| Summary: | A general assessment model of industrial wood residue use was devised and tested using the sawmill industry in Massachusetts. Two analytical approaches were used in the model. The first employs financial analyses of individual mills (in various production strata) to determine the profitability of their residue operations. An economic analysis used to determine the need for public intervention is also part of this approach. The second part of the model utilizes a scoring technique to evaluate the technical components in the sawmill's residue operation. It is intended primarily as a tool to complement the economic analysis in the first approach. Sixty individual firms, comprising 40 percent of the State's sawmill industry population in 1980, responded to a questionnaire survey aimed at examining their residue operations. Residue prices and equipment costs (obtained from primary and secondary data sources) were applied to the annual physical flow of residues and equipment at each mill. From these data cash flows for the evaluation period of each residue operation were developed. The residue inventory indicated that 86 percent of all residues generated in Massachusetts were sold. According to the net present worth values calculated in the financial analyses, 95 percent of all sawmills selling their residues did so at a profit. Residue operations at the other mills could be improved mainly through changes in equipment use, residue pricing, and greater attention to marketing. Because of the general profitability of residue operations in the state, an economic analysis was not conducted for this study. For the technical components analysis, the establishment of a standard threshold value allowed operations to be compared on a technical basis to other mills in the same production class. The threshold index also provided a ranking that could be used in determining the need for public intervention under a limited budget.
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