Q: Is it profitable to dry your own wood?
Technically speaking, no problem. In general, you will find that you can produce higher-quality kiln-dried lumber if you dry it yourself than if you buy it on the outside. The reason is, in a nutshell, that your kiln operator will have your very specific quality items in mind while drying your wood. Further, you will be able to easily feed back to the operator any problems or concerns. An outside drying operation may not fully appreciate your special requirements at times. Further, they may not be able to accommodate your needs, even if they knew what they were, as they are drying for many customers.
The real question is: "Is it profitable to dry your own wood?" If you look at the green lumber price and then the kiln-dried lumber price, your first answer would be: "Yes, indeed!" The difference in price can easily be $300 per MBF at times. But, from this drying price difference, you must factor in 7 percent shrinkage, somewhere between 3 percent to 10 percent value loss due to warp, checks, splits and so on, transportation costs from the sawmill to your operation, lumber handling costs, including stacking, and skilled kiln operator costs. This is all in addition to the cost of the kiln and associated equipment such as ovens and balances, increased inventory costs, energy costs, maintenance cost, sticker cost, extra fork lift wear and tear, and so on. You will also need space for receiving fresh lumber, stacking, and the kiln. Also, make sure that the operator attends a good drying school to learn all the latest and best drying techniques.
You also need to ask yourself if you can feasibly dry all the thicknesses and species you need. Perhaps, rather than planning to dry all your lumber, you will want to target drying your main species and thicknesses and then buy your remaining needs from a wholesaler or broker. (For example, assume your kiln holds 10,000 BF. What will you do if you dry 10,000 BF of 4/4 basswood, but only need 5,000? Or what if you need 12,000 BF?) Kiln size will be very critical to good inventory management; usually, smaller kilns provide more flexibility in what you can dry.
Also, your cash flow will change a bit as the sawmill will want to get paid immediately.
The bottom line is that you will indeed potentially save money by drying your own lumber, if the drying process is properly managed and operated.
The first step is to get a handle on anticipated costs and benefits. Contact a good accountant or financial consultant, preferably someone who is familiar with lumber drying operations. Let this person help you decide the financial aspects of expanding into drying.
The next step is to contact several manufacturers of drying equipment. Have them give you the name of several of their customers who are drying the same species that you anticipate drying. Get drying times, costs, energy usage and so on from these people. (Don't believe the salesmen, but believe their customers.) Make sure that the equipment is well tested and that if you get into trouble you can get technical advice and replacement parts easily. You will also have to decide which fuel you want to use electricity, natural gas, propane or wood waste.
Do not use cash to purchase this equipment, but get a loan. Save cash for inventory purchases and so on. Check with a wood consultant about lumber handling issues. Send an operator to kiln drying school.
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