26 



HARDWOOD RECORD 



April 25, 1922 



Moss Again Heads Millwork Cost Bureau 



{Continued /r 

 ' ' The reason tlie mill owner does not get the right price for his prod- 

 uct is usually within himself," Mr. Dickey declared, having in mind 

 the ignorance that is inevitable if a manufacturer does not actually 

 know what an article costs him. 



He concluded with the statement that the "mill owner has the 

 right to get the right price, or fair profit, for his product, and the 

 only thing that stands between him and this right price is ignor- 

 ance. ' ' 



Ma/Chine Tests Eliminate Mistakes 



The mistakes which the operations of a proper cost system will 

 jobviate were strikingly revealed in a discussion of machine per- 

 formance, in which a number of the members took part. These 

 discussions showed no instance in which a careful cheek of a 

 machine did not reveal that in actual practice it produced much 

 less, sometimes less than half, claimed for it and roughly estimated 

 by the millwork manufacturer. For instance. President Moss 

 declared that the machines in his plant had been on a stock clock 

 for years; automatic recorders on the moulders showed every stop 

 and every set-iip, and .yet "we never got better than 52 per cent 

 efficiency. ' ' 



Previously he declared that the biggest spread between promise 

 ,and performance in millwork production is on hardwoods. With 

 reference to stickers and planers, he said no machine would get 

 100 to 150 feet a minute, as often claimed. 



Samuel Roberts, president of the Eastern Woodworkers Cost 

 Information Bureau and president of the Grater-Bodey Co., Nor- 

 ristown, Pa., who said he had spent thirty-eight years in the mill- 

 work business, declared it a principle that a machine "won't turn 

 out one-half or one-fourth of what the guarantee of the maker 

 says. ' ' 



This was not always the fault of the machine, the discussion 

 showed, but because of unavoidable conditions of millwork manu- 

 facture, which compel stops for set-ups and stops for many other 

 reasons, which preclude the attainment of ideal efficiency in 

 operation. 



But nevertheless many mill work manufacturers undertake to, 

 and do, conduct their operations, make bids and sell stock, without 

 testing the performance of their machines. Thus one manufac- 

 turer testified that he had been basing his estimates on jobs on a 

 machine performance of 30 feet of stock a minute, while actual 

 tests revealed that he was only getting 17 feet a minute out of his 

 machines. 



Moss Defends Legality of Bureau 



The entire legality of the methods of the Millwork Cost Bureau 

 was emphasized by President Moss at every opportunity through- 

 out the two days of the convention. He opened the general meet- 

 ing of the convention on the afternoon of April 19 by reading a 

 letter, which he had addressed to Herbert Hoover, secretary of 

 Commerce, defending the bureau against the imputation of illegal- 

 ity contained in the reply which Attorney-General Daugherty made 

 to Secretary Hoover relative to trade association activities under 

 date of February 3. 



Mr. Moss told the Secretary of Commerce that of the eleven 

 trade associations activities on which the attorney general gave 

 his opinion, the first question only, "bears any relation to the 

 activities of the organization for which I am authorized to speak." 



Mr. Moss then entered into the following description and 

 defense of the methods of the Millwork Cost Bureau: 



Some nine years ago I assisted in forming what is Ixnown as the 

 Millwork Cost Bureau. I was made president and have served con- 

 tinuously in that capacity up to the present time. The planing mill 

 business for years had been on the rocks, with more failures to its 

 credit, or discredit, than in any other line of legitimate business involv- 

 ing a large number of skilled employes and similar investments. It 

 was notorious that planing mills doing custom work were a liability 

 rather than an asset, and apparently this deplorable condition was due 

 to the fact that no mill operator had any means of knowing his cost 

 on any job completed in his mill, neither had he any guide or means 



■Jill imfir 23) 



of estimating the cost of a given piece of work upon which he was 

 called to quote a price. Several of the more progressive operators had 

 employed cost accountants at great expense to install systems, with 

 the result that not in a single instance did the cost systems as installed 

 by accountants meet the requirements or supply the desired informa- 

 tion. They were expensive, impracticable, and did not touch the difficult 

 problems peculiar to the mill business, so that it was decided to form 

 an organization for the sole purpose of conducting a campaign of 

 education. The program involved, first, the development of a practical 

 cost system adaptable to the business; second, the development of 

 cost accountants by acquainting them with the problems peculiar to 

 the business, so that they might install cost systems and instruct 

 others in the operation of same: third, the assembling and dissemina- 

 tion of any and all information relative to production costs of all kinds 

 of special or custom made millwork; fourth, the compilation and dis- 

 tribution of a list covering special or custom-made millwork, such list 

 being what is known as a Long List, so that it could not possibly be 

 used as a selling price, but would be subject to a discount, as has 

 always been the custom on stock goods in practically every line of 

 merchandise. There should be no confusion as to this list. If a law 

 were passed prohibiting the distribution of a list on stock goods in any 

 line of business, it would have tlie effect of restricting rather than 

 increasing competition, for the reason that in the absence of a list, 

 ever.v buyer, in order to make a comparison of prices, would be obliged 

 to secure a price from each manufacturer on eveiT item, and make a 

 comparison of the price quoted on each item, while with the use of 

 the list, in order to make comparisons on all sizes, it is necessary only 

 to compare the discount quoted, thus securing competition from many 

 bidders with the least possible expenditure of time and money. Stock 

 lists are usually established as a result of comparisons of experienced 

 manufacturers with the view of establishing differentials as between 

 the different sizes and designs, based upon experience, so that the 

 use of such a list is an economic necessity in the interest of the pub- 

 lic, the manufacturer and the merchant. So much for stock lists. 



Conditions of Millwork Industry 



Now, what is the condition confronting the manufacturer of custom- 

 made millwork? Here we had a situation where the operator of a 

 planing mill was called upon constantlj' to estimate the cost of pro- 

 ducing articles which he may have produced years or months back, 

 under entirely different conditions, and almost daily called upon to 

 quote prices on new designs which others may, or may not, have 

 produced; and in such case, the mill operator, from the drawings or 

 descriptive matter, plans and specifications, without compass, guide 

 or chart, must submit valid offers to sell for a definite price, the result 

 being that the estimator had absolutely no knowledge of factory bur- 

 dens or overhead expense, due to the lack of comprehensive cost 

 records, and depending entirely upon his own judgment as to the 

 amount of time and material that would be required, would proceed 

 to establish the price at which the product could be sold. This condi- 

 tion of uncertainty as to costs we seek to remedy by placing the mill 

 operator, so far as it is possible, in position to anticipate as to the 

 amount of actual time and material that will be required, based upon 

 the experience of others who have produced similar designs and quan- 

 tities. With this information at hand as to the probable amount of 

 labor and material that will be required, the mill operator is then in 

 position to figure his ow'n cost of lumber and apply his own factory and 

 commercial burden and profit. By following this procedure, the mill 

 operator is in position to anticipate as to his cost of production, except 

 the variation that will occur in any plant, due to the varying condi- 

 tions and the efficiency of the workmen, such variance rendering it 

 impossible for the mill operator to determine his cost with anything 

 like the same certainty which obtains in the case of the wholesaler, the 

 jobber and the retailer, who are in position to know at all times as to 

 the actual cost of that which they offer for sale. 



In this connection the word *'cost" and the sense in which it is used 

 should be clearly defined. For example, first, prime cost, in the case of 

 a manufacturer, usually means cost of material and productive labor; 

 second, factory cost; in the case of a manufacturer, usually means total 

 factory cost, including prime cost, plus factory burden; in other words, 

 total cost of product without merchandising or selling expense; third, 

 invoice cost, usually means the price paid by the wholesaler, jobber 

 or retailer, without merchandising cost; this basis to the wholesaler, 

 jobber and retailer being the same as factory cost to the manufacturer; 

 fourth, selling cost, being the same as factory cost to the manufac- 

 turer and invoice cost to the wholesaler, jobber and retailer, plus the 

 cost of doing business. In order that we may consider this phase of 

 the matter from the same angle, I would like to inquire what basis of 

 cost you and the general are considering. This is germane. There 

 must also be a better understanding of the wide difference between 

 uniform cost and uniform selling prices. Broadly speaking, there is 

 no such thing as uniform production costs, and certainly there should 



