Customers First
This two-line Finnish sawmill starts by determining what its many customers need, and then picks the right logs, right gear and right finishing process to make each product.
by Scott Jamieson
The customer comes first. It’s often said, but what does it really mean? In many cases, it’s another way of saying that the customer is always right. Or that if you have to choose between your needs and those of your customers, there is in fact no choice. For the Keitele Forest Group in central Finland, however, it means just what it says.
Manufacturing at this large family owned and operated wood products company starts by deciding what products its customers really want. After that, those needs drive the entire production process, from forest planning and harvesting through log sorting, sawing, green sorting, drying, planing, and a host of other value-added processing and packaging steps. All of the company’s many production processes, from lumber and glulam beam production to components and co-gen are located on one very modern 47-ha site, but chat a while with one of the founder’s sons, Mikko Kylävainio, and you quickly grasp that technology is but one piece of the puzzle. Rather, marketing and sales are the drivers of this growing company to an extent rarely seen in the wood products sector anywhere, let alone Canada.
“My father started the company in 1981, and even then the reason for opening was to produce customer-oriented sawn goods. He worked for a Finnish lumber wholesaler, and got tired of not being able to sell customers what they really wanted. So he started his own sawmill.”
Over 25 years later, that focus hasn’t changed. Keitele Group is a large and growing concern, with operations that include the parent company Keitele Forest Oy, as well as Keitele Timber Oy (sawmill), Keitele Forest Wood Production (reman), an energy company named Keitele Energy Oy, and the new glulam operation, Keitele Engineered Wood Oy. Yet it still saws almost exclusively to order, with very little in the way of unclaimed inventory in either logs or lumber. That’s not a bad idea, given current record high log prices in Finland thanks to escalating Russian log export taxes and changes to Finland’s own land tax laws. Average delivered log costs in the region had hit US$ 100/m3 when CWP was on site in January, and as of press time had crested
$110. Still, Keitele’s made-to-order approach is not a reaction to short-term spikes in the local log market. It is a longterm business philosophy that relies on four key elements for success:
• A keen understanding of the market and each client in it.
• An exceptionally high degree of communication between the mill and forestry operations.
• Production processes that combine high degrees of automation and optimization with the ability to create, track and isolate individual products within that flow.
• A wide array of end products for both in-house and external clients that allow Keitele to maximize volume and value recovery from each precious log.
Like the legs on a solid table, each of the four elements depends on the others to stay upright, but together make a very solid base.
First To Market
It is common for Canadian sawmill owners and general managers to focus on the production side of the business, and leave the marketing to employees or outside agencies. At Keitele, the business was founded by a marketer, and the trend continues.
Take Mikko’s role. After graduating from university with a masters in economics and business administration, he was slated to head up the company’s emerging glulam business. The ultra-modern and automated plant was under construction as he left school, and in Canada a natural role for young Mikko would have been to jump right into the design and production side of the plant. Instead, he moved to Japan for a few years as part of an international marketing program, learning the language and culture.
“Our intention with the glulam plant was to target the Japanese market with smaller dimension beams that were not as common at the time. I moved to Japan to get closer to the market, as part of a European Commission training program for exporters, to understand the customer better, and to learn the language, which is not easy.”
When Mikko returned, he assumed the role of sales manager for the glulam plant, which started production in 2005. The products are now sold under the Aurorazai brand name,itself a testament to how well the company understands its market.
“Aurora comes from Aurora Borealis, of course, and signifies our northern forest,” Mikko explains while carefully presenting me his business card with two hands, Japanese style. “Zai means ‘“material’” in Japanese, but as a play on words, the symbol for Zai in Japan is also two trees.”
Still, Mikko does not want to leave the impression that the Japanese market as a whole is new to Keitele. The company first entered the lumber market there in 1991, several years before Finland’s big players started moving in. Nor is attention to export markets new. Finland’s vast forest products sector has just over five million domestic customers, a market about the size of Toronto. Finnish producers must thus learn to export, or die trying. Keitele has no worries there.
“We are very much an export driven company, even by Finnish standards. We deal with over 30 countries and many languages, and that will continue to grow as the new European economies expand, and use more wood.”
This sales and export focus resonates through the entire family. Mikko’s older brother Matti heads up sales and marketing for the sawmill and planer mill, while at 60 years old, the father Ilkka is still very much in charge as CEO and chairman, expounding the founding philosophy on a daily basis.
“We put a lot of emphasis on being a truly customer-oriented manufacturing company – which means putting as much emphasis on meeting specific and changing customer needs as possible while maintaining a high level of manufacturing efficiency. Our sales and marketing emphasis is high – we ave far more people working in this side of the business than is normal even in Finland for an annual output of 335,000 m3 (142 to 210 million bdft depending on which conversion factor you use) – and there is constant communication between them and the manufacturing side of the business.”
Logging Lumber
If manufacturing decisions start as far away as Japan or Egypt, the next step takes place deep in the Finnish forest. Keitele’s log procurement staff uses the gap between the sawmill’s order book and recent lumber production to create log order files, orders that may change daily. These in turn drive the bucking optimization programs of the company’s 25 contractor-owned cut-to-length (CTL) harvesters, which produce 800,000 to 1 million m3 annually, all from small private cutblocks in the 2- to 4-ha range.
Communication between sawmill and logger is extremely tight at Keitele, even by Scandinavian standards. This is no accident, as the company has worked closely with another Finnish family business, Ponsse, to create a sophisticated, computerized two-way link. Ponsse is a global CTL machinery supplier with dealerships in Canada, and Mikko says its Opti log optimization and forest planning software is the common language among the entire harvesting crew.
“All of our contractors use Ponsse machines. We want to make sure they have reliable machinery, and that’s part of it. But the biggest reason for using all Ponsse machines is that our business model demands a very high degree of communication between mill and harvester, and vice versa. To us, Ponsse is leading the way from this perspective.”
Ponsse’s Opti suite of harvesting software products was developed in close co-operation with Keitele’s staff, and the sawmill now uses it daily to create, track and manage the mill’s log inventory. These include programs to create cutting orders based on mill customer needs; simulation programs to test the cutting orders in expected stand conditions to ensure they do not create unexpected results (i.e. excess cull); communication programs that tap into Finland’s excellent cellular phone network to download cutting orders to each harvesters’ bucking optimization computer, and send production reports at the end of each shift; GPS mapping programs to guide and track harvesting; uptime programs to track machine productivity and utilization; reporting software to manage inventory and payments; and calibration reporting to guide and report on measuring system calibration and quality control.
The technology is impressive, but is also available on this side of the Atlantic. The big difference in this case is that the sawmill itself is driving the technology’s full use by tying log harvesting so closely to mill production planning and control. Keitele has also established the infrastructure to ensure successful implementation, including bucking quality control.
When asked about problems using the harvester optimizers for scaling, a major issue among Canadian CTL operations, the answer from all parties was simple – operators follow a prescribed calibration program developed by Ponsse at pre-set intervals (according to running hours or logs produced), and the program creates reports (printed or via email) proving that the calibration checks were done. Landowner associations also conduct spot calibration checks of their own, and were in fact on site doing one when CWP dropped in on a nearby Keitele contractor. While many Canadian CTL loggers don’t even bother using the harvester’s diameter measuring system, it is used here both for payment and to collect stand data for future optimization decision-making and simulations.
Contractors create a wide array of log products in the woods, with upwards of 10 main sorts being made at the site we visited, along with a host of specific lengths within those sorts. Loggers make standard European log lengths of 3 to 6 metres in 30-cm increments, as well as a host of custom lengths for various Keitele clients, as custom lengths are made when possible in the forest, not at the sawmill trimmer. Harvester operators help forwarding and hauling by making full use of the harvesters’ colour marking system, but Mikko cautions that there are limits.
“In theory the harvesters can make new products in 1 cm increments, and I am sure the theoretical case could be made for each one from a pure lumber recovery or value position. But we have to balance recovery with production realities and logging efficiency. I think we already have enough sorts,” he says with a smile.
Logs are optimized in the bush according to constantly updated price or value pecking orders, but even after logs have been manufactured to relatively precise lengths and diameter classes, nothing is yet final. When logs arrive at the mill’s log yard, they are loaded onto extensive sorting lines where full-profile scanning gives the mill an exact picture of the available resource, warts and all. The harvester optimization package has a pretty good idea of what the log will be used for, but it is at this stage that the log’s final destiny is decided, with cutting patterns chosen depending on both the mill order file and the ability of the log to yield valuable products.
“You can see from the log yard how many sorts we have – over 80 in all just for raw material. That is magnified some hundred fold in finished products, and for us it is a business necessity. The raw material here is exceptionally good, but is also very expensive, so we pay a lot of attention to what we get from those logs in value. We try to optimize the cutting patterns to get all the sawn timber we can, with very subtle differences in log diameter for example yielding a different pattern at times. Having a lot of products to fit into those logs – say 20 different sideboards rather than two or three – helps, but then we need to know before hand what we want to make, and how many we’ve already made.”
Cutting for both Japanese and European markets also helps, and the mill can mix and match products from both markets even within the same log.
Customized Automation
Lumber production begins with presorted logs brought to the debarking station via wheel loaders with overhead Paralift style grapples. Keitele runs pine and spruce (70%) in batches, and all debarking is on 550 VK Brunette ring debarkers close-coupled to mill production. These in turn feed the two main lines – A HewSaw SL200 Duo small-log breakdown line added in 2001 that includes HewSaw’s first optimized log positioner; and an Ahsltrom twin band canter line with gang edger added in the 90s. The HewSaw SL200 Duo is actually two breakdown machines close-coupled, with the first a four-sided canter that also saws a sideboard from each side. After the sideboards drop off, the cant goes to a ripsaw where it gets sawn and boards are removed from both top and bottom.
Gaps on both lines are very tight, but feed speeds leisurely by Canadian standards at 50 to 150 m/min depending on log size. Nonetheless, production is relentless and the labour content exceptionally low given the range of decisions surrounding each piece of lumber coming off both lines.
Lumber from each main breakdown line (including HewSaw sideboards) and large-log line sideboards are kept separate at this stage, and each and every piece goes through one of three different FinScan BoardMaster greenend automatic colour lumber grading lines (sold as Scanware in Canada) looking for specific product attributes from each piece according to its origins. Lumber is sorted accordingly in a brand-new 100-bin green lumber sorter, and will be dried in several different kilns and kiln types depending on end use and MC target, including two new Valutec optimized two-stage continuous (OTC) kilns designed to dry timber down to 12% with minimal degrade for use in the glulam plant. The green lumber’s end use is clearly defined, and each piece will be handled and dried with that goal in mind. For example, joinery and other products destined for remanufacturing are dried to 12%, or even as low as 8%. “We have very careful drying schedules to get that low without degrade, and it is expensive, but in many of the products we sell, it is essential for the product to behave as required.”
Lumber is graded and sorted again after drying, using Finscan systems. All lumber is dried, but only 25% of the lumber will be sent to the planer/ moulder mill, with the rest sold rough or remanufactured in house. Suitable lumber can be sold as blanks, components, or sent to the company’s fingerjointing line or glulam plant, and will have been dried and processed with that in mind from early on in the process. It’s a strategy Mikko sees growing.
“We see a lot of synergy keeping all the operations close, including the further processing operations, like fingerjoining and glulam. We had a strategy that by 2005 we would further process 50% of our sawmill output right here. We were late – It took until 2006, but we made it, including a growing business in window and door components to feed a growing market for woodaluminum combinations.”
Not surprisingly, biomass is also an important part of the company’s bottom line, as Keitele can produce four times the heat and energy it needs. Even CTL harvesting slash is put to use, which makes sense given that most harvesting sites are well within 100 km of the mill’s power plant. The harvester operators we watched carefully placed slash in piles off to the side rather than using it as a brush mat as is the case in Canada. A separate contractor comes along later to bring it to roadside and chip it.
“We supply our own energy needs and those of the community, which barely consumes a 1/4 of what we produce. Many Scandinavian mills are turning to pellet production, but to us it looks like the future may be as much in electricity generation as anything else. In any case, the future looks quite bright for mills with excess biomass like us.”
Mikko also sees opportunities for sawmills in the trend to more customized wood products manufacturing, whether in engineered wood products, components or building systems. Targeting specific end products earlier on in the process may bring challenges, he admits, but also advantages for seasoned sawmillers like Keitele.
“With the creation of more processing of timber adjacent to sawmills, producers will increasingly look at their lumber less as a mass of raw material and more from what products it will make, and will pay more attention to the requirements demanded by those end products, and what can be done along the production process to capture the most of those requirements. We are certainly on that road. It requires knowledge of the resource. You need to know, for example, from which part of the log you should cut a certain product to be used for further processing into specific products, how to sort your lumber to extract the best product for a given higher value use, how to then dry with that in mind, etc… Wood is used in so many ways – structural, interior, decorative, kitchens, engineered wood, furniture and flooring, components – and the requirements of each need to be considered early on. It’s complex, yes, but we sawmillers already have a lot of that intuitive knowledge. We use a lot of it already in what we do here at Keitele, and it won’t be easy for other remanufacturers to walk in and compete.”
