The Cost of Lumber Js4anufacture 



ThtTt it a wicloiipr«a<l moMMinrit :i ng jiiintHrinrn throughout the 



eouDtrr to gpi ut tlic coxt of projurini; lumlwr. It is well utiilcrstoixl 

 that loo liltlo of Uiut hail been done in the ]>iist The ninnufnrturer 

 of IuitNt Ii!<« t<w often lumod his Rellin); price on (»iie.«!i\viirk. If that 

 ha* to hit, no harm has rciiulted, but mnny timen it hn^i 



mi?-' .Mibcr hn» lieen sohl too nenr the cost price for safety. 



An iovi*«ti(n>tion has been in proi^ress for some time, by the Fore^t 

 Ser^'iec in coopcrntion with lumber nisocintions, to dctcrmioo the 

 cost of producini; lumber. An address by Austin Gary licforc a meet- 

 ini; of the West Coast Lumber Manufacturers' Association nt Seattle, 

 February 2C, 191.'), t;nve some results of the work in that re);ion. 



Along that lino, the n.<sociation has sent out a cost sheet, emboily- 

 injj the fi(;un>s of twenty large mills in Washington nnti Oregon for 

 the year 1913. The itemized sheet follows: 



Totsl cut 001,320,211 fcot 



Arcrase cut per mill 34,586,010 • 



Total dnjs run (Including night sblfta) 5,830.3 



ATeragr dayn run por mill 291.5 



ATcraKc cut per dn.r por mill 118,575 feet 



Total number uf men cmplo.vcd (day shift only) 3,248 



ATcracc numtxr men per mill (day shift only) 102 



ATeraice wngcs per day $2.71 



PcrceDtSKo of output surfaced M% 



COST 



Boom l«t)or . . $0,068 



Boom repairs and supplies • 013 



Mill lalwr 1.448 



U1II repairs and supplies 576 



Total l>oom and mill 



Planer labor 488 



Planer repairs and supplies 121 



Kiln labor 181 



Kiln repairs and supplies 016 



$2,103 



Total planers and kilns .800 



Yard labor 1.208 



Yard repairs and supplies 176 



Total yard 



1.383 



Total direct operation $4,294 



Salaries 341 



Sundry eipenses 147 



Industrial ln.surance 081 



Fire Insurance 140 



Taxes 101 



Total general expense. 

 Depreciation 



.810 

 .430 



Total manufacturing cost $5.5?4 



Interest on plant at 6 per cent .451 



Interest on lumber stock 153 



Interest on log stock 069 



Interest on accounts receWable 081 



Interest on current cash 017 



Total interest on working capital at 6 per cent. 



.320 



Total cost with Interest $C.305 



It should be observed that the cost of stumpage and logging is 

 not included in the foregoing figures. They simply show what would 

 be the cost of producing lumber, if the logs were laid down free. 

 Since logs do not come that way, the expense of stumpage and work 

 in the woods must be added. That will vary greatly. The figures 

 show that when all cost of timber and logging is left out of account, 

 the expense of producing one thousand feet of lumber at those largo 

 West coast mills is .$6.30 '-l"- 



It is questionable whether the work can be done more cheaply any- 

 where in this country than on the 'West coast. The timber is large 

 and of good form. Every regifcn presents a different problem, and an 

 average cost of manufacture at one point cannot be safely accepted 

 as an average at another; neither could the price of stumpage and 

 logging in one region be taken as the cost in another. 



The West Coast Lumber Manufacturers' Association plans to fol- 



low Otf iir'-t iiiti'^tif'ation of rost by others dealing with logging 

 o|H'rntians, selling, uud Htumpugv. This will show the complete cost 

 of the luml>er nt tlic time it pusses out of the niunufucturers ' hnnda 

 into thos<> of the buyer. A circular inxued by the assuciution, and 

 ilcaling with the subject of cost, says: 



"That this soiling value will Ite found Ix-lotv the average cost of 

 ]iroduction is no surprise to us, but will bo news to the consuming 

 public. It is not a farfetched conclusion tliat the public, ooco rightly 

 informed, will not ]K>rmit an industry of this magnitude to continue 

 without adc<|unto returns to lalx)r and capital, and Mr. Cary's study 

 will Ix' an authoritative source uf information." 



Lower Michigan Lumber Rates 



The lower peninsula of .Miilii^aii, lifing MirriniinliMl on three sides 

 by water, is peculiarly sitimted so far as rates, Vxith class and com- 

 modity, uro concerneil, and tliis situation has had much to do in the 

 naming of low lumber rates on account of water competition. 



The lumber rates a|>plying between iKiints in the lower peninsula 

 of Michigan have In-en unsettled for more tlian a year. For tho 

 last ten or fifteen years these rates were on what is called n checked- 

 in basis and were generally agreeable to the lumber shippers of the 

 state. In some cases low rates were made on account of water com- 

 ]ietition, in order to hold the trafUc to the railroads and in most cases 

 the railroads made low log rates to the milling point in order that 

 they might obtain the manufactured product out. When the gen- 

 eral advance in class and commodity rates were asked for a year ago 

 last October, the railroacl.s in the lower peninsula of Michigan can- 

 celled their commodity tariffs on luniljer and endeavored to apply the 

 full official classification basis of the sixth class. This was strenu- 

 ously objected to by the shi|>pers and a hearing was held l)efore the 

 Michigan Railroad Commission, where both luml>er shippers and the 

 railroads were represented, date of hearing, April 23, 1914. All 

 parts of the lower peninsula of Michigan were represented and argu- 

 ments were presented. 



The Michigan Railroad Commission having given the matter con- 

 sideration, issued an order to the effect that the rates on lumber 

 and forest products in carloads should be based on 9') per cent of the 

 new advanced sixth class basis, and on October 26, 1914, this basis 

 of rates became effective in the lower peninsula of Michigan and 

 a joint tariff participated in by all of the railroads of lower Michi- 

 gan was issued by Eugene Morris, agent — Central Freight Asisocia- 

 tion, Chicago. These rates were not generally satisfactory because 

 of the extreme high basis on which the rates were made. Com- 

 plaint was therefore made against the tariff and another hearing was 

 held before the Michigan Railroad Commission in Lansing, April 7, 

 1915, for the purpose of reviewing these rates. At this hearing there 

 were present representatives from Saginaw, Bay City, Cadillac, Lud- 

 ington, Manistee, Petoskey, Pellston, Alpena, Cheboygan, Grayling, 

 Johannesburg and other points. There were also present representa- 

 tives of the Michigan Central Railroad, Pere Marquette Railway, 

 Grand Trunk Railway, Detroit & Mackinac Railway, Grand Rapids & 

 Indiana Railway, Ann Arbor Railroad, Bay City, Gaylord & Alpena 

 Railway and others. Commissioners Glasgow and Cunningham repre- 

 sented the railroad commission ; Attorney Hal H. Smith of Detroit 

 represented the Saginaw valley and other shipjicrs on the east side of 

 the state. R. R. Darwin of Lansing represented the Cadillac shippers; 

 F. H. Coggswell, the Alpena shipper and Attorney McPherson rep- 

 resented the Ludington and Pellston shippers. Witnesses from all 

 parts of the state were examined by both attorneys for the shippers 

 and for the railroads and were in turn questioned by the railroad 

 commissioners. 



After a three days' hearing the case wa,s adjourned, to be recalled 

 in Lansing April 29 at 9:30 a. m., when shippers from Ludington, 

 Pellston and Grand Rapids will be heard. After that time the rail- 

 road commission will render a decision. All of the shippers are ask- 

 ing for a reduced basis of rates from those in effect. 



