lncreased Cost of Retail Lumbering

By Everett C. Parker President, Patten BlinnLumber Co., LosAngeles

'(At the recent Southern California retail lumber confer,ence held at San Diego, California, September 26, 27, and .28, Mr. Parker read a most informative paper on the in.creased cost of operating a retaii lumber business in South,ern Califo:nia. It being of consideradle length, THtr CALIFORNIA LUMBER I4ERCHANT published in its Octo.ber l5 issue that part of the paper devoted to the increased ,cost of taxation, which was of consuming interest. This is now follou'ed by other verbatim excerpts from Mr. Parker's .cost digest, lr'hich are of most practical interest to the retail .lumber t:ade. In the follorn'ing paragraphs he discusses the :increased cost of insurance, \,vages, and salaries.)

A main item of operating expense is insurance, including .fire, compensation and accident, and public liability. F'ire insurance has increased very materially over the past ten .years, partlv due to increase in rates, but largely due to increased valuations. With the same amount of footage on .hand in 1950 as in 1940 the valuation of your lumber for insurance purposes rvould be about two and one-half times .as large. The same r,vould be true of wallboards, hardware .and sash and door items and etc. If you would get an appraisal of your improvements by a reputable appraisal company you would find it two to three times as much as 194O. Since most of us carry 90,/o of r.alue clauses in our policies, 'our fire insurance premiums u'ould be double or more. In fact, our company paid in l95O for fire insurance about 2-l/3 times what rve paid in 1940. Compensation and accident 'insurance for your employees is another items u'hich costs over double 'rvhat it did ten )'ears ago on the same number of rnen. This is partlv caused bf increased wage level, and therefore increased compensation per rveek u-hen men are injured, but it is also due to a peculiar pholtia on the part ,of ivorkers ancl people generally, to take a good rest if the least opportunity presents itself and sonrebody pavs you a sizeable non-taxable sum per .ll'eek. The attitude of hearing boards is much more liberal and the cost of t:eatment much higher. Public liabilitv and property damage for our trucks and general liability cost rls three times what it did in 1940. This is due to higher costs of treating those injured and higher costs to repair damage to cars. Insurance statistics show that bodily injurv claims cost 51% more thar-r ten years ago; property damage I24/o more; hospital fees 774/o more, and verdicts for liability suits 80/o more than ten years ago. Our records shon' that rve paid for insurance ofall kinds in Southern Californai tn'o and one-half tinres rvhat u'e did in 1940.

Then there are all kinds of other expenses, charit:rble donations, advertising, general expense items of one form and another, repairs onyour trucks or your mill, telephones, stationery. You are all acquainted with these additional costs. Just a few examples may refresh your memory. Gasoline tank loads 1940-lIlc; 1950-20c a gallon. Truck tire and tube 90Ox20 12 ply 1940-$68.37; 1950-9104.89.

'fypelvriter-1910-$96.37 ; 1950-$i55.00. 10 column comptometer 1940-$,+06.25; 1950-$696.56. Ford coupe for collector 1940-$861.24 ; 1950-$1705.60. Ford truck stake body 1940-$996.51 ; 1950-$2217.96. Truck license 1940-919. 10 ; 1950-$37.70. Charge tickets have gone up from 48/o to 76/o, according to size, from 1940 to 1950.

Adding to our cost of goods although not to our operating expense are these interesting items-Portland freight on lumber including tax 1940-15.32c per 100#; 195075.33c per 100S. Freight from Northern California including tax on lumber per M 1940-$8.65; 195O-913.46.

But the most important item of operating expense is labor and salaries. Half or more of the operating expenses of the normal lumber yard, in m1' opinion, is outgoing labor and salaries. This would not include incoming labor, mill labor or truckdrivers.The amount paid to employees becomes, of course, a very important factor. Wages and salaries since the end of the l.ar u'hen the r.vage freeze was lifted have increased greatly. It u'as brought about partly due to employers increasing prices but largely because with Gorrernment sympathy and assistance, each union vied

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V/e hcve moved from our old oddress ot 99 Son Bruno Avenue, Sqn Frcrncisco, to our new qddress qt