Avoiding Band-Aids

Excessive sawmill "patching" in effort to delay major upgrades could be terminal

By Tony Kryzanowski

Failure to upgrade sawmill facilities in a timely manner to maintain one’s status as a low cost producer could eventually prove fatal. That is according to a TimberWest survey of forest industry consulting engineers. Furthermore, they add that now is an excellent time to plan and implement a sawmill upgrade due to depressed markets. "Your capital costs are going to be lower than upgrading when the economy is booming because right now you will get deals from fabricators and suppliers," says GME Consulting Ltd. owner Gerhard Mueller.

"Building in bad times is when you can lower your capital costs significantly, which makes you a very competitive lumber producer later." Mueller’s company offers complete planning, procurement, equipment design and project management services in Washington and Idaho. Engineers surveyed highly discouraged excessive "patching" as a means to weathering economic downturns.

While some may be able to afford these types of short term, band-aid solutions, sawmills in greatest peril are those that continually delay major upgrades. "I compare the process of performing regular upgrades with being a race car driver," says Mueller. "You can be the best driver in the world, but if you don’t have a fast car, you are never going to win." As a rule of thumb, he counsels his clients to aim for being among the top 10 percent of low cost producers in the country. Given the pace of technological advances, sawmill owners rely generally on consulting engineers to advise them when an upgrade is essential.

The general consensus on primary and secondary breakdown equipment such as canters, gangs, edgers, and optimizers is around 10 years, but could require upgrading in as little as six and could last as long as 12. Sorters and planers have the longest shelf life — in the 20-year plus range.

There are telltale signs that a sawmill will need to make a capital investment shortly. These are:
• lower than acceptable levels of lumber recovery based on current technology;
• unacceptable levels of lower grade lumber recovery;
• the need to improve productivity, and;
• general equipment wear and tear. "

A sawmill should always improve costs by at least the rate of annual inflation," says owner of Pederson Management Ltd., Lloyd Peterson. Over the past 12 years, his company has been involved in the feasibility, design, project management and start up of approximately half a billion dollars worth of projects in the United States, Canada, Russia, South Africa and Brazil. Timing is also a contributing factor to the shelf life of installing new sawmill technology, Pederson adds. "Equipment installed at the start of new advancements will have a longer life than equipment at the end of the cycle," he says. In the case of planning a major sawmill upgrade, all engineers emphasize the importance of:
• taking the time to analyze your wood basket;
• establishing an accurate forecast of log size and quantity over the next five to 10 years, and;
• taking the time to analyze trends within target markets.

They also stress the importance of contracting consulting services in a timely fashion preferably early in the planning process.

"There is a misconception that in the engineering field, there is a lot of money spent for nothing," says partner with International Quest Engineering, Rod Lecher. "If the engineering is done right from the beginning, the dollar value will come back ten fold. We can save the client money on capital costs, easily recovering the cost of our bill." There are some key elements to successful project implementation These are:
• having a detailed budget and cost tracking system; involving mill personnel in detailed design and equipment selection;
• paying attention to detail in the engineering to ensure that the design is functional for the intent of the project; producing detailed specifications and performance guarantees for all equipment;
• picking an adequate project team to ensure the project is managed on time and on budget; and,
• implementing a safety program to ensure all project personnel adhere to safe work practices.

It typically takes two to six months to plan an upgrade, whereas a greenfield project will take significantly longer as further analysis of the fiber supply and markets are generally required.

Prior to commencement of construction, it is important to draft a detailed implementation plan so that whatever can be installed around existing production equipment is installed while the mill is operational. Barring any unforeseen circumstances, major equipment installation can usually occur during regular mill maintenance shutdown periods. When purchasing equipment, delivery can take anywhere from three to six months. A portion of payment is made up front, another payment on delivery, and a final payment based on the equipment meeting established performance criteria. It is essential to ensure that computer equipment is properly installed so that machine centers communicate effectively with control centers. Finally, provide adequate training for production staff on the use and production parameters of new equipment. Investment in training makes the start-up phase of operating new equipment easier to manage and allows the sawmill to achieve full equipment production much faster. Take it from the experts. There is a time and place for patching — too much, though, and your system could be in jeopardy.

TW

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