United States Department of Agriculture Log Sort Yard Forest Service Forest Economics, Planning, Products Laboratory General and Feasibility Technical Report FPL−GTR−146 John Rusty Dramm Robert Govett Ted Bilek Gerry L. Jackson Abstract About the Authors This publication discusses basic marketing and economic concepts, John Rusty Dramm is a Forest Products Utilization Specialist in the planning approach, and feasibility methodology for assessing log Technology Marketing Unit of the Forest Products Laboratory, sort yard operations. Special attention is given to sorting small- USDA Forest Service, in Madison, Wisconsin. Mr. Dramm’s work diameter and underutilized logs from forest restoration, fuels reduc- focuses on potential applications of log sort yards to improve the tion, and thinning operations. A planned programming approach of viability of forestland restoration and fuels reduction activities. He objectively determining the feasibility of establishing a log sort also provides technical assistance in primary manufacturing con- yard operation is recommended. This critical thinking will help version efficiency, quality, and productivity improvement of forest develop the strategic, marketing, business, and operational plans to products. He has more than 20 years of industrial experience in guide the development and operation of the log sort yard. Prelimi- wood products and aluminum manufacturing industries. nary financial feasibility should begin early in the planning process Dr. Robert Govett is a Professor in the College of Natural to help focus efforts on potentially viable opportunities and save Resources at the University of Wisconsin in Stevens Point. time, effort, and money from chasing poor investment scenarios. Dr. Govett has more than 20 years experience in teaching, research, After options are narrowed, detailed resource assessment, markets, and extension activities, both in the western and Lake States re- and financial analyses are done. Several critical factors are consid- gions of the United States and internationally. He has done consid- ered and evaluated for each log sort yard scenario. Although com- erable work in technical and financial feasibility studies for new mercial log sort yards have a proven track record throughout North forest products businesses, equipment replacement, and process America, small community-based and government-operated log and manufacturing improvement. yards have had limited success. Serious consideration must be given to employing an experienced log sort yard contractor to Dr. Ted Bilek spent 14 years at Canterbury University in Christ- operate and manage day-to-day operations. Several operational, church, New Zealand, doing research and teaching forestry eco- policy, and judicial issues need to be resolved for successful nomics and business-related courses. He is currently an economist operation of government and community log sort yards in the at the Forest Products Laboratory, specializing in economic United States. feasibility analysis. Gerry Jackson is a Forest Products Marketing Specialist with the Keywords: log sort yard, small-diameter, economics, Technology Marketing Unit of the Forest Products Laboratory. feasibility, marginal logs, community log sort yard, Mr. Jackson provides marketing assistance to organizations government log sort yard, planned programming engaged in rural community assistance and the forest products industry. Acknowledgments Coordination of log sort yard site visits was made possible by efforts of Federal and State utilization and marketing specialists February 2004 throughout the United States. We especially recognize the efforts of Peter Lammert, Maine Department of Conservation; Dean Huber, Dramm, John Rusty; Govett, Robert; Bilek, Ted; Jackson, Gerry L. 2004. USDA Forest Service, Northeastern Area; and Bill von Segen, Log sort yard economics, planning, and feasibility Gen. Tech. Rep. FPL- USDA Forest Service, Region 6, State & Private Forestry. Several GTR-146. Madison, WI: U.S. Department of Agriculture, Forest Service, Forest Products Laboratory. 31 p. individuals, companies, and organizations contributed their insights into log sort yard operations, and we are most grateful for contribu- A limited number of free copies of this publication are available to the tions from the following: public from the Forest Products Laboratory, One Gifford Pinchot Drive, Madison, WI 53726–2398. This publication is also available online at Roger Jaegel, Watershed Research and Training Center www.fpl.fs.fed.us. Laboratory publications are sent to hundreds Mark Stella, Rogue Institute of libraries in the United States and elsewhere. Terry Mace, Wisconsin Department of Natural Resources Chris Edwards, Western Wood Products, Inc. The Forest Products Laboratory is maintained in cooperation with the Bob McCarty, Weyerhaeuser Company University of Wisconsin. Marshall Peacore, Menominee Tribal Enterprises The use of trade or firm names is for information only and does not imply Carl Henderson, Huber Resources Corporation endorsement by the U.S. Department of Agriculture of any product or Bruce Edwards, E.D. Besse & Son service. Peter Holman, Maxiwood The United States Department of Agriculture (USDA) prohibits discrimina- Jamie Barbour, Pacific Northwest Research Station, USDA Forest tion in all its programs and activities on the basis of race, color, national Service origin, sex, religion, age, disability, political beliefs, sexual orientation, or marital or familial status. (Not all prohibited bases apply to all programs.) Conversion Persons with disabilities who require alternative means for communication Inch–pound unit factor SI unit of program information (Braille, large print, audiotape, etc.) should contact the USDA’s TARGET Center at (202) 720–2600 (voice and TDD). To file a inch (in.) 25.4 millimeter (mm) complaint of discrimination, write USDA, Director, Office of Civil Rights, foot (ft) 0.3048 meter (m) Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Wash- cubic foot (ft3) 0.0283 cubic meters (m3) ington, DC 20250–9410, or call (202) 720–5964 (voice and TDD). USDA is 3 an equal opportunity provider and employer. 1 board foot 0.00236 cubic meters (m ) acre 0.4047 hectares (ha) Contents Forest Inventory Analysis ............................................... 30 Feasibility and Marketing Plans...................................... 30 Page Small Business Assistance.............................................. 30 Introduction........................................................................... 1 Appendix C—Selected Planning Resources ....................... 30 Background........................................................................... 1 Business Planning ........................................................... 30 Problems in Perception ..................................................... 2 Forest Products Marketing.............................................. 31 Community and Government Yards ................................. 3 Forest Products Market Reports...................................... 31 Forest Service Policy and Operational Changes ............... 4 Forest Industry Trade Magazines.................................... 31 Subsidizing Uneconomical Log Sort Yards...................... 5 Industry Directory........................................................... 31 Results of Lengthy Litigation ........................................... 5 Log-Sort Yards (General)................................................ 31 Economics............................................................................. 5 Log Cost/Value Relationships .......................................... 6 Related References.......................................................... 31 Lowering the Cost Curve.................................................. 7 Raising the Value Curve ................................................... 7 Planned Programming Approach.......................................... 8 Purpose of Business Planning........................................... 8 Planning Team .................................................................. 9 Log Sort Yard Objectives ................................................. 9 Feasibility Analysis............................................................. 10 Preliminary Feasibility.................................................... 10 Information and Data Collection..................................... 13 Critical Factors................................................................ 14 Next Steps........................................................................... 22 Layout and Design .......................................................... 22 Yard Construction........................................................... 23 Management and Operation............................................ 24 Conclusions and Recommendations ................................... 24 Economics....................................................................... 24 Planned Programming Approach.................................... 25 Feasibility........................................................................ 25 Recommendations........................................................... 25 Procurement and Marketing Focus ................................. 26 Sources of Information ................................................... 26 Literature Cited ................................................................... 26 Appendix A—Preliminary Feasibility Analysis ................. 28