How Can the State Association Help You To Make a Better Profit?

E. C. Pcrlcer

It is my privilege to welcome you to the business sessions today of our State Association. It is very pleasing to me to see so many in attendance, and I hope that we may all feel repaid for having come.

About one year ago in this room we adopted the new Constitution and By Lar.vs of our State Association, which set up a new means of drawing together the retail lumber clealers in this State. The reorganization plan adopted called for membership in our association mainly by organized group membelship instead of by inclividiral membership as in the past. The Reorganizatiot Committee, after several months' rvork, secured the membership of every organized retail lumber group in the State except one, together rn'ith many individual memberships in those sections where there were no organized groups. Directors elected from these organized groups and from unorganized sections met at Bakersfield inApril and elected officers to carry on the work for this year.A great amount of detail rvork was necessary to set up the nerv organization so that it would properly function, and I am pleased to report that we are norv fully organized and ready to carry on in the interest ofall retail lumber dealers in the State.

The State Association is divided into three clivisionsthe State Association as a rvhole, the Northern Division and the Southern Division. Headquarters of the State Association and the Southern Division thereof have been established in Los Angeles, and has a working arrangement with the Lurnber & Allied Products Institute wherebv vour officers have the assistance of its complete Dersonn"t. -ttr" Northern Division has headquarters ai Carmel. and has the assistance of group secretaries in that section.

The function of the State Association as a whole is to follow and watch legislative action affecting lumbermen in our State, and maintain a legislative representative at Sacramento at all proper times. Your State Association cooperates rvith and supports the National Retail Lumber Dealers' Association inits efforts to watch national legislation affecting business men, and lumber men in particular, and in other matters such as increasing the utility and usefulness of the National Housi.ng Act. Your State Association will from time to time disseminate certain trade statistics useful and interesting to lumbermen, will compile digests of certain legal requirements, such as Social Security larvs, and make our State Association office a medium rvhere informat;on o,n taxation and other legal requirements can be obtained. We will, of course, hold our Annual Convention and issue our statewide Year Book.

The function of the Northern and Southern District Boards, acti.ng independently, will be to assist in forming group organizations, and to assist in keeping them functioning. They will hold meetings for the purpose of furthering cooperative effort among the groups, and to discuss and encleavor to correct or assist in correcting the proltlems of our industry peculiar to our respective districts, such as the lorv gross margin of profit, increasir-rg costs of doing business. unnecessary or unfair competitive practices, stabilization programs, orderly distribution, laltor problems, and to perforrn other functions u'hicl.r are considered necessarv or valuable from time to time.

It is my opinion that our association should confine its activities to a few important things, snch as I har.e mentioned, of primary importance to the pocketbook of all membdrs as a u'hole, instead of trying to render services of too wide a scope and,not have the time or opportunity to concentrate on those things that mean more dollars earned or more dollars saved to every dealer. The strength of our association tvill depend on what it can clo to help lumbermen make a proper profit.

I think, too, that the primary objectives of our associatiorr should be so clearly stated that every retail lurnl>er dealer rvill know what n'e are trying to acconrplish, ancl thereby be better able to assist inits accomplishment. anrl also,so clearly stated that every manufacturer anrl wholesaler u-ho sells his goods to us rvill knorv the dealers'objectir.es and thereby be better able to cooperate and workrvith the dealers rvho, in the last analysis, market their goods to the ultimate consumer. I shoulcl like at this time. therefore, to point out a few of the important oltjectives of our association.

One important objective of your State Assoc;ation is to use its influence in every proper way to check the ltresent tendency on the part of National and State legislators to pass laws unduly restrictive on business men sellerallv, and on lumbermen in particular. During the boom ir-r tl.re nineteen twenties. there occurred some abuses in btrsiness ethics on the part of some business men, and these abuses \\'ere so publicized that it became very popular for legisIators to pass legislation intended to correct these abuses. The legislator, noting the popularity of these measures, soon failed to discriminate between lesislation to correct abuses and measures that had the result of seriouslv curtailing business and discouraging honest business men. It is my opinion that this association, through its representative, should cooperate with other business groups to check and turn the trend of legislation lvhich restricts honest business and discourages business men from going ahead.

To my mind, one of the most important objectives of this association is to present actual facts and statistics to prove that our industry has been and, I think, will be faced with increasing costs of doing business, but that the gross margin of profit on the goods sold by lumbermen has stayed practically the same for a period of twenty years, and must be put on a higher plane if the dealers in our industry are to make a profit o,n their investment. As I have stated before, this industry has no combined statistics, and I have been obliged to use figures that have been made available to me. The figures used comprise sales of lumber and comm,odities at retail in metropolitan areas, medium and small size towns and farming districts, and are large enough, I think, to give with a degree of accuracy the conditions which have prevailed on the average in this State. The items which comprise the sales, cost of goods and operating expense have been handled as to accounting practice just the same during the whole period. I might add in this connection that cartage is not treate'd as a sale, but as a deduction from cartage expense, and that actual charge-ofi accounts have bee.n eliminated and I7o of sales added for same. I have taken actual statistics since the war, namely, from 1919 to 1936 inclusive-a period of 18 years and have divided them into three, six and nine yearperiods. The total figures comprise over one billion feet of lumber, and many, many millions of dollars of lumber and commodities sold at retail. The figures quoted will be the percentage of increase ,or decrease per dollar of sales and not the number of percents. For instance, your expenses may be n% on sales one year and 25% on sales the next. Tlri percentage of increase per dollar of sales is 257o, bvt the increase in number of percents has been five'With this explanation, I will give you a few statistics which would be- very interesting if they were not so indicative of the fate fating our industry. The gross ry?rgin of profi-t^ in the three year period from 1934 to 1936 was 2 6/1073 more than ih" gio.t profit in the 1B year period from 1919 to 1936, but the operating expense in the last three years