Obvious Opportunities for Increasing Demand and Sales

By A. C. Dixon President of the National Lumber Manufacturers Association Address Made Befor.e the Annual Meeting of the West Coast Lumberrnen's Association at Tacoma, Wash., on January 30,l.9rl.

With regard to Association activities, the year just past has been characterized by the number of meetings and conferences callod for the purpose of analyzing conditions and seeking remedies. Neces. sarily, there has not been entire agreement on all points but there is substantially no disagreement to the proposition that, from the rnanufacturers' viewpoint, two things are wrong and corrective remedies must be found.

These two things are (first) over-production and (second) insufficiency of demand. Much time and thought has been given, especially, to the former and we have sought earnestly for answers to the questions: "Can we merge?" "Can we work under a managem€nt plan?" "Will we operate on a uniform per cent of our capacity, this capacity adjusted to fit the market, or must the weaker operators or those most easily discouraged be forced out of business?" No entirely satisfactory answer has been found, although a new spirit of cooperation has been developed and necessity has forced some to restrain themselves when reason and logic have failed.

What we will finally do about production I do not know but, sincc it seems a difficult problem to persuade Mohamet to come to tbe mountain, suppose we try moving the mountain. If we cannot hold the supply down to the demand, can we increase the demand to take care of a supply equal to approximately what we should be satisfied to produce?

Manifestly, we cannot get along in this territory for an indefinite period operating at 52 per cent of our capacity, and neither can the other regions continue on their present operating basis. On the other hand, there is no occasion to,strive to create a demand that will take 100 per cent of our rated capacity for the reason that we cannot produce to the indicated maximum of our capacity statistics. Unforeseen weather conditions, the fire season, seasonal labor shortages, unavoidable break-downs and many other things with which operators are familiar will always keep us below the theoretical capacity of our plants, and probably a steady demand which would require the use of 80 to 85 per cent of-our capacity would put our industry in a fairly prosperous condition.

Some have said and will say that the supply will immediately be increased to equal any demand that is created, but I do not believe this is so and my idea is based on the thought that we have at least partly learned an economic lesson of great value and that, in view of the cost of opening up new operations of any size and the results of recent over-production, those who might possibly undertake to add to the production will be slow to start and will wait until they are satisfied that something approaching stability has been achieved and that, in the interim, consolidations are going on, sales methods are improving, the public is being informed as to the harmful effects of unrestrained competition and many movements of significance are taking place which in time will tend to prevent a repetition of what we have gone through

To some, and perhaps to most of us, it may appear that profitable and fruitful markets are not to be found at this time; but a very casual investigation will bring the conclusion that this is not so. It is a matter of general knowledge that some lines of business have improved even during 1930. Recent statements by movie houses on the Pacific Coast indicate a peak income. The insurance business with many companies is better than it has been, many public utilities have made new high records and, lest you say that these industries are not comparable, please note that some tines of business are increasing their consumption of lumber even while the per capita consumption of lumber is decreasing. Among them might be listed boxes and crates, furniture, vehicle and vehicle parts, refrigerators and kitchen cabinets, matches and toothpicks, toys, patterns and fasks, signs and supplies, and this enumeration I think is sufficient to indicate that there are other possibilities.

Authorities give a number of reasons for the curtailment in thc use of wood and I will not attempt to enumerate all of them, but wish to call your attention to some. The one given first place is the increased consumption of other materials. An important ptace is given to the tack of aggressive merchandising of wood products, the short life of most lumber companies and the belief that there will soon'bg.aruiood fanine. Students call attention to the fact that, as ad 'in&rstry;i we are losing in our sales because'wood. has been improperty used in mariy instances and because, as a matter of fact, in some instances other materials are superior. I think we can pass these latter two things by for the present and pay attention to the first four statements.

As to the 6rst (the increased competition of other materials), there is no way to prevent the competition but there is a way to meet it and that is what the National and regional associations are attempt- ing to do.

There is nothing to do concerning the short life of some lumber companies except that if lumber is properly manufactured, graded and presented to the public-and this can be done through associated effort-the total consumption will not depend on the life of any company but rather on the continuance of.a proper policy by the companies which still operate and join in these associated efforts.

Concerning the threatened lumber famine (which we have all heard of for many years but have never seen), fact-finding bodies such as the Timber Conservation Board and others will, in my opinion, very shortly do a great deal to disabuse the American public of the idea that they should not use wood freely wherever, as the physicians say, its use is indicated.

This leaves for present discussion the question of aggressive merchandising of wood products and that, I believe, is where we have been the most delinquent and where the greatest opportunity for improvemint is afiorded. I am of the firm opinion thet the time is now opportune for a merchandising drive that can. be made to yietd results which will be apparent to everyone and which can be made to put the industry on its feet.

Allow me to compare for a moment our industry with the life-insurance business, because they are so different. The life-insurance business is prosperous year in and year out and it very often makes its greatest gain in what is generally considered a poor business yearWe have poor results in good business years and in poor business years they have been terrible. The insurance men send representa- tives in the field to study prospective customers, their needs and capacities, and then (after having planned as to what should be sold them) they set about creating the desire and make their first contacts with the prospective customer service contacts, wherein they offer to do something for him such as analyze his business afiairs, help him to anticipate inheritance taxes, the education of his children, etc. Our industry usually waits until a prospective customer has announced his intention to buy, through securing a building permit or in some other way, before we approach him. Picture to yourselves what would happen to the insurance business if it pursued the waiting policy of the lumber industry, especially as is evidenced by the consumer contact-man (who is the retaile-r), and picture to yourselves what would happen to the lumber business if, like the insurance people, we sent our trained representatives out to every prospective customer and started to work on him in a systematic way to create a desire which we could help to fill.

The thought may occur to you that this is not a proper comparison, for the reason that we must atl die and consequently all must give serious thought to insurance. I think a good answer is that we are all entitled to modern and convenient homes and the necessarv auxiliary buildings.

Creating a desire for the use of lumber, especially in home and plant building, ought to be easy. The love of the trees and their products and the desire to use them is almost inherent in our American people. Strenuous advertising by makers of substitutes may haVe caused this desire to be stifled or latent for the time being, but I think it can be warmed up. .If you will take the trouble to engage in discussion with some of your friends who are not so very welposted about the present status of the lumber and timber business and will prepare yourselves so you can straighten them out on some of their misconceptions, such as those relating to supply, durability, cost, etc., and witl throw in just a little of the romance and beauty that can be attached to lumber, you are very likely to find these persons taking the arguments out of your mouth and helping you to prove your case.

We do not have the problem that the producer of a new material has and we have no fear that our product, which looks all right in the laboratory or to a casual investigator, may be all wrong when put to the test, since we have hundreds of years of satisfactory demon- stration behind us and talking points such as no others have or ever will have.

Just now I think the best field for our work and the trying out of our ideas is on the farm, and that there lies our great opportunity. I can dimly remember when Gates and others of his time fenced the farms of' the Mississippi Valley with wire-fence, something which had been newly developed and caught the fancy of the farmers. It was a good article and Gates and his associates profited to the extent of many millions. Those who- have read the historv of him and his contemporaries read one of the romances of the times. Since then, innumerable other people and industries have followed suit and it only requires the mention of the automobile, radio, farm-lighting systems and farm machinery to call to your mind the great list that could be made up of salesmen and sales organizations that have prospered on account of the buying power of American farmers. This buying power is existent today and will never wear out as long as the farmers produce nine billion dollars worth of crops a year and the rest of us have to consume these crops; in fact, this buying,power will increase because the figures show we are, individually, eating more farm products and we are increasing in numbers, while the Jarmer is -receiving more for his product by reason of having graded and refined it and marketed it better. In response to this statement, a banker friend said: "Not at the present price of wheat." I am willing to qdmit that, generally speaking, just now I would leave the wheat farmers alone but, if all the wheat produced in the United States brought $1.50 a bushel, it would barely equal 10 per cent of the value of the total farm crop; so it will be all right to leave the wheat farmers out because I do not expect that we will ever sell 90 per cent of the farmers anyway.

If anyone thinks the farmers irave no money, let them investigate the conditions surrounding the failure of any of the 1200 banks that failed during the past year in farming communities and hear the complaint. going up from the farmers of lost money. They would not have lost it if it had not been in the banks. In other words, if they had put it into modernizing ol their homes and farm plants, it would not have been lost. I never want to get seriously in debt to a bank, but would rather be in their debt than for them to be in mine when they take a notion to break and I think the farmer could well look at the matter in the same light.

It is true, as a matter of course, that an intensive house-to-house solicitation of farm business is not practical in all territories and I know of -very few merchandising campaigns where those in charge do not give some section of the country especial treatment while intentionally, almost if not quite, neglecting other sections.

_ That adequate results can be procured in many territories is evidenced by reports coming in from scattered sections of the countrv. and I could spend more than my allotted time in reading some veiy in-teresting ones to you. I will quote from the Manager of a yard Easi of the Mississippi River:

-"We have just finished _today checking up the year,s work of our manager who has been so much interested in intensified selling among the farmers, and find that his net orofits for_the year were close to 20/o on his capital stock, which will give him and the rest of. as l04o on our stock and the company l0/o surplus. Not very many yards in this State will lave any profit for 1930, and only those lumber yards who have dsng 1 good job of soliciting, such as youi men and mine are doing, will wind up the yiar in blacli."

Here is another letter from the executive in charge of a verv larse operation West of the River, and referring to a paiticular tolrin. i; his letter, after telling of how they soticited farm business, he says:

"As a result of this eftort, we increased our business greatly. Indeed, had we not had the business obtained by this canvassing, we would have done a very small busines-s the past year because the town was unusually quiet." Reports.of this kind are not limited to any section but are comins in from all over the United States. The number *oiking &il;;: sively for farm trade is not large, as yet, but is growing "nd *E-fri* plans for a much greater development.

On the question a,s to_whether the farmer has money or not, I will say.that a record of- quite a few hundred personal ."il. st"*r-r"i., made to three out of ten farmers who own their own pt"".r, witt*"o record kept_o_f_ tenant farmers because as a rule th.y ;.; ;.t;;;; prosp-ects. lvhgn I have.finished_with this paper, if.time permitJand 19Ldgsire, I ruill be.gla-{-1o read you one-of tri,o detaitid-a;ily;;: ports from solicitors in different parts of the country.

It seems, -in looking bpck I little way into history, that other in_ !,us1ries and. other people who have.piofited greatiy lv'riii""'.f tnelr und€rs-tandrng ot_ the tarm-purchasing power have in each in_ stance seized opportunity by the-forelock aI just the propii til;';i rnat' rn. some cases' what. they did successfully would have been of no avail if tried a rittle ear'rier or a rittre rater. i u"ti.ui tt;ip.;;;"'i: ogy, economics and all o_ther factors are probabll ",,;";lt.fi;iif;, us now as they were for Montgomery-Ward and Sears_RoeLucE;i;;; they -started their mail-order- busine-ises. Many ttt;nss rdiniorcd'i^his h:lier. _ Quite rece_ntlv presidentHoover and l*- pi;rid.ni' -C".ir.iii,, Ford, Edison and.Young, e-s_pecially; have seemingly gone out of thi# way to comment in the public press on.the needJorind th;-vad;;i

: (Continued on Page 26)

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