August 25, 1915. 



The Wholesale Yard Coming Back 



Indications have not been lat-Uing of late to suggest tliat tlip 

 wholesale yard, located in consuming districts, is due for a 

 rejuvenation, on account of the desire of factory men to cut down 

 their stocks of lumber. In other words, they are coming to see 

 that the "middleman" serves a useful purpose in putting lumber 

 in stock and carrying it until it suits their convenience to use it. 

 This being the case, they are willing to pay something for this 

 service, in order that they may reduce their investment in raw 

 material, turn their capital over oftener and do a greater volume 

 of business with the same investment of money. 



The middleman has been hit so hard, as an institution, in the 

 lumber field as elsewhere, that it is gratifying to find sentiment 

 swinging the other way. Of course, the lumber jobber could hardly 

 l)e put out of business by any conceivable development, for but for 

 a time the wholesale yard, serving principally a local clientele, 

 seemed to be losing its grip; but the big markets like New York 

 and Philadelphia, not to mention others closer to the producing 

 districts, have recently given signs of developing greater support 

 for the yard men, who are actually carrying stocks and enabling 

 consumers to get lumber in whatever tinantity and at whatever 

 times they desire. 



The Cost of Lumber 



The writer was recently given a striking demonstration of the 

 fact that lumbermen do not know what it costs them to make their 

 [iroduct. 



The average hanlwood producer knows, if he stops to figure, how- 

 much money it takes to manufacture 1,000 feet, log run, of any 

 particular kind of wood; but when he comes to the question of 

 selling an individual item, he has nothing to fall back on to 

 prevent him from fixing a price which will not pay the cost of 

 manufacture and leave a profit. 



Maybe it is impossible to arrive at any logical conclusion on the 

 subject of the cost of making any specific grade, but at least the 

 manufacturer ought to have an average price in mind, which will 

 let him "come out even" or better, on a log-run basis. 



The instance referred to was a purchase of a large quantity of 

 dimension oak by the government for the use of one of the depart- 

 ments. The prices were quoted on a delivered basis, and of course 

 the cost of transportation varied somewhat, and accounted to a 

 limited degree for the difference in the quotations. But the great- 

 est reason for the wide discrepancies which were noted must have 

 been either a difference of opinion regarding stumpage values or a 

 lack of knowledge on the subject of the cost of production. Per- 

 liaps both factors entered into the situation somewhat. 



At any rate, the lowest price quoted on this particular order 

 was $30 and the highest was $60. The range, in other words, 

 was 100 per cent of the minimum price. Allowing a possible dif- 

 ference of $10 in freight, which is a good deal more than necessary 

 to take care of the variation in the rate, there is still a discrepancy 

 of $20. The lowest bidder probably was asking too little and the 

 highest too much; but the wide range of prices would not be a good 

 argument to use as a means of showing that lumbermen are not 

 making money on their product. To the uninitiated it would seem 

 to indicate that the margin is great. That is not the case, of 

 course, and the real explanation is that suggested above: ignorance 

 on the subject of cost accounting in the sawmill business. 



"The Forest Products Manufacturer" 



A development of the business which is significant of the nar- 

 rower margin of profit and the increased necessity of having the 

 widest possible market for the output of the log is the tendency 

 on the part of large owners of stumpage to install equipment for 

 making not only lumber but all other forest products. 



One concern which has been principally in the lumber business 

 is now making veneers, built-up stock, hoops and box shocks. 

 Another which has been operating as a sawmill proposition prin- 



cipally has turned its attention to certain kinds of cooperage 

 material and to veneers, and has adopted the settled policy of 

 equipping itself for the manufacture of anything that a log will 

 produce. 



This means, in addition to enlarged opportunities for the con- 

 cerns which have adopted this policy, greater competition for those 

 who have been specializing in the allied lines; and also shows 

 that the different branches of the forest products industry are 

 much closer together than the casual observer may have realized. 

 Another aspect of the case is the greater quality of salesmanship 

 which wUl be needed to market these various products. It will 

 not only take highly efficient men in the operating departments, 

 to turn out good stuff at low cost, but exceptionally versatile 

 salesmen to go out and talk the merits of several different kinds 

 of wood products. 



So, from various angles, the tendency to .spread out has possi- 

 bilities that one may profitably ponder. 



The Remanufacture of Lumber 



One of the shre%vdest M.id most intelligent hardwood men in the 

 business recently made the statement that the only way it is 

 possible to make money in the rehandling yard is by means of 

 installing equipment for the remanufacture of the stock. 



He took the ground that the old-fashioned yard man, who hope.l 

 to make his money by "beating the game" in taking up the lum- 

 ber and then beating it again in selling it to his customer, hasn't 

 a chance nowadays, because the people he deals with, at both ends 

 of the line, are too well educated to the situation to permit it to 

 be done. 



"But," he continued, "if one can actually increase the value 

 of the lumber he handles, both from an intrinsic and a technical 

 standpoint, without prohibitive expense, there is a chance to add 

 sufficient value to provide an opportunity for profit. When one is 

 operating what might be called a concentrating yard, and taking 

 the output of various country mills, it is necessary to trim that 

 lumber up, equalize it and in other ways improve its appearance, 

 so that it will stack up alongside the product of the bandmi'll of 

 your competitor. 



"Then, again, you can cut off defective ends, rip out heart- 

 wood, rip off sap and bark and really increase the grade of the 

 wood, as well as the appearance. And it seldom happens that the 

 value of the footage lost is sufficient to offset the increased value 

 secured in this way. It is really getting into the dimension busi- 

 ness, but that is what consumers are demanding more and more, 

 so that the rehandler who is using his head and is equipped to' 

 manufacture his lumber as he goes along is in line with progress. ' ' 



This particular member of the trade has cited numerous specific 

 instances of how unpromising material has been remanufactured 

 and impressive profits scored; but it would be unfair to him to 

 indicate too specifically just how he has been able to make a 

 $2,500 investment in saws and power equipment pay him bi" 

 returns. 



Walnut for Store Fixtures 



A New York lumber salesman recently made the statement that 

 the greatest recent increase in the consumption of walnut, outside 

 of its use for war purposes, has been in the manufacture of store 

 fixtures. This may be of interest to those engaged in this business, 

 who may have had the idea that the furniture trade offers the' 

 best opportunities for the sale of their product. He pointed out 

 that many department stores in the East have recently specified 

 this wood for cabinets, partitions, etc., and that the fixture houses 

 have accordingly become steady customers for walnut lumber. 

 The fixture business is much more important, anyhow, from a 

 consuming standpoint than the average lumberman appreciates, 

 and it would be a good idea for the live sales manager to make 

 up a special list of these concerns and analyze their requirements 

 in a more detailed way than he has done heretofore. 



—19- 



