Small-diameter wood processing in the southwestern United States: An economic case study and decision analysis tool

Ponderosa pine ecosystem restoration has been proposed as a method of improving ecosystem health and lowering the risk of catastrophic wildfire in forests in the southwestern United States. There are few facilities in that region that process material removed from restoration treatments into products. At the time of this study, Alpine Trucking and Specialty Woods was an integrated small-wood processor located in Eagar, Arizona, that used logs from restoration treatments to produce roundwood products. A flow diagram was created that showed the products and by-products that resulted when a log was allocated to production of a primary product. This was converted into a spreadsheet model that included the product yields, processing rates, processing costs, and sales revenue. The primary value of this to a broader audience is in demonstrating that a useful model could be built from the working knowledge of mill employees. As a result of this study and the use of the decision analysis software, it was determined that utility poles were not a good product option for Alpine given their equipment mix because processing was inefficient, resulting in high processing costs and low or negative margins. Hand-peeled poles made large contributions to net revenue because they required little processing and carried a premium price. Alpine determined that small peeled poles were their core business and implemented in-woods sorting to route some logs directly to other manufacturers to minimize handling of logs that were not profitable for their operation. The practice of aggressively marketing by-products such as shavings, sawdust, and bagged firewood was retained as an important key to being able to gain revenue from all of the material brought to the mill.