BUSINESS APPROACH TO CONVERTING SMALL WOODLOT AND URBAN WOOD TO PROFITABLE PRODUCTS

Transcription

1 BUSINESS APPROACH TO CONVERTING SMALL WOODLOT AND URBAN WOOD TO PROFITABLE PRODUCTS Wednesday, July 26th, 2017 Research Triangle Park Harry Watt North Carolina State University Wood Products Extension North Carolina State University Wood Products Extension Since 1958 has supported the wood products industry in North Carolina in the areas of wood education, training, troubleshooting problems, research and overall assistance in making a large variety of wood products. It is the policy of the State of North Carolina to provide equality of opportunity in education and employment for all students and employees. Educational and employment decisions should be based on factors that are germane to academic abilities or job performance. Accordingly, the North Carolina State University ( NC State ) does not practice or condone unlawful discrimination in any form, as defined by this policy. NCSU/WPE Website = 1

2 Urban and Small Woodlot Forests Financial incentives are a must for achieving good forest utilization Lots of Opportunity Based on Supply & Demand 2

3 Success = Opportunity + Preparation Successful full utilization of urban + small woodlots materials has not occurred, but we may be gaining! Small woodlot owners struggle to find loggers and markets = opportunity for startup businesses Leaving billions of $ out of the economy Causing harvesting of billions of trees worldwide that could be replaced by using US urban and small woodlots materials for products purchased by Americans-humans worldwide chase $ Overwhelmed by the Opportunity All measures of the volume of urban removals and small woodlots are enormous Large variety of species, quality, configuration are available, and high variety can be a problem Wide dispersal in every urban and small woodlot situation No reason we cannot achieve better utilization 3

4 Urban and Small Woodlot Tree Harvesting for Products Problem Can Only Be Solved By Folks Cooperating for Financial Gain Need a full set of players-landowners, homeowners, harvesters, transporters, processors, buyers Good $ in the economic pie for everyone Volume and margin determine profitability 4

5 Can Think in Terms of $ Per Load & $ Per Day- Sales and Bottom Line-Must Appreciate the Economics Have to have a sufficient profit margin Have to have volume sufficient to gross enough $ Profitability = Volume x Margin Example-Markets for Firewood- Restaurants No uniform quality and moisture content or species requirements Typically an agreement between restaurants and processors of what specifications are wanted May have to develop a strategy for efficient deliveries and packaging Can be a year-around market 5

6 What Does an Urban and Small Woodlot Wood Utilization Network Look Like for Durham and Raleigh Regions? One network for each city with cooperation Collection system that works with homeowners + landowners + businesses + city units Centralized information system to link removals and collections-could put out announcements for removals-performed by public or private organizations Multiple collection and processing yards Network of Processing Centers-can be a combination of public and private facilities Unloading and sorting equipment Basic processing equipment Grinders and chippers Sawmills Firewood processors Composting Primary and secondary options available 6

7 Network of Processing Centers-can be a combination of public and private facilities There is a Hierarchy of Increasing Material Values Lower-mulch, chips, firewood logs Medium-industrial logs for pallets and cross ties Medium-lower/medium grade lumber logs High-high value lumber and veneer logs Goal is to always direct materials to higher valued uses 7

8 Funding the System for Processing Materials From Urban Forests and Small Woodlots Public units-fees and payments upon taking urban wood materials-flexible system that works Logs + Chipped ground materials Stumps + Compostable materials Goal is to make the network affordable + best choice Private industry businesses Use Urban and Small Woodlot Wood for Creative Housing Projects! 8

9 Measure the Opportunity by Costs and Benefits Revenues-sum of quantity x price Costs-materials, labor and overhead problems avoided Business and job creation + tax improvement for local governments Want to make this a great business want folks to see potential profit $ Incentives and Success for Everyone-$$ $ Want to make this a great business opportunity for start up businesses-best if market based incentives Want to make both easier and cheaper for homeowners and businesses to remove materials and small woodlot owners to sell timber Want everyone involved to find success Want incentives to have a positive effect 9

10 Simple Receiving and at Collection Points Logs-sawlogs, firewood logs, chip and grinding materials Can collect and redistribute to best suited processors Output products-lumber/firewood/mulch /chips/ compost Removal businesses have to harvest materials in the forms useful for processors Have to Prepare Woody Materials at Harvest Into States That The Next Step Can Use Efficiently Easy to convert high value materials into low value products 10

11 Metro Governments Can Help-1 Create demand by using lots of chips and mulch on government properties Providing land by ownership or lease for collection and processing centers Promoting networking with homeowners and business users Promoting networking with meetings and outreach efforts Metro Governments Can Help-2 Cooperate to keep the systems simple Support with websites and apps-provide leadership Work to reroute materials from landfills to collection centers and processors Incorporate urban wood materials into government facilities new and remodel construction 11

12 Lots of Opportunity for Non-Conventional Products Look at the Economics-seeing the profitability A full time employee may make $X a year but need to generate Y$ sales per year The magic formula for success-seeing the opportunity What is the volume? What is the profit margin? Profits = volume x margin! 12

13 Business Goals Convert urban and small woodlot materials into profitable products for owners + local businesses Have to cover material, labor and overhead costs + have a profit Want to connect with others on both the supply and demand side-cooperate and network Want a network of multiple processing centers so delivery is close and quick Opportunities Exist-Potential is There for Everyone Everywhere! Start small-grow businesses with reinvestment strategies We should focus on startups and extensions of existing businesses Support cooperative sharing of resources and knowledge of markets The potential is there for anyone everywhere! 13