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Minn. Logger Has Eye On Adding Value
Pohl Creek Logging runs two crews with Ponssee cut-to-length machines to supply wood product mills.
By Carolee Boyles
Date Posted: 5/1/2003
GRAND RAPIDS, Minnesota ó Start with a sawmill family in the woods of northern Minnesota. Grow up a son with an independent spirit and a dream to start his own business. The result? A thriving logging operation that complements the familyís existing sawmill business.
"I grew up in the sawmilling business," said Nik Rajala, owner of Pohl Creek Logging Inc. in Grand Rapids, Minnesota. "My family has three sawmills in the area plus a veneer mill and a dimension plant. Theyíre located in Grand Rapids, Deer River and Big Fork, Minnesota. We also had logging operations, and my training was working for my father."
Before he went to college, Nik spent quite a bit of time talking to his father about what to study. He knew he wanted to stay in the forestry industry, but he didnít know whether to study forestry or another subject.
"My father suggested to me that in order to get a more solid foundation, I should pursue my forestry education in the forest and in the industry," Nik said. "He steered me into studying business, which I think was a very good choice."
Nik figures he learned as much about forestry and the industry from his father and his own experience as he could have learned in school. "Plus, fathers tend to not be very lenient and plenty critical of your work," he said. "So you do a lot of learning by mistakes."
When he graduated from high school, Nik went to Montana State University to study business. One of the things he learned was to write a business plan, and he wrote one for a logging company that would bring that aspect of the industry back into the family business.
When he got back from college, he showed the business plans to his family. At the time, though, they were intent on developing a value-added processing plant to their mills, so the timing was not right to add a logging business.
Nik was not deterred. Eleven months after graduating from college, he decided to start the logging business himself. He invested in a pair of Ponsse cut-to-length logging machines, a Ponsse HS16 Harvester and an S15 Forwarder, in 1998.
"We put 7,000 hours on those machines in two and a half years," Nik said. "But due to market conditions and some personal differences in my business relationships, I decided that it was time to be out of the logging business. I sold my equipment to a local contractor, traded in my logging boots for a pair of cowboy boots, and headed west to Montana."
In Montana Nik went to work as a carpenter. After three months the phone rang with news from home: one of the familyís dry kilns had burned down. The last several years had not been good for the lumber business in Minnesota, and the loss of the dry kiln made things worse.
"After two sleepless nights," Nik recounted, "I called my brother and said, ĎIím only going to ask you once. Do you need my help?í " His brotherís answer was simple and direct: yes.
"Two hours later, I owned another team of Ponsses, a 2001 Ergo Harvester with an H73 harvesting head and a Ponsse Buffalo Forwarder," Nik said. "Two weeks later, in September 2001, I was back in Minnesota. The machines arrived, and weíve been logging with them ever since."
This past January Nik purchased a Ponsse 2003 Ergo Harvester. In April he made a little bit of logging history when he bought a Ponsse Wisent Forwarder. "Itís the first one of that model in the United States," he said. "So when Ponsse had a big open house for their new facility in Rhinelander, Wisconsin, my new forwarder was the star of the show."
Having two pairs of Ponsse harvesters and forwarders allows Pohl Creek Logging to run two cut-to-length crews. Counting Nik, who maintains an office in his home, the company has six full-time employees in the woods. The two crews produce a combined 25,000 cords of wood annually.
Nikís fiancťe helps the company by doing the books, picking up fuel and supplies, and running errands. "I donít know why she said yes, but when she did, sheís been in trouble ever since," he said with a laugh. "We donít let go of help very easily!"
Nik has retained close ties with his familyís lumber business. "Iíd say 60 percent of what I cut goes into the family mills," Nik said. "The other 40 percent is for pulp markets and is subcontract work for other wood buyers. I work very closely with my family, but I maintain my independence from them at the same time. Together we do some very interesting things."
Nikís original business plan was for a company that would use cut-to-length technology for wood procurement at the sawmill level, and he has been successful at making this the primary focus of his logging business. "Iíve been able to bridge the technology that I intended for those mills by pursuing the logging side of the business on my own," he said.
Nik said he runs what is basically a mobile operation.
Most of the time, when Pohl Creek Logging cuts and processes a tree, it is merchandised specifically for a customerís order. "A lot of our log inventory that goes into the mills is just-in-time inventory," Nik said. "We cut a batch to order to the specs of a millís customer. My log specs are directly targeted to the products the mill supplies its customers. We keep filling orders that way even though typically in this part of the world things arenít done that way. We just cut order by order for specific needs of the end user."
Pohl Creek Logging harvests red and white pine, aspen, and Northern hardwoods that include white birch, red oak, basswood and hard maple. Wood that is not suitable for milling becomes firewood.
"The white pine is cut into veneer flitch," Nik explained. "At a flitch mill, instead of spinning the log to get a continuous sheet of veneer, they saw the log like they normally would into lumber. Then they take that board, which they call a flitch board, and slice it with a knife. Itís like taking a piece of lumber and resawing it without any kerf. The knife just shaves off a layer." The result is matched pieces of veneer that are highly prized by woodworkers and high-end furniture makers.
"When you have a piece of flitch stock and you slice it into all the veneer pieces, itís called a book," Nik said. "Based on how you open the book, whether you open it like the pages of a book or you just slip the pieces across one another, you get different looks out of the veneer when you make a panel. That way you can take a veneer slice that looks like a board and put it against the panel on a door, and it looks like a real piece of wood instead of having the Ďpeeledí look of veneer over a core." Much of this veneer goes to door manufacturers across the Great Lakes region.
Pohl Creek Logging also supplies red oak logs that are processed into parts for doors and windows.
"The aspen goes two places," Nik said. "Half of it goes into high-grade and industrial-grade lumber. The other half goes into paper and oriented strand board -- OSB -- in the pulp market. High-grade basswood goes into wooden Venetian blinds, and the low-grade basswood is used for core in door and window components."
White birch is a specialty of the area. "The white birch from here is about as fine as it comes," Nik said. "Itís sawn into high-quality lumber parts, and some of it goes into OSB panel parts."
The knowledge and expertise that Nik gained from working with his father has helped him develop a favorable reputation with landowners looking to sell timber. "We do a lot of hardwood thinnings," he said. "Being able to go to a private landowner and gain their confidence by describing what Iím going to do, and then back it up by being able to show them other sites that Iíve done gets me on almost any hardwood site that I want to cut. Having the forestry background and a lot of experience actually harvesting has been a key success factor for me."
The Ponsse machines also have been a key component of Pohl Creek Loggingís business. "I liked the machines the first time," said Nik. "But the new models that came out in 2000 are far superior to the older models. Although the original machines that I had were very reliable and productive, we were going through a learning curve on cut-to-length and on the new models that they had at the time."
When it came time for Nik to re-enter the logging business, he looked at both his experience with the Ponsse machines and with the Ponsse company as a supplier. "The way your manufacturer treats you is just as important as the reliability and capability of the machines," he said. "Ponsse has always done a bang-up job of standing by me and keeping our operation running. So I went with their equipment again and found the most recent models to be far superior to the machines of old."
When he left for Montana, Nik believed that the technology of European cut-to-length harvesting machines was 10 years away from the type of equipment that was needed for the forests of northern Minnesota. "But when I came back to Minnesota, I was pleasantly surprised to find that in three years...they closed that gap. These new machines are phenomenal. And the service has been as reliable as it always was."
Ponsse has done a great job of providing the support and service he needs, said Nik. "Weíve always been able to get parts overnight," he said. "But one recent enhancement to Ponsseís service is that theyíre putting up a facility here in Grand Rapids due to the popularity of the machines around here."
Ponsse cut-to-length machines have been instrumental in helping Nik meet challenges to his business. "One of our biggest challenges is to maintain our market share in local wood procurement," he said. "Plus, we need to stay ahead of the curve of debt for an infant business. We work at making the economics work out with the extremely high stumpage prices we have. And weíre challenged by the need to maintain and develop new niches in the marketplace."
Nik would like Pohl Creek Logging to increase production moderately in the next few years. "I donít see a lot more volume being the answer," he said. "My goal is to continue to deliver a product that adds value to my companyís customers so we can increase our margins."
Also important to Nik is his reputation as a good steward of the forest. "The standard of performance in the industry continues to rise," he said. "To stay in business, you have to keep finding ways to get better and better at what you do and still move at a pace where youíre economically competitive. Otherwise you donít have wood to cut."
Improving quality means reducing damage to residual trees, Nik noted, plus conserving non-timber resources. "We want to continue to serve landowners well," he said. "We have a good reputation for doing a wonderful job, and the Ponsse machines are a big part of that. I want to maintain that ethic of doing a quality job and serving landowners in the forest well."
Strong words and a strong commitment to Minnesotaís landowners from Nik Rajala and Pohl Creek Logging.
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