February 2005 - The Logging and Sawmilling Journal
Going the distance
Alberta contractor PineRidge Logging is finding the transition to in-the-woods chipping challenging, but is willing to go the distance providing there is support from the mill.
By Tony Kryzanowski
An Alberta logging contractor that has bought into Daishowa-Marubeni International’s (DMI) program to convert from strictly tree-length logging to in-the-woods chipping, is quickly learning exactly how challenging this venture is, especially without any long-term price certainty on critical consumable items like spare parts and fuel. This issue affects both chipping and chip transportation. Yet to the Peace River, Alberta pulp manufacturer’s credit, it is listening to contractors’ concerns, knowing that with higher mill production—as well as unexpected increases to the price of steel and fuel—it may not achieve the $8 million in annual savings it projected two years ago. “The health of our contractor force is a primary concern,” says DMI woodlands superintendent Joerg Goetsch. “If they don’t make a living, I don’t have the reliability.”
PineRidge Logging is owned by La Crete, Alberta residents Pete Peters and Jake Froese. For the moment, the owners are still working to overcome the new challenges presented by in-the-woods chipping. Their options were hardly attractive—the alternative was to shut the operation down altogether. While some jobs were lost in the transition to in-the-woods chipping, all of the company’s employees would have been unemployed had the company ceased operations. “It was a business choice,” says Peters regarding the company’s decision to make the transition. “DMI was going in a direction where if we wanted to continue to work as one of their contractors, that was the direction we had to take. It definitely was a surprise how quickly they made the transition.”
One unknown was how financially viable in-the-woods chipping of a steady diet of frozen aspen logs is, because this method was new to Canadian forestry. PineRidge Logging’s concern was what would happen if it didn’t work out and how the company would pay for its two $1.1 million chippers if they were idled, and who would buy them if they needed to be sold. Then there was the issue of what the company should do with its logging trucks, butt’n tops and delimbers, which will not be needed as part of the in-the-woods chipping process.
On their end, DMI says there is no going back to tree-length logging. The company itself has made a $12 million investment in new chip dumps to accommodate the move to in-the-woods chipping, and will shut down its wood room completely this December. “We will fix problems as they come up and make adjustments where necessary,” Goetsch says. “There is no doubt that we will not be going back to tree-length logging. This system is definitely here to stay.” PineRidge Logging harvests about 400,000 cubic metres annually consisting of about 85 per cent aspen over a large area between La Crete and Peace River. Peters and Froese had worked together on various business projects before deciding to get into the logging business about five years ago.
They also have an interest in another logging company that harvests short logs for OSB manufacturer Footner Forest Products, and tree-length logs for Tolko’s softwood sawmill in High Level, Alberta. In addition to two Peterson Pacific DDC 5000-G portable chippers, the company also owns three lines of logging equipment, including a newer John Deere 853 feller buncher with a Gilbert Tech 22F head. Complementing its equipment fleet are five chip trucks, and 10 logging and winch trucks. Peters says the biggest change he has noticed in the transition to in-the-woods chipping is the critical impact of downtime. As a tree-length contractor, if a piece of equipment broke down, there was a time buffer between each logging operation.
That way, the company had enough time to get the equipment back up and running. The company can’t afford that type of downtime with in-the-woods chipping. “It’s like operating a sawmill,” says Peters. “It’s a production chain. If one link in the chain breaks in the process, everything stops. We’ve had a lot more maintenance than projected. There are so many small things and they just all add up. Your maintenance person is a very critical part of the operation.” Goetsch says it is not so much that there is more maintenance required on the chippers than expected, but a matter of there being a lot more maintenance than what tree-length loggers are used to. “I think the guys are surprised how much maintenance there is on this type of machine, because that is its nature,” he says. “It’s just a lot of work every day to keep your chip quality at an optimum. You have to continuously check out the flail chains and the knives to make sure they are at peak performance in terms of sharpness and don’t have any chunks missing.”
Two main issues have arisen recently: dramatic increases in the costs of parts due to the escalating price of steel, and maintaining consistent chip quality. “We’ve replaced a variety of parts already and they have increased in price anywhere from 15 to 70 per cent,” says Peters. “Fuel prices have also gone up. These are all major items related to the operation of the machine.” Peters says that DMI hasn’t left its contractors flailing in the wind regarding the challenges they have faced. He rated the support from DMI as “fairly good.” “It’s a learning curve on both ends,” he says. “It definitely takes team work. DMI has always been good to work for.
There is just some unforeseen stuff that has caught both the contractors and DMI by surprise.” Goetsch couldn’t agree more that the frustrations being felt by tree-length loggers making the transition to in-the-woods chipping have more to do with the learning curve than anything else. However, the company is tweaking its rate to ensure that contractors are fairly compensated when they move from stands measuring two to three trees per cubic metre to less productive stands yielding up to nine trees per cubic metre. It also recognizes that issues like the cost of steel—and its impact on parts prices—and escalating fuel prices necessitate a rate adjustment as well.
Goetsch says the company’s chipping contractors need to stay focused on quality and learn from the experiences of those who are doing well under this program. DMI is even prepared to make its chip quality index more stringent to get the point across to its contractors that there is no financial benefit to pushing production over quality. “A lot of these contractors were totally geared as loggers to being production oriented,” Goetsch says. “Quality didn’t matter as much, because it wasn’t a finished product that they were delivering. It was just a log that was basically put through secondary manufacturing here at the mill. Now, however, they are the ones producing the chips.”
Communication between contractors and DMI is definitely more frequent, says Peters. There is daily communication on chip quality, and meetings monthly to discuss operational issues whereas there were only semi-annual meetings when contractors were tree-length loggers. The big breakthrough in DMI’s decision to adopting in-the-woods chipping of aspen occurred when Bowater Inc, operating in Eastern Canada, and Peterson Pacific developed technology and a method for producing high quality chips from frozen aspen using the DDC 5000-G chipper. The 14-year-old pulp mill owned by DMI manufactures about 440,000 air dried metric tons of pulp per year, consuming about 75 per cent hardwood and 25 per cent softwood. A fully deployed fleet of nine portable chippers will eliminate 12 full steps in the chain of a tree being harvested through to chips being deposited on the company’s chip piles.
In addition to notifying its contractors of its intentions to make the transition to in-the-woods chipping within two years, DMI also contracted All-Wood Fibre Ltd, a company with chipping experience, to operate two chippers for the company and to train its existing contractors on the proper operation of their own chippers. Peters says learning how to operate the chippers wasn’t too difficult. Handling the maintenance was another issue. DMI also contracted Kamloops, BC-based Gold Star Transport (1975) Ltd, to operate a fleet of chip trucks to deliver chips manufactured in the woods to its chip piles. Peters concludes that as long as DMI is prepared to listen to its contractors, particularly as it relates to unforeseen expenses like the price of fuel and the cost of steel, then PineRidge Logging will feel a lot more comfortable about the future of this new endeavor.
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