Conditions and Prospects in the Lumber Industry of California

By Frank \fl. Trower,Trower Lumber Co., San Froncisco

Writing under this head is a large order, for California is an empire as large as several combined states on the Atlantic seaboard. Lurnber Trade has a different meaning in the mil1s of the Sierra and the redrvood coast than in a lumber yard or industrial plant perhaps 6OO miles distant, but still within California. In spite of long years of adversity in thc general lumber business, there are yards which hardly have knorvn there rvas a depression. Usually such concerns sell a heavy percentage of other building materials, u'hose price is fairly well maintained by the manufacturers. One may easily include too much territory in speaking of California lumber trade conditions. Yet, upon the whole, and in the long run, we are all affected by the general situation. The public is often bafiled by the financial contradictions affecting difierent localities and branches of the California lumber business. I{owever, if any lumbernran, whether stevedore or owner o'uvned by his banker, happens to rate notice in the daily press, he nearly always is relerred to as "a wealthy lumberrrian." We appreciate the compliment, but enjoy a secret grin. Long years in the trade teaches that Caution follows close on the heels of Experience r,l'hen it comes to guessing the California lumber market and its mercurial temperament. As schooiboys we learned from reciting Longfellow's Psalm of Life that "things are not what they seem !"

"The Market" is what we are all interested in. Its trends or sudden fluctuations often mean the difference between pro'fit and loss. Lumber well bought is alreadl' half sold. In many of our large California cities present retail lumber prices are far below those needed to cover proper costs and reasonable profit. Therefore close buying is required to meet competition and stay in business. Not only price, but grades, quality, texture, manufacture, are important buying factors. During Code days a lower price for the same grade had to be made for certain Fir producing districts whose timber is harder, coarser and heavier than others. Even then such mills had difficulty moving their stock and many of them accumulated heavy inventories that were later sold at a loss. Yet, to the public lumber is just lumber.

A few months ago the irrcreasing sound of the hammer and the saw was sweet music in our ears. Business was on the up grade; a dammed-up building program had burst its barriers. Money for legitimate building was, and is, plentiful. Then something happened and today we have a sort of creeping paralysis covering the home building business. ft is too complicated to attempt analysis in this limited space, even if one felt adequate to the task. Sit-down strikes throughout the country, defiance of courts and law, ill-concealed approval by government officers, unreasonable Iabor demands, the President's blast against higher costs, all brought loss of confidence. That word means much more than a political slogan. Without Confidence we shali have poor lumber trade. This sudden change reminds us of the darkey in the story we heard in boyhood days, r'i'ho was roasting a 'possum in his cabin oven. Tired by the hunt and the heat, he lay down for a nap. A practical joker, passing the open door, sniffed the savory odor Tiptoeing in, he dipped his fingers in the'possum grease and applied them quietly to the lips and fingers of the sleeping negro; then decamped with the roast. Sambo awakening, licked his chops, looked in the empty oven and exclaimed: "f shore musta done eat it. But dat am de most ONSATISFACTORY 'possum I yever did eat !"

In recent issues of daily papers in the Bay district appeared ads covering Open Statements to the Plasterers and Hodcarriers of the Bay area. One signed by the Northern California Institute of Architects said: "A recent survey of the principal architects offices in the Bay Area shows a great shortage of work. In spite of the need for new building, the public has started a buyers strike, due to their feeling that the cost of building has been raised to an unreasonable plane."

Another signed by the Contracting Plasterers said; "Are you going to wreck your business as the brickmen have done theirs ? The brickmen ran labor costs too high. As a result, substitutes for brickwork have largely taken the place of brick construction. If plastering labor costs are forced too high, substitutes for plaster will be the result. Then, where will your jobs and our business be? We are both in the same boat !" That tells the present building trades story and might well sum up this lumber review.

In recent issues of this journal have appeared notably thoughtful research studies by E. C. Parker, President, California Retail Lumbermen's Association. He says; "It can be shown by actual statistics that the average sales price of lumber the 6rst four months of 1937 is less than a T year averag'e. The idea that lumber is high has been brought about by the fact that it is considerably higher than in the abnormally low years of 1932 and 1933." He says further: "Most items that compose the lumbermen's cost of doing business are higher in 1937 than a 20 year average"-yard employes in July, 7937, earn about 25%, more than the previous 20 year averag'e.-"Statistics will also prove that the gross margin of profit on the goods sold by lumbermen is not higher than a 2O year ayerage, r,vhereas practically every item of their cost of doing business is considerably higher than a trventy year average."

Yet Lumber is made the public scapegoat for the entire increase in building costs, though it represents but a fraction of the increase. Lumber needs a first-class press agent on the job steadily. Former wide mill price slumps are impossible now.

The market student must fairly consider this matter of \,vage costs. Formerly when competition forced down lumber prices the first thought was to take some of it out of the worker's hide. Now, fixed union wages prevent that. Owners must make a pro'fit, or borrow money, or close down. That is a social and economic gain. We start with a fair wage for a fair day's work and build on that solid foundation, or not at all. But again we must avoid dogmatic statement. For there are instances when an employer has an honest right to ask his workers to share some of his loss, so that the plant may keep going for their mutual benefit. The National Lumber Survey Committee in its recent 24th quarterly report to the U. S. Department of Commerce states that wage scales are the highest in the history of the West Coast lumber industry. It adds that throughout the depression lumber prices have averaged substantially less than building materials prices generally. Lumbermen should somehow get these truths across to the public. Today's market survey must take note of the solid fact that present lumber cargo freight rates on this Coast clo not return costs, even without insurance and depreciation, rvhich should be included. The Coastwise Freight Conference expires August 18th, but rates have long been open. More boats are quitting the losing battle against low rates and higher operating costs, and are joining the idle fleet. Stockholders know that most coastwise lumber steamers have not paid dividends for 10 to 14 years. The ferv exceptions only prove the rule. No new lumber vessels have been built on this coast since 1923. But we must not paint too dark a pictufe, however justified, or bankers may refuse loans to their lumber shipping clients, -if they can.

Wise lumber buyers are keeping an eye on the prospects for a shipping tie-up Sept. 30th, when agreements with the Longshoremen and Maritime unions expire. Harry Bridges' recent renerval of the L L. A. contract seems hopeful on its face. Incidentally, by a mere stroke of his pen in changing the name of his organization, he put on record the first agreement of a major western industry with the C. I. O.; to the bewildered astonishment of the Waterfront Employers Ass'n., which had casually written him of their own change in name, indicating they were a Coastwise group now instead of a merely San Francisco body. Most steamship owners expect a strike or higher \\'ag'es and operating' costs, or all three. The limit on boat operating expense has been reached; rail mills are steadily increasing their trade at the expense of cargo mills. It is a definite trend that carries great significance to all lumbermen.

If lve know what Labor and Government rvould do in the next six months or six hours we could make a fairly intelligent guess on the market outlook. Curtailment by Fir mills is removing the fear of overproduction. Log supply is barely normal and prices hold well.

Jurisdictional labor disputes threaten to close some

(Continued on Page 12)