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Intelligent Log Purchase 



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Editor's Note 



The question of log cost, both to veneer and to hard«'ci-><:l lumber manufacturers, is of constantly increasing 

 importance with the depletion of virgin forests. The accompan.ving article, read by U. B. Sale of the Hoffman 

 brothers Company. Fr. Wayne, Ind.. before the National Veneer & Panel Manufacturers' Association in convention at 

 the Auditorium liotel. Chicago, recently, gave some valuable suggestions on this subject. 



The subject assigned me, like all the others 

 on our program, and all subjects generally 

 at this stage of the veneer business, is one 

 demanding a great deal of thought and care- 

 ful study. It has been said, during the his- 

 tory of this organization on several occasions, 

 "When business is poor we don't have much 

 trouble in getting the members together, for 

 they are all trying to learn how low the prices 

 can be made by competitors, and still see 

 them stay above the water. When business 

 is good we are all too busy to care what the 

 other fellow is doing or to attend meetings." 

 Business, I believe you will all admit, is 

 now good as far as volume is concerned, but 

 I am of the opinion that the better we can 

 weld our relations without becoming a trust 

 or violating the laws of our commonwealth, 

 the better off we will all be in the near future 

 as well as permanently. 



In attempting to treat this subject intelli- 

 gently, and I think the program committee 

 assumed a great deal in assigning me a sub- 

 ject with that word intelligently incorporated, 



in it, I hardly know which is of the most importance, the adoption 

 of a comprehensive, simple cost accounting system, or the intelli- 

 gent purchase of our raw material, for by the use of a good cost 

 accounting system I believe all veneer manufacturers would soon 

 revert to more careful purchase of the raw material. 



It seems lo me the vital point in our ])urchase of raw material, 

 which wo should ever have before us, is that our raw material is 

 very unlike that of other businesses, in that it is not being 

 refined or becoming better by careful processes of cultivation or 

 manufacture, but on the contrary is becoming poorer by a gradual 

 reduction of our forest area. We are all no doubt going back to 

 timber tracts and taking trees that we would have left for firewood 

 five, ten or twenty years ago. The result is that either our 

 percentage of flitches or veneer wood from logs, on the average, 

 is decreasing very rapidly, or the quality of our product is 

 decreasing. This not only apjilies to quartered white oak but to 

 all of our domestic hardwoods. White oak trees suitable for 

 veneer purposes are, generally speaking, a very small percentage 

 of our native forest growth, and as the forests become less dense, 

 the quality will necessarily become less suitable, in accordance 

 with the standard of quality of the present time. The rate of 

 growth of a tree in an open stand is more rapid diametrically than 

 in a close stand and the free is more apt to ho limby. It is, hence, 

 less desirable. 



With these few points before us. and the very important point 

 of the difficulty of raising prices on our veneer staring us in the 

 face, would it not be well for every manufacturer of veneer to 

 base well his standard of value when working up the timber 

 buyer's estimate for a price on trees? We all know by long bitter 

 years of experience that logs above the first or second cut of a 

 tree, depending, of course, on the length and size of the tree, 

 density of the forest, etc., are not as valuable as the wood closer 

 to the ground, and though they may be smooth bodied are never- 

 theless defective. Therefore the jirice on the upper cuts should 

 • not be that of the butt or second cuts, for they are nothing other 

 than lumber logs, and their product will bring only lumber prices. 

 Wo are all familiar with our cost of manufacture, but how many 

 of us know just what the cost of our raw material is, when it 

 —28— 



rORT WAYNE, 



is ready to cut into veneer? I refer now 

 primarily to those of us who manufacture from 

 the trees. For those reasons a standard base 

 price for the different cuts of the tree, estab- 

 lished by the experience we have had in the 

 past, will go a long way toward eliminating 

 vicious competition for timber. 



Recently I had an experience that you all 

 no doubt have had many times, which im- 

 pressed me very deepl.y. The wood was white 

 oak. The trees were estimated by several 

 timber buyers to have 105,000 feet of good 

 logs running from 20 to 40 inches, mostly 24 

 to 30, for which the party who purchased 

 them paid .$8,000, which price the party who 

 sold them admitted to one of our timber 

 buyers was $1,000 higher than the next high- 

 est bidder, and a man who had offered $7,000 

 had a mill within ten or fifteen miles of the 

 trees, whereas the purchaser was said to be 

 a Chicago veneer man who was to ship the 

 logs to a sawmill, then reship the flitches 

 to his veneer factory. For mj' part I can't 

 see how he can do anything but lose money 

 on that deal, and even should he get his money back, would he have 

 ])aid that amount of money for that little bunch of timber if he had 

 based his price on experience? 



The day of guessing what the other fellow is going to bid and 

 then adding a liberal amount so as to be sure to be above the 

 other fellow, should be banished into the past. 



In the matter of flitches, we have eliminated the vast source of 

 chance from our buying to a large extent, and we are not so near 

 to buying a "pig in a poke." The quality, texture of wood and 

 figure are largely laid bare for our inspection, but here too an 

 intelligent basis will help to make our business profitable. I am 

 of the opinion that the best basis for prices on flitches is that 

 fixed by actual width and not that based on averages. By this I 

 mean so much for each width or range of widths, such as li to Ti/i, 

 8 to 9'-;, 10 to IIV2, etc., depending on the prices we can obtain 

 for our product. 



I said at the beginning of this paper that business is good, but 

 shall not we all now profit by former experiences? For instance, 

 the demand for poplar ])auels some two or three years ago by the 

 automobile trade, of which wood this trade uses very little today, 

 advanced the price of poplar in the tree from a reasonably mod- 

 erate price to an abnormal price which has not decreased since to 

 anything like what it should have, price of veneers and lumber of 

 that wood taken into account. We should not allow the farmer, 

 who is without organization or even a price list, to force us to butt 

 our heads against one another and pay him prices for timber that 

 neither the price of our product nor necessity demands. 



The National Chamber of Commerce 



The movement to create a National Chamber of Commerce has 

 received nation-wide attention, and it begins to appear as though 

 it would culminate, in the near future, in the organization of such 

 a body. X bill providing for such an incorporation has been recently 

 introduced in the House of Representatives, and the measure was 

 later approved at a meeting of the executive board of the organiza- 

 tion. The lumber trade was well represenled among the incor- 

 jiorators by Everett G. Griggs of Tacoma, Wasli.; .1. N. Xeil of 

 Portland, Ore., and A. C. Dickson. 



