February 2005 - The Logging and Sawmilling Journal
Strong case for higher value
Veteran secondary manufacturer Peter Schmutz of Alberta makes a strong case for diverting high quality logs to turn out higher-value products, which would allow smaller sawmillers to take advantage of market opportunities the big sawmills leave behind.
By Tony Kryzanowski
Alberta wood product producer Peter Schmutz would like to see a stronger effort made to direct high quality deciduous logs on a consistent basis to secondary manufacturers, rather than seeing these logs being consumed for OSB production, pulp manufacturing, or firewood. “I see room for a substantial new branch of the forest industry that could develop out of that resource,” the veteran secondary wood product manufacturer says. However, Schmutz feels that it will be up to consumers to put pressure on those who control the forest resource—specifically forest companies and politicians—to make more high-value logs available for the manufacture of secondary wood products. “My philosophy is that nobody will bring about big changes by themselves,” he says. “I’ve come to the conclusion that the best thing we can do is keep manufacturing good quality products and put examples in front of people.”
Hopefully they will take notice, and begin to question whether high quality logs wouldn’t find a better use in higher-value wood products, rather than firewood in their fireplaces. Peter and Monica Schmutz have owned and operated a successful secondary wood product manufacturing company—Solar-Dri Timber Specialties Ltd—near Rocky Mountain House, Alberta, for the past 10 years. They mainly manufacture hardwood flooring, wood paneling, mouldings and siding from birch, pine and poplar, which are all common local species. They are among a growing number of farmers who have come to realize that operating a wood product manufacturing business in tandem with a farm business is a viable diversification strategy.
It can be particularly attractive if the sawmill has a consistent wood supply, operates efficiently, focuses on producing niche products, and keeps as much control as possible over the price dictated for each product manufactured. Schmutz immigrated to Canada from Switzerland 30 years ago as an apprentice carpenter. He and his wife Monica, whom he met in Canada, then took up dairy farming. Ten years ago, they sold that business and launched their wood product manufacturing venture, yet kept their hand in farming by raising purebred cattle. Right now they have a small, 30-head, purebred cattle operation and raise feed on a half section of land.
Given the financial consequences of the mad cow crisis, diversifying into manufacturing wood products has proven to be a smart strategy. “I have to admit that we’ve had situations where the wood manufacturing business actually supported the farm, particularly more recently,” says Schmutz. Over the past decade, he says the wood product manufacturing business has proven itself. “There are products that the big manufacturers don’t pay as much attention to for reasons of efficiency and simplicity,” he says. “A small business can certainly take advantage of opportunities that are left open in situations like this.” Among the most important lessons they have learned is that succeeding in secondary manufacturing is rarely a sprint to the finish line, but rather more of a middle distance race with plenty of twists and turns along the way.
While everyone agrees that it is desirable to add more value to wood products, Schmutz says a more accurate description would be “expense adding.” “It really should be called expense adding, because that is what you are going to do for several steps before you actually have a product to sell,” he says. What invariably occurs along the learning curve is that the owner becomes the most knowledgeable person regarding his/her own wood products. Having come to that conclusion, Peter and Monica have chosen to take the direct marketing approach for the company’s products and it has really paid off. Right now, they market their products to a list of about 50 contractors, primarily in central Alberta. They also sell products directly to individuals building homes.
Schmutz says there are definite pros and cons to dealing with wholesalers. His own experience is that they generally try to entice you with a promise that they will take a certain amount of volume, then turn around and try to dictate the price that they are willing to pay for it. It’s better for the sawmiller if they have more leverage on the price side, he says. “You really have to put yourself in a situation where you are a price setter, rather than a price taker.” He and Monica work well as a team in dividing up the duties in day-to-day business operations. In addition to both working full time in the sawmill or in the yard, Peter looks after arranging the timber supply and setting up the equipment.
Monica handles the bookkeeping, maintains customer relations over the telephone, and meets with potential customers on site. The company averages three full-time employees, with almost all key employees being female. “We’ve had a very positive experience with women paying attention to the quality control that is required at every step along the way and being efficient at the piece work,” Schmutz says. The company sources its wood from Crown land through a local community timber program, through which a group of smaller wood users have been given access to a wood resource, and are responsible for harvesting and managing that resource.
Solar-Dri Timber Specialties uses about 1,500 cubic metres per year. Manufacturing poplar products is a significant growth area for the company. It now produces between 300 and 500 cubic metres of poplar products per year. Once the logs arrive in the yard, they are bucked so that the rough sawn, green material will fit into the company’s dry kiln. All the birch and poplar logs are sawn on a Wood-Mizer LT40 bandsaw mill. The mill is also used to manufacture 2x8’s from larger conifers for use as siding. In addition to the bandsaw, the company also operates a small scragg sawmill for its smaller timber, which gives it the capability of producing cants, or logs cut on two sides. Cants are then broken down further using a Gabianni ripsaw with a four-inch capacity.
Schmutz says it is important that anyone contemplating an investment in secondary wood product manufacturing has the right mindset. It is essential to pay attention to the details right from the start, particularly when manufacturing products from birch and poplar. The key to a successful venture is to adopt the sawing, drying, ripping (SDR) approach. First the logs are sawn to rough dimensions. Then the rough lumber is dried. “You put it through the kiln drying process, let it undergo the stress it must undergo, then rip straight pieces out of it,” he says. “This approach does not fit very well within a large, softwood lumber production line, and that is exactly where the strength of a small business is.”
The Schmutz operation has solar drying capability based on an experimental model developed at the Halland sawmill near Love, Saskatchewan (see story on the Halland operation in the June 2004 issue of Logging & Sawmilling Journal). Working on a simple thermostat principle, once enough heat is built up on the solar panels, a fan kicks in and draws air off the panels for use in the kiln drying chamber. However, the backbone of the drying process is a wood-fired boiler, which operates almost identically to commercial kilns. Waste material is burned in the boiler. Most of the company’s green lumber is dried down to below 10 per cent moisture, with flooring dried to as low as seven per cent.
The drying cycle is substantially longer than at most commercial sawmills, with pine on a 14-day cycle, and birch on a 21-day cycle. “The green lumber is dried much more slowly, but at the same time we need to have an even charge of wood in the end and can not have a range that is several percentage points apart,” Schmutz says. Now comes the serious value-adding process—ripping the dried lumber into finished products. “That’s really the step where the never ending sorting process starts,” Schmutz says. “And focusing on the different qualities that you pull out in relation to the different products that you make.” The company attempts to manufacture random length wood products as much as possible. That way, it can produce higher value products by cutting out defects. The backbone of Solar-Dri Timber Specialties’ value-added process is a Weinig Profimat 22 moulder and the profile knife grinder.
The grinder allows the company to manufacture and maintain its own profile knives, which provides it with the flexibility to manufacture a variety of different wood products. Finished products are either shipped to customers by truck, or picked up on site. Peter and Monica have modest objectives for their company. “We’re planning to keep it as a manageable, family-size business,” says Peter, “and to make what we are doing more efficient and in some cases, easier.” The trend toward farmers deriving extra income, either from working off the farm or developing a non-agriculture related business, is truly a sign of the times no matter where you go, Peter concludes. He notes that his son—who is working on a farm in Australia—has noticed a similar trend there. On the farm that he is working on, they are raising cattle and also operating a fencing business.
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