Integrated Truss Plant and Sawmill Business Plan A Business Plan for the Yukon- Kuskokwim Economic Development Council Prepared by the University of Alaska Center for Economic Development Contents I. Executive Summary .................................................................................................................................... 1 II. Yukon-Kuskokwim Regional Background .................................................................................................. 3 A. City of Bethel ........................................................................................................................................ 3 B. The Region: Bethel and Wade Hampton Census Areas ........................................................................ 4 C. Housing Trends ..................................................................................................................................... 7 III. Market Opportunity ............................................................................................................................... 10 A. Bethel and Wade Hampton Housing Demand .................................................................................... 10 B. Case Study: Quinhagak ....................................................................................................................... 15 IV. Business Description .............................................................................................................................. 17 A. Business Product Concept .................................................................................................................. 17 B. Service and Market Description .......................................................................................................... 19 C. AVCP’s Approach................................................................................................................................. 21 D. Key “Production” Factors ................................................................................................................... 22 E. Location and Physical Facilities ........................................................................................................... 23 F. Relationship to Regional Development Strategy ................................................................................ 23 V. Marketing Strategies............................................................................................................................... 25 A. Relationship Formation ...................................................................................................................... 25 B. Product Advantages ............................................................................................................................ 26 C. Promotion Strategy ............................................................................................................................. 27 VI. Competitive Landscape Analysis ............................................................................................................ 28 VII. Truss Plant SWOT Analysis .................................................................................................................... 32 VIII. Financial Analysis – Truss Plant ........................................................................................................... 33 A. Financial Analysis Assumptions .......................................................................................................... 33 B. Capital Costs ........................................................................................................................................ 37 IX. Income Statements and Cash Flows, and Financial Summary ............................................................... 39 A. Income Statements (10 Years) ............................................................................................................ 39 B. Cash Flow Statements (10 Years) ........................................................................................................ 41 C. Break Even Point Calculation .............................................................................................................. 43 X. Sawmill Business Description .................................................................................................................. 44 A. Current Status ..................................................................................................................................... 44 B. Proposed Opportunity ........................................................................................................................ 45 C. Necessary Equipment ......................................................................................................................... 45 D. Staffing ................................................................................................................................................ 46 E. Key Risks .............................................................................................................................................. 47 F. External Lumber Markets .................................................................................................................... 48 G. Location and Logistics ......................................................................................................................... 49 XI. Implementation Strategy ....................................................................................................................... 50 XII. Timber Analysis ..................................................................................................................................... 51 A. Timber Supply – Is it Adequate? ......................................................................................................... 51 B. Would the Resource Owner Grant Harvesting Rights?....................................................................... 52 C. Is Local Lumber Price Competitive? .................................................................................................... 53 XIII. Sawmill SWOT Analysis ........................................................................................................................ 54 XIV. Financial Analysis ................................................................................................................................. 55 A. Income Statement Financial Assumptions ......................................................................................... 55 B. Capital Costs ........................................................................................................................................ 59 XV. Income Statement, Cash Flow Statement and Financial Summary ...................................................... 60 A. Income Statement (10 Years) ............................................................................................................. 60 B. Cash Flow Statements (10 Years) ........................................................................................................ 61 XVI. Business Structure ............................................................................................................................... 62 A. Business Structure........................................................................................................................... 62 XVII. Combined Economic Impacts – Sawmill and Truss Plant ................................................................... 66 XVIII. Legal/Regulatory Analysis .................................................................................................................. 68 A. Lumber Grading and Mill Certification ............................................................................................... 68 B. Lumber Grading .................................................................................................................................. 68 C. Truss Plant Certification ...................................................................................................................... 69 D. Lumber Type Specifics ........................................................................................................................ 69 E. Local Building Permits ......................................................................................................................... 70 F. Insurance Requirements ..................................................................................................................... 71 G. Other Relevant Permits/Licenses ....................................................................................................... 71 XIX. Facility Design Considerations ............................................................................................................. 72 A. Lumber Drying/Yard Maintenance ..................................................................................................... 72 XX. Funding Sources .................................................................................................................................... 77 A. AVCP Contribution .............................................................................................................................. 77 B. Private and Local Funding ..................................................................................................................