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April 2005  - The Logging and Sawmilling Journal

SMALL SAWMILLING 2

Strategic sawmill partnerships

Precision Lumber Products in northern Alberta is tapping into the huge market for pallet and container stock in the United States, and developing strategic alliances for both its aspen and spruce production.

By Tony Kryzanowski

Tom Friesen wants to take full advantage of the huge wood pallet and container market in the United States while building his business. But being located so far away from that market, he knows he can’t do it alone.

Tom and his brother Martin own Precision Lumber Products Inc in La Crete, Alberta, about eight hours north of Edmonton. The business consists of a sawmill as well as a remanufacturing plant, Conde Reman Limited. All told, the business has 35 employees, including two of Friesen’s school-aged sons who work at the mill part-time and a son who owns a skidder and delimber who works in the company’s logging operations.

Currently a producer of spruce dimension lumber as well as crate and pallet cut stock from aspen, the company plans to double the size of its remanufacturing operation within a year and add to its equipment line to improve recovery.

Creating cut stock from longer lumber lengths gives Precision Lumber Products access to a variety of markets. Having the flexibility to serve a number of different lumber markets is especially important during a market downturn.

What Friesen appreciates about the remanufacturing process is that rather than exporting stacks of 2x6 lumber in 16-foot lengths, he can break down that 2x6 and sell it in multiple pieces. Having the flexibility to serve a variety of lumber markets is especially important during a market downturn. “The remanufacturing industry opens up the whole world to you instead of just the traditional North American 2x4 housing market,” Friesen says. “Everything gets shipped on some kind of pallet—from groceries and clothing to motors and industrial supplies. If you walk through a shipping department, everything is on a pallet or in a crate.”

Precision Lumber Products began operating in 1991, built on the foundation of the province’s Community Timber Permit (CTP) program. Essentially, CTP applicants earned a timber quota in exchange for making an investment in the area’s forest industry. However, the owners of Precision Lumber Products concluded right from the start that the company’s future depended on successfully tapping into niche markets, rather than trying to compete in the commodity dimension lumber market.

Transforming the aspen lumber on site into four-foot notched stringers, used in pallet construction, reduces the stringer’s volume by 12 per cent, meaning reduced shipping costs to southern markets

“We’ve always said from day one that for a smaller sawmill to survive, success is not necessarily wrapped around the fact of high production, but rather on high quality, consistent production, and finishing the product as far as it is reasonably possible,” Friesen says.

Developing niche markets has also helped the company cope with higher labour costs. Friesen estimates that Precision Lumber’s labour costs per thousand board feet are about three times as much as a large dimension sawmill. However, the extra income the company derives from remanufacturing its lumber makes up for that extra cost. “Not only is there money in remanufacturing, but we take huge pride in being successful at taking our products as far as possible right here in northern Alberta,” Friesen says.

Tom Friesen (above) and brother Martin plan to double the size of their remanufacturing operation within a year and add to its equipment line to improve recovery. Strategic alliances with Tolko and Footner Forest Products will result in the Friesens getting access to additional fibre.

Economics also played heavily into the company’s decision to produce partially finished cut stock from aspen. Friesen says freshly milled aspen is quite heavy because of its moisture content, and given the sawmill’s northern location, transportation costs are a strain on the company’s bottom line. So after milling, they let the aspen cut stock sit in the yard for a few months to allow it to partially air dry. Transforming the aspen lumber on site into four-foot notched stringers, which are used in pallet construction, also reduces the total mass of each stringer by about 12 per cent.

Precision Lumber Products found marketing its products particularly challenging, given that the sawmill is so far away from larger urban centres. However, the company has discovered the value of strategic alliances in both marketing and finding new timber supplies for its sawmill. About half of its sawmill production is spruce lumber, typically in 2x4 and 2x6 dimensions. The rest is aspen lumber measuring anywhere from a 1x3 to a 2x8 in 16-foot lengths.

The company has developed a strategic alliance with Edmonton-based secondary manufacturer Spruceland Millworks, which purchases about 60 per cent of its spruce lumber. Spruceland adds further value by manufacturing products like decking and J-grade lumber and sells it into both the North American and Japanese markets. Precision Lumber sells its lower grade spruce lumber to Tolko Forest Products in High Level, which has the equipment to transform it into higher value products like J-grade and machine stress rated (MSR) lumber. Friesen says Spruceland Millworks owner Ben Sawatzky deserves a lot of credit for mentoring him through the process of developing a remanufacturing branch to his business.

About 95 per cent of the company’s aspen production is sold to Vandermeer Lumber Products in Vancouver, which in turn markets the pallet and crating material primarily to the agricultural market in the southern US. Friesen says developing that partnership provided the company with instant credibility with potential purchasers, as Vandermeer has established market connections and a Vancouver office.

“Most of the people in the United States don’t even know where Alberta is, never mind La Crete, Alberta,” he says. “They can’t believe that we even live up here.”

The company presently consumes about 60,000 cubic metres of fibre annually. However, strategic alliances with Tolko and oriented strand board manufacturer Footner Forest Products to acquire additional fibre will increase that amount to over 100,000 cubic metres. This will allow Precision Lumber Products to achieve its goal of doubling its remanufacturing capacity. Not only has the company secured fibre supply agreements with these two forest companies, but it also supplies chips to Peace River pulp mill operator, Daishowa-Marubeni International (DMI).

“Having other forestry businesses in our area has been very crucial to the growth of our business,” says Friesen.

That partnership philosophy even stretches to Precision Lumber’s logging operations. Friesen is the contractor. He then hires a number of owner/operator subcontractors to harvest the timber and deliver the logs to the yard.

Rather than switching back and forth between softwood and hardwood production, the sawmill sticks to one or the other for up to four months at a time. That’s because each has different grading procedures and different sawing requirements.

At the mill, a Komatsu WA 350 loader feeds whole logs onto the infeed deck. Each log proceeds through a Nicholson A5 debarker, and then down a transfer table to a cut off saw before entering the sawmill. The main breakdown unit in the sawmill is an end dogging overhead carriage manufactured by Dika Industries of Rycroft, Alberta.

“It’s a very reliable machine,” says Friesen. “We really like it. In 1997, we installed a centre chain on it to transform it into a chain-fed scragg for smaller logs. We use the end dogging and overhead carriage on the bigger logs for recovery purposes.”

Boards manufactured by the Dika Industries carriage then proceed to a gangsaw edger, which consists of a gangsaw edger on one side and a combo planer head on the other side. The combo planer head shaves down the slabs and second cut boards to workable sizes. “That way we can recover all the slabs that is reasonably possible and can also go down to a 1x3 board,” says Friesen. “Our recovery numbers are actually fairly good for a small mill because of that machine.” He adds that the company plans to invest in an optimizing edger to improve recovery even further.

From there, the boards continue to an unscrambler and waterfall system, which sorts them prior to encountering a two-saw trimmer. After trimming, the boards are manually sorted and stacked.

The Conde Reman Limited facility is located next to the sawmill. The company recently expanded its building to allow for more indoor storage. The reman equipment line consists of a Bob Hanna notcher, a custom-built multi-trim saw, and a Wagner double arbor edger. All transfer tables and conveyors were custom designed and installed. The reman operation produces mostly notched pallet stringers. Friesen says they intend to invest in bandsaw equipment to improve recovery in this branch of the operation.

Getting to this point has not been a smooth ride for Precision Lumber Products. Since 1991, the company has suffered two sawmill fires before finally settling down at its current permanent location east of La Crete. Over that time and despite these setbacks, Friesen has discovered that forming alliances and being open to advice from more experienced people can pay off.

For example, he has never forgotten the advice given to him by Alberta Sustainable Development Department deputy minister Howard Gray.

“He said, ‘Tom, make sure you sell your low grade,’” Friesen says. “So that’s the way it has always been as far as the marketing goes. We try to sell that material first. The high end material will sell itself.”

With the low grade representing as much as 20 per cent of production, Friesen says it is quite conceivable that income from that source could represent your profit at the end of the year, and sometimes the difference between making it or breaking it in a down market.

                                                                                

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