-RUSSIAI A New Threat in

The

World Lumber Market

Russia now pos€s a major competitive challenge to America in the world lumber market, a Portland, Oregon, executive reoently returned from the Soviet Union warned in a speech to the Stanford Graduate School of Business.

Robert F.- Dwyer, executive vice-presi' ' dent of the Dwyer Lumber and Plywood Co., said Russia now matches the U.S. in total lumber production-and plans a 20 percent annual increase in the years ahead.

A member of the President's National Export Expansion Council, Dwyer returned this summer from an unofficial tour of the Soviet lumber industry.

Interviewed following an address at the Transportation Management Program of the Stan{ord Graduate School of Business, he said Russia plans to expand its present lumber production of 35 billion board-feet by six or seven billion annually.

Practically all Russian timber is harvested by tractor from comparatively small trees, he reported. Most stumps are 16 to l7 inches in diameter, being cut into one and two-inch boards.

Since Russia entered the world lumber market in 1958, the competitive efiects on this country have been substantial-mainly because of our obsolete transportation methods and policies, Dwyer told TMP executives.

American lumber producers have lost more than $300 million of their annual domestic market to foreign competition, primarily Canadian, he said. This developed after Russian exports forced Canada to withdraw from the British market.

Western Canadian producers now can ship lumber to the East Coast for $12 to $I4 a thousand board feet less than Amer' ican firms, which are prohibited from using lower-cost foreign vessels. As a re' sult, 200 sawmills and nearly 14,000 jobs have been lost in the Pacific Northwest in the past two years alone, Dwyer said.

The extra shipping cost imposed on U.S. producers by the Jones Act are so great that Canadians now are buying U.S. logs, taking them to Vancouver for milling, and re-shipping them to the East Coast at a Iower price than Arnerican firms.

o'Despite our higher labor costs, our taxeso our investment costs, and our highpriced timber, American lumber is produced from the mills as cheaply-or very nearly so-as anything the Canadians or anyone else can produce," he emphasized, ooThe Russians are shipping lumber to Britain, to France, to Western Europe, to Japan-to all of the foreign markets. where our country has sold lumber."

"We can serve up better quality than the Russians, and our production costs are as low or lower.

"We are beaten in transportation. We cannot win this foot race with foreign competition in lumber or anything else if we must run it wearing the crutch of decrepit transportation," Dwyer said.

Russia now has 400 million feet of rough-cut lumber ready for export from Leningrad, he reported. The Soviets have frnished a new lumber fleet of vessels, with 40 more under construction.

The Russians claim these ships can load I.000 board feet of lumber for less than $2 or o'less than half the very best we have ever been able to manage in our ports," Dwyer noted.

Lumber is not alone in its shipping predicament, Dwyer added: ooThese are false remedies, the opium that kills the pain, but never cures."

(I) The Northwestern fishing fleet has declined seriously because of Japanese and Russian fishing-factory vessels' ooWe have no comparable ships and the cost of building them in American yards puts them out of the competitive picture before we begin," he commented.

(2) America's Great Lakes barge fleet now is threatened with specially subsidized Canadian barge construction.

(3) Hawaiian sugar and pineapple pro' ducerso forced to ship only in American bottoms, find it increasingly difficult to meet lower-cost shipments from the Philip pines to the U.S.

Dwyer praised government efiorts to build a $30 billion national highway net, a 2,000 mph supersonic aircraft, and nuclear-powered merchant ships. But he sharply criticized "the crippling, decadent sickness of prolonged operating subsidies" for the shipping industry.

"If we are going to export the ideas of democracy to the world, we must do it on our own wagons, by our own transPorta' tion. If we are going to import the riches of the world that we have become accustomed to, we must do it with a competitive transportation system that is the strength of our economy."