Preparation and Merchandioing of Fir

An address by Chas. S. Keith, Ccntral CoaI & Coke Company, before the joint meeting at facoma.

"Mr. Allen has requested me to address you on this occasion. He has permitted me to choose my own subject. I have decided to discuss the question of preparation and merchandising offir lumber. The question of preparation has a direct effect on distribution, and therefore I am discussing it together with the question of distribution. I am purposely avoiding a discussion at this time of the matter of 'direct selling as opposed to present methods of selling through jobbers. I am doing this for the reason that this subject in itself is large enough to cover a chapter. But, manifestly, it is evident that if the industry is to develop a bu3iness which is going to be our business it must be done through direct representation and not indirect representation. Furthermore, it is evident that the companies' own employees have a greater interest in the price they get for the product than someone who is interested only in a commission on sales.

"The things which I will'say today are the result of an analysis I have made of the situation in the last two or three years, and some of the conclusions I have drawn will without doubt be controversial with the present thought of the fir industry. There is no intention on my part to criticise anything other than to point out what may be done to help the situation. I hope to avoid anything personal and request that you not make any personal application of anything I say.

"As a matter of fact, frequentl5r those who look upon a situation from the outside reach different conclusions, and sometim€s more correct ones than those who live with a proposition constantly, I know this is true on the operating end of our own business, and I believe it is equally true with reference to sales and distribution. So, in discussing this proposition, f propose to do so without fear or favor, and on the theory only that what we want is a free and frank interchange of thought. We need a surgeorl We do not like the operation, but if a patient Uves heroic methods must be adopted. I am giving you my thought for what it is worth, and the thought which I will express has, at least, the merit of being honest conclusions though perhaps somewhat different from the general thought of the industry.

"(1) Our situation from an earning point of view is extremely bad. Prices are much lower than present production costs justify. We are liable to reach the conclusion that prices are afrected only by supply and demand, so lower prices are prima facie evidence of too great production -+dvancing prices are evidence of a short supply. In the earlier deduction the logical thought is that production must be adjusted to demand; in the latter that production should be increased to meet the demand. In general principlcs, this is true. I do not think, however, that this is entirely true. Distri- bution affects values as much 3s oVCrpto: duction. If the supply of wheat in the United States was 100 million bushels, and demand for wheat 200 million bushels, our' conclusion would be that prices for wheat should advance. Yet, if the entire produc: tion of the United States were crowded into the state of Texas, prices would decline re. gardless of the national demand for the product.

"The west coast figures for the first thirty weeks of this year, covering 96 indentical mills, show that sales have exceeded pro. ductron 5.41 percent; shipments have exceeded production 4.01 percent. In other words, stocks of lumber have decreased to the extent of 4 percent of production for this period of 96 mills, or approximately 110,@0,000 feet. Furthermore, orders to ttre extent of 1.39 per cent of the production for this period have accumulated. So, the conctusi6n I draw from this picture is this: We have not produced too much lumber, as we have sold 105 per cent of production. We have had no overproduction.

"From an analvsis which I have made on 65 kgy items reported through the Davis Statiatical Bureau at Portland, it is shown that the price of lumber increased during this period 6 cents per thousand feet. Consequently, ifit is not a case of overproduc-

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LONE PINE LUMBER & IMPLEMENT CO.

G. W. Dow, Proprietor

Lone Pine, Crlif.,

Attention Mr. Kingrley

Dear Mr. Kingsley:

July 24, 1926

'We are very pleased to write this letter telling you that the car of FINISH we are now unloading IS THE FINEST CAR WE HAVE EVER RECEIVED IN THIS YARD. This car was shipped by your Company on the l3th. Our truck drivers all claim THEY HAVE NEVER UNLOADED A CAR THAT WAS AS WELL TIED AND LOADED AS THIS CAR and the writer only hopes that he can buy many more such cars.

(Signed) c. W. DOW.

WHAT WOULD THIS SORT OF STOCK MEAN TO YOU?

WEST OREGON SUPER FINISH OUR PA.RTICULAR PRIDE

Everything that human experience and ingenuity can devise, together with the finest of raw material in the shape of carefully and particularly selected old growth yellow Fir logs, goes to make our incomparable Super Finish. The choosing of the logs, the sawing, the re-sawing, the handling, the grading, the drying, the dressing, the tying, the loading, and the shipping, are all done along scientific lines to the end that the product may be as perfect as such a prcduct may be. Our Super Finish is the giandard that others are gauged by wherever such products are known.

And the 30,000 feet of lumber our mill cuts every hour is all on a parity for quality, grade, and general worth, to our Super Finish. West Oregon Fir means complete Fir satisfaction.

(Continued from -Page 18) tion, thcn it must bc a case of faulty distribution. By 'faulty distribution' I mean overeclling ccrtain markcts and thercby developing v-lucs, resulting in lowering of values to all other markcts. Analyzing the sales madc by the companies reporting through thc Davis Exchange, the following figurcs have becn dcvclopcd: We find that on total ealcs up to JuIy 23, rcportCd through the exchange, amounting to 1,168,603,000 fbet, 55.08 perccnt went by rail; 11.24 perceat California cargo; 13.89 pcrc€nt Atlantic cargo; 11.5 pcrcent €xport, and, 8.29 pcrcent local consumption These figures would indicate that the total watcrborne business was approximately 37 percent. Yet, these waterborne markets have becn oversold, or, I should say, oversupplied, and based upon the values dcveloped in thcse markets which have been oversupplied, values for the balance of our business have been determined. In making the application to 3,109,124,0fi) feet of new busincss reported through the West Coast Barometer in the first 29 weeks of the year, I find that 50.1 percent were rail sales; 5.1 percent for local consumption, and 45 percent for waterborne markets. These figures are reasonably representative as they represent onc half of the year's production and conscqucntly 60 per cent of total production of fir lumber on the Pacific coast.

"The lack of rcasonable facilities to ltrovide storage for lumber results in transit cars and transit cargoes. Such shipments are generally in distress and create a buy- crs'markct. f am informed that one dietrict alone, in June, shipped 35 million feet of such consigned cargoes to San Pedro. WiU it cvcr be possiblc to secure reasonablc values undcr this kind of merchandising oolicy?

"fhe Southern Pine Associiti-on iisues yearly a iummary of shipments from the mills whicb subscribc to the scvcral exchangcs, similar to the Davis Portland Sta- tistical Exchange, and which arc located in the scvcral districts of thc southern pine rcgron. The rcport lor 1922, compilcd from thcse various reports, showcd that 57.8 perccnt of the ealcs of thc rcporting companies were madc for shipment to territory north of the Ohio River, and in 1925,48.37 percent. In other words, the amount of production marketcd north of the Ohio River, in thc period mentioned, has declincd 20 per cent. The compilations show that in 1922, 41.8? pcrccnt of thc production was markcted south of thc Ohio River and in 1925, 51.35 perccnt. This means that the amount marketed in thc territory of production has in: crcased 25 percent and that marketcd north of thc Ohio River has declincd 20 percent. My own judgment is that if the complete figures for the industry werc available for 1922, they would show 60 percent of the product was moved to the territorv north of ihe Ohio and 40 perccnt south of it. Today' the figures are reversed. In other words, in this period that amount of lumbcr markcted north of the Ohio has decrcased 33 1-3 pcrcent and the amount marketed in the territory of production has increased 50 percent. Of course, the latter figures are estimates, based on observation of the figurcs taken from the several exchanges. F'urtrhcrmorc, I am of the opinion that there will bc at least 8 percent less lumber made in the south in 1926 than in 1925, and this 8 percent less lumber will have to come out of the sales that would have Sone into the territory north of the Ohio River and not the territory south of it. If this is a fact, the distribution figures will show that approximately 68 pcrcent of thc production was distributed iouth of the Ohio River and 32 percent north of it. in which casc the decline in volume going to the tcrritory north of the rivcr will be 46 oercent and the increase into the territory bf production will be 65 pcrcent. It is a fact that the southern pinc barometer