ooA Doy of l)ecision fo, Vood"

Address by N. Floyd McGowin, President, Nqtionol Lumber Mqnufoclurers Assn., before Western Pine Associotion Sqn Froncisco, Colif. Morch

7, | 958

It has become a tradition in our industry for the current officers of our various associations to appear before one another's meetings and say a few words.

It gives me great pleasure to continur that tradition by being here today in my capacity as president of the National Lumber Manufacturers Association.

I'm proud of my office and feel honored to follow in the footsteps of the distinguished line of lumbermen who have prereded me in this job.

The best thing to me about being an officer in any of our associations is that you've got to be a lumberman first.

I'm sure every man in this room shares my pride in being able to say, "I'm a lumberman." No longer are we called despoilerswe are conservationists growing more timber each year than we cut.

It's a feeling that goes beyond dollars and cents-although I can't think of a better way of rneasuring our abilities as lumbermen than in those highly important terms.

But in that simpl€ statement of fact-"I'm a businessman and a lumberman"-there is also a proud declaration that we belo,ng to a group that represents just about the last stronghold of what used to be called rugged individualism.

And that's why I'd like to talk to you today not only as a spokesman for your industry's national organization, but as a lumberman. There isn't a more courageous, more enterprising group of men anywhere. We still like to stand on our owri feet, carve out our own destinies, without any help from the government or anybody else.

I think these things are important. And I'd hate to see us lose sight of this tradition of courage in the face of odds.

It's partigularly important right now, when lumber is facing the great€st challenge in its long history.

We all kriow the challenge is there. We talk about it at our meetings. Each of us has his own ideas about what this industry needs to overcome the obstacles placed in its way by competition.

The shares of our traditional markets that are being sniped at by wood's competitors-and in many cases gobbled lp wholesale, are well known.

During the last two years the size of our markets has dropped alarmingly. In terms of dollars and cents, tl.re decrease has been even worse.

Since April 1956 the average f.o.b. milt value of all spccies of lumber has declined almost $10 per thousand, while from 1955 to 1957, board foot volume tell ofr. L4/s.

That adds up to a loss of nearly a quarter of a billion dollars worth of business to members of associations belonging to NLMA.

The steel and aluminum people, the plastics and clay people are hitting us with everything they've got. And they are wcll-heeled. For one thing, these competitors of wood nevet believed for a minute that their ,products would sell themselves. Nothing sells itself these days.

You can name single companies in one of these competing areas that spend more on merchandising every year than our whole industry put together.

On national advertising alone, Alcoa and Reynolds each spends vast sums each year.

And if you've been in a retail yard lately or talked to any big contractors, you know the things the aluminum people are doing to back up these big advertising budgets.

These competitive propaganda campaigns deride the values of wood. But, so far, no one has stood up and spoken in an equally loud and clear voice to say they're wrong.

Our competitors go out and tell builders that their products ofiers lower "in-place" costs. And most builders have no way of knowing for sure whether they're right or wrong. And even if they are wrong, no one has told the builders about it.

The same .thing is doubly true when it comes to insurance rates. Shouldn't someone be telling school boards and their architects that it's often cheaper to build a wood school in spite of a higher insurance rate?

Building codes are a whole story in themselves. Here we are indeed confronted with a special problern.

Our competitors have done such a good job in this field that there are areas of this country where it's against the law to use our lumber in the way it can and should be used.

Then, there is what we are pleased to call the general publicmillions of potential custoners, each with his own ideas about wood.

It has been suggested that the man in the street doesn't really have much to say about what kind of materials go into his homethat wE must first sell our product to the building industry.

In the short run, I'm sure this is true. But, in the last analysis, I believe that the man-with-the mortgage and the half-paid-for car and a commuting prob'lem is the man we have to reach.

I believe that if he's given all the facts, he and his neighbors will make the right decisions. At present he's being fed a lot of distorted ideas about wood, ideas having to do with fire and rot and termites and upkeep.

These are misconceptions that can be wiped out with simple facts. And I don't know who's going to tell them these facts unless we do.

Then we get to the matter of the public taste-one of the vague intangibles of the make-up of our average man that can't even be described, much less defined. But we all know it can be influenced.

I don't agree with the idea that the American people can be led around by the nose by any self-appointed arbiter of taste who happens along.

But it's been my experiencB, in pointing out the virtues of wood to my non-industry friends, that they almost invariab,ly say that they've sort of felt that way about it all along but never thought about it consciously.

If they've.been persuaded to use something besides rvood for certain decorative purposes-say to cover a wall-the1"re unhappy with it.

But the point is they don't know why they're unhappy. They wanted wood and didn't know it.

Surely, people like that-and there must be millions of them-can be influenced by a merchandising program that puts into words and pictures for them the feeling they've had about wood all along and didn't know it.

I hope I haven't given you the im,pression that I think nothing is being done about these factors that are costing us real money in lost markets.

Certainly, I lrrrow of the wonderful job your own association is doing in merchandising to the general public. Your magazine ads are perfect examples of sclling the intangibles of wood effectively.

Thanks to you, wood paneling on a wall is a symbol of the epitome of good taste. When something becomes fashionable in any field the sales job is 90% done.

And I certainly don't want to sell short the efforts of the association I represent here today. We think we're doing an important job-one that isn't being done and, in fact, can't be done by any other organization.

There has been a lot of discussion at our various association meetings about the functions of the National Lumber Manufacturers Association-where its areas of responsibility lie.

I like to think we've arrived at a good working arrangement. National does the things it can do best. Simply stated, National's job is to represcnt wood as wood in the battle for markets.

Put another way, National should go out and soften up the prospect for you, so you can move in and clinch the sale for your species.

This goes for all aspects of lumber trade association activity- merchandising, public reiations, insurance, codes, legislation-anywhere it seems evident that the concept of using wood must be sold.

This before you and your co.mpetitors even have a chance to go out an<l fight for your own species.

Certainly, our work shouldn't take precedence over yours. Na- tional's areas of cornpetence are every bit as specialized as your own -no more, no less.

Yours is to sell the Western Pines. Ours is to sell all wood.

Each is a difficult job, but when we're both doing our jobs well, we're infinitely better off.

The same thing holds, of course, for the other r-nember associations of NLMA. I\{any of them are doing an excellent promotional job within their own areas of concern.

The very idea of a trade association is based on a belief that rle can do things as a group that will benefit us as individuals.

If you didn't believe that, you wouldn't have to be sitting here listening to me tell you things you already know.

And I subr-nit to you, gentlemen, that NLMA stands in the same relation to the Western Pine Association that the Western Pine Association stands in relation to the Ralph L. Srnith Lun.rber Company or anv other Western Pine member.

Individual lumber companies have been fighting a ganre battle that I sometimes think does each of us almost as much good as it does them. I certainly don't want to depreciate their efforts.

Weyerhaeuser, for instance, has made a habit of walking away with the Saturday Review's prize for enlightened public service advertising. The Simpson Logging Company ads are ec1ua,tly impressive, and I could mention others.

In fact, I think these examples prove my point. Ask the man in the street to nanle a brand of lumber and chances are he'll mention one of the above.

Why? Not because they're the biggest. Not because their product is so far superior to everyone else's 'that even the uncnlightcncd Saturday shopper can immediately tell the difference.

The simple reason is that these concerns back up their excellent product \rith adequate promotion. People believe in it because it's familiar. They've been told it's good and they buy it.

How many of us can say the same thing about our own product?

As an association, you can say it because you're doing the same thing certain individual companies are doing-promoting your products.

The retailers-the men on our marketing firing line-pose a llter- why that's all right with the retailer-he'll take his business to somebody who will do his preselling for him. l,ike everyone else who has anything to do with the building industry, we lumbermen are concerned with the number of homes built each year in this countrl'. And rightly so, because housing is still our biggest nrarkct.

All of this, of course, paints a pretty dark picture. And if our industry keeps on drifting along-if no one steps forward to speak for wood-I'm afraid things are going to get darker.

Let's face it-the only thing that's keeping our industry from a real downhill slide is an expanding population.

People aren't buying more wood than they did fifty years ago. What's happening is that there are more people buying less wood.

Right now, we're building a million houses a year, more or less. But we're told that by 1965, we'll be building nearly a million and a half houses a year to meet the needs of a growing population.

Ily 1970, that figure will have climbed to two mil ion a year. Truly a wonderful opportunity for the lumber industry.

Or is it? Let's look at the other side of the coin: chandising problem for us as individual manufacturers and for our industry as a whole.

In 1920, the average new home contained 18,900 feet of lumber. But by 1953, the homebuilders were using only 10,500 feet in each home.

This figure is still dropping ancl is expected to go right on dropping, according to the Stanford Research Institute's report, "America's Demand for Wood."

I say to you: Let's go right on concentrating on housing starts. It's the most promising field for the future of our industry.

But let's try to see that more lumber is used in every one of those two million homes we'll be building ten or twelve years from now.

If we don't, we'll be a static industry in a booming economy. Well, just what do we do about it? I'd like to be highly original about what to do and offer you a dramatic new way to save lumber's market-Western Pine's markets, if you please. But I'm afraid I can't.

TIrc blunt fact is that nobody has come up with a universal panacea for our ills. Nobody will.

Our salvation lies with the people who could buy wood, and we have no choice but to go out and sell it to them.

Our industry is no different from any other. There are no special favors for us. Even work-hard work alone may not do the jo,b.

But we can certainly tear a page from the experience of other industries-especially those who in addition to hard selling have developed an aggressive aclvertising and merchandising p_rogram to platform tlreir sales efforts.

One of the things rve're always ready to do when busincss gets bad is cut prices. Well, back in the days when everyone was buying lots of wood, a price cut was a logical way to beat the competition, and it usually worked.

But in those good old days our competition was the sawmill at the other end of the valley.

Today, our enemy is the big steel corporation or the aluminum plant. If these giants are interested in us at all, they probably enjoy watching us cut each other's throats in price-cutting duels.

We're busy competing with each other for the favor of the retailer or wholesaler. But he's not ordering as much wood from anybody as he used to, and where does that leave us?

National Lurnber's marketing consultant has told us the retailers feel we manufacturers aren't doing much to help them rnerchandise wood.

Historically, we like to counter that claim with the charge that the retailers don't seem to be interested in merchandising lumber. And there the matter rests.

Well, why should the retailers get emotional about selling wood? They're businessmen too. When a retailer makes the bulk of his profit f rom selling non-lumber items, he's not going to u'orry about us.

He's too busy selling the things his customers do want.

Our job is to make the retailer's custorners want wood so badly they'll walk right by the other things he has on his shelves and ask for lumber.

The lurnber retailer isn't alone in his indifference to products that aren't presold to his customers.

Fo,r better or worse, we've got to live with the fact that, in today's economy, the big selling job must be done by the manufacturer.

If any manufacturer doesn't know about this, or care about it,

It leaves us with an average net profit after taxes of 2.3/o of sales in 1957. Compare this with the 5.4/o we made in 1955 (more than double last year's figure) and I think you'll agree that it's high time we did something besides cut prices.

Maybe we can learn something from our competitors.

Our competitors have d.etermined this important lesson atrout America's buying habits in this year of grace, 1958. They've concluded that price is only one consideration-and often a minor one at that-in the spending of the consumer dollar.

We no longer live in a price economy, where the simple laws of supply and dernand seem to be everlasting and immutable.

People want quality. They'll pay more to get it. But if they don't even know your product is good, if you dont tell them about it, then they won't even bother to find out how nruch it really does cost.

They'll buy something they think is good because they read it somewhere.

Wood's competitors are out selling good products at fair pricesand 'people are still buying thern, recession or no recession.

True, maybe people won't buy quite as much this year as they did last year. But these shrewd merchandisers know that a price cut won't help much in the long run.

Meanwhile, they go right along merchandising their products to the hilt wth full knowledge that.the customers who don't buy this year probably will buy next year. And the aggressive merchandiser won't be forgotten.

These just aren't the idle meanderings of an armchair economist. In good times and bad, it's been proven time and time again: It pays to promote. It pays to merchandise. It pays to advertise. An old chestnug but never in our history has it been truer than it is right now.

The merchandising program you will be offered later has a price tag ,on it. It will cost the membership of NLMA $1,250,000 annually.

Generally speaking, such programs are considered a cost of doing business. However, in our case, I feel we can look at this price tag as an investment that will come back to us with dividends.

There.are two ways in which we can expect,this return: First, to have the program help us recover l1/o of our lost sales. (Any increase beyond this would be added to our net profit).

Secondly, to have the program stabilize and improve our price structure, so that profits on what we do sell come back at a reasonable figure.

Of course, if both objectives are realized, and this is our opinion, all of us will reap multiplying benefits fr,om the program.

I think we can be grateful for one thing at least. The inherent virtues of our product-good, honest wood-are so strongly ingrained in the minds of so many people that our job is going to be a lot easier.

Don't forget, the test tube boys haven't yet been able to come up wth a miracle product that's capable of becoming a friend of the family.

Cold steel, hard concrete and shiny aluminum don't have as much to ofier in the way of warmth and character.

I don't think it's too far-fetched to say that in this age of guided missiles and traffic jams, what this country really needs is more wood to calm our over-stirnulated senses.

With a product as good as ours, the job of re-acquainting people with its merits should be relatively easy.

It requires an investment of money in a sound merchandising program<n investment that will be returned many times over,

And let's be realistic. It also takes courage. No one is going to make that investment for us. We'll have to reach down in our pockets and raise this money ourselves.

If we wait for the laggards-those few who aren't ready to face the challenge of the competitive marketplace, it will be too late.

The opportunity for the lumber industry to soar to new heights was never greater. Never before in history has there been a more promising demand for wood. But we aren't going to cash in on that potential by having me or anybody else tell us about it.

The time has come to stop talking and start merchandisrng.

Almost every day we find a new demand for the type of material that only a national merchandising program can provide.

Take the matter of textbooks, for example. If our program is accepted, we propose donating text materials on wood to 216 colleges and universities which feature courses in civil engineering, architectur8 and architectural engineering.

Only the other day we were asked for such material by the Department of Civil Engineering at the University of California. Let me quote just a few sentences from that letter: "Associations concerned with such materials as concrete, steel, etc., have been most cooperative in providing bulletins, etc., dealing with the properties and uses of the particular materials with which they are concerned.

"There is need fpr similar information on wood.

"Here, I think, is a splendid opportunity for the industry to assist in bringing to the attention of engineers reliable information on wood as a structural material.

"I bring this to your attention with the hope that your association may see fit to undertake the supplying of several hundred copies a year which the engineering departmrnt needs."

I don't believe we need to discuss that request at length, gentlemen. I'm sure you're as interested as I am in educating tomorrow's architects and engineers in the virtues of our products.

And while we're on the subject of opportunities, let's consider the vast school contruction market.

One of the objectives of our merchandising program would be to acquaint school officials and the public generally with the many advantages of the modern wood school.

Just recently the Ford Foundation appropriated four and a half million dollars to study ways of cutting school construction costs. This school construction market is big business. And the Ford people are interested in helping school officials to get the greatest value for more than $,O billion to be spent on school construction in the next ten years.

We're on the same team in this respect. But are we going to rake the initiative and tell our story the way it should be told?

Redwood qt South Pole

San Francisco detailed lumber ft's a selling progr:rm created by so,rre of the best brains in both lumber and merchandising. And put together by an extremely capable advertising agency.

Redwood beams shipped from Northern California have performed life-saving service to scientific weather observation teams at the Antarctic, according to Redwood News, published by the California Redr.iood Association. Twenty-foot redwood 4x4 booms were used by the Navy to support crevasse detector electrodes in picking a safe trail across miles of ice to Byrd Station, base for International .Geophysical Year scientists studying weather conoltrons.

"Redwood was selected because of its light weight, freedom from defects, and high internal viscosity which discourages destructive vibrations," according to the sounding device's designers.

Redwood's versatility is shown in other articles in the l6-page quarterly publication of CRA which depict ,the_ durable wood's use for a water storage tank in MacKerricher Beach State Park in California; a Jewish Temple in Swampscott, Mass.; a home'in Minneapolis, and a water pipeline in California,s eastern Sierra Nevada.

The Redwood News is circulated quarterly to more than 35,000 architects, lumber retaillrs, buiiders and o-ther persons interested in redwood throughout the U. S.

Believe me, gentlemen, we'll have a lot of listeners when we do decide to tell our story.

School officials are interested in how thc wood school can stretch their school buying dollars.

The taxpayer is interested in how the wood school can lighten his tax load. And parents are interested in how the wood sihool can contribute to the safety, the physical and mental well-being of their children.

The presentation you're going to see today contains directions for a first giant step toward a new day for industry.

I cannot emphasize too strongly that the presentation you will see is NOT the wishful thinking of NLMA staff members.

It is a proposal in which some sensible lumbermen including some distinguished Western Piners have a lot of faith-faith they're willing to back up with real money.

By today's standards, this merchandising program is a modest one indeed--only a fraction of the kind of money being spent by our competitors. But it is important to you and me and to every man who has a stake in the future of this great industry.

And, certainly, this national eftort must give greater impetus for expanded merchandising programs conducted by the Western Pine Association, and eveiy other NLMA federated association.

Each program will complement the others and the whole-the total effect-will be far greater than the sum of its parts.

Speaking for myself and for NLMA, it is my fervent hope that you will accept both the letter and the spirit of this great new program.

But, whatever your decision, you may be sure that your representatives on the NLMA Board, other NLMA directors and myself will abide by it in good faith, and carry out your wishes to the Nth degree.

, It is my firm belief that you will see thc value of this program and make an affirmative decision in behalf of a national unification of our industry.

This is a program designed to regain and hold that share of the market lost to producers of competitive materials.

Johnson Aword Winner Selected

Berkeley-Donald K. Rodgers of Grass Valley has been selected final winner of the 1958 Johnson Award in Forestry at the University of California. The $150 final award recognizes him as an outstanding senior in the school. He gained on-the-job experience last summer with the Collins Pine Company at Chester, and plans to resume his employment there following graduation in June.