Ed,

            Re: the August 2010 issue and the article on page 28.

            The article seems to have two titles, and I fail to see how it treats over-runs other than superficially.

            In New England, there are a variety of log rules used, and all seem to do the job intended. I think most people involved in buying and selling logs have long since come to terms with the differences among the rules used in their area. For instance, quite some time ago, in eastern NY state the Doyle and International ¼” rules were used to buy and sell logs. The interested parties would decide which rule was to be used, and then the price of the logs would be adjusted accordingly. If Doyle was selected, a premium of about 20% paid compared to International ¼”. People that deal in logs regularly as a living are incredibly knowledgeable about what they do, and seldom make errors.

            Today’s astute sawmill managers are keenly aware of over and under-run, but do not rely on “free wood to make or break their profit picture, knowing that the correct mix of all the factors will produce a successful outcome.

            Many years ago when the small sawmills in New England were disappearing, and some grew into larger mills, there was a switch to band mills with 1/8” kerf. It was notable that none of the users of band saws switched to the international 1/8” rule to scale the logs, the intention was to pay for the adoption of band saws by getting a bit more over-run. Gradually, as competition set in, the advantage of band saws in terms of over-run disappeared.

            I know of a hardwood mill that staples a plastic tag to the end of each log they buy. This tag shows dia., length, footage paid for,, gross and net scale, species, etc. Every day the mill collects the tags from the days’ sawing and compares the input with the lumber grade and volume tally for that day. An excellent control.

            The illustration and explanation of Table 1 seems to be a contrived result. One would need all the supporting information to understand, and believe,, what is reported.

            The article states that the sawmill owner must optimize the log mix into the mill. Every owner I know attempts to do this, but is constrained by what wood is available to him year ‘round. He does not always get the optimum mix, in fact, probably seldom.

            I can probably agree that a “good” industrial engineer is a vital ingredient to a successful sawmill, but what level of sale does a mill need to financially justify such a person? And is he needed as a permanent addition to the staff?

Sincerely,

Donald Bradley

Dear Ed,

Re: Mr. Bradley’s Letter to the Editor:

            I appreciate Mr. Bradley’s comments, and do not disagree with his comments on the various log rules and the benefits to lumber recovery provided by the evolution of thinner saws. Also appreciated is his comment on the mill that tags every log and compares scale volume and value to actual volume and value obtained…this is indeed a wise practice, and an excellent way to measure what Dr. Eugene Bryan calls the “Profit Gap” in his book on the subject, The Best Possible Sawmill. Note however, that measuring the profit gap and doing something about it are two different things.

            Unfortunately, the article may in fact seem “superficial” and Table 1 “contrived” because, as Mr. Bradley suggests, the topic is quite complex and the full findings are difficult to communicate in a two-page article. We have on file here at Penn State a 75-page Master’s thesis on the topic and that thesis is more adequately summarized in the 8-page paper in Wood and Fiber Science mentioned in the article.  For those interested in reading the more detailed treatment of the subject, and how an industrial engineer would study it, the paper is available online at http://woodpro.cas.psu.edu/291.pdf .

            For the failings of making the main points clearly in the Pallet Enterprise article, I apologize.

            The main points intended for the article are:

            1) There is no direct correlation between daily, weekly, or monthly over-run and the profitability of a sawmill.  Therefore, any attempts to manage the mill using over-run as a key productivity metric are misguided and will almost certainly cause the mill to realize lower than maximum profits on a consistent basis.

            2) Higher profit can be achieved through lower over-run if the mill is purchasing logs that will produce products more closely matching those that are bringing a premium in the market place and run well in your particular mill. This practice we would call moving toward an optimized log mix.

            3) An optimal log mix will not consistently be achieved through good luck or the mill owner’s fondest wishes.  It can only be achieved by timely manipulation of your mill’s log prices and training local loggers on your log preferences to encourage them to bring the highest value logs to your mill and to sort out the lower value logs for your competitor down the road.  This concept of value has to be based on timely market information on lumber prices in combination with mill run yields specific to your mill for the different species and grades of logs.  This process is complex and requires regular mill recovery studies and the use of a computer model by an experienced analyst to deliver the profit gains promised in closing the “Profit Gap.”

            The last point leads us to the answer for Mr. Bradley’s final question about the value of hiring an industrial engineer.  He is correct in stating that the return on a hire of this type is volume-driven. Since the scope of an industrial engineer’s work would include increasing all aspects of the mill’s efficiency, it would not be unusual for this type of work to increase the mill’s profitability by at least 10%, and more in tough markets.  I’ve always maintained that if I owned a mill with ten employees, one of them would be a trained industrial engineer…and that I would hire another IE for each 25 employees above that.  Sure, they require more salary than the average employee, but the typical IE makes a company 10-20 times his annual salary every year.  That is a pretty good return on investment for any mill that has the volume to make it.

            Please thank Mr. Bradley for taking the time to read and comment on the article. Sawmill over-run isn’t the hottest topic in the news these days (was it ever?) and it is always nice to know that someone out there is interested.  Thanks also to Pallet Enterprise for running the article in the first place.

Sincerely,

Chuck Ray

Associate Professor, Wood Products Operations

The Pennsylvania State University

cdr14@psu.edu

Ed,

            I liked reading the article in the Pallet Profile (September 3, 2010 issue) on “People Pulling Together.” I sure wish our industry and its associations would heed these words.

            Publish this letter if you like. We do have to pull together and in one direction. Sounds funny, but it is true.

Sandy Campbell,

The Nailer Man, a wood pallet advocate

www.nailerman.com

Editor’s Note: Sandy Campbell’s letter refers to an article in Pallet Profile, the weekly pallet and low grade lumber market report published by Industrial Reporting Inc. This article covered the new Hardwood Leaders Forum, which is an effort to develop a strategic plan to move the U.S. hardwood lumber industry forward to tackle a changing global market. Find out more about this initiative by reading the editorial by Dr. Ed Brindley on page 26 of this issue of the Pallet Enterprise. If you want to keep on top of the latest industry information every week, consider subscribing to the Pallet Profile. Call Jeff at 800-805-0263 or visit www.palletprofile.com.