CAPITAL PROJECT PLANNING

CASE STUDIES

 

Capital Project Evaluation—The Beck Group assisted a timbers and cuttings sawmill in the U.S. West with evaluating a planned capital investment project designed to improve mill flow and reduce lumber handling damage. Beck’s tasks included visiting the site to review the planned project and observe the mill in operation, then quantifying project payback based on labor cost savings, improved process flow, and reduced handling damage.

 

Beck summarized our findings in a concise and easily readable written report that our client was able to share with its management team and owners as a way to illustrate a neutral third-party’s opinion about the effectiveness of the capital investment project.

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Fence Mill Feasibility—The Beck Group assisted a lumber manufacturer interested in developing a greenfield sawmill designed to produce wood fence pickets in the U.S. West. Beck’s scope of work included evaluating the local timber supply and demand balance for the target species, analysis of the market for fence pickets, modeling likely financial and operational performance (including sawing patterns, process flow, product mix, staffing, and manufacturing economics), evaluating potential sites for suitability, collaboration with sawmill design engineers on equipment specifications and process flow, and evaluating impacts on the company’s other operations. 

 

Our knowledge and experience in timber supply and demand, specialty forest products manufacturing, and forest products markets helped our client develop a solid plan for constructing a new sawmill to produce specialty lumber products.

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Capital Project Planning and Feasibility Analysis—The Beck Group assisted this confidential South American lumber manufacturer in analyzing several potential projects for expanding its operations as part of an overall plan for the sale and recapitalization of the business. The client, who was in negotiation with a potential purchaser, retained Beck to independently assess the feasibility of several capital projects that were focused on increasing the plant’s production capacity. They included additional lumber dryers; added sawmill edger capacity; installation of a planer mill; and the addition of a small remanufacturing operation. Beck reviewed capital cost estimates and vendor quotations, completed a financial analysis for each project, and projected the mill’s improved performance. The client used the finished report to sell the business.

 

BECK staff members have extensive industry experience in capital planning projects and feasibility analysis of wood products businesses and are frequently asked to assist clients in this important area.  Whether a small foreign lumber producer or a larger North American lumber forest products manufacturer, The Beck Group can assist. We work closely with various engineering firms and equipment vendors and have a track record of arriving at practical capital improvement plans that achieve their intended results.

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Product Manufacturing Study —The Beck Group was retained by a confidential Western Canadian company to analyze the opportunity for recapitalizing an existing large-scale lumber manufacturing operation. The options that were analyzed included mill modernization focused on a smaller scale, specialty sawmill operation, and a veneer manufacturing plant for producing dry veneer for both U.S./Canadian domestic markets as well as for export to Asia. The study included estimating capital costs for both alternatives, as well as detailed market and feasibility analysis. A declining timber supply was also assessed to identify the practical level of expected timber volume availability. Beck staff members completed an in-depth assessment of the supply-demand balance in the U.S./Western Canadian softwood veneer business in assessing veneer market opportunities.

 

Beck staff members, working closely with the client’s management and staff, can extend the expertise and knowledge of even the largest forest product manufacturers in completing independent assessments of strategically important projects.

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San Carlos Apache Sawmill Planning—After decades of planning with the assistance of The Beck Group, the San Carlos Apache Tribe now has an operating sawmill in eastern Arizona. The Beck Group helped the Tribe plan and develop a sawmill that is scaled to match the amount of timber available from the Tribe’s forest resources on reservation timberlands; that can handle a large range in log sizes; and that can produce lumber to a broad range of thicknesses, widths, and lengths. The planning assistance included timber supply, market, and product line analyses; assessment of a range of sawmill equipment alternatives; feasibility assessment and business plan development; assistance with project financing; and work with an engineering and installation contractor on equipment procurement, installation, and start-up planning.

 

Beck consultants’ extensive hands-on experience in the sawmilling world enables us to see a facility not merely as an investor might, but also as an owner would. The client gained the means of utilizing its lands to help improve Tribal members’ economic outcomes in sustainable fashion.

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Planning Assistance for New Sawmill Construction—The Beck Group assisted a confidential client – a vertically integrated sawmill and lumber pallet manufacturer – in planning the addition of a new sawmill operation as the company transitioned from predominantly hardwood pallets to mostly softwood pallet production. The assistance included an in-depth timber supply assessment of regional hardwood and softwood timber availability; assistance in site selection, sawmill equipment configuration and capital cost planning; and feasibility analysis of multiple alternatives, including the possible purchase, relocation, and upgrading of an existing sawmill operation. While designed primarily for Southern Yellow Pine pallet lumber, the final mill configuration was also capable of specialty hardwood lumber production.

 

For this project, Beck staff worked closely with mill management in developing and analyzing various alternatives before arriving at a mill configuration that achieved the overall specialty product line specifics the company was planning. The project team had worked together on prior projects and their working relationship, along with the input of partner vendors, helped achieve a cost-effective solution that met the company’s return on investment objectives. Company management approved the plans and the new mill has been constructed.

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Planning Assistance for a New Sawmill, Remanufacturing Plant and Biomass Power Generation—Beck staff assisted a confidential client in developing plans for a new greenfield sawmill, remanufacturing plant, and associated biomass power plant to complement the company’s South American timber holdings. The focus of the project was manufacturing high-grade pine products to supply global markets with a combination of lumber and remanufactured products. Because of limited markets for sawmill residuals in the region, a biomass power plant was included in the plans to provide an internal market for the residuals as well as power for the operations. Some excess power was also examined for sale into the regional power grid.

 

Beck staff also evaluated the acquisition and expansion of an existing sawmilling company as an alternative to new greenfield construction. Beck staff members worked closely with the client in assessing timber supply; assessing alternative mill locations; analyzing market opportunities for both lumber and remanufactured products; developing capital plans and cost estimates for the entire operation (with the assistance of an engineering firm subcontracted by Beck); and in detailed process flow and financial modeling/feasibility analysis.

 

With nearly 50 years of history, The Beck Group has extensive experience in assisting clients with complex planning projects, whether in North America or offshore. Having actual sawmill performance information based on past benchmarking studies and prior planning projects, plus extensive experience working with a variety of types of sawmills (hardwood; softwood; commodity-focused and specialty-oriented mills; large-scale and medium- to smaller-scale operations), provides our clients with information and analysis at a high level. Additionally, our use of subcontractors with specific areas of expertise (such as biomass power generation, specialty millwork markets, and sawmill engineering) allows us to assemble project teams to address even the most complex forest products planning projects.​​​​​

 

​Capital and Strategic Planning Assistance – For this project, The Beck Group assisted a mid-sized specialty lumber manufacturer and timberland owner(confidential) in developing strategies for improving and expanding their business. This included timber supply and demand analysis and opportunities for expansion; changes in log procurement and log allocation strategies involving multiple manufacturing locations; assistance in in-depth process flow analysis to understand the implications of the potential changes; and financial feasibility assessment of various alternatives identified for improving the business.

The Beck Group worked as a part of a team with company personnel and two other firms that provided specialized areas of service, including an engineering firm identified and recommended by The Beck Group.  For this long-term client, Beck’s services were invaluable in defining a path forward that will help guide the company in its log procurement planning, marketing, and capital investments over the next several years. The Beck Group has completed similar, complex development plans for many clients during its 40+ years of assisting lumber manufacturers.