November 10, 1916 



HARDWOOD RECORD 



n 



any advance in price to mean anything should exceed the in- 

 creased cost of production. 



E. A. Hamar followed Mr. Kellogg with a paper showing va- 

 rious items entering into the increased cost of logging and manu- 

 facturing. Mr. Hamar said: 



We all remember last year's heavy losses with chagrin, and we are 

 not looking forward to a repetition of that disastrous experience with any 

 degree of pleasure. Why did we operate at all during that year? I 

 remember talking to a manufacturer in another line at that time who 

 seemed to be very much surprised to think we would continue to manu- 

 facture at a loss. He asked: "Why don't you shut down?" That is 

 the rub, why don't we shut down when our figures indicate red and are 

 on the wrong side of the balance sheet? 



The whole trouble with us is, that we do our figuring afterwards instead 

 of before. We are optimists and not opportunists. I think this is the 

 history of the industry and therein lies one of its greatest weaknesses. 



There are a great many ways of figuring the cost of lumber, and per- 

 haps most of them are right ; but we cannot get away from the fact that 

 It consists primarily of cost of stumpage, carrying charges, logging, 

 freights, mill operating costs and administration expenses. On a basis 

 ol $2.50 to $3.00 for stumpage I dare say that nearly all of our members 

 lost money last year and very few are making any this year ; (I am speak- 

 ing now and this discussion deals only with those members manufacturing 

 largel.v hemlock and the lower priced hardwoods, for there are a number 

 of plants still cutting a large amount of pine and high-priced hardwoods 

 to which these figures would not apply. Conditions have been materially 

 improved this year through foreign intervention. Lumber, however, has 

 been a laggard ; so that we have not been as fortunate as the other fel- 

 lows : especially those manufacturing iron, copper and brass goods. These 

 manufacturers and others have had very handsome advances ; while on 

 the other hand, owing to the very same causes, lumber continued down 

 the toboggan well into the last half of the past year, since which time 

 we have had a gradual increase In prices. This Increase was forced by 

 conditions over which Ave had no control, until at the present time we 

 have an advance of about 15 per cent. Compare this with an Increase 

 of 10 to 20 per cent in wages and an Increase in mill and camp supplies,- 

 with the possible exception of hay, of 20 to 100 per cent. 



For the sake of arriving at something concrete let us assume that we 

 lost $1.00 per M last year (I know, of course, none of you will admit to 

 losing that much), add to this loss $1.00 per M Increase in logging and 60 

 cents Increase in operation at the plant, we show that an Increase of 

 $2.60 in price is necessary to let us out even. We have no more than 

 had this advance. Or putting it another way, we might summarize as 

 follows : 



Stumpage $ 2.25 



Logging 5.50 



Freight 1.50 



Sawing and shipping 3.80 



Selling 75 



Administration 2.00 



Cost of lumber on cars $15. .SO 



These figures are perhaps a good average, and if .vou will take the fig- 

 ures on cost of production prepared by U. B. Goodman some two or three 

 years ago and add $1.00 per M to them you will find that they coincide 

 very closely. 



Our present selling price of hemlock at $1.50 to $2.00 off list prices is 

 netting us about an average of $15.25 to $15.50 for all grades No. 3 and 

 better or for the product of the log ; and maple is not doing much better. 

 It would appear from figures submitted that It is going to keep us 

 hustling to produce lumber the coming year at our present selling price. 

 In my judgment prevailing prices are $2.00 a thousand too low. The 

 market warrants an advance, and we are going to get the advance, for 

 we must have it. 



There seems to be one thing peculiar to the hemlock business, and that 

 is, that the cost of production keeps up with, and about two Jumps 

 ahead of the selling price. Away back In the 90s we were selling for 

 S9.50 and producing for about the same figure ; in 1903 and 1904 we were 

 up to $12.50 and the cost of production was still playing tag. In 1917 

 It will cost us $15.50 to $16.00 to produce ; I am not wise enough, how- 

 ever, to guess at the selling price. Will it take a lumber famine to put 

 prices where they belong, and are we to have a lumber famine? The 

 only reason we have not an over-production right now Is owing to the 

 shortage of labor and that shortage is going to continue and become more 

 acute. Therefore, the cost of all commodities will advance. Will lumber? 



With a history of twenty years back of us, can we not see that the 

 price of production Is going to keep up with, and Just a little ahead of the 

 selling pric«? Shall we strain every nerve to get a large stock of high- 

 priced logs to sell at no profit, or shall we go slow and produce a normal 

 or below normal cut and sell at profitable prices? These are questions to 

 which we should give serious and careful thought. 



Secretary Swan gave a talk on a plan for better merchandising, 

 which had for its basis the organization of the Northern Lumber- 

 men's Salesmanship Conference. He outlined the work done in 

 this direction by other lumber associations. The plan contem- 

 plates a three days' stop at mills, Merrill, Wis., being the point 

 at which the meeting will be held. The key to the meeting will 



be the question of satisfied customers, which is based on a better 

 knowledge of customers ' needs and of the stocks the salesman 

 has to sell. A general discussion on the proper way of handling 

 customers according to their varying personalities will take up 

 part of the time. 



The question of service is based, according to the announce- 

 ment of the meeting, on co-operation between the manufacturing 

 and the sales ends of the business, and this must be given greater 

 attention and a greater uniformity of action developed. Sale 

 arguments will be worked up based on competition within the 

 trade, competition with other woods, and on competition with sub- 

 stitutes. It is planned to hold the meeting about a week after 

 Thanksgiving on Friday, Saturday and Sunday, and in each ses- 

 sion some manufacturer will be chairman. 



The secretary read a letter from Federal Trade Commissioner 

 Parry regarding the influence of car shortage and of other con- 

 ditions upon the northern business, the question of chronic over- 

 production being one of the chief points in his letter. He asked 

 as to the effect of the car shortage on the price, and also the effect 

 of the quantity of production on the price; and asked for infor- 

 mation as to the production a year ago and prices at the same 

 time. 



On motion of K. B. Goodman, the secretary and E. A. Hamar 

 were instructed to reply to Mr. Parry's letter. Mr. Goodman 

 maintained that in spite of Mr. Parry's suggestion, it was pos- 

 sible for lumber manufacturers to conform their plans to slight 

 changes in the general business situation — that it is not possible, 

 merely because of the scarcity of cars, to limit production. 



President Phillips appointed a committee on terms of sale, 

 namely, Edward Hines, M. J. Quinlan and C. A. Goodman; and 

 on branding of lumber, E. A. Hamar, H. T, Latimer and George 

 N. Harder. 



Mr. Phillips announced that the annual meeting will be held 

 Thursday and Friday, January 25 and 26, 1917, at the Pfister 

 Hotel. It is planned to have the annual dinner on the night of 

 the twenty-fifth. 



Following the satisfactory report of the treasurer, A. L. Osborne 

 asked that the members utilize the traffic department more than 

 they have been as that department has cleaned up the urgent 

 outside work and is now in a position to handle the auditing of 

 all freight bills. 



R. B. Goodman here took occasion to talk about the general 

 condition of the hemlock market. He said there is developing a 

 much better market for No. 3 hemlock. 



The sales managers' committee then gave its report, which told 

 of the various meetings of that body and made various sugges- 

 tions for co-operation with the manufacturing end of the busi- 

 ness. The sales managers' committee reported on market con- 

 ditions, first for hemlock and then for hardwoods. On hemlock, 

 Mr. Klass said that the hemlock situation has never been so favor- 

 able as now; that there are 78,000,000 feet less hemlock than Oct. 

 1, 1915. He also read a list of the sales managers' ideas of what 

 going prices on hemlock now are. He said that the holdings of 80 

 per cent of the members in one inch No. 2 and better hemlock 

 shows 7,000,000 feet of dry and 2,000,000 feet of green. The re- 

 port maintained that now is the opportune time to get more money 

 for hemlock. 



J. F. Halpin reported on hardwoods as follows: 



Market Conditions on Hardwood 



October 2, 1916. 



BIRCH. FAS No. 1 



%" Surface Measure $37.00 $23.00 



^ 4/4" 42.00 23.00 



1x4 6 and up 1 face strip.. $2.8.00 5/4" 46.00 26.00 



1x4 and up 2 face strip.. 35.00 6/4" 48.00 29.00 



1x5 and up 1 face strip.. 35.00 8/4" 50.00 33.00 



1x5 and up 2 face strip. . 42.00 10/4" 55.00 45.00 



1x6 and wider selects strip 36.00 12/4" 60.00 50.00 



No. 2 No. S 



$14.00 $10.00 



14.50 10.50 



BASSWOOD. 



4/4" 

 5/4" 

 6/4" 

 8/4" 

 10/4" 

 12/4" 



38.00 

 41.00 

 43.00 

 45.00 

 50.00 

 52.00 



28.00 

 31.00 

 33.00 

 35.00 

 40.00 

 42.00 



I6.nn 



19.00 

 23.00 

 30.00 

 35.00 



19.00 

 21.00 

 23.00 

 25.00 

 30.00 

 32.00 



11.50 

 11.50 

 11.50 

 12.00 



15.00 

 17.00 

 18.00 

 18.00 



