profit and loss from wood drying: how does kiln drying affect a
TRANSCRIPT
Profit and loss
from wood drying:
How does kiln drying
affect a sawmill’s
bottom line?
Peder Gjerdrum, Skog og lands
nowledge of the kiln process, of drying quality, hoosing the right technical equipment, etc. come veryday challenges, widely studied and presented
Profit and loss account Comments
Gross sales revenue All products: boards, chips, bark, ..
- Sales expenses Transp. to customer
Net sales revenue
- Raw material cost Sawlogs
Production added value
- Prod. variable cost Most cost relates to produced volume
Labour
Energy
MaintenanceContribution margin
- Time variable cost Administration, insurance, ...
- Depriciation
Operating result
- Finacial items Banking, shareholders, ...
Profit/loss befor tax
Cost of drying to MC 10%
A “typical” example
Example 20 €/m3
energy cost 40%
timber quality loss 32%
Cost of drying to MC 10%
Detailed model for calculation
Example 50 €/m3
energy cost 42%
timber quality loss 32%
Cost of drying to MC 10% 20%
Examples 10-17 7-14 €/m3
Spreadsheet model for use at sawmi
Cost of drying to MC 10% 20%
Illustrated model calculation
Examples 39 17 €/m3
Energy cost 20% 20%
Timber quality loss 29% 0% (= reference M
0
5
10
15
20
25
30
35
40
45
50
20 16 12
MC, %
Co
st, €
per
m3
LogisticsQuality loss
Heat (El. (fans)
Super
Maintenance
Depreinteres
Dimension lo(shrinkage)
In the following:
Drying to shipping-dry is regarded as part of the basic sawmill operation
i.e. cost for stick-laying, local transportetc. is accepted as ‘basic cost’
0
5
10
15
20
25
30
35
40
45
50
20 16 12 8
MC, %
Co
st, €
per
m3
LogisticsQuality loss
Heat (bark)El. (fans)
Supervision
Maintenance
Depreciation,interest
Dimension loss (shrinkage)
“0 cost”
Profit and cost accountSaw
Basic dry
Addi-tional
Dry sort Etc
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
LocationKiln
Profit and cost accountSaw
Basic dry
Addi-tional
Dry sort
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
Kiln
In a sawmill,
1/3 of electric power consump
for kiln fans and hot water circulation
Profit and cost accountSaw
Basic dry
Addi-tional
Dry sort Etc
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
LocationKiln
Distortion reduces the revenue
Profit and cost accountSaw
Basic dry
Addi-tional
Dry sort
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
LocationKiln
Higher temperature
->
Higher maintenance cost
Kiln maintenancemajor challenge
and cost
Profit and cost accountSaw
Basic dry
Addi-tional
Dry sort Etc
Mill TOTAL
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
Concave boards - result from casehardening. Increasing problem with wider boards.
Photo: John Barbakken, Bygg
How to calcu
possible los
good-will, t
might come i
effect in t
future, and m
influence s
timber in gen
Element: Timber quality
Timber logistics
Heat production
Drying process
unit €·m-3·%MC-1 €·m-3 €·m-3·h-1 €·m-3·h-1
Revenue improved prices, incr.
shrinkage & degradation
(quality loss during storage)
Personal expenses sticklaying, loading ,
supervision
operation supervision & control
Cost of materials (stickers) bark, wood debris
Cost of energy fuel oil for trucks
electricity for fans and pumps
Other operational expenses
insurance heat plant maintenance
kiln maintenance
Depreciation & interest
equipment, timber in stock
heat plant & pipes
kiln assets
Need to identify the nature of all revenue and
elements, how they vary, what factors causes vari
AVERAGE MC IN BOARD
AV
ER
AG
E S
HR
INK
12%18%24%30%36%42%48%54%60%0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
EdgeWidthMean trend
)36u()36u100(3.6Krymp 2
>⋅−⋅=
Regularly, a customer requires a 50 mm to be 50even if dried to 8% MC.
Shrinkage = f(MC) - so you must calculate additshrinkage, i.e. reduced timber volume.
For industrial
kiln drying:
Drying time
Drying temperature
MC accuracy
Drying temperature
Risk of unwantedmoisture loss
Drying temperature
DepriciationMaintenance cost
Drying temperature
Economic effect of drying temperature is very com
Did anyone try to calculate?
Element: Timber quality
Timber logistics
Heat production
Drying process
unit €·m-3·%MC-1 €·m-3 €·m-3·h-1 €·m-3·h-1
Revenue improved prices, incr.
shrinkage & degradation
(quality loss during storage)
Personal expenses sticklaying, loading ,
supervision
operation supervision & control
Cost of materials (stickers) bark, wood debris
Cost of energy fuel oil for trucks
electricity for fans and pumps
Other operational expenses
insurance heat plant maintenance
kiln maintenance
Depreciation & interest
equipment, timber in stock
heat plant & pipes
kiln assets
Constant
(no calc
needed)
Main
var.
with MC
Main variation
with drying time
(for given temp)
Summary of cost elements
8 NOK ~ 1 €
NOK €Price sawn timber at 20% MC, per m3 1400 175Additional time in kiln ca. 10 h per 1% dryer; incresing
Quality losses, per m3 3.00 0.38 per 1% dryer
Shrinkage in volume see graph, same in width and th
Cupping and other distortion 60% addition to shrinkage
Biofuel: Bark, sawdust, cost per m3 600 75 proportional to drying time
Electricity, cost per kWh 0.6 0.1 33% of all el. to kilns
Survey, control, transport 16 2Technical investment Sum for kilns, heat plant, hot w
Maintenance 20% of sawmill total; proportiontime
Depriciation 15 years
Interest 8% p.a.
Additional Contribution, per m3 2.00 0.25 per 10 h additional drying time
0
50
100
150
200
250
20 18 16 14 12 10 8Actual MC, %Actual MC, %Actual MC, %Actual MC, %
Akku
mul
ert t
ørke
kost
nad,
kr/
m3
Additional Contribution
Depriciation & interest: Techn investment
Maintenance: Techn investment
Survey, control
Electricity: Fans, pumps etc
Revenue loss: burnt Bark and chips
Shrinkage, Cupping and Quality losses
Some cost are more important than others:
Shrinkage, cupping and quality loss
Investment costs and maintenance
Must be calculated more accurately, following the sawmill’s description of own situation
0
50
100
150
200
250
20 18 16 14 12 10Actual MC, %Actual MC, %Actual MC, %Actual MC, %
Akku
mul
ert t
ørke
kost
nad,
kr/
m3
Additional Contribution
Depriciation & interest: Techn investment
Maintenance: Techn investment
Survey, control
Electricity: Fans, pumps etc
Revenue loss: burnt Bark and chips
Shrinkage, Cupping and Quality losses
Conclusion: If you don’t get +10€/m3
for drying another 4%, don’t do i
Conclusions
Extra drying is added value to the timber and
be reflected in higher sales revenue
It’s time improve kiln economy calculation
The calculation models must be tailored to ref
the situation for each single sawmill
This presentation gives just an outline;
more details and specification will be neede
Better models and more use will teach us to
reduce unwanted cost,
ask the right sales prices,
improve kiln operations, ...
Thanks
for your
attention!
Peder Gjerdrum