How you can save on delivery costs

QUESTION:

"After a delivery vehicle has been totally depreciated, doesn't it make sense to keep it as a spare?"

ANSWER:

Probably not, and for several reasons. A couple of years ago, one of our clients was running three trucks to handle about S800,000 in delivered sales. This is about $270,000per truck annually,which is just slightly more than $1,000 per work day per truck. Not very much. Among other things, it was recommended that two of three trucks be sold and not replaced. These two units had been written off. but had a market value of about $6.000. The cost of ownership alone on the three vehicles was substantial.

The company had spent $10,000 on fuel the previous year and the trucks had been driven a little over 16.000 miles during the period. The removal of two trucks from the fleet. and their subsequent sales, brought $6,000 in cash to the company and eliminated almost $10,000 annually in ownership costs. The remaining truck became much more productive and was not driven but half the miles traveled by all three trucks the previous 12 months. The cost of fuel consumed and the driver payroll were both beneficially affected. An extra vehicle is convenient, but oh so expensive. The year the client sold the two trucks, the gain of almost $16,000 exceeded the previous years' total profits.

QUESTION:

"Do you consider the operation of fork lifts to be part of delivery costs?"

ANSWER:

The operation of fork lift trucks is a cost of material handling unless used off premises. Generally, think of delivery as those costs which would go away if the services were discontinued. If a dealer goes out of the delivery business, the chances are very good that fork lifts would still be needed to receive merchandise and to load the customer's vehicle. If a fork lift is moved to a te€rm track off premise, it is part of inbound handling costs. If it is moved to a job site to off load a truck, it becomes part of the delivery process and hence a delivery cost in this context.

Builder Goncern Over $ Rates

Rising interest rates, pushed up by record high federal deficits and a more restrictive monetary policy, threaten to send the economy on another rollercoaster ride, slowing housing construction in the second half of 1984 as well as the pace of the overall recovery, the National Association of Home Builders has warned.

NAHB President Pete Herder blamed the most recent round of increases in interest rates on a'"mismatch of economic policies" being pursued by the Congress, the Administration and the Federal Reserve Board. In the past two months, the prime rate has risen from llgo to l2%v/o and fixed rate mortgage loans have moved up a full percentage point to around 1490.

"On the one hand, we are running up deficits at a rate of $200 billion year after y€il," Herder said. "On the other hand, the Federal Reserve is committed to a more restrictive monetary policy that is bound to slow the pace of the recovery. Caught in between are investors. businessmen and consumers who invest or borrow capital to compete in the marketplace and who, in the final analysis, represent the heartbeat of this economic recovery. t t

To avoid further increases in interest rates, Herder said, Congress should enact and send to the President its budget plan for fiscal 1985 that would cut the deficit in the $150 billion to $200 billion range over the next three years.

In addition. Herder cautioned the Federal Reserve Board against overreacting, noting that the Fed has slowed the economy too abruptly in the past, sending the economy into a tailspin that, once started, is extremely difficult to reverse.

Alumlnum Assn.'s New Name

At its San Antonio spring meeting, the Architectural Aluminum Manufacturers Association changed its name to American Architectural Manufacturers Association.

The new name reflects the maturing nature of AAMA and its broadened scope to include all materials used in the fabrication of windows, doors, skylights, space enclosures, curtain walls, siding, and related products.

Western Hardwood Assn. Growing

In keeping with the resurgence of the Western hardwood market, the Western Hardwood Association had a near record attendance at its Spring meeting, May 2-4, in Portland, Or.

Members from Canada, Washington, Oregon and California made new friends, renewed old friendships, learned about Western economics and hardwood growth, entered into buying and selling deals, and made plans for the luture of the association.

Keynote speaker Ray Broughton of First Interstate Bank reported that economic indicators show that the hardwood industry of the West should have a good and steady increase over the next few years. The forest products economist said our industry is lucky to have the resiliency and the ability to rapidly adjust to changes.

Scores of new faces were in attendance. The association reported an increase of six new members over the past couple of months and is anticipating an additional twenty members before the summer is over.

Terry Brown of Oregon State University reported on a seminar that will be held October U-26. for mills and manufacturers to discuss the management of alder, mill production, marketing the lumber, and manufacturing the consumer product.

Murray McBride concluded the speakers program on a high note, emphasizing the importance of involvement in the organization to achieve its goals.

President Marvin Noble of Noble and Bittner Plug Co., Hebo, Or., presided at the board of directors meeting and the general business meeting. The WHA was reported to be in a sound financial position, and it is mounting a major membership drive to increase its economic effectiveness in the marketplace. This could include a redefining of the Quality Control Program, as well as greater emphasis in the legislative procedures, it was reported.

Co-chairmen for the meeting were Paul Meyers, United Forest Products, and Ken McCoun of North Pacific Lumber Co., Portland. North Pacific Lumber Co., Hardwood Division, hosted a Hospitality Suite.

Jim Harrison of Diamond Wood Products in Eugene, Or., will be the chairman for the Fall annual meeting scheduled in Reno, Nv., September 26, 27, and 28.

BanUBuilder Conflict Cited

Legislation allowing federally-chartered commercial banks to develop land and engage in the full range of housing development activities would be detrimental to home builders, home buyers and bank depositors, according to John Koelemij, lst v.p., National Association of Home Builders.

Testifying before Congress, Koelemij said that Congress should wait to assess the impact of recent S&L deregulation before moving to give banks the go-ahead on previously restricted real estate ventures.

l'In recent years, some financial institutions have begun to compete directly in real estate development with independent builders and developers," Koelemij said. "The added authority of banks to participate in real estate development, finance and sales would provide an enormous concentration of power in financial institutions, and promotes several anti-competitive practices."

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line that their ability to survive in the marketplace is dependent on the knowledge and help their employees provide to the customer.

Their employee handbook phrases the commitment this way. "The company does have plans to keep expanding with the town and its needs. Additional expansions depend totally on the commitment of DeCou Lumber Co. to serve the needs and wants of the town it grew up in, and its ability to survive in a marketplace dependent on the knowledge and help that our employees have become known to be able to supply."

A family oriented business, the company has prospered and expanded since its acquisition in 1937 from