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Cost of Marketing Lumber 



Editor's Note 



Tlu' fdlldwiiis paper on the Cost of Merchandising: I.iuiilicr, from a joblx-r's viewpoint, was delivered by J. W. 

 Tavlor, president of the Domestic Luniher Company. Columlnis. (_)hio. at the recent Ciiieauo iiiec'ting of the Lumber 

 Sales Manasiers' Association. Mr. Taylor has tne repiilalicin of beinR one of the most paiiistaUinK and astute mer- 

 chants in hardwood lumber in the country, and what he has to say on the subject of menliaiidising cost is backed 

 bv the authority of experience and business history. It may be "ihouiiht that some of Mr. Taylor's observations 

 and deductions are radical, but the facts that he presents are' certainly based on wide experience. There is a lot 

 of meat in his story, that should be thought out carefully by many people interested in the wholesale purchase and 

 sale of hardwoods. 



.1. W lAVl.OH, COLfMl'.l 



Your program committee has \mi nio down 

 I ur a short talk on the subject of cost of 

 .uerehandising lumber, ami underscored the 

 word "short." Wish that they had chosen 

 a real lumber merchant to handle this sub- 

 iect. I will work along the lines of easiest 

 resistance and therefore it is easier to recite 

 how to not merchandise lumber at a proiior 

 basis of cost than it is to merchandise lum- 

 ber at a proper basis of cost. I shall express 

 only my on'n individual opinions; they will 

 not represent the opinions of any company, 

 lerson or association, but will represent my 

 own, and 1 hope to God that 1 can convince 

 ■ one or more men, in connection with one of 

 the largest industries on this continent, that 

 there are many things that are radically 

 wrong in connection with the cost of con- 

 ducting our business that need remedying, 

 and none that can not be remedied by united 

 intelligent effort. 



The cost of doing business in hnulier at 

 wholesale on the average is notoriously high 

 when compared with other lines of industry. 

 Take, for instance, banking, which you might 



say wholesales and retails money. The total salaries, expenses, 

 taxes disbursed by the average commercial bank (the figures being 

 based on gross profits) average around forty per cent of the gross 

 profit, or in other words, about three and one-half per cent of the 

 cost based on the total of loans made, whereas the average cost 

 to do business based on total sales with the average wholesale 

 hardwood luml er concern is sixty to ninety per cent of the gross 

 profits, or about s?ven per cent of its total sales. The lumber 

 business, compared with liard.varo, dry goods, coal, etc., is .iust 

 as bad. 



I have had the courtesy of recorils of live leading wholesalers 

 in the district in which we operate. The average traveling man's 

 road expense per car lumber sold during last year was .'i!l0.42, the 

 average overhead and office expense, exclusive of interest on 

 money invested was .•fill.!)'.', or a total cost per car of $21.34; yet 

 there are peoide connecterl with the car lot industry who think 

 they can wholesale lumber at $1.00 per thousand margin and make 

 money. They have simply succeeded in fooling themselves, and 

 are handicapping their fellows in the trade by so doing. 



I was recently asked by a prominent banker, "'What is the 

 business situation as regards the hardwood industry?" I apolo 

 gized for the grammar, and told him, "My Heaven, there ain't 

 any business situation in rcganl to the hardwood industry," and 

 r now quote this with a full knowlerlge that some of you will 

 brand such statement as d.vspeptic or incendiary; but, gentlemen, 

 1 have the data on file that can prove to any business man the 

 above statement. T am here to say to you that the lasis of 

 proper and successful merchandising in any line of business is 

 to deliver goods at a consistent market price, together with satis- 

 faction with the (|uality the order calls for. Trade relations 

 founded on any other basis will break without notice. We talk 

 about standard universal inspection publicly, but less than thirty 

 five per cent of the shippers are shipping within four per i-ent 

 of what the rules call for today. There are twenty per cent 

 shipping above what the rule calls for today through design: 



nllh 



ten jier cent aie doing the sanu tlirougli ignor- 

 ,auce; and twenty per cent are shijiping under 

 the rules through ignorance; and twenty per 

 cent more .are shipping under the rules through 

 design. 



.\s a further illustration that there is some- 

 vhing wrong, will say to you that the manu- 

 facturer and wholesaler of hanlwoods are 

 serving their customers with a grade that is 

 made according to some inspector's individ- 

 ual notion, or carelob'siicss. lie is simply 

 tcDucd loose and supported in his inefficiency 

 or incompetency. 



There are not thirt .'-three per cent of the 

 inspectors of the hundred mills that I have 

 done business with in the last three years, 

 that have seen an inspection rule book in 

 five years. AVhat they know of grading lum- 

 ber they learned mechanically fnun some fel- 

 low ahead of them, who may and may not 

 have known the first letter of the alphabet 

 about grading rules. 



We have, connected with the industry, two 

 rival associations, which 1 consider are 

 largely kept up from pfide and jirejiidice 

 ii against ore another, not tlirough any educational preventive or pro- 

 tective w<iik that they do, and could be united in six minutes if six 

 men were invited to stay at home. 



We have iu tlu' eoiirse of business called on both associations; have 

 had the same association man go over the same car; have found him 

 off his own tally twenty per cent. We have hired and fired during 

 the last year on our own account seven different insjieetors. I liave 

 found them off as high as fifty per cent. 



We need one set of rules and a set of ins|iectors who will in- 

 spect. 1 called recently for reinspection on one car and out of 

 26,000 feet I found less than 8,000 feet up to quality ordered. 

 During the past twelve months every seventh i;ir 1 have delegated 

 the mills to load out for me has been kicUoil on either in quality, 

 dryness, widths, lengths or feetage. 1 have had many reinsjiec- 

 tions by the association, and on only three cars out of the nutny 

 lias the invoice of the shi)iper been sustained. 



As a result of these mis-shipments and this farcical basis of 

 trade, many cars of lumber have to be insi)ected from three to 

 live times, and I have come to the conclusion that my earnest, 

 honest desire to make money in this game on a margin and not 

 on tnanipulation, is titterly impossible; and thai the money that 

 has 1 ecu ni.'ide out of it by dealers through eomlilions above 

 recited, has been and must be made by either nu'asuring short 

 at the mill or measuring long to the customer, or switching the 

 (,'raile on the peo]de concerned. 



This state of atTairs has cost me he.-illli, prestige and profits. 

 It is costing many of you unnecessary thousands of dollars an- 

 uimlly to merchandise your lumber, as all of you know that every 

 lime there is a kick it costs the profit of fh.il i ar of lumber and 

 .inotber with which to settle the thing up. The man who says 

 he likes to settle kicks lies. 1 am here to till you that during 

 fh(( last year the kicks that have been handed me by mis ship- 

 ments from one cause or aiudher, have cost if.'J.OO per car on our 

 entire movement of stoi'k, which sum of money would lia\i" e;irned 

 us eighteen per I'cnt ilividend on our ca]iital. 



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