Granby Business Putting Beetle Kill To Work

Granby, Colorado sits nearly 8000 feet above sea level on the Continental Divide and serves as the base of operation for Ranch Creek Ltd., a small lumber manufacturing business taking advantage of their location in what has become known as ground zero for the Mountain Pine Beetle epidemic.

Approximately 95 miles northwest of Denver, Granby lies in the midst of vast once-green forests of lodge pole pine that have turned an ugly shade of red and brown as the infestation killed vast swaths of pine trees.

The epidemic thus far has claimed upward of 3.5 million acres of lodge pole pine in Colorado and southern Wyoming, creating an ideal situation for lumber harvest and manufacture.

Mike Jolovich, owner of Ranch Creek Ltd., recognized the potential hazards and environmental liabilities created by the situation.

“When the beetles kill these trees they’ll eventually fall over on the stump and provide fuel,” he said. “For the first year and a half after the tree dies the fire hazard is extreme because of the needles still being on the tree. Once the needles fall off, the fire danger greatly reduces but doesn’t disappear.”

Dan Jolovich, Mike’s son, explains Ranch Creek’s need to harvest dead trees before they fall, “We’ve got another year and half to two years before it’s going to get tough,” he said. “Once they start to fall over naturally they’re no good for our purposes.”

Mike pointed to the largest forest fire in Colorado history, the notorious Hayman fire (Sidebar), as an example of the potentially disastrous consequences ahead if the trees killed by the beetle – known as beetle kill – go without harvest.

“For 40 years or so in this climate, those dead and down trees are just fuel wood and if a flash fire comes through it sterilizes and kills off everything in both the old canopy and the emerging new canopy. So you have huge erosion issues for several years to come and you can only regrow the canopy by replanting.”

“The only thing that stopped the Hayman fire was geographic barriers and snowfall and they’re continuing to have erosion problems,” Mike said. “And Denver’s reservoirs are filling with silt. That’s part of the economic concern.”

The availability of beetle kill at minimal cost allows Ranch Creek to market a variety of quality products at inexpensive prices.

Dan sees the beetle kill as a good opportunity coming from a bad situation. “Beetle kill has helped our business,” he said. “The volume has driven the price of timber lower and that allows us to sell it cheaper.”

Ranch Creek sells the majority of their products to Universal Forest Products in Windsor, Colo, who then pressure treat the lumber before selling to Home Depot, Lowe’s and other lumber retailers.

“We provide probably between 40 and 60 percent of Home Depot’s timber on the Front Range,” he said. “We’ve recently started manufacturing material for pallet manufacture. That’ll probably become a pretty big part of our business.”

In addition to the lumber Ranch Creek manufactures and sells for other purposes, two years ago, Mike brought in a custom lathe purchased with grant money from the US Department of Agriculture.

“We put the log home lathe in two years ago to take advantage of some of the good quality, relatively low price larger diameter beetle kill trees,” he said. “Our marketing sales prices are very low, I was hoping to offer that value to first time builders, along with the sale of the kit, we would try to provide assistance in the construction and that was geared toward young people who previously had been unable to afford a home.”

Not only does beetle kill allow Ranch Creek to market low-cost lumber, the quality of beetle kill timber is surprisingly high. The beetles essentially accelerate the process of making timber suitable for use. As the beetles bore into the tree, the sap picks up a fungus the beetles carry and systematically spreads it throughout, killing the tree.

“As the tree dries after it’s died, the fungus stains the tree blue. In most instances the sawmill industry doesn’t like the stain,” Mike said. “The needles will actually bleed out all of the moisture and that dries out the tree itself and the tree may eventually check itself.”

“Checking,” is an industry term referring to the tree splitting open to relieve the dryness and relieves stress.

“In the case of the log homes we design the kit to keep the check pointing up or down to keep it out of visibility,” Mike said. “Once the house is caulked and sealed there aren’t any exterior openings.”

The blue stain left behind by the pine beetle gives the lumber a distinct color for an otherwise perfectly sound timber home.

“They’re aesthetically pleasing, they’re massive, solid-wood construction homes,” Mike said. “The wind can just be whipping and howling and unless you look outside and see the wind you have no idea as it’s very quiet inside.”

“We offer our kits at pricing you would find back in 1975, we’re at $15 a square foot,” he said. “One thing we’ve run into is people think our prices are unrealistically low and they think we’re trying to fleece them. We’re not.”

For the environmentally conscious homebuilder, solid wood construction offers more energy efficiency than insulated walls.

“Solid wood construction doesn’t usually score too high in that test,” Mike said. “When you factor in that solid wood construction stores energy during the day and releases at the same slow rate when it’s dark, it does quite well.”

Though the housing industry’s recent slump began just as Ranch Creek’s log home operation went online, Mike remains optimistic and committed to his plan.

“I’ve been involved in the forest industry since 1978, I’ve never in my entire career seen the inventory we have today, that puts our log cost super low, even lower than the 1970s,” he said. “The second thing that makes this real affordable, the log lathe machine we have was purchased with a USDA forest service woody biomass grant that makes our need for profit much smaller. I have enough wood in our yard now which I’ve committed to this operation for about 50 homes.”

Mike planned to sell kits geared toward first-time homebuilders planning for three to four bedroom homes finishing approximately 1500 square feet.

“The marketing strategy I had initially was geared toward the first-time homebuilder,” he said. “Unfortunately, as the recession has hit home, that group has probably been the hardest hit.”

Rather than offer several designs from which the buyer could choose, Jolovich instead chose to allow builders to bring in their own designs from which Ranch Creek will engineer and manufacture the custom log home kit.

“There are so many sources for design, just about everywhere you look,” Mike said. “If we put a dozen engineering designs together, eight times out of 10 someone will want to change the design so more engineering has to occur. Our purpose is to make any design work from what the customer decides they want.”

Thus far Ranch Creek has sold just one home, a 10 by 16 foot getaway for a couple in Aspen, but Mike can put together any size log home at bargain price.

“There’s no limit on size,” he said. “We can buildings as small as 150 square feet and as large as 10,000.”

Low cost with no sacrifice in quality remain the hallmarks of Ranch Creek log homes and if by chance the buyer has the initiative and knowhow to put their own sweat-equity into construction of the kit, massive cost savings for a quality home exist.

“A young do-it-yourselfer could install and be at the bottom end of the spectrum,” Mike said. “Our model home was constructed along those lines and that probably cost $75,000 and that’s finished, it’s nothing terribly fancy, but good quality and nice.”

While the housing industry nationwide took a major hit and some areas suffer more than others, the cost for a Ranch Creek home delivered anywhere in the nation runs remarkably consistent.

“You can fit everything from us for a home on one truck and would cost roughly $20,000 and that’ll fit on one truck that’ll only cost about $4,000-5,000 to ship all the way across the country,” he said. “The cost savings for anyone would justify the shipping cost. As our little business is evolving we’re making more and more things that can be used in a log home at a quarter the cost of what a builder would pay at a local lumber retailer.”

For any prospective buyer, Mike suggests putting in the effort to buy as many peripherals for a log home directly from Ranch Creek. In addition to the cost savings of buying beetle kill, more often than not the shipping would offset the cost simply from the space available on the truck.

“Depending on the size of the kit and the space on the truck available, I think a person would want to take full advantage,” he said. “A 1500 square foot home would take less than half the space of a 48 foot truck so it would behoove them to get as much from us for the porch and siding and anything else possible to save cost on freight.”

Despite stagnant sales, Mike does what he can to keep from selling multiple kits to single purchasers in order to ensure each kit is unique.

“I’ve tried to stay away from developers,” he said. “I’m trying to not deal with people like that and sell directly to the homeowner.”

The difficulties of conducting an outdoor business 8000 feet above sea level in the mountains are various. “We never have enough summer, the difficulties we face here are weather,” Mike said. “We have much more winter, more freezing conditions, more energy use.”

Although he faces adversity in conducting business and selling homes in a down economy, Mike’s vision of preserving the forest remains clear.

“Those trees are dead and dying and time will go by and from a farming standpoint the crop is ripe and ready to be picked,” he said. “We’re either going to pick it and enjoy the harvest or let it fall and rot. That seems to be our choice.”

Mike says Ranch Creek Ltd., offers an affordable timber home option for the budget and environmentally conscious.

“Obviously the more of this stuff that can be used for anything, the better off the long term health of the forest is going to be.”

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