# Vertical integration



## gainer (Jul 23, 2009)

How many uses are there for the wood that is removed as a function of your tree service businesses? Obviously firewood but what other wood products do you create? I would think there is always some down time in your operations which could be filled and equipment utilized at a higher rate the more vertically integrated your wood processing operations become. Since I don't own a tree service business take my thoughts with a grain of salt, but I have run 2 businesses of my own and have found the more I could utilize both my employees and my equipment the more profitable we became.


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## gainer (Jul 23, 2009)

Absolutely nothing!


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## outofmytree (Aug 18, 2009)

I'll bite.

The wood we remove is used or recycled 3 ways.

The straight grain, easily split we cut to firewood lengths for a family and a few people we have met over the years. We don't charge for this as most are pensioners but I do seem to have a lot of home-made jam....

Any hardwood that doesnt get turned into firewood, probably 80% of what we remove, is chipped on site and turned into mulch. This mulch is sold by the cubic metre or by the truck. In summer we often are 4 weeks behind as demand is high.

The balance of the wood we remove will be palms, succulents and shrub prunings. As this simply cannot be chipped into saleable mulch we recycle this at a local facility which, using a tub grinder, can chip anything into salable mulch.

I have considered many other options over the years Gainer but I am happy to listen if you have some suggestions. I run my business as just that, a business. If I am going to do something on a regular basis it is for profit and I view all ideas in this light.


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## gainer (Aug 19, 2009)

No biting necessary. I have been pondering a business that might include tree service along with a woodlot, sawmill, drying and wood processing as a new venture. I own the woodlot, the sawmill, the material handling equipment, the kiln, and would like to maximize the value of each. I live in an area dominated by lobloly pine, but my woodlot also contains 12 to 15 thousand tons of mixed low value hardwoods mostly sweet gum, willow oak, and maple all affected by seasonal high water table staining. The opportunities I have seen are for everything from fence and barn building to timber frame adornments for residential and commercial buildings as well as other finished lumber products ie. flooring, mouldings, etc.. The tree service would add a source of high value manhour labor as well as some additional wood types to the mix. The thought is in the integration of equipment + high value labor + low value labor = maximum utilization = maximum return on investment = maximum profitability, just a thought.


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## outofmytree (Aug 19, 2009)

I know little about timber processing but I know the tree business very well. Every hour saved on the job is money in my pocket. If there was a "boutique" timber mill that would collect single logs there would be a great deal of business done in the city I live in. 

Perhaps you could start a thread that discusses exactly what would work for you and how that might mesh with tree companies. Focus on how they can either make money or save money and you will go far.


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## gainer (Aug 19, 2009)

My thought was to incorporate the tree service into the company, but it may be smarter do to insurance, workman's comp and other potential liabilities to partner with existing tree services. I have assumed tree service companies have slow periods where the equipment and labor could be directed at woodlot management and wood processing activities if it is all one business. The current economic climate is creating the need for more flexible and multifaceted operations which can respond to many different markets, since I believe we are at a no growth/slow growth economic phase for at least 4 more years.


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## outofmytree (Aug 20, 2009)

I think an association rather than incorporation is going to function better regardless of the state of the economy in general. Good business owners are going to be easier to find in this industry than good employees simply because all the attributes which you need in the latter make them a prime candidate to become the former.

If you choose to incorporate then I suggest you find a mature climber with 20 plus years on the job and pay them more than anyone else will. Someone like this will attract younger men who want to learn his skills and although you will have a hiogh staff turnover you should be able to cover the work. Old brains + young backs is a good formula for profit.


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