September 2C, 1015. 



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j^.Ts The Lumhermen s Round Table ^f 



One Phase of "Price Cutting" 



AVhilc rpllini; liiinlMr or :iiiy otlur »l4i|ilo ruiiniindity nt n jiricc 

 ^' 'I i» botow rtiindurd toiids to diiiturb iiinrkpt conditions to tlint 

 lA'.Lnl, it ix not tnio that tlir concern wbicli disposcH of a pnrticuliir 

 lot of stock at nliiit hcvnis to bo a low price should ncccswirily i>o 

 dcsi^atrd ns a prico-cuttcr. There may be legitimate ardunients in 

 favor of moving the lumber, at thnt time, at a conccssiou in the price. 



In this connottion, a good mnuy lumbcrnioii niiglit well take les- 

 sons from piogressive retailers. The moileni nieroliant knows that 

 the .«ocrot oi" snocei^.s consists of a rapid turn-over. The stock that 

 moves fust, even tliough at a narrow margin of profit, is tlic profit- 

 .ible line, whereas goods which nominally carry a long margin, but 

 ^ell so slowly tliat the turnover is much less rupid than on the other, 

 are not nearly so dcsiraMe. 



Conscqi-ently, the up-to-date retailer studies his stock carefully all 

 the time. The goods which fail to move, the "stickers" — and no 

 trade i.« witliout them — are put on the bargain counter at a reduced 

 price. They are sold, converted into cash, so that this capital can be 

 invested in more readily salable, and hence more profitable goods. 



The lumberman who wants to make his money work for him nio.st 

 ofDcicntly will keep his stock moving. Items which are "slow sell- 

 ers" should not be held indefinitely for a price which will insure a 

 profit on that specific operation; it is far better to sell the lumber at 

 less than its intrinsic value might suggest, in order that some other 

 stock may be bought or manufactured, out of which profits may be 

 more easily extracted. 



The lumberman who is sometimes called a price-cutter because, 

 when others are holding their stock for more than consumers will 

 pay at that time, he goes out and offers his holdings at a price which 

 will move them, may, in reality, be just a little shrewder and more 

 far-seeing merchant than the others. 



This general problem of keeping tab on the profitableness of dif- 

 ferent items, involves a closer scrutiny of stock than many members 

 of the trade give it. Many progressive hardwood men can tell you 

 whether they make more money on poplar or plain oak; how often 

 they turn over their ■capital invested in chestnut, and why they have 

 quit handling certain other woods. They know their business — and 

 they are best prepared to deal with the question of fixing the right 

 price. And, as suggested, that, may not necessarily be a profitable 

 price, if the item to he sold has outlasted its welcome. 

 One Way to Sell Lumber 



Some lumber salesmen believe that a price-list is all they need in 

 order to handle the factory man. This is assuming, of course, that 

 the latter is buying altogether on price, and without any very definite 

 knowledge of the effective contents of the stock that he is ordering. 



But it is quite possible to get better results by using better meth- 

 ods. And this applies particularly to moving lumber which happens 

 to be selling at below the normal rates, and on which quotations are 

 therefore lower than the value of the stock would indicate, taken in 

 comparison with other lumber of the same kind. 



A clever salesman recently noted that his concern had an overstock 

 of Xo. 2 common oak, which has been a rather slow seller, though the 

 demand is now picking up somewhat. He began figuring the propo- 

 sition with a view to moving the lumber, taking into account the 

 difference between the price and cutting value of No. 1 and No. 2. 



"According to the rules," he said to himself, "No. 1 contains 

 16 per cent more clear cuttings than No. 2. The latter must contain 

 50 per cent, so that, roughly speaking, No. 1 ought to be worth about 

 a third more than No. 2. But at present prices, it is bringing two- 

 thirds more. That means that, at the market price. No. 2 common 

 oak is the best possible buy. Suppose I show this to the buyers of 

 oak on my list?" 



It might be urged that as a practical matter the comparison would 

 not work out, as No. 1 might be better suited for the purpose, in an 

 individual case, and No. 2 might not be good enough in respect to 

 widths to work into the job. But there is no getting away from tho 

 fact that, considering the intrinsic cutting value of the two grades, 



—26— 



there is u btriking comparison possible on the subject, and the con- 

 sumer whose product will take a No. 2 common grade would certainly 

 be intt're.-ited if the salciman made the difference in price, as con- 

 tr.'isttvl with tli.> .llfTirci'i'c in cutting viiliic, clear to him. 



Why a Traffic Bureau? 



A progrcboivc younji,- hardwood man, who has a fairly good business, 

 but not a large one, admitted recently Unit he spent a good deal of 

 time, and that his clerks spent a great deal more, trying to figure ou'. 

 ratts and routings, .-ind that after ull their effort they were npver 

 quite sure that they had gotten everything just right. 



This is the best possible argument in favor of employing the serv- 

 ices of an expert, who know,'-; everything about traflic, and who can 

 adviso promptlj" and accurately regarding any question that arises, 

 whether it pertains to rates or rules. The lunibernmn is dealing with 

 a commodity a large percentage of whoso price is represented in 

 transportation costs. That means that tho better he knows the traf- 

 fic game — or the more he can find out about it — the more profitably 

 and easily he can sell his product. Uc not only can use, but must 

 have service along this line. 



An oiBce of the size referred to cannot afford to pay for the ex- 

 clusivG services of a high-grade trafliic man. That is the reason for 

 the widespread demand for the establishment of traflic bureaus. A 

 bureau devoted exclusively to lumber would be ideal, of course, but 

 if the lumbermen of a city are not stiong enough financially and 

 numerically to support such an organization, then they ought to lend 

 their support to a general bureau serving all lines of trade. They 

 can well afford to pay from $100 to $500 a year, or even more, for 

 the right kind of service, because they may be able to save that much 

 in handling a single transaction. 



Traffic developments in the lumber business have been numerous 

 and important recently, pad are likely to prove even revolutionary 

 in their scope in the near future. Don't rely on "the trade" seeing 

 that your interests are properly taken care of. Do your part by help- 

 ing to support a traffic bureau in your town, and study every devel- 

 opment in its relationship to your business. Then you won't be 

 astonished and mortified to wake up some fine day to the fact that 

 the railroads have tied you hand and foot, and have made it next 

 to impossible to do luit.iiu"-s in one of your lest markets. 



A Condition and Not a Theory 



Supply and demand are supposed to determine price; but the real 

 truth is that quality determines it, supply and demand merely fixing 

 the range within the price moves. The price must be sufficient to pay 

 the cost of manufacture, or in other words must be in accord with 

 the quality, otherwise the article will ultunately cease to be produced. 

 That is almost self-evident. 



Some lumbermen believe, however, that they can juggle with qual- 

 ity and still get the price. When experience shows them that they 

 are confronted with a condition just the opposite of this, they seem 

 to be unable to determine just why it is that the stock isn't moving 

 at the price it is nominally quoted at. 



Take for instance the ash situation at present. There has been a 

 heavy demand for thick ash. This has resulted in every millman 

 cutting up all his ash logs into heavy lumber. Thinner stock, inch 

 for example, has been made only when the log wouldn 't produce good 

 thick lumber. This has h.id the effect of making the inch stock run 

 to extremely poor, trashy stuff. Take the first and seconds out of 

 this dimension, if there were any, and the residue would certainly 

 not bo attractive to the user of ash. Naturally, under the circum- 

 stances, inch common ash is not bringing the price that it would do 

 if the logs were being manufactured into four-quarter lumber right 

 straight through. 



There is no criticism of the policy of manufacturing a thickness 

 which is in good demand at attractive prices; but it is merely to 

 point out that you can 't eat your cake and have it, too. If ycu are 

 going to skim the cream off your timber, don't expect to get eream 

 prices for the skim milk. 



