Morbark, LLC

Equipment changes help company redefine itself, cope with economic realities

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Courtesy of Courtesy of Morbark, LLC

For years now, loggers have had to cope with the same daunting economic conditions currently plaguing the rest of the country today: tougher markets in which to sell, operations and contracts headed overseas, and pressure to do more with less. To survive, many in the logging and lumber industry have been forced to get extremely creative. So creative, in fact, that some bear little resemblance to the companies they once were — both in terms of size and focus. One such firm, Yates Lumber, has essentially transformed itself from a lumber mill doing a bit of green waste grinding, to a chipping contractor producing better than 1,500 tons of chips to area paper and biofuel plants each week. The road to that transformation has been bumpy at times, but a number of equipment refinements — including downsizing to a more fuel-efficient Morbark Model 40/36 Whole Tree Chipper — coupled with a renewed regional interest in biofuel, have resulted in a leaner Yates Lumber, better suited to cope with today's harsh business realities.

Invaluable Experience
There's little denying that logging and lumber are in Alton Yates' blood. Immediately after graduation from high school, the eventual founder and owner of Lee, Maine-based Yates Lumber, was brought onboard by his older brother Scott to work in a local sawmill, and for the next 12 years learned enough to realize he wanted to start his own business.
“Those first years were an important time for me,” he says. “That mill was owned by a family friend; the experience was invaluable and led to the decision to purchase my own sawmill in 1996 and start a trucking company, Yates Trucking, a few years later. My brother Scott joined me in 2001 and today we are co-owners of both of those companies as well as a chipping plant.

“Once in business, I discovered that there were some things I didn't anticipate, such as how challenging it would be to get rid of the waste we were generating. Most of the area's biomass plants had been shut down since the 1980s and there were only a few paper companies taking material to fuel their boilers. So, in 2000, I bought a Morbark 1000 tub grinder which allowed us to create hemlock and cedar mulch and use some of the waste. It was a good start, but we needed to do a whole lot more.”

As luck would have it, they were able to do just that when H.C. Haynes, one of the largest landowners/mill suppliers in Maine — and one of Yates' largest customers — approached him to chip all the material they were generating.

“It was an incredible opportunity,” he says. “This allowed us to begin focusing on chipping as a real income source rather than just a solution to a problem. We bought our first Morbark chipper, a Model 50/48, in 2001 and we've been doing it ever since.”

Rebirth of an Industry
Chipping — and providing those chips to area mills — was fairly commonplace throughout Maine up until the early 1980s when, according to Yates, things started to change.
“I suppose economics the driving factor back then,” he says. “With the downturn in the logging industry, many of the markets for chips dried up, mills closed, boiler plants shut down, and so on. With no outlet for the chips, those that were logging and clearing were simply hauling the waste material back deep into the woods and leaving it there. Around 2004-2005, however, the push for alternative fuels was gaining in popularity, leading to a renewed demand for biomass fuel. Suddenly that waste was a valuable commodity again. Today, there is probably between eight and ten plants — both mills and power plants — within our 150-mile radius of operation, with new ones in the works.”

Yates' contracts with H.C. Haynes, as well as other smaller projects, have allowed him to get to a point where he is steadily chipping and sending about ten 30-ton loads of chips per day to plants for use as fuel.

“I never dreamed we'd be doing 1,500 tons a week,” he says. “But the demand is definitely there and, in this business, you have to act while you can.”

Dealing With the Competition
With that demand has come some intense competition. Yates says that, as recently as three years ago, his was the only operation in the region focusing on this type of work. Today, he says, there are probably as many as 15 grinders working in his area.
“That competition for material, coupled with fuel costs that have essentially doubled over the last year, has prompted us to closely look at ways to reduce operating costs and increase the efficiency of our operation. Equipment was the most obvious place to start. We have always been Morbark users — I broke into the business on a Morbark sawmill, and since then, have owned a pair of Morbark tubs and five Morbark chippers. So we knew we wanted to stay with them as our equipment supplier. The spike in fuel prices, however, was killing us and we needed a way to deal with it.”

For Yates, dealing with it first meant reducing the number of chippers he had in operation from two down to a single unit. The second was to trade in the now-idled Model 50-48 on a new model Morbark had just introduced: a Model 40-36 Whole Tree Chipper. That switch, he says, made an immediate, significant and lasting impact on operational costs.

The 411 on the 40-36
Introduced in 2007, Morbark's Model 40-36 chipper was designed to meet medium- to heavy-duty chipping demands, yet offer better portability than its larger counterpart, the Model 50-48. While those are outstanding benefits to Yates, in his mind there's no bigger selling point than the 40-36's fuel economy.

“Morbark offers these units with a range of available power plants,” he says, “but we chose the six-cylinder, 600 Hp John Deere engine. It really has outstanding power — we feel that, for us, when material is staged right, it can almost match the larger Model 50-48 in production. The difference, however, is in fuel consumption; the new chipper uses five to seven gallons less fuel per truckload. We always try to keep production at no less than ten truckloads a day, so, with fuel lately averaging $4 a gallon, we figure we are saving about $250 in diesel costs per day.”

Projected over the course of a year, that adds up to better than a $60,000 reduction in fuel costs. And the savings, says Yates, don't stop there.

“We've found the maintenance on the new machine to be easier and less costly as well. With our previous 12-cylinder machine, changing injectors at 6,000 hours, as recommended, would cost us about $8,000; any issues with the turbo could cost another $3,000. This is a six-cylinder engine so those costs are essentially half of what we were used to. We've also found the knives to be easier and less expensive to replace; another plus we hadn't expected. This unit really seems to have been designed with an eye on a company's bottom line. It's definitely made an impact here.”

Gaining an Edge
As the demand for more and more material increases, Yates — and other like him — are facing a sort of cruel irony: the rise in fuel costs is feeding a demand for the biomass material, but those same high costs are preventing chipping contractors from putting additional equipment on the road to create and move the material.

“I could probably have five chippers working full-time just to meet the demand,” he says. “But at the end of the day, after paying to keep those chippers and the trucks running, we'd have little to show for it. Still, this is an exciting time to be doing what we do: essentially creating an alternative fuel source from material that was once left to rot in the woods. While the current high fuel costs aren't letting us do everything we'd like, there's no denying that our new chipper has helped us get something of a competitive edge. And that can be huge in times like these.”

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