Lumber and Profits

Excerpts from an Address Delirered at the Annual Convention of the California Retoil Lumbermen's Association

Nou"rb"r 3, 1932

Bv C. H. Griffen, Jr. General Manager Calilornia Redwood Association

At last year's Convention I talked to you along lines very similar to those to be discussed today. During the past year experience has strengthened my ideas on this subject and emphasized certain features. While I have been associated for the past eight months with the manufacturers of Redwood in a broader field, I am decidedly interested in the retail lumber business. I still have a considerable financial investment in the retail lumber business, and still have a dealer's mind. Please remember that in making the remarks which follow I am speaking strictly as one dealer to another.

In the past twenty years we have all seen new building materials come on the market one after another. Many of thenn have taken the place of lumber for one use or another; all have gradually contributed to the steady decline in the per capita consumption.of lumber. We dealers have taken them on, one after another, on the theory that we don't care what we sell; that we can and we will sell anything that carries a profit. llowever, has this been good for the retail dealer? I don't know. I know quite a few men who made substantial fortunes in the retail lumber business between 1900 and 1910; I do not know any who have made fortunes in recent years. Most of us have been mighty busy trying to protect what we have. This condition may not be due entirely to the development of other malerials; there may be many other contributing reasons, but whatever the reason, the retail lumber business does not today offer the same opportunity for making money that it did twenty years ago.

Some ten years ago the stucco home began to be popular. We were not disturbed; we simply undertook the sale of the materials required for the stucco construction and made no efiort to continue the popularity of the rvooden home, nor to stem the stucco tide. Some months ago our organization figured out the difference in cost between a stucco home and a wooden home of the same size; also the difference in the dealer profit. We checked this with about fifty dealers. We found a wide difference .of opinion as to the correct prices of each item, but no matter what the difference in unit prices, the same conclusion was inevitable in all cases; namely, that the cost to the consumer of the walls of a stucco home was from 10 per cent to 2O per cent higher than the walls of a wooden home, using highest grade siding, which is of course Clear Heart Redwood, and the profit to the dealer from the sale of the walls of a wooden home rvas twice that of a stucco job. If the average dealer profit is $25 more on a wooden home, it is easy to see how much profit has been lost by the dealer on stucco homes. I believe that a very conservative estimate of the number of stucco homes built in the State of California in the past ten years would be 100,000 hqmes. That means that we should have had two and one-half million dollars more net profit, even had we sold all the materials for the stucco. However, we did not by any means sell all the materials for the stucco, for as soon as that market developed into something worth while, the building material companies stepped in and took most of it away from us. We have been told many times that this is due to the change in the architectural trend, or to public demand, and that there is nothing we can do about influencing public demand or architectural trends. This is definitely not the case. The experience of the California Redwood Association and 'its field representatives has shown definitely that architectural trends can be influenced and that it has been done in many instances. Greater effort and concentration along these lines, particularly by the great number of retail dealers, could exert a tremendous influence on public opinion toward the use of more wood in construction.

The question of control of the lumber business has been raised. Control of the lumber business is entirely in the hands of the dealers themselves. Lumber is the only building material which is sold by lumber dealers only. The competition in the sale of lumber is entirely between lumber dealers; it is not complicated by the entrance into the picture of manufacturer, hardware merchant, or mail order house; so that I would say that now the sale of lumber is definitely under control, except among retail dealers themselves. Cooperation among retail dealers themselves is the only thing needed to place the sale of lumber directly under absolute control.

Lumber is still the source of most of our profit. That being the case, does not lumber deserve the most :of our: time, the most of our efforts, and the most of our brain power? Does it get these things? I'm afraid not. Ifmi afraid very few of us devote much constructive thinking to the sale of the item which brings us our tq'-ead and butter; namely, lumber.

A few years ago a certain nation-wide chain of tobacco stores was very prosperous ; .was known as one of the; greatest of our American business institutions. Now it is in the hands of receivers. As I passed one of these.gtores

,the other day I made a little study of its show windows. Perhaps 5 per cent of its display sp4ce was used to display cigars, cigarettes and tobacco. The windows rvere full of ,books, magazines, candy, razors, razor blades, soap, play'ing cards, and even handkerchiefs. We have been told 'that this.institution even developed real estate and rental departmeirts. The average cigar store clerk may be qualified to run a department store, but I doubt it. It is very possible that the collapse of this great institution is due to this frenzy of expansion; the scattering and dissipation of capital, energy, time, and thinking over a myriad of items, not even closely affiliated with the things they really know how to merchandise and sell. A great chain of drug stores has collapsed in the same way. This train of thought started me to thinking of the offices of some of the yards in which I am personally interested. If you should walk into any pne of several of them, there is nothing which would meet your eye which would indicate that lumber is any part of the business of that yard. There is not a sign of lumber or anything made from lumber. There is very little to tell of the merits of the most beautiful, most versatile, the most adaptable, and most economical of all building materials, namely, lumber. Perhaps we are really overlooking our big opportunity, really neglecting the item which is our bread and butter; the only item which we linow more about than anyone else. Perhaps the shoemaker should stick to his last.

We do not advocate that we should entirely give up the sale of other materials, but we do advocate that we should concentrate our efforts on the main issue. We do not see Why the proprietor of a shoe store shbuld not have in his show cases shoe laces and shoe polish for sale, but we do think he would be foolish to concentrate his time and effort on the sale of shoe.laces at 10 cents per pair rather than shoes at $7 or $8 per pair.

Perhaps concentration on the line of merchandise which we know will develop us the most profit would go a long way toward bringing us out of our present troubles.

Herbert L. Sullivan

' Herbert L. Sullivan, widely known Southern California iumberman and vice-president of the Western Lumber Company, San Diego, Calif., died at his home there, Friday, December 9. He was 44 years of age.

He was the son of Jerry Sullivan, Sr., president of the Western Lumber Company, with whom he was associated in the business, and a brother of Jerry Sullivan, Jr., president of the Sullivan Hardwood Company of San Diego. lfe was born in Whitehall, Michigan, and was a resident of San Diego for over twenty-one years where he was active in'the chamber of commerce, Masonic circles and in civic affairs.

Surviving him are his parents, Mr. and Mrs. Jerry Sullivan, Sr.; his widow, Florence C. Sullivan; two sons, Robert J. and Jerry H. Sullivan; a daughter, Mary Ellen Sullivan; two brothers, Jerry Sullivan, Jr., and Donald G. Sullivan, all of San Diego, and two sisters, Mrs. W. H. Frey of La Jolla, Calif., and Mrs. J. A. Maclvor of Detroit, Mich.

Funeral services were held dt San Diego on Monday afternoon, December 12.