The economics of a hardwood sawmill are primarily oriented to industrial uses (furniture, cabinets, millwork) where appearance is die main value criterion. Along with the clear grades, though, considerable amounts of' knotty. defect-ridden material are inevitably. produced. These generally sell for applications where appearance is unimportant. such as pallets. These markets have traditionally offered low prices, though they also required little processing on the part of the mill so costs ire low.

Tests using NDT revealed that there is considerable unused mechanical potential in such pith-centered cants, Despite their defects. about 40 % have properties that: are high enough for their use as chords in trusses. while another 50% could be used at least as truss webs, The underlying attraction of this proposition is the price premium generally obtained for stress rated lumber. In recent years, pallet stock has sold for between $250 and $285 per thousand feet, By contrast., stress rated spruce-pine-fir has sold for as high as $535. but also as low as $365. Although on the whole truss applications yield higher prices, they also In terms of processing, upgrading of cants for structural uses requires that the stock. be dried to about 15% moisture content, planed on four sides and be individually graded for strength characteristics. Costs depend on the scale of the operation as this is a diminishing costs-to-scale industry, Unfortunately, most hardwood sawmills operate on a relatively small scale and do not -generate enough volume to justify, the investinent needed to achieve a competitively scaled operation. Therefore, a concentration center where the outputs of many plants are aggregated for more efficient processing needs to be considered.

Capital costs to equip such a facility run to about $3 million. The employment of 31 people would be required to operate it. Next to labor. the largest input cost of about $0,4 million is for the fuel needed to run the kilns, On (lie scale envisioned (1 shift, 36, 5 million feet per year), total extra costs would be about $ 100 per thousand feet, which, when added to the opportunity cost of the pallet stock. makes the operation marginal at recent prices for structural, stress rated lumber, But, taken over the cycle as a whole, the profits in the higher levels of the business cycle would be more than sufficient to offset marginal losses during the weaker periods. Thus taking the long view and furnishing a facility on a competitive scale, the proposition has potential to increase value of lower grade hardwood lumber.