Impact of curve sawing on southern pine dimension lumber manufacturing: Part 3-Mill profitability and rational investment

This paper provides insights into the potential economic impact of curve sawing in southern pine dimension lumber manufacturing through a case study conducted in Alabama in 2003. Specifically, the incremental net revenues realizable from curve sawing by southern pine dimension mills and the maximum rational investment (MRI) for such a system were estimated, given the level of mill productive capacity or lumber production per unit time. Results from regression analysis indicate that the expected incremental net revenues from curve sawing increase (or decrease) with mill productive capacity or production level at an average rate of about $24.27 per thousand board feet (MBF) of lumber output, based on 2003 nominal prices. There is a reasonably good chance (about 68%) that such rate of increase (or decrease) would be between $22.12 and $27.51 per MBF of lumber output. In this connection, the expected MRI increases (or decreases) at the rate of about $78,930 to $98,700 per MBF of lumber output or a weighted average of $87,830 per MBF of lumber output, assuming a 10-year service life. These estimates would be even greater if a larger proportion of the input logs, i.e., more than the 16.4 percent used by the study mill, have a minimum sweep of 3 inches. [PUBLICATION ABSTRACT]