Kiln drying for higher profit

Expanding a molding business to include kiln drying poplar. November 18, 2002

We are considering installing a dry kiln for poplar lumber, as 90% of our molding sales are poplar. I'm trying to get an idea of how kiln drying will make us more profitable. I understand that a log usually saws out 30% more than the log scale calculates. Wouldn't this bonus more than pay someone to saw it for me? I was told that I could buy premium butt logs for .50 per bd ft. We've been paying .95 per bd ft for FAS kiln dried poplar.

On the other hand, others will custom dry for .10 per bd ft, which seems cheap, but I really don't want the hassle of hauling a lot of lumber around. How much I can expect to gain in value by drying my own lumber?

Forum Responses
It would take more knowledge about your operation to give you precise numbers. (Check the archives here for info, too.)

First, in sawing, on smaller logs you easily will get more lumber than the scale *if* you use Scribner or Doyle scales. With International 1/4 Inch, you will be quite close, although a thin kerf mill will get somewhat more.

The sawmill will make a profit, so you are paying to have the logs sawn (including insurance, setup time, overhead), as well as profit. Plus, the mill may not saw the pieces the way you want them - for example, they may saw 1-1/8", while you could benefit from 1-1/16" thickness.

Anyone who charges $0.10 per BF for drying is way under the market cost and may not even be making profit. For small quantities, $0.20 would be minimal, with many mills charging more as small quantities can be a handling problem. Drying it yourself will again produce lumber that is closer to exactly what you need, especially final MC and stress. Check the book 'Opportunities for DH Drying' from the Virginia Forest Products Association.

Gene Wengert, forum technical advisor

I agree with Gene on the contract drying price of $0.10/bf being real cheap. Here in Southern Indiana, it runs about $0.18 to $.25 per BF for poplar and closer to $0.30 per BF for oak. These prices do fluctuate, however. A good place to check market prices for lumber is the Hardwood Market Report. It provides market prices for both green and kiln died lumber. Also, handling costs are significant for contract drying. Many people neglect this cost or don't have a realistic number plugged in for it.

There is a chapter about drying costs in 'Drying Hardwood Lumber'.

Gene Wengert, forum technical advisor

Don't forget about shrinkage, degrade, handling, payback on kiln, operating expense and sawing expense. Isn't worth it for 45 cents bf.

From the original questioner:
Let's see... 12,000 bd ft kiln. 2 charges per month = 24,000 bd ft per month x .45 = $10,800.00 per month. Less 7% shrinkage still leaves $120,528.00 per year. $43,200.00 to get it sawed and 2 part time guys to stack and unload for $20,000.00 per year. I still have $57,328.00 to work with. Not bad if you ask me.

The molding business is very competitive on volume runs and I'm finding that the key to compete is to have the "package"... trees to trim. For example, local lumber companies buy 3 1/2" s4s poplar material for .48 per lf. They want to deal with me but I need to be in the price range. Buying FAS quality poplar costs me 1.00 per bd ft and, considering a 33% waste factor, leaves me with 1.33 per bd ft I have in the material, which translates to .39 per lf in material I need to sell for .48. Not much money for sawing, sorting, and molding. How would kiln drying my lumber factor into this scenario? One thing I've noticed is that a lot of lumber suppliers often pawn re-graded lumber off on the small operators. Maybe I don't buy 5 truckloads a day, but I should get the quality I pay for! Not to mention how many times I've bought 5/4 lumber that was 1 1/8" in the rough. Frustrating when the profile calls for material thickness of 1 1/8". Doesn't leave anything to clean up molder tracks.

Here are just a few thoughts.

Are you buying rough KD 5/4 lumber? If so, it can be 1/16" scant of the nominal thickness, meaning 1-3/16" is okay. The general thickness of 1-3/16" applies to the cuttings and not to the entire piece - that is, wane or other thin spots outside of the "cutting area used to determine the grade" can be under 1-3/16" thick.

Quartersawn 5/4 lumber has even more tolerance (3/32" scant), due to the excessive shrinkage in thickness for such lumber.

If you are buying FAS, the entire piece must be flat enough (not warped) to be able to be surfaced 2-sides to standard thickness (1-3/16") - that is, minimal warp in FAS; other grades are less restrictive.

Incidentally, 5/4 surfaced lumber can be 3/16" under standard thickness, or 1-1/16".

Gene Wengert, forum technical advisor

I think the more steps of the process you can control without adding tremendously to overhead, the better off you are. Kiln drying is not labor intensive or brain intensive. It gives you more options on supply and reduces costs. If you look around the country at who is successful, you'll find most do dry their own. There are lots of factors to consider. Gene outlined a lot of them. But (being somewhat biased), it will almost always favor you putting in your own drying.

Can you use or get rid of the lower grades of lumber you will get by sawing your own logs?

From contributor O:
Not only is drying labor intensive and brain intensive, it is also capital intensive for initial startup.

I've never met a kiln charge yet that I could call a no-brainer. Although poplar is one of the easiest, if not the easiest, species to dry, there is still the potential for stain, warp, twist and cup. Not to mention the ability to do it profitably enough to recover your capital investment.

The questioner is putting enough thought into the idea to justify his costing, but we have not discussed fuel source, stacking, loading, and amounts of on-hand inventory required to complete the process.

Energy costs vary with types, regions and suppliers. Your wood waste may be the source, however the equipment needed to convert the energy into heat/electric adds significantly to your startup cost. Let's throw in the potential for expansion if the venture proves successful enough.

How does the lumber get into the kiln? We need sticks and a method of stacking. By hand is labor intensive and mechanical processes again raise the capital investment. Do we have a forklift capable of loading a kiln?

If we are giving consideration to hand loading and unloading, this runs into the next issue - on hand inventory. If the lumber is processed by hand, we can not buy in much dead green lumber - it will stain up before we've finished our lunch. Timing is absolutely critical.

If we plan to keep on hand inventory on sticks, it does help reduce drying time and reduces the cost per thousand for drying, but there is an additional carrying cost associated with the venture.

While I disagree strongly with the notion that drying is simple and easy (I once worked for someone that described a kiln operator as someone that sits around, drinks coffee, and watches lumber dry - he no longer is associated with the lumber industry). I do agree, however, with the notion of doing as much as you can in-house. If you can do all the homework, the benefits can be enormous.

From the original contributor:
We make architectural blocks as well as moldings. A friend of mine has a finger jointing machine as well. My plan is to use the low grade 5/4 poplar for rosette blocks, plinth blocks, base blocks, and dentil blocks. The low grade 4/4 will be chopped and finger-jointed for paint grade molding. I'm presently cutting the blocks from FAS poplar because my lumber suppliers are only drying 5/4 FAS. It seems to me that I'm missing a lot of money making opportunities by *not* drying my own lumber. I also believe that the woodworking industry is becoming more of a service-oriented business. Kiln drying will enable me to have a larger inventory custom cut to suit my needs at a reduced cost in material. We also make a lot of base moldings that are 5/8" in thickness. If I could get my lumber cut a little heavy of 6/4, then I could resaw and produce twice as much molding with only 50% more material than I've been using.

We are buying our 5/4 lumber in the rough. 1 3/16" would be satisfactory for me as the thickness, but there are many times that I'm getting boards that are 1 1/16" in the rough. I'm not saying that all the boards are shy of thickness. I'd say 15% would be a close figure. Of course this varies from one lumber supplier to another. I've seen a lot boards that were very thick on one end and thin on the other end.

Why don't you buy the logs and have a portable sawmill come in and saw just what you want? Then you will have a chance to see what is going to come from the logs and what you can do with it. Then sticker it and haul it to the kiln and have it dried for $0.10 bd ft. Then bring it home and see what you have and what you can make from the load. Also what you will do with the slabs and sawdust. This trial run will give you an idea of what will be involved in adding these operations to your setup.

It is not a no-brainer to saw or kiln dry. There is a lot to learn and ways to do it better. But try a trial run and see if money can be made.

I agree with the above. That is exactly what I did and the results made sense to me. I now own my own Wood-Mizer and kiln, not to mention drying racks, forklift, trailers, etc. Get my drift? Investing in a kiln and sawmill is a major capital expenditure. Don't expect plug and play here. Instead, expect a significant learning curve.

From the original questioner:
I have no intentions of buying a sawmill. I would like to have someone with a portable sawmill come to my facility and saw it there. I'm not totally green on the idea of kiln drying. We had a 3,000 bd ft kiln at our old location. We already have a forklift for moving stacks of lumber. The woodworking business in general takes a large capital investment unless you're aiming on making birdhouses out of craft wood in your garage.

The guy that dries for $0.10 bd ft is in a contract with a broker and he only dries 30,000 bd ft for that price. I'm not concerned as to whether I can do a successful job of drying it or not. I don't think sawing or kiln drying is a no-brainer job. However, poplar is about the easiest and most forgiving lumber to work with.

We built the 3,000 bd ft kiln at our other shop. We had very good results drying our own lumber. The only thing I didn't like about our other kiln design was the fact that it had to be loaded from the end with a custom built cart. Not to mention, 3,000 bd ft wouldn't last two days with the amount of volume that we run now. Our new kiln design will hold 12,000 bd ft that can be loaded with a forklift.

From contributor O:
One thing about the numbers that you were crunching to determine your profitability was a determination that you can do two loadings per month. Once you develop a schedule that works for your kiln, you can easily see three charges through in one month.

I am sure you are trying to be conservative in your figuring, but this is one area that you can use to compensate for over-run costs.

Again, if it is possible to have air-drying lumber on sticks prior to loading, mother nature can help you stuff the profits in your pocket.

Several different economic calculations of profit are done in 'Opportunities for DH Drying', including NPV and IRR.

Gene Wengert, forum technical advisor

The comments below were added after this Forum discussion was archived as a Knowledge Base article (add your comment).

Comment from contributor A:
I think the above calculation for shrink is incorrect. If you spend $1.00 a bf and have a 33% shrink, then your cost for the remaining product will be $1.52 bf, not $1.33. In other words, if 100 bf costs you $100, if you lose 33%, you have 66 bf left. If you paid $100 for that 66 bf, you have a cost of $1.52 bf.