Spencer Forest Products Logs in Upper Peninsula of Michigan – Woodland Equipment Supplies TN725 B Track Harvester
The economy is hitting everyone hard, and that includes the timber industry. But with perseverance and good choices in equipment, Jim Spencer at Spencer Forest Products is maintaining his focus on the bottom line. He’s doing well enough, in fact, that he recently purchased a new TimberPro TN725 B with a Rolly II Harvesting head. Adding it to his equipment, he said, has increased his productivity and competitiveness in an increasingly tight marketplace.
Spencer Forest Products is located in Gulliver, Michigan, on the state’s Upper Peninsula. It’s an area with a lot of state and federal forest land, a strong forest industry, terrain that can be difficult, with many lowland and rough areas, and a lot of competition.
Jim has been in the forest industry his entire working life.
“I started working for Stan Zeller and Sons, a logging and excavation operation in Gulliver, before I even graduated from high school,” he said. “I was 16 when I started working so I was too young to saw at first, but as soon as I got old enough to saw I started cutting after school and on weekends. I liked it, and I wanted to get out and do it on my own, but it took me a long time to get to that point. We had two kids and want to take the time to raise them before I started out on my own, so I worked for a lot of different loggers and ran a lot of different kinds of equipment.”
When Jim was 33, he took all the experience he had gained working for other people and used it to begin his own company.
“I started Spencer Forest Products in 1991,” Jim said. “I started with an old Gafner Iron Mule 5000 that was one of the first forwarders they came out with. I just had one cutter at that time, and I was cutting short wood. I was cutting mostly hardwoods then, and sold them through other people because I didn’t have my own contracts.”
The following year, in 1992, Jim bought his first Timberjack forwarder.
“I had three cutters behind that forwarder,” he said. “Then in 1993 I bought a new Hydro Axe feller buncher and went back to two cutters working behind that one.”
The company continued to grow, and in 1994 Jim bought his first processor from Timbco with a Slingshot processing head.
“I added another Timberjack forwarder at the same time,” he said.
The next major change in the company took place in 1997, when Jim’s wife Barbara got tired of her job as a teller at the local bank and came to work for Spencer Forest Products running one of the forwarders.
“She thought she wanted to go out in the woods, and apparently she was right,” Jim said. “She found out it was tough work but she’s still out there. Having her in the company has really helped our bottom line because having her doing that job means I don’t have to pay someone else to do it. She’s gotten real efficient at it over time. We had a few struggles working together at first, but it’s worked out well for us.”
As Jim’s son Keith grew up, he started running one of the processors. After several years of him doing so, in 2004, Jim sold him a harvester and forwarder to him so Keith could subcontract for Spencer Forest Products.
“He wanted to get something started on his own, so I sold him the two pieces so he could,” Jim said. “He’s running a John Deere 703 with a Waratah 616 processing head on it. He also has a Valmet 840-3 forwarder. That’s the same model my wife runs.”
Last December, Jim traded in a Valmet 415 EX with a Rolly II head on it on a new TimberPro TN725 B, also with a Rolly II harvesting head.
“Komatsu bought the Timbco line, and now they call it Valmet,” he said. “I didn’t care too much for the one we had, because it had a lot of overheating problems with the hydraulics and we couldn’t find the problem with it. I knew TimberPro had made the Timbco line before they sold it, but they had to wait five years before they could make anything competitive. So they’d had five years to work on it and when they came out with the TN725 B—which I saw at the Lake States Logging Congress last year—I thought ‘Wow.’ It has so much better hydraulics and so much more speed than the one I had that I decided to buy one.”
Since Jim really liked the Rolly II head he had on the Valmet, he wanted the same thing on the new TimberPro, and was able to get it.
“This is a much nicer machine than what I had, and it’s a lot easier to work on,” he said. “It was a big upgrade as far as I’m concerned. It’s worked out really well.”
Until his most recent equipment purchase, Jim said, he dealt with larger equipment companies. However, he was dissatisfied with the service he received after the sale.
“They all got so big that they lost track of their customers,” he said.
So when it came time to make his latest purchase, Jim chose Woodland Equipment, located in Iron River, Michigan. He said the service and comfort level he has with the company is far better than what he had with his previous vendors.
“The owner, Ron Beauchamp, and Wayne in the service department have been really great to deal with,” he said. “The guys there are really good, and they’ll tell you things over the phone that you need to solve a problem.”
Until early July, Jim was running the new TimberPro himself, but at that point he hired someone to run it for him.
“I never really liked processing, but it took me a while to find someone who’s really efficient and who I wanted to put in it,” he said. “His name is Vern Gage, and he’s quite good.”
Having Vern in the processor is giving Jim a chance to catch up on work he wasn’t able to do while running the TimberPro, such as repairing roads and buying wood.
“Now I’m in the process of buying another log truck, so I’ll probably be driving that for a while,” he said. “I kind of move around, according to what needs to be done.”
Although Jim had a slump in business earlier this year, the summer was better.
“We’ve been pretty lucky,” he said. “This spring it got kind of slow, and there was only enough for one harvester. I kept my son running his because he needed to make his payments and I was in a better position than he was. Usually we have one month in the spring when we sit because it’s too muddy to do anything anyway, but this year the economy made it longer. But since then it’s been pretty steady.”
Spencer Forest Products still is doing short wood; the biggest difference between what Jim is doing now and what he was doing when he began is that today he’s mechanized instead of doing everything by hand.
“Right now, neither Keith nor I have a sawyer at all,” Jim said. “I go out sometimes and cut big trees that the harvester can’t handle, and cut the logs out of the bottoms and let the harvest come behind me and pick up the tops and process them. That way we don’t have to pay for a guy on the ground to do that.”
Most of the wood he buys, Jim said, is Department of Natural Resources timber on state bids.
“About 95 percent of the work we do is on state timber,” he said. “We do very little private land. We cut both hardwoods and pines. The hardwoods are mostly sugar maple and red maple, and a lot of aspen. Keith cuts red and white jack pine for 2x4s and other lumber.”
Much of the pulpwood he cuts he takes to Verso Paper in Quinnesec, Michigan, Jim said.
“We also go to NewPage in Escanaba, Potlatch up in Gwinn, and Louisiana-Pacific over in Newberry,” he said. “We cut about 600,000 feet of logs a year, and probably 25,000 cords of pulpwood.”
Jim said he may truck wood anywhere from 3 miles to 160 miles to sell it.
“Right now we’re running a lot of 140 mile to 160 mile trips, and that’s one way,” he said. “That makes for a long day, and the price of fuel makes things tough. The trucks average about 3 ½ miles to the gallon, so you can burn $400 worth of fuel pretty easy at today’s prices. When fuel was up around $5.00 a gallon, basically everything I made was going right back into the tank.”
Generally, Jim said, he doesn’t have to go that far to find wood to harvest.
“Right now Keith is working about 95 miles from home, and my crew is 62 miles away,” he said. “However, it’s kind of crazy. We’re passing people coming from that direction to come up here and work in our area, and we’re going to where they’re coming from to work. It’s just the way timber sales are bid; it would be nice if we could all get together and work in our back yards instead of going to work in someone else’s back yard.”
Even cutting that much wood in a year, Jim runs the company so efficiently that he has low overhead and a small work force. The main company is just Jim, Barbara, Vern, and truck driver David Littlejohn. Keith’s operation consists of only him and a forwarder operator. With that small an operation, it’s hard to offer any benefits, although Jim said he would love to offer company paid health insurance if he could find some he could afford.
“We do give our employees paid holidays, and a week’s paid vacation a year,” he said. “We try to make this a good place to work, but it’s hard to compete. I’ve lost a lot of good people to other jobs where they can get better benefits that I just can’t match. Ironically, a lot of those businesses now are cutting back on their benefits because they can’t afford to keep offering them. This is a hard area in which to pay well and offer good benefits.”
Over the next few years, Jim said, he plans to ready his company for his retirement.
“I’ll probably keep the contracts and buy wood for my son,” he said. “But in another few years I’ll be in my 60s and I’ll have had enough of chasing things around in the woods. I’ll just buy wood and market it, and maybe keep the trucks to haul it.”
Between now and then, Jim said, with the economy the way it is, it’s all about survival.
“For a long time I contracted out my wood hauling, but now I’ve bought my own trucks again because it’s more cost efficient,” he said. “But I don’t want to grow the company any larger; I don’t want to get so big that I can’t keep track of what’s going on.”
Whether or not Keith takes over Jim’s part of the business still is an open question.
“Ten years from now, I hope he’ll have both harvesters and run them,” Jim said. “But it will depend on him and what he wants to do. It’s takes a lot of time and energy to do that, and there’s not a lot of profit left in it any more.”
The troubles in the local timber industry didn’t begin with the current recession, Jim said; they actually began about eight years ago.
“Our problems started during the Clinton-Gore administration, when they shut down a lot of the Federal forests that were supposed to be open for cutting,” he said. “What that did was push a lot of people who had been cutting Federal wood over onto state lands. When that happened, the competition drove the price of stumpage up, and prices escalated big time. The profit margins we had in the past just aren’t there, so we have to make it up with efficiency and by working really hard.”
The only thing that will turn the situation around, Jim said, is for the Federal government to allow loggers to cut wood on forest lands that they promised to open for cutting two decades ago.
“They were supposed to put out a certain number of cords of wood a year, and they’re not even coming close to it,” he said. “The need for wood is increasing for a lot of reasons, and the wood is there; it’s just not available to us. And the price of stumpage isn’t going to come down until it is available. People forget that trees regrow, and that the new forest is healthier than what was there before. It’s not the public as much as it is politicians. When the government makes a bad move it’s hard to get it reversed, and nobody realizes it’s even happening until it’s too late.”