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
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
Operating result
- Finacial items
Profit/loss befor tax
Transp. to customer
Sawlogs
Most cost relates to produced volume
Administration, insurance, ...
Banking, shareholders, ...
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
Examples
10%
20%
10-17
7-14 €/m3
Spreadsheet model for use at sawmi
50
45
40
Cost, € per m3
35
Dimension lo
(shrinkage)
30
25
Depre
interes
20
Maintenance
15
Super
El. (fans)
10
Heat (
5
Quality loss
Logistics
0
20
16
12
MC, %
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
In the following:
Drying to shipping-dry is regarded as part of the
basic sawmill operation
i.e. cost for stick-laying, local transport
etc. is accepted as ‘basic cost’
50
45
40
“0 cost”
Cost, € per m3
35
Dimension loss
(shrinkage)
30
25
Depreciation,
interest
20
Maintenance
15
Supervision
El. (fans)
10
Heat (bark)
5
Quality loss
Logistics
0
20
16
12
MC, %
8
Profit and cost account
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
Saw
Location
Kiln
Basic
AddiDry
dry
tional sort
Etc
Profit and cost account
Saw
Kiln
AddiBasic
tional
dry
Dry
sort
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
In a sawmill,
1/3 of electric power consump
for kiln fans
and hot water circulation
Profit and cost account
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
Labour
Distortion reduces the
Energy
revenue
Maintenance
Contribution margin
- Time variable cost
- Depriciation
Saw
Location
Kiln
Basic
AddiDry
dry
tional sort
Etc
Kiln maintenance
major challenge
and cost
Profit and cost account
Net sales revenue
- Raw material cost
Higher temperature
->
Higher maintenance
cost
Production added value
- Prod. variable cost
Labour
Energy
Maintenance
Contribution margin
- Time variable cost
- Depriciation
Saw
Location
Kiln
Basic
AddiDry
dry
tional sort
Profit and cost account
Saw
Basic
dry
Additional
Dry
sort
Etc
Mill
TOTAL
Net sales revenue
- Raw material cost
Production added value
- Prod. variable cost
How to calcu
Labour
possible los
Energy
Maintenance
good-will, t
Contribution margin
- Time variable cost
might come i
- Depriciation
effect in t
future, and m
influence s
timber in gen
Concave boards
- result from casehardening.
Increasing problem with wider boards.
Photo: John Barbakken, Bygg
Need to identify the
nature
of all revenue and
elements, how they vary, what factors causes vari
Element:
Timber
quality
Timber
logistics
Heat
production
Drying
process
€·m-3·%MC-1
€·m-3
€·m-3·h-1
€·m-3·h-1
improved
prices,
incr.
shrinkage &
degradation
(quality loss
during storage)
sticklaying,
loading ,
supervision
operation
supervision &
control
Cost of materials
(stickers)
bark,
wood debris
Cost of energy
fuel oil for
trucks
Other operational
expenses
insurance
heat plant
maintenance
kiln
maintenance
equipment,
timber in stock
heat plant &
pipes
kiln assets
unit
Revenue
Personal expenses
Depreciation &
interest
electricity for
fans and
pumps
10%
9%
Edge
Width
Mean trend
8%
Krymp = 6.3 ⋅ ( 100 −
For
industrial
kiln
drying:
AVERAGE SHRINK
7%
u 2
) ⋅ ( u > 36 )
36
6%
5%
4%
3%
2%
1%
0%
60%
54%
48%
42%
36%
30%
24%
18%
12%
AVERAGE MC IN BOARD
Regularly, a customer requires a 50 mm to be 50
even if dried to 8% MC.
Shrinkage = f(MC) - so you must calculate addit
shrinkage, i.e. reduced timber volume.
Economic effect of drying temperature is very com
Did anyone try to calculate?
Drying time
MC accuracy
Drying temperature
Risk of unwanted
moisture loss
Drying temperature
Depriciation
Maintenance cost
Drying temperature
Drying temperature
Main
Constant
Main variation
var.
(no calc
with drying time
with MC
needed)
(for given temp)
Timber
quality
Timber
logistics
Heat
production
Drying
process
€·m-3·%MC-1
€·m-3
€·m-3·h-1
€·m-3·h-1
improved
prices,
incr.
shrinkage &
degradation
(quality loss
during storage)
sticklaying,
loading ,
supervision
operation
supervision &
control
Cost of materials
(stickers)
bark,
wood debris
Cost of energy
fuel oil for
trucks
Other operational
expenses
insurance
heat plant
maintenance
kiln
maintenance
equipment,
timber in stock
heat plant &
pipes
kiln assets
Element:
unit
Revenue
Personal expenses
Depreciation &
interest
electricity for
fans and
pumps
Summary of cost elements
8 NOK ~ 1 €
Price sawn timber at 20% MC, per m3
NOK
€
1400
175
Additional time in kiln
Quality losses, per m3
ca. 10 h per 1% dryer; incresing
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
2
Technical investment
Depriciation
Sum for kilns, heat plant, hot w
20% of sawmill total; proportion
time
15 years
Interest
8% p.a.
Maintenance
Additional Contribution, per m3
2.00
0.25
per 10 h additional drying time
Additional Contribution
Depriciation & interest: Techn investment
Akkumulert tørkekostnad, kr/m3
250
Maintenance: Techn investment
Survey, control
200
Electricity: Fans, pumps etc
Revenue loss: burnt Bark and chips
Shrinkage, Cupping and Quality losses
150
100
50
0
20
18
16
14
Actual MC, %
12
10
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
8
Additional Contribution
Depriciation & interest: Techn investment
Akkumulert tørkekostnad, kr/m3
250
Maintenance: Techn investment
Survey, control
200
Electricity: Fans, pumps etc
Revenue loss: burnt Bark and chips
Shrinkage, Cupping and Quality losses
150
100
50
0
20
18
Conclusion:
16
14
Actual MC, %
12
10
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