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Troubles of the Dimension Man 



An interesting sidelight on the dimension stock business was 

 developed recently by a well-known lumberman, who is confining 

 his attention exclusively to the manufacture of dimension stock 

 for use in wagon and plow manufacture. The company with which 

 he is connected is controlled by a large concern in the farm 

 implement field, but is operated entirely independent of it. The 

 manufacturer buys from the subsidiary if the latter can make as 

 good prices as its competitors; othoiwise, tlic competitors get the 

 business. 



Obviously, it is up to the dimension company to make good on 

 its merits, entirely independent of the parent company. Conse- 

 quently it is interesting to learn from the manager of the hardwood 

 mill that the business thus far has been very unprofitable. 



In discussing the reasons for this condition, and pointing out 

 the defects of the present system of doing business, the dimension 

 stock manufacturer recently made the assertion that the cost of 

 the material that goes into the mill is not properly figured. That 

 is to say, he took the ground that the cost of the material should 

 be figured not at the cost of getting it out of the woods and to 

 the mill, but at its market value as lumber. In other words, if 

 the piece which is to go into dimension stock would be graded 

 as a No. 1 common board, its value, from the standpoint of 

 material cost, should be figured at the regular price of No. 1 

 common. 



That this is the true basis for figuring is evident from the 

 fact that unless such a basis is used, there is no justification for 

 cutting the stock into dimension. The excuse for the latter 

 operation is that it makes better material with less waste, and 

 consequently adds to the value of the material; but if this value 

 does not appear in the price charged for the finished product, the 

 manufacturer is confronted with an equation which is not true. 



As the lumberman referred to says, ' ' We claim that every cant 

 that goes into the dimension mill should be graded according to the 

 rules of grading lumber, and the cant charged up to the dimension 

 department at just what it is worth as green lumber. For example, 

 if firsts and seconds are worth $40 per thousand in green lumber, 

 and the cant would make a first and second, the dimension mill 

 ought to be charged $40; if it is No. 1 common, worth $25, the 

 dimension mill should be charged $25; if a No. 2, worth $13, the 

 mill should be charged that. In this way the dimension mill would 

 be required to show profits, over the cost of green lumber, after 

 deducting the cost of labor and waste. 



"The average dimension mill operator doesn't figure his material 

 in this way, however, but in about the following manner: If 

 stumpage amounts to $6, logging expense $4, overhead $2 and 

 sawing and handling expense $2.50, making a total cost of $14.50, 

 this is the charge made to the mill for the material. And if a 

 showing over and above this is made, after deducting the other 

 charges, the millman regards that as profit. This is a fatal mistake, 

 for the material is thus put in at considerably less than it is 

 worth. 



"If 4"xl2" first and second green plank is worth $55 at the 

 mill, what is the sense of cutting it into wagon poles and getting 

 only from $49 to $50 for the poles? This, on its face, appears to 

 be a ridiculous proposition, and yet that is what is hapjjening in 

 the dimension business right along. The manufacturer who does 

 this is out $5 per thousand feet, besides the cost of manufacturing 

 the poles. In addition one or two rejected poles may be made 

 from the same plank, again reducing the margin, while a 12" 

 plank in a grade of firsts and seconds would admit two or three 

 defects that would make a rejected pole, if a pole should be sawed 

 out of it. 



"The whole theory used by the average concern cutting up 

 dimension stock is wrong, for the reason that it doesn't figure 

 what the stock is worth before it is cut into dimension. That it 

 is cut out of waste is no reason why the man who buys it should 

 get it for nothing. If Jones agrees with Smith to deliver so many 



—22— 



pieces of a certain size, absolutely perfect, it is none of Smith 's 

 business if Jones gets those pieces out of slabwood or gets it 

 out of the very best of lumber. He fills his part of the agreement 

 by furnishing clear pieces. If Jones could not buy the pieces, he 

 would have to buy the lumber, and by doing that he would soon 

 find that the price he is offering for piece stuff is low, considering 

 the waste involved in getting it out." 



Another inconsistency noted by the same manufacturer, who has 

 studied the dimension business from a good many angles, is that 

 the manufacturer who buys dimension at a low figure because he 

 convinces the millman that its selling value should be below its 

 intrinsic value, does not pass the benefit on to the consumer, but 

 charges just as much as though the stock had been cut out of 

 firsts and seconds. 



The typical conversation between the dimension manufacturer 

 and the chair manufacturer, for example, is about like this: 



After being quoted a fair price, i. e., one that will show a profit 

 to the dimension man, but still is less than the net cost of lumber 

 cut up by the chair manufacturer, the latter says, "Oh, I couldn't 

 pay anything like that." 



"Why not?" inquires the dimension man. "You have been 

 buying No. 1 common and cutting this stock out of it. The price 

 I am making you is less than you may possibly get by cutting your 

 stock out of No. 1 common lumber." 



"That's all right," retorts the chair man, "but you will go 

 back to the mill and cut m}' order out of slabs, edgings and other 

 waste. ' ' 



If the dimension man knows the chair manufacturer well enough, 

 he may say, "Now, Jim, it is none of your affair what I cut this 

 stuff out of. I agree to furnish you so many pieces of a certain 

 size; manufactured out of clear stock. If I do this, it doesn 't 

 matter to you what 1 make it out of," 



Assuming that the chair man, by hammering on the origin of 

 dimension stock, succeeds in getting a much lower price than he is 

 entitled to, would it not be proper for him to quote his chairs to 

 the retail furniture dealers at a lower price on account of having 

 made them out of material which originated in the waste of the 

 sawmill? 



"I have often wondered," says the dimension manufacturer 

 whose views are quoted above, "what would happen if the retailer 

 met the chair man with this argument: 'You are too high, 

 because I happen to know that you are buying all of your rough 

 material from Jim Brown, who cuts it out of scraps from the mill, 

 at $10 to $15 a thousand under the price for lumber. You ought 

 to be able to sell us the chairs at a lower price. ' I wonder if 

 the shoe would fit the chair manufacturer's foot. What do you 

 think about it?" 



The views of the dimension stock man referred to have been 

 quoted at length because they are a forceful expression of condi- 

 tions as they exist in the industry. That dimension stock is sold 

 at too low a price, and that as long as this condition prevails 

 normal growth or permanence can be expected of the business, is 

 a matter of common knowledge. But the arguments put forward 

 indicate that the chief reason for the low prices may have been 

 overlooked. The fact that it is the intrinsic value of the wood 

 that the consuming manufacturer is interested in, and not the 

 manner of its production, can hardly be too greatly emphasized; 

 and on the other hand the point that the cost of the material which 

 goes into the dimension mill should be figured at a fair market 

 price of the wood, regarded as lumber, is all-important, because 

 if the dimension man takes the wrong basis as a means of figuring 

 selling prices, he is sure to go far wrong. 



Perhaps the dimension men ought to take a cue from the other 

 branches of the industry and begin a study of costs along really 

 accurate and scientific lines. The installation of a modern cost 

 system would show the expense of handling each operation, as 

 well as the cost of the material itself. Armed with the results of 



