Investment Limits for Small-Scale SDR (Saw-Dry-Rip) and EGAR (Edge-Glue and Rip) Sawmills.

Abstract : A viable investment must produce an output that can be sold to generate enough revenue to cover operating costs, return capital investment, and produce sufficient profit to attract investment monies. Market prices, roundwood costs, and other operating costs essentially establish investment limits for new sawmills or converting old sawmills to new products. Using such operating factors, this paper provides algorithmic equations for estimating maximum investments for building or converting a sawmill to use the SDR (Saw-Rip-Dry) and EGAR (Edge-Glue-and-Rip) processes to manufacture between 6 million and 12 million board feet (two-shift basis) of random length structural lumber year from low- to medium-density hardwoods. This paper also includes examples for both new and converted mills, based on typical economic assumptions. The equations are derived from discounted cash flow analyses and are linear, even though discounted cash flow analyses do not yield linear results when using different estimates for input. However, results are close enough to be approximately + or - 5 percent discounted cashflow results when estimated of change are within + or - 30 percent of those used for deriving equations, as displayed in the appendix.