The Wholesale Situation 1n Southern California

By E. B. Culnan, Chas. R. McCor:nick Lumber Co., Los Angeles

The business of wholesaling Douglas Fir lumber in Southern California has gone through a period of marked development during the past two years and today it can be said that the industry is in step with modern methods of merchandising.

This has been brought about partly .through the efforts of the mills, resulting in a curtailment of production which kept the demand slightly greater than the supply, and did away with the frequent fluctuation in prices, so common in years gone by. Much of the credit for improved conditions, however, goes to the wholesalers and mill representatives in Southern California.

More than a year ago a credit bureau was formed, to which nearly every wholesaler subscribed, and this proved an excellent foundation for further development. A careful study of credits on the part of this bureau ltas saved the wholesalers losses which in past years have run well into five figures annually with individual firms. There has been a shortening of credit limits with customers who ignore the fundamentals of good business. Over-extension of credit induces overbuying and undue expansion on the part of the retailer and in most cases, certain failure. This watchfulness of credits on the part of the wholesalers has been a real service to the retail lumber industry in this section of the state, for every failure is usually preceded by a program of price cutting in a last minute effort to secure funds necessary to ward off the impending disaster.

Previous years have seen the docks at San Pedro and Wilmington frequently piled high with twenty to thirty millions of feet of unsold lumber. When this condition prevailed, prices tumbled and sales were made day after day on a basis far under the actual cost of production. California has always been and will continue to be a market for stock that the mills cannot sell to advantage elsewhere. Southern California has been a heavy consumer of Douglas Fir for many years; therefore it is only natural that when market conditions in this district are in an unhealthy state, it reacts directly on the mills and affects conditions in every market where Douglas Fir is sold.

Realizing this, the manufacturers have adopted programs of curtailment from time to time in an eftort to prevent overproduction. Closer attention is being given to the matter of distribution, and when any particular market develops an oversupply of certain items, the mills endeavor to divert their accumulations to other points until that oversupply has been absorbed.

One of the leading Douglas Fir manufacturers, in an article a few years ago, stated that the trouble with the lumber business was not over-production, but rather improper distribution. He pointed out that all the lumber produced each year was consumed eventually, but that because of poor distribution, the supply in certain markets usually was in excess of demand, thereby creating a "buyer's market".

It was only after several disastrous years of losses and numerous failures, the mills came to realize that through teamwork and organized effort only could this wretched condition existing in the lumber industry be corrected. The past year has shown what can be accomplished along this line. While the mills have not made worthwhile or legitimate profits during that period, they have, with few exceptions, avoided the losses experienced during recent years.

The retailers fully appreciate that by keeping the ship on even keel, the mills are benefiting the industry as a whole. Prices in general have shown little change during the past year, and the retailer no longer hesitates to keep stocked up, fearing that the market will tumble next week and leave him r,r'ith a lot of high priced stock to move, while his competitor buys to better advantage.

Every department of the lumber industry, from the logger to the retailer, realizes now that close association with, and confidence in his competitor is absolutely essential to successful merchandising. A "let live" policy has replaced the old "survival of the fittest" plan of operation. Retailers have found that whenever a competitor was driven out of business by cut throat methods, a successor always stepped in to take his place and the battle went on again. Sawmill operators noted that when a mill went broke and shut down, some new operator with capital and enthusiasm appeared on the scene and the wheels started turning once more. The realization that to put a competitor out of business benefited no one, is the cornerstone of the splendid structure lumbermen are erecting throughout the country today.

Energy is responsible for just about everything that happens in this world, and to those energetic business men in every department of the lumber business whose untiring efforts are bringing about the improved conditions herein mentioned, the entire industry owes an everlasting debt of gratitude.