Q: Can you explain for me the connection between hardwood lumber grades, yield and cost? We are seeking to reduce our raw material costs. You always seem to be so practical and clear in your explanations.

A: The connection between grades, yields and costs is a complex issue. Nevertheless, understanding this relationship can offer many producers the opportunity to save on raw material costs. A recent survey directed by Bob Smith at Virginia Tech looked at the hardwood lumber grades currently used by the secondary processing industry.

When we examine our future log resources and the potential lumber that will be produced, we see a strong trend that will mean less and less upper grade (No. 1 Common and higher) lumber produced. Less of this quality lumber means higher prices. Similarly, more lower grade lumber on the market will potentially mean lower and fewer increases in price for such lumber. Understanding the grade/yield/cost issue is one key for success.

Let me first review hardwood lumber grades, then discuss yields and processing times, and then overall costs.

Grades

For over 100 years, the National Hardwood Lumber Assn. has been the only source of hardwood lumber grading rules. The rules are based on grading rough lumber from the worst side.

The basic grades (FAS, Select, FAS 1-Face, No. 1 Common, No. 2A Common, No. 2B Common, No. 3A Common and No. 3B Common) reflect the amount of clear areas in a piece of lumber. The higher grades (FAS is the highest) have a larger percentage of the lumber's surface in wide and long clear areas; the lower grades have a smaller percentage of the surface in smaller clear areas. Although there are some variations, the basic clearness required on the worst side is no less than 83 percent for FAS; 67 percent for Select, FAS 1-Face, and No. 1 Common; 50 percent for No. 2A and 2B Common; 33 percent for No. 3A Common; and 0 percent for No. 3B Common. In all the grades, small clear areas are not counted in the percentage. (Special note: The difference between No. 2A and No. 2B Common is that stain is permitted in clear areas in No. 2B.)

Upper grades

In the upper grades, the number of separate clear areas that can be used are limited. The total clearness of a piece of lumber of No. 2 Common and above is often in the 90 to 98 percent range, but this high value is achieved by using many small areas that are not used when grading. Clear means that the surface is free from knots, splits, cracks, stain, rot and wane. The volume under the surface area used cannot have splits, rot, pith (the center of the log) or wane (the absence of wood).

There are also some size restrictions: FAS and FAS 1-Face lumber must be at least 6 inches by 8 feet; Selects must be at least 4 inches by 6 feet; and the Commons, at least 3 inches by 4 feet.

It is important to note that the color of wood is not part of the basic grading rule. It is necessary for the purchaser to use a special rule (such as "No. 1 White Maple") or create a special requirement in a purchase order to achieve the desired color. My experience is that there will be more color variation in the lower grades than in the upper grades; hence, this extra specification may be more critical in lower grades. The NHLA offers many three- to five-day grading classes throughout the country.

Yield

With this short lesson on grading, let's now estimate the expected yield from each grade. Yield is the percentage of the lumber that ends up as usable pieces when the lumber is ripped and cross cut. In this discussion, the yield is based on the kiln-dried footage. If based on the green footage, then the yield would be lower by as much as 6 percent.

Understand that the yield for the grades depends on the size of the smallest piece or cutting you are taking. For example, if the shortest cutting is 15 inches long, then the yield from FAS is 76 percent; No. 1 Common, 71 percent; and No. 2 Common, 59 percent. As the shortest cutting gets longer, then there will be more difference between the grades. If the shortest cutting is 26 inches, then the yields are 71 percent, 63 percent, and 53 percent for FAS, No. 1 and No. 2 Common.

The upper grades will produce more long cuttings. For example, if producing 2 x 30 inches, then the yields are 64, 53 and 38 percent, and if producing 3 x 40 inch cuttings, 56, 42 and 29 percent.

The yields from FAS 1-Face, Select, and No. 1 Common are very close, as the poorer face of all three is graded as No. 1 Common. Often, the clearness of the better side is not an issue when cutting parts.

Size affects yield

The minimum size of the lumber in each grade does affect yield slightly. In fact, with No. 2 Common lumber, a recent U.S. Forest Service study by Jan Wiedenbach reported that nearly two-thirds of the lumber graded No. 3A was under 6-3/4 inches wide when green at the sawmill, and nearly 90 percent was under 8-3/4 inches wide. In terms of processing, lower-grade lumber will often require more pieces to equal a given footage than upper grade. Stated another way, with lower-grade lumber, the piece count per 1000 BF will be higher than with upper grade.

Special note: I was recently in an operation that was cutting a lot of No. 3A Common lumber. Their minimum width strip at times was 3 inches wide. The preponderance of narrow lumber in No. 3A Common meant that in about half of the lumber pieces, they were able to rip only one 3-foot strip. Waste was high and yields were very low. They could easily increase their yield by 25 percentage points if they sorted their lumber by width into two piles, one pile with lumber widths of 3-1/4 to 3-3/4 inch, 6-1/4 to 6-3/4 inch, and 9-1/4 to 9-3/4 inches. Then, when cutting the 3-inch pieces, cut only lumber from the pile with the more desired widths. Sorting is not easy, but the yield increase makes it worthwhile.

Finally, as the cuttings required are wider, the yield is substantially lower.

Processing

As a rough rule of thumb, each 1 percent gain in yield means that 2 percent less lumber must be sawn to achieve the same number of parts. Therefore, improving yield is certainly a desirable goal.

Conversely, each 1 percent loss means 2 percent more lumber must be processed. However, if the yield loss also means that the incoming lumber costs less, then perhaps this increased processing cost can be offset by lower-cost raw material.

Some concrete examples

Here is one example for a furniture plant using mostly pieces that were 19 to 30 inches long and not too many shorter pieces.

Run #1. When processing all FAS lumber, the yield was 68 percent and the processing time was 2.0 hours. The average part cost was $0.0118 per square inch including lumber cost and processing cost. (That is, a piece 2 x 30 inches with 60 square inches cost $0.71 to produce.)

Run #2. When processing 100 percent No. 1 Common lumber, yield was 59 percent and processing time for about 16 percent more lumber than with FAS was 2.3 hours. The average part cost was $0.0098 per square inch. (The 2 x 30 inch piece now has a cost of $0.59.)

What if? What if the price of No. 1 Common lumber went up 10 percent? Then the production cost is $0.0104 per square inch, which increases the cost of a 2 x 30 inch piece up to $0.62.

Run #3. When processing 100 percent No. 2 Common lumber, yield was 48 percent and processing time for about 23 percent more lumber than with No. 1 Common was 2.9 hours. The average part cost was $0.0098 per square inch. (The 2 by 30 inch piece now has a cost of $0.59.) The cost of running No. 2 Common in this case is equal to running No. 1 Common, but the longer processing time (or lower productivity per shift) would certainly favor using No. 1 Common.

What if? What if a mixture of No. 1 (30 percent) and No. 2 Common (70 percent) lumber were used? This would require 2.6 hours of processing time, but would lower the overall production cost to $0.0092, which results in the 2 x 30 inch piece costing $0.55. The cost of lumber and the processing cost for each plant will be different, so you cannot use the data from these examples directly. To determine your costs and the best grade of lumber, you can make several test runs to estimate your yields and processing times for various grades of lumber. (Make sure your lumber grading is perfect.)

Consider hiring an expert to assess your present yield and provide some realistic ideas for yield improvement, including employee training. One more example: If, in the No. 1 Common example above, the yield were increased 1 percent by better processing, the cost would drop to $0.0096 per square inch and the 2 by 30 inch piece would have a cost of $0.58. That is a savings exceeding $25 per 1000 board feet of lumber. Many plants I have worked with have the potential to improve by several percentage points without large capital investments and without changing grade.

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