Marketing Strategies For The Small Sawmill Lumber Producer

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Marketing Strategies for theSmall Sawmill Lumber ProducerJoe DenigRetired NC StateUniversity WoodProducts ExtensionProfessorRiner, VAE-mail:joe.denig@gmail.com

A Good Marketing Strategy is Requiredfor Success as a Small Sawmill Operator It is easier to saw lumber, than sell at a profit Its easier to sell at no profit than to sell at a good profit You must plan in advance how you will sell the entire mixof what you saw Make a great plan, implement it, and correct as necessaryA goodsalesmancan sellcurved logsas well asstraight!

Learn to Observe and Listen You can be successful given the rightcombination of inputs and outputs You have to look around and see how you fitwith the variables around you Compare to competitors and see where you canbe unique-avoid competing Visit your prospects and customers to see theirtrue needs, may not be able to tell you what theyneed

Focus of Small Sawmill Marketing Must move everything you saw at a profit! Don’t buildinventories! Small sawmill businesses are family businesses-must beprofitable in terms of cash flow Focus on customers that pay upon pickup or quickpayment terms, deadbeat customers that buy a lot oflumber at discount prices are not your friends Look at your potential mixes, which produce the highestcash flow

Concepts of Small Sawmill Marketing Logs regardless of quality, saw out a range of lumber quality Marketing goal, is to move all grades promptly, at an overallprofit Keep looking at your mix and question what you can betterin terms of your sawing mix (for example, you can spend alot of time sawing a low grade in 4/4 lumber, is it better tomake it into a railroad tie?) Have to align log supply, sawing capabilities, and payingcustomers at all times to be profitable Keep working on your customer base

Marketing StrategiesCommodities You can get any color you want, aslong as its black Commodity, not much productvariation from one producer toanother Market sets the price Typical large sawmill, very efficientproducer is the winner Small sawmills can’t normally beprofitable selling commodity products

Marketing StrategiesCommodities Usually doesn't work well forsmall sawmills because of thecost of production versus salesprice Under the right conditions itcan work Low input costs, such as freeor subsidized logs, low laborcosts, etc.

Marketing StrategiesMass customization Different colors, differentpowertrains, options, butstill the same car Custom grades to meetspecialty markets Higher selling average,but market still rules Who can appreciate whatlumber you have to offerand is willing to be yourcustomer?

Marketing StrategiesMass customization Small sawmill, customgrades to meet specialtymarkets, sells kiln driedmaterial Advertises to public Customer base is lookingfor quality Held an “Open House”and 200 people came ona rainy day in a rural KYlocation

Marketing StrategiesBe a Service Provider Move from being amanufacturer to a serviceprovider Price as a customservice, not as a productyou can buy easily fromanother producer Service can be to sort forwidth, color, character,odd species, etc.

Marketing StrategiesExample of a Service Provider Entered business just ashurricane Fran hit Knew his costs Charged by the hour,mileage, and whatevergoods he consumed onthe job (saw blade) Would do whatever thecustomer wanted Got paid at the end of theday

Marketing Green Lumber Want to presale so you “saw and load” Sort at the sawmill to minimize labor Saw what your customers want to buythicknesses, widths, etc. Develop a market for lower grade rustic lumberused in higher valued products like cabinets,furniture and millwork instead of industrialproducts like pallets

Large Products Crossties-lots of species available, center poorerportion of logs, quick to saw, high in demand forrailroads, many lower quality forest standscontain logs for crossties and pallets Timbers for homes-for timber frame homes andlog homes, longer lengths bring premium prices,strength is important-have to limit defects thatreduce strength Sawing large product greater bf/day

Marketing Kiln Dried Lumber Wholesale hardwood lumber market pay up to /- 400/mbf for kiln dried over green lumber There is a greater range of customers that canuse kiln dried lumber than green lumber Dry, short lumber may become an interestingproduct for a local market because it is easy toload into a SUV

Thick Slab Products Wide cuts 2” thick and thicker Natural edges a premium-may have tight bark Wide widths sell for table tops but can glue upnarrow stock into wide panels Should be kiln dried for killing insects & stability Slabs can contain crotches or tree forks Splits and holes may not be defects Slabs can bring over 1,000 each

Thicker Lumber Products 6/4 and 8/4 lumber brings apremium and is hard to findfor most lumber buyers Most sawmills don’t cut thicklumber ( 5/4), so it is a way tobecome a strong niche player Does require better dryingskills for air and kiln drying

Pricing Lumber Products Hardwood and softwood market reports weeklyoutline current wholesale prices for green andkiln dried lumber Wholesale market are based on truckloadquantities Should develop a system to track costs versussales for the full range of lumber productsproduced Watch your inventory

Marketing to Metro Regions More buyers than you can support, thechallenge is to find them May be close by or far away Metro areas have few local sawmills Small sawmills in SE Michigan are selling locallumber to Habitat for Humanity Restores at goodmargins

Marketing to Rural Areas Develop lumber products of low grade lumberfor barns, fences, utility work on farms May want to saw standard widths 4,6 & 8” Fence posts, tomato stakes (from edgings),survey stakes are popular items Can cut barn rafter, joists and post products Barn siding is always popular

Know Your Customer Learn and practice what it takes to attract andsatisfy customers

Marketing-AdvertisingLet people know about your business Word of mouth – thinkabout your image andhow you come across Exposure to localgroups – farmers,wood workers, landowners, home owners Internet Local communitybulletin boardsSawmillMan

Relationship Marketing-Good Image Be a good listenerBe a problem solver for your customerGuide them through the processTreat people honestly, fairly and with respect (dowhat you promised) Be on time and on schedule Be respectful of your customers property Maintain a professional image

Internet Marketing Attract a differentclientele Think about who youwant to target Get a knowledgeableperson to help you Key search words arevery important Test your site Ability to reach“boutique” customers

Niche Marketing Example www.quartersawnoak.com of Chatham Co., NC Focuses on quartersawn oak lumber, longbeams and thick slabs Has a dehumidification and solar dry kiln Strong Internet presence Large baker band mill 65’ long track for aswing blade and chain mill sawmill Shop has band resaw

Niche Marketing Example www.quartersawnoak.com of Chatham Co., NC

Your choice, either sit on the sidelines, ortake life on by the horns (antlers)

A Good Marketing Strategy is Required for Success as a Small Sawmill Operator It is easier to saw lumber, than sell at a profit Its easier to sell at no profit than to sell at a good profit You must plan in advance how you will sell the entire mix of what you saw Make a great plan, implement it, and correct as necessary A good .

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