Better Business by Cooperation

Secretary, r"*r"ll5""TJt":H:"n or Los Angeles

Reprinted from the Calif ornia Constructor'

Kenncth Smith

Subscribers to The California Constructor who are contr".t"it p-U"il1y f".t- itrat ttreir business is "different"' and the materiai dealer probably figures that he does not f,a". t-gt."t deal in common with the contractor, but the i""i "i ?he matter is, that they are both engaged in the same business of providing shelter. - -

For many yearj past, -E ha.'e had here in metr,opolitan L;-Ad;1r;s,'a volime running to more than one hundred million Eolars per year' and yEt so irresponsib-ly managed is this great iniustiy, that a ridiculously small profit has .""*"a-to any branih of it, or to any individual in it'

We all know perfectly well, that our greatest need is stability, and yet nearly every factor.in the buslness rs .rrs.ged' in practices that mai<es stability and profitable opEt""tiott almost impossible. Irresponsible bidding,-prtce .[iiitts, fid o.aari"g, over financing, careless extension of "i.aiti' and an alm6st total lack of co-operation .between the various divisions of the industry are responsrble' anc this lack of co-operation between the several branches ot the industry is the most serious of all these causes' -i".ft ai"ision and branch of this great industry is full of ;;" "na "t-pitint as to the thingi that are wrong and il. thltg;-thaf ieep them from making a profit' Jt".l ll: other diy I was reiding in a contractor's paper a scathlng editorial'denunciation oJ the municipality or private owner who failed to give the contract to the low 'bidder,. pointing out the terribG injustice in permitting a contractor to do .ff-tft" *ott of preparing a bid, taking--the risk involved in .ub-ilting the lowest fifrrre, and- then h."Iin-g to. sit by and see the contract awarded to another and higher.bidder'

On the other hand' you cannot contact wlth any su.D.o"it."l"t, be he eleclrician, plumber,, painter,.material dealer, lumber or millwork dealer, without having your *i oo"t.a full of the terrible things the general-"93: tractbr does to the sub-contractor in the way ot bld o"aiti"". and I believe it is generally regarded as one it ift. frorst evils that afilicts the building industry' oi ttt. industry, and leaders of every division of it, are fully aware of th6'unhealthy condition that exists' and no one can read the list of claims filed and petitions it; b*kttptcy, that are the most prominent features of the rewr of our industry, without reilizing that we are piling

Whether bid peddling is responsi.lte f-or price cutttng' or whether price cutting is responsible tor bld peccrlng' seems to me about as useless an argument as to whrcn ;;; ntst, ttte hen or the egg. I do not think there is "tv -qt"ttion but what the Jv-il of' price cutting and bid ".iaf-l"e, plus the rank situation with resp-ect t9 hi-gh hnancinlg in Southern California, is responsible. io.r tle tremend-ous percentage of business th-at goes into the.hands of the irresponsible contractor at the exPense or tne resitimate and ethical contractor' --i""d"t.

' uo untold thousands of dollars of loss to the industry out oi a volume of building that should be returning adequate orofits to everyone. ittir is a condition that is impossible to cure through the agency of any single division of this industry, and it muit be met by co-oferation between all the branches ;1 ;il1ndustry. Th.o*tt.t should be tau-gh.t-the.difierence between -quality building and 'jerry building" by. a widespread campaign of education' He should be brought to itte ,"rn. .oir.i-ou.rr.tt with respect to the quality in building as he has been with respect to the quality ot nearly iverything else that he buys.

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This eduiation is most needed Ly the owner because he is the man who lets the contract, blt it must also reach all concerned in the industry, the architect, the general contractor, plumber, electrician, roofer, painter, p.lasterer' material dealer, planing mill and lumber ya!.d' .-rhe great thing needed is for some agen-c-y to untte all ot tnese tactors"behind such a campaign-. Undoubtedly ther-e.ar.e manl' abuses that could be corrected by the action ot rndrvrdual businesres, and particularly of individual divisions of this i"auttiv, and ali of you have heard suggestions t-o lftis end; suggestions, for instance, that sub-contractors decllne to eive"Eids a second time to a general contractor who o.a?l". UiJt, ."a suggestions on tle other hand that the !"*. "uif could be Jrired by the sub-contractor and mai.ti"t a.l.r naming his price and standing on it' And while both of these suggeslions have a tremendous amount of merit behind them,"t'frey have not proven practicable as yet because of the extent to which human nature atfegts business policies. - i ; p^ersonally, frorn the standpoint of the seller, unatteraUty commitied to the Policy- of naming a. fair -and ;i;tapfr"" for my merchan&se ind standing,hitchil -"," tfiat pblicy, but aS an individual, I recognize that it r:,al: most impossible to get enough business to live on that basis wlien there is existent-in the industry an.almost ;;;;;"; practice of meeting the figure of -the price -cuti.n, "ftn""gft evetyone knowJ and admits that this p-lays ;i;ilil;-tTt; hands of the irresponsible contractor and bid peddlcr.

I never cease to urge upon my division of this industry that--prices should bJ qu^otea ol .ol!: plll u r:.asona!.1.e orofit. and then sold at that price without haggltng wrtn ihe contractor. Some of these days, if we live out a normal iii., *. *ifi see the business of ihis .great industry raised loin .tni..l plane where business will be done on a basis "i i"it-i.t"rrrtfo, the quality of merchandise, and-s-ervice' ana *ne" that time "&tt.t, -we will be through -with hag; Sli"* o";t prices and the contractor will know when a subcontractor or a material dealer submits q pric€, that it is i"ir, "ra be satisfied to pay it and permit the sub-contractor and the dealer to take a profit out of his business just as hu*:lg evetry-one else in the industry as well as themselves. he himself expects to take a profit out of contracting. When a iealer extends uttr."r6rrible financial """irt- There is not any question in my mind but that the con- ance' or when he sells his merchandise on a non-profitable tractors, the material dealers and all of the divisions of pasjs t9 3 bid-peddler, he is sawing off the limb bn *t i"f, the industry, courd well afford to join together with a il"'j;i'fT"lrTi,tL:;"fjT:,?J.H.t;f.i:.r3:r:Jruf 3; deliberate intention of playing together, working toge.ther 'pr."s oi'",.""r.iiy it; a;G it.i'i" *aer that the con- to get a price for the ultimate product, be iidwilling, iractor.may-himslli get the job) has no one to blame ex- office. building, school or bridge, which would permit ever"y cept himsif ];;-;h-" unprofitable condition to which his individual in the industry who might- participate in tht br'anch ;iih. inaurity has been reduced. construction of that product, to take a fair, reaionable and You canit;rt"h ;;r fish on one hook. you cannot have legitimate margin of profit out of them. The contractor sound conditions in one branch of the industry for very can far better afford to spend his time w9lki-ng- on a con- !rg, i{ """ou"a conditions exists in the other branches. structive co-operative effort with a material deiler to that gL; ^;i. itr;-si.;i rervices of. organizations such as the end than to spend his time and energy in shoppi-ng-arou-nd A.9,9.ir-b;Jki"; do*r, economiiiiiii..."y, making com- in an effort to get a price which deprives th;'de;ler of a petition more inieilig"r,t,--anJ-l;;;i;iil men the advan- legitimate margin of profit because ihe ultimate result of tages of "o-op.i"1ion. that policy' as all of you know' has been to deprive both it i, a ra-lr.a9r for any branch of this great building in- the contractor and dealer of a profit' .-,_ __ .'. . dustry to ih-in-li tir"t it is important of itself, that the in-

The time has gone by in business in this country when gult{, ""; di"id;ltself into architects, A.G.C.,s, master any individual or any single branch of any indusi-ry ca-n builders, m";;ri;i dealers,plasterers, painters, plumbers, stand alone. The old idea that organization of one bianch electrical contractors, ru*r'.il;;;:;' Jt"., and expect to of an industry is inimical to the interest of other branches win individuai rl.".r. at the expense of the rest of the of the same branch, is out-grown. No one branch of this i"ar;;;t. - o;iy";; "ll divisions ii tt* industry working building industry can follow unsound practices without together ". un'ird"stry can we achieve success.

AL MORLEY vlsrrs sAN FRANcrsco BEN MATsLER LEAvEs F.oR EuRopEAN TouR a *toY:$ru:Xi:i,il'n"; ,ftT"liy+!!;.4:"'rfii,,Xli / Ben Maisrer, Maisrer Brothers Lumber co., Fresno, has the Bay O;.iri"t, -tt. *"r a visitor at ihe-;;;;;;t'il; / left for a ten months' tour of Europe He witl tour the Francjsco office, and also called on many of his fu*bei- West Indies, Spain, Italy and Palestine. Mrs. Maisler is men friends. He returned to Los Angells after the first accompanying him on the trip. Whenever possible, they of the year. will tiavel by airplane.