.

So keep this in mind with your logging costs. Equipment wears out and someone has to pay to fix it or buy new equipment when it wears out.

My chainsaw dealer says some loggers will wear out a chainsaw in two years. A 460 was around $800 the last time I looked.

So the question is... What equipment will you be using for this logging job and how much will it cost you to use that equipment for that job?

Then "profit" to me is income minus expenses.

 

[GASoline71]

Are you set up for loggin'? Or are ya tyin' to tackle this with a couple of saws, some chokers and a 3/4 ton truck.

If it's the latter... you won't make much...

Gary

 

[2dogs]

It's good to hear their is a market somewhere. Transportation costs can make or break the deal. Take your time and work everything out on paper.

 

[sILlogger]

I just got off the phone with an old timer in the industry.

He's offering me $125 per hardwood 8'4" and up sections...min 12" dia (white pine $50)....sounds pretty good to me.

The only other offer I have is $75/$40.

if those are prices per thousand board feet then you are better off leaving them in the woods. that is 12.5 cents for hardwood, and 5 cents a bdft for pine. skidder rent here is 3 cents a foot and then you have to maintain it (figure 1 cent a foot for fuel on a fuel efficint machine. so the pine you are making next to nothing on and about the same with the hardwood. At those prices i don't think you will break even after it is all said and done.

here is how i do it around here, i cut, skid, buck, market and sell the timber and the landowner gets the following prodeecings:
Blocking (lowest grade): 50%
Grade (better stuff): 60%
Veneer (best stuff): 70%.

this seems to work out better typically gets the landowner the most money, and at the same time i still do pretty good. it also provides for a paper trail in which the landowner knows what they are getting out of their trees, and there is no conflict on prices. I don't care that they know what i'm making off of them because i'm not out to screw them.

 

[Boleclimber]

I would not cut the lot for half the profit. There should be a source for stumpage value in your region. In New Hampshire our Department of Revenue publishes the high and low value of timber species. The value is an estimate of what a timber is worth per Mbf standing on a lot and based on past timber sales. Though the numbers for summer 2009 do not look to bad, timber is not selling in the state. Meaning it is not the greatest document to set you stumpage price. Factor in what you can sell a loge for when setting your purchase price.

How the document is used:
Depending on difficulty of logging a person can adjust what they believe is a good offer to the land owner. The purchase of standing timber is a contract between the logger and land owner, thus any price can be negotiated.

As others have stated about there own state holds true in New Hampshire- no one is logging.

I recommend you cover your but with contract with any log buyer. The quoted price may disappear when the time of payment comes. What grade logs where those prices? How many Mbf (1,000 board feet) does he want to buy? What grades does he buy? Does he take pulp wood? What diameters does he want per species? How large can the knots be in a pine log? I bet he quoted you the cream of the crop and very few logs will fetch that price.


I would ask the forest owner to define profit - will he split the cost of break downs or losses.
I bet he says NO!!

See the link below for NH stumpage prices.
http://www.nh.gov/revenue/munc_prop/documents/avgstumpval04_09_09_09.pdf


Another link to a log buying company:
http://www.hhp-inc.com/uploads///PDF/Henniker Pricing 3-6-09.pdf

 

[TheLumberJack]

thanks all

i probably will pass on this opportunity

if any of you would like to do it, let me know

with three hands in the pot (landowner, mill, me) there just doesn't seem like enough potential profit to go around and make this happen

 

[xander9727]

Probably a good choice in our present economy.

 

[ak4195]

if those are prices per thousand board feet then you are better off leaving them in the woods. that is 12.5 cents for hardwood, and 5 cents a bdft for pine. skidder rent here is 3 cents a foot and then you have to maintain it (figure 1 cent a foot for fuel on a fuel efficint machine. so the pine you are making next to nothing on and about the same with the hardwood. At those prices i don't think you will break even after it is all said and done.

here is how i do it around here, i cut, skid, buck, market and sell the timber and the landowner gets the following prodeecings:
Blocking (lowest grade): 50%
Grade (better stuff): 60%
Veneer (best stuff): 70%.

this seems to work out better typically gets the landowner the most money, and at the same time i still do pretty good. it also provides for a paper trail in which the landowner knows what they are getting out of their trees, and there is no conflict on prices. I don't care that they know what i'm making off of them because i'm not out to screw them.

Dang,sounds a bit backwards.I remember in the early 90's down on the kenai peninsula the common arrangement for a portable dimension miller(decked out logs) was 30% of lumber milled went to the land/log owner,seems like with things the way they are,land owners OUGHT to get a bit less.

ak4195

 

[hammerlogging]

If you consider the logging rate concept as relative to your proposed 50% deal, the cheapest mountain loggers get a rate of about $140/mbf. The most efficient flatland mechanized crews (fellerbuncher, 1 or 2 grapple skidders depending on length of skid and a loader or 2, whole tree harvesting) maybe about $120/mbf, cause its super high production.

So whatever half of $125/mbf is..... not enough.