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About Spilyay tymoo. (Warm Springs, Or.) 1976-current | View Entire Issue (Oct. 20, 1978)
PAGE 8 OCTOBER 20, 1978 Mill Improvements Recommended for Maximum Returns by Cynthia Stowell The Tribes can realize the optimum value of its timber over the next ten years by investing $6 million into improving Warm Springs Forest Products Indus tries facilities, wood products consultant Ed Williston told the Tribal Council Monday. Williston was presenting Council with the findings of his nine-month study, requested by the Tribes and financed by the Economic Development Admin istration. The purpose of the $55,000 study was to determine, the optimum products that W.S., F.P.I. should manufacture and the optimum conversion facili ties (processing plant) needed to maximize returns on the avail able raw materials. The study found no justifica tion for the building of a new sawmill and recommended no major shift in product line. Instead, modernization will be the key to maximizing profit, Williston said, noting that the W.S.F.P.I. mills need to be brought up to “state of the art” industry standards. Improvem ents would result in immediate annual savings, paying for them selves within three or four years, he said. Williston stressed that in making necessary improve ments it must be remembered that lumber has five times the market value of chips and ten times the value of sawdust. Whenever a log can convert to lumber, it should, he said. While the bulk of Williston’s recommendations were specific to improvements in the sawmill, studmill, veneer plant and ply wood lay-up plant, he also of- ferd observations on the prepa ration and transfer of the raw material. He was “disappointed” to find that the B.I.A. does not have a. “complete forest inventory,” making long range management and planning difficult if not impossible. However, he noted that the inventory statistics and. projection supplied to him were adequate for his study. The consultant also noted that logs are being transferred from the woods to manufactur ing operations at a price far below true market value. This makes it appear that the mill’s profit picture is rosier than it is, when in reality manufacturing inefficiencies are being masked by the exceptional savings in raw material purchase. Logging practices also need to be sharpened, Williston sug gested, thereby eliminating waste at the earliest point. Why a study? The need for a study such as Williston’s became apparent to the Council when discussion about the future of the W.S.F.P.I. facility reached an impasse. There were many unknown fac tors, among them market out looks, the condition and potential of existing conversion facilities, and the availability of the re source. There has also been concern about the unprofitability of the plywood lay-up plant in Madras. In order to address these concerns, Williston identified and carried out five tasks which were: 1. Examination of timber resource data. 2. Evaluation of the mills. 3. Identification of optimum product lines. 4. Development plan for optimum conversion facilities. 5. Evaluation of expected return on investments. Williston used a number of methods in his study, including on-site observation« running tests on processing efficiency, and simulating mill operations by computer. In addition to his own years of experience in wood products manufacture, Williston utilized the talents of subcontractors, the Bureau of Indian Affairs, U.S. Forest Service, and W.S.F.P.I. management. Williston’s findings appear to contradict former W.S.F.P.I. manager Persh Andrews’ thoughts about converting the mill for small log handling and whole log chipping. The raw material picture for the next ten years does not justify such modifications at this point, said Williston, although he noted that at the rate forestry practices and conversion techniques are changing, further facility chan ges will undoubtedly be required after that ten year period. It makes more sense dol lar-wise to seek short-term pay-offs on investments rather than to convert the operations based on a change in the avail able resource that may be dec ades away, he said. A total capital cost of $6,008,646 should result in annual savings of $3,804,573 after a pay-out time of 3-4 years. The return on investment should be slightly better than 80 percent. What next? HARD HEADS - Members of the Tribal Council were taken through the WSFPI mills by Manager Ralph DeMoisy Tuesday before hearing the final report on the mill study they requested last year. Rita Squiemphen, Larry Calica, Karen Wallulatum, Elmer Quinn, and Delbert Frank were among those council members concerned enough about the future of the mill to hire consultant Ed Williston to take a good hard look at the operation. CDS Photo With the study results di gested, W.S.F.P.I. management is preparing recommendations to the Board for capital invest ments to be made in the coming year, said manager Ralph DeMoisy. These recommendations, which will be presented to the Board on Monday, are accomp anied by a sense of urgency, he noted. Since it takes six to eight months to acquire some of the needed equipment, a decision must be made very soon, said DeMoisy. The manager went on to say, “1979 is the big construction year, with refinements and shak ing down in the year 1980.” Improvements will be made with the least interruption in produc tion possible, he said. After such major changes it takes a facility a year or so to “smooth out” the! rough spots. A Closer Look At The Mill Study In his evaluation of the Warm Springs Forest Products mills and their potential in the manufacture of marketable pro ducts, Ed Williston covered a wide spectrum of concerns, from management of the resource to market outlooks. His observa tions and recommendations, which were often quite specific, are summarized here by area of inquiry. Raw Materials -The B.I.A.’s forestry inventory is inadequate, as it does not; include grade along with size and species. The current inventory design being created by Paul Sanders and Wes Rickard should prove to be valuable. -Logs should be sold to the mill at true market value, not the B.I.A.’s appraised value which is much lower. No. 3 fir sawlogs selling for $250 per thousand board feet in the outside market are being transferred to the veneer plant at $150. This savings in raw materials acts as a smoke screen for manufactur ing inefficiencies. -Felling and bucking practices could be improved to lessen waste and increase earnings. For instance, notches should be in the stump, not the log butt, and logs should be bucked more accurately to avoid short and long logs. -Culls, or old trees with weak cores, often have marketable outer layers and should be utilized more frequently in the sawmill. -Safer access to the mill from the highway for log delivery would lessen the likelihood of injury, death and-or costly law suit. Sawmill -Only larger logs (11 inches and up) should go tô thé sawmill to best fit the equipment. Small logs should go to the studmill. -Continue the current pine prod uct line (shop lumber and finished boards). -Replace, repair or otherwise update equipment to maximize efficiency, increasing lumber re covery by 7-9 percent or 880,000 a year. Plywood Plant lay-up might be automated to The plywood lay-up plant in increase efficiency. Madras lost money in 1977 and -The plywood market looks fav faced either a shutdown or orable for the short and midterm drastic changes. These improve and even though the longterm ments were suggested: may favor such competitive —Veneer should be transferred at products as wafer board, invest market price and the plywood ment into the plywood plant plant should have first refusal would mean quick pay-out and with the option of later selling, high profit. swapping or buying materials. Right now 30 percent of the Residuals Studmill -More logs (11“ maximum dia veneer is being sold green to -Never make chips instead of meter) are needed to supply the outside markets. lumber or plywood. They are far studmill. Possible sources are -Move the plywood plant down to less profitable. thinned trees, diversion of more the Warm Springs site. This -Make as little hog fuel as small logs from the sawmill and would eliminate much of the possible. (Hog fuel is sawdust, veneer plant, or retaining veneer breakage that is occuring in the bark, and non-chippable scraps). transporting of dried veneer to This will mean less fuel for the cores now being sold. -Replace, repair or otherwise Madras. It would also eliminate powerhouse but Williston’s ad update equipment including the hauling costs, make mainten vice was “Don’t feed the addition of two saws to better ance more convenient, expedite monster.” Williston feels the control and supervision, and cut three generators were a good utilize each log. -Studs (2”x4”x8’ lumber for down on handling. investment despite the shortage' house framing) will continue to -Driers should be repaired to of fuel and says they will pay for be a “bread and butter” product ensure better quality veneer and themselves. for W.S.F.P.I. Veneer Plant -Because of the reduced volume of logs available (down 28 per cent from 1977) arid the ineffic iency of the conversion opera tion, a hard look was taken at whether the fir logs would be better used for lumber or veneer. It was concluded that veneer would be more profitable. -The green veneer market looks very favorable but the direct sale of veneer must be weighed against the potential profitability of maintaining the plywood op eration (by which dried veneer is glued together to make ply wood). -The veneer plant needs to be improved. Some deficiencies have been corrected already, such as leaking steam vat doors and the need for moisture control devices, but new peeling equip ment is still needed. AGING HEADRIG - Built in 1901, the headrig in the sawmill is obsolete, said Williston who conducted the mill study. The carriage needs to be rebuilt, a thinner saw would reduce sawdust and the sawyer could use digital setworks to saw more precisely. Many such improvements were recommended by Williston. CDS Photo
