Cost and Productivity Analysis of Southeastern U.S. Logging Contractors from 1996 to 1997

A group of 22 independent southeastern U.S. logging contractors provided 44 contractor-years of detailed cost and production information. Information was collected on demographics, operational characteristics, and business strategies for the participants.

Precipitation was statistically proven to not be a good predictor of production, accounting for 2% of the weekly variation. High production through periods of favorable harvesting did not occur. Loggers contracting for the same mill in the same general area had higher than average production in the winter months and lower than average production in the summer months.

Summary analyses for the entire population found that the cost of producing an additional ton dropped in 1997 by $0.90, but fixed annual costs rose. Predicting costs on the basis of production for the population was misleading. A comparison of total costs for individual firms with the population average (regression equation) found that the equation underestimated costs by as much as $408,000 and overestimated costs by as much as $528,000.

Contracted services expenditures increased in 1997, as expenditures for equipment, consumables, and labor decreased. Over the study period, total costs per ton increased by 3.7%, but total production increased by 3.9%.

The relationship between key cost components revealed strong evidence to disprove previously held theories. A major portion of the population increased production but experienced increased costs per ton. Replacement purchases of equipment tended to be of similar capabilities and technology and did not reduce labor costs. Trends in supply and equipment costs per-unit were not found in the expected fashion.