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For 12 MMBF sawmills, a 0.1 percent increase in operating Table 7. Effect of Log Cost Changes on Annual Profit and
Annual Log Cost for 12, 8, and 4 MMBF Capacity Sawmills
cost results in an annual loss of $4,510 compared to the break-
even point at 0.00 percent operating cost change (Table 6).
For 8 and 4 MMBF sawmills, the same 0.1 percent

increase in operating costs results in annual losses of $2998
and $1502, respectively (Table 6).
However, a report in the Hardwood Market Report explains
that sawmills have experienced operating cost increases of
30-40 percent since 2020 alone. Examining
Table 6, a 25 percent increase in operating cost reduces
profit by $1,130,724, $751,761, and $376,692 for 12, 8, and
4 MMBF capacity sawmills, respectively, compared to the
break-even operating cost (Table 6).

Thus, simulation results show that operating cost increases
of this magnitude have a severe impact on mill profitability
regardless of annual capacity.
Simulation results showed that a 0.1 percent increase in
Log Cost log costs will reduce annual profit by $4,411 for 12 MMBF
The Aligned Rank Transform (ART) statistical test in conjunction capacity sawmills (Table 7). For 8 and 4 MMBF annual capacity
with R (R Core Team 2022) showed that a 0.1 percent change sawmills a 0.1 percent increase in log costs reduced annual

in log cost caused a statistically significant difference in profit. profit by $2,933 and $1,470, respectively.
The statistical analysis was repeated for 8 and 4 MMBF
sawmills, with the result that a 0.1 percent change in log cost Lumber Prices
caused a statistically significant (α = 0.05) difference in profit The Aligned Rank Transform (ART) statistical test in conjunction
for the smaller capacity sawmills as well. with R showed that a 0.1 percent change in lumber prices
Table 7 reports the annual profit and log costs for the caused a statistically significant difference in profit.
indicated percent changes in log costs ranging from -25 The statistical analysis was repeated for 8 and 4 MMBF
percent to +25 percent. sawmills, with the result that a 0.1 percent change in lumber
prices caused a statistically significant (α = 0.05) difference
Minnecologies in profit.

Table 8 reports the annual profit and log costs for percent
changes in log costs ranging from -25 to +25 percent. Simulation
results showed that a 0.1 percent decrease in lumber prices
will reduce annual profit by $3,419 for 12 MMBF capacity
sawmills (Table 7).
For 8 and 4 MMBF annual capacity sawmills, a 0.1 percent

increase in log costs reduced annual profit by $2,273 and
$1,139, respectively.