..PRICING TO FIT THE SALE''

Pcrul Hollenbeck Reports on New Monogement System in Clinics Wirh Midwest Yords

Retail lumbermen throughout the Midwest have recently been taking a closer look at their costing and pricing methods in an effort to overcome their biggest single problem l sagging profits during a period of unprecedented economic growth and development. At top-level sessions in Chicago, Milwaukee, Lansing, Des Moines, Topeka and Little Rock, Paul Hollenbeck, managing partner of Lumber Service Co., Burbank, California, has been showing lumberyard owners and managers how to analyze their businesses, project their sales, and operate their yards at a profit that allows a reasonable return to investment.

These sessions have met with wide acceptance and are highly recommended by lumbermen who have been in attendance. Each is a two-day, shirt-sleeve, down-to-earth clinic devoted to the complete and concentrated study of all of the factors involved.

The solving of this basic problem lies in the complete understanding by lumbermen of the mathematics and principles involved in properly pricing their merchandise to fit the varying conditions under which they operate their businesses. This means a knowledge of how inventory" accounts receivable, fixed assets, and other items of investment affect the prices they should charge for merchandise. Also involved in the problem are the. type and number of services rendered to the customer with the sale. Hollenbeck calls this "Pricing to Fit the Sale."

The first requisite in establishing a proper retail price structure is knowledge of the cost-of-doing-business. This means a knowledge of this cost as it applies to the various categories of customers (contractor, home-or,l'ner, do-ityourself builder) as well as the combined or overall cost of doing business.

The second requisite is knowledge of how to arrive at a price that will return a satisfactory profit.

The third, and perhaps most important requirement, is knowledge of what a fair return or net profit really is.

The usual lumberyard manager today has a good idea of his overall cost of doing business. However, rvhen he gives careful thought to the analysis of his sales, he will find that there are different categories of sales, each involving different amounts of overhead expense. For example, to deliver a carload of studs directly from the car to the job of a tract builder entails a proportionately smaller percentage of overhead expense than that involved rvhen selling a single piece of lumber to a do-it-yourself builder on Saturday morning.

Satisfactory profit can best be measured on the basis of the return to investment in the business. Net return to sales does not tell the correct story because it does not take into consideration the investment required to get the sales. In establishing a reasonable price struc- ture the profit should be predetermined so as to give a satisfactory return to the amount invested.

This profit should allow for the paying of income taxes, the provision of adequate capital reserves, and the payment of dividends to stockholders. If such a program is followed, a net profit to investment (before taxes) of. 2O/o is almost the minimum that should be considered. This would allow one-half of the profit for the payment of income taxes, with the remainder being divided between capital reserves and dividends. Certainly, even a 5/o dividend is little enough for investors when secured investments bring even a greater return.

The analysis of a business :rnd the projiction of sales in line with these principles is the responsibility of management. At first thought, it may seem to be a job for auditors or accountants alone. However, only management has the understanding and knowledge of the various phases of the business to accurately apportion the costs involved to the various sales categories.

As a tool to assist retail lumberyards in realizing a proper return on investment, Hollenbeck and the Lumber Service Co. staff publish The Market Analizer. First published for the Southern California area over seven years ago, The Market Analizer is now in use in several hundred lumberyards throughout the west and midwest. Tailormade for each area it serves, the book is kept current by constant research rvhich assures the subscriber a steady flow of wholesale price and product information.

Paul Hollenbeck recently presented to Market Analizer subscribers in Chicago a new method of pricing. As far as is known, for the first time in history, the method prices merchandise by considering the return to investment, as well as other important factors which govern the price charged for merchandise.

Introduced on a trial basis, this new system has been enthusiastically acclaimed by its users. They find that it not only helps them establish a method for pricing to fit the sale and the services rendered, but when properly used assures an adequate return to investment. Also incorporated in the system is a simple, yet effective, step toward inventory control.

Hollenbeck reports that the acceptance and response to the Top. Management Clinics and The Market Analizer by midwest lumber dealers is gratifying. Profit-producing dealers in every area are the ones who have determined to price their merchandise to fit the sale.

$27,5OO,OOO in Volley Homes

Early start of $27,500,000 in new San Fernando Valley homes by the Aldon Construction Co. was announced recently with acquisition of 295 acres. Since 1945, Aldon has built more than 26,000 homes at nearly $300 million, of which 6000 were in the Valley. Plans called for $17,500,000 in luxury estate-Class homes a mile south of Ventura boulevard west from the extension of Reseda boulevard to the ocean, and $10,000,000 in single-family dwellings in the northwest section of Northridge.

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1908 Conodo Boulevord

Glendole 8, Colifornio

WHITE FIR, PINE, INCENSE CEDAR

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TI'VIBERS TO FIFIY-FOOT TENGTHS

Representing Oceqn View Lumber Co. - - Corgo

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L. A. Hoo-Hoo Ghristmos Pcrty ot Riviero Country Glub, December 2l

Jim Forgie, Snark of Los Angeles Hoo-Hoo Club 2, has requested all Black Cats to hold December 2l open for the BIG golf tournament and Christmas party, which has been scheduled for the Riviera Country Club this year. This important event has always attracted one of the largest turnouts of the year and Snark Forgie is anxious to maintain the attendance record which will run between 250 and 300 lumbermen and their friends.

A full schedule of entertainment has been planned for this Yuletide event. Following the golf tournament, the cocktail hour will get underway at 5:D p.m. Dinner will be served promptly at 7:49 p.m., to make way for the presentation of door prizes and golf trophies. Immediately following the awarding of the prizes, a lavish yaudeville show will get underway.

"Th,is show has been arranged for your entertainment," Snark Forgie declared, "and we have gone all out to secure the best acts obtainable from the nite spots of the west."

Reservations should be made immediately with Freeman Campbell, 'Western Mill and Lumber Company, ANgelus 2-4148. "Bring a guest and make up an office party so that everybody can enjoy the fun," says Freeman.

Garden Grove, Calif.-J. & S. Construction Co. will divide 10 acres at the southeast corner of Trask and Clinton avenues into 4O homesites.

'Grinding rhe ,tlill' ls liffle-known Aspect of Sqwmill Operotions

One of the little-known behind-the-scenes operations in a sawmill is "grinding the mill."

Early one Saturday morning recently the "big side," large headrig in Mill B at Weyerhaeuser Timber Company's Everett, Washington, Lumber Division, was the scene of this unique activity by specialists at the job.

"Grinding the mill" is the term for resurfacing the rims of the big wheels on which the headrig bandsaw rides and which power the sau'. The headrig at Mill B, a "ten-foot mill," operates with a set of eight saws used interchangeably. Riding with a strain of 18,000 pounds, these saws have worn grooves in the big wheels with the millions of revolutions they have made. The wheels turn at a top speed (usual running speed) of.9,2OO feet a minute. During the 18 montl-rs between grindings, the long bandsaw (61 feet, 6 inches long) spin a total of more than f million miles. r

Running two shifts daily, the saws for Mill B headrig are eventually ground down from the original size of l6r/a,, to an allowable ll" in about 18 months. When it is time for a new set of saws, it is time for "grinding the mill." This job falls to Weyerhaeuser's Assistant Superintendent at Everett,

Keene Strobel, and his team of experts who do the job on off-shift hours. Their objective is to restore the original flat surface of each wheel and to insure that each is a perfect circle.

Biggest part of the job is setting up for it. Brackets are bolted in place to hold the grinder. An intricate and exact measurement of the wheel's surface is made to determine to what depth the grinding must go. Part of this computation includes a tape measurement of the circumference of the wheel so that the grinding will bring both edges of the rim to the same measurement.

When this preliminary work is completed-usually a matter of several hours-the grinder is adjusted for contact with the rim of the wheel, the power is turned on to run the wheels rvith the saw in place; and the grinding begins. Amid a shower of sparks, the iurning band mill wheel spins the grinder which is moved steadily back and forth across the surface of the wheel's rim.

As little as 3/64 of an inch was skinned from the face of the wheel by Strobel and his crew. But it was enough to restore it to the right measurement to properly seat the new set of saws. The trick here is to take off only the amount which is necessary and no more. With this type of grinding, the wheels will usuallv last 2O years or more.

o. Newliteroture o..

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Selecting the proper and most economical roof truss design for their building projects has been simplified for architects and engineers in the new publication, "Clear Span Wood Roof Trusses," issued by Timber Engineering Company, researcl-r affiliate of the National Lumber Manufacturers Association, and central clearinghouse for timber design information for more than two decades. Architects, engineers, and contractors may obtain copies of "Clear Span Wood Roof Trusses," without charge, from Timber Engineering Company, 1319 18th Street, N. W., Washington 6, D. C.

A new graphic method for quick selection of patterns for loading 20,000 sizes of containers on the 4A' x 48" pallet has been devised by the Navy and published in a report available to industry through the Office of Technical Services, U. S. Department of Commerce. The 140-page report, PB 111845 Container Size and Pallet Pattern Selection Criteria for Use on 4U' x 48" Pallets, J. P. Akrep and

S. Stambler, U. S. Naval Research and Development Facility, Dec. 1955, may be ordered from OTS, U. S. Department of Commerce, Washington 25. Price $3.

"Increased Profit In Heavy Logging," a popular, 16-page publication showing the latest large timber methods of ground skidding, arch logging, cable yarding, loading and road building is offered by Hyster Company, 2902 N. E" Clackamas Street, Portland 8, Oregon.

Practical methods of 'combatting embezzlements of money, merchandise and other materials are described in a 32-page booklet, "Embezzlement Controls for Business Enterprises," by Lester A. Pratt, C.P.A., nationally-recognized authority on fraud prevention. Available to employers, without charge, from Fidelity and Deposit Company, 2140 Fidelity Building, Baltimore 3, Maryland. Request : on business letterhead.

IIow trussed rafter construction, using the Teco system, saves up to 30/o in material, and even more in time and labor, compared to the old style joist-and-rafter roof framing, is graphically shown in a novel folder issued by the wood industry research organization, Timber Engineering Company, affiliate of National Lumber Manufacturers Association. The two roof framing methods are compared in a savings chart that shows the amount of lumber required for each component. Copies of the Savings Chart are available, free, from Timber E"gtneering Company, 1319-18th Street, N.W. Washington 6, D.C.

Garden Grove, Calif.-Tract map for a 76-home subdivision at Gilbert and Katella avenues was approved by supervlsors.

Poar rumBER coMpA-Ny,

o new wholesale distribution yord loccted on Dock No. l, Porl Hueneme, Colif., is NOW READY to ofrer c new fype of DE LUXE, FAST SERVTCE to rhe REINI tUtlBER YARDS in ihis importont Zone of Infuence.

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Clay Brown, head of Brown Timber Co., was in southern California from Eureka to visit his offices here and confer with headman Carl Poynor, and also with Dean Jones, manager of Brownfs other property, Eureka Redwood Lumber Co.

Hac Collins, Twin-City Lumber Co. partner, returned to San Rafael Nov. 15 after two weeks in L. A. on business.

The Fairhurst Lumber Co. gang, including Chuck Noble, Bob Kilgore, Ernie Bacon, Jean McKee and Bert Hasselberg, spent an early November week in the Eureka region. All (except Jean, of course) found time to do the 9th Annual Stag of the Northwestern California Lumbermen,s Club Nov. 9.

Paul Hollenbeck of Lumber Service Co., Burbank, left Nov. 6 for Oklahoma, Kansas and Missouri to conduct several clinics for regional groups of the Southwestern Lumbermen's Assn., Kansas City. He will return early in December.

John Rhoda of Simpson Redwood Co., Arcata, spent two weeks in the southern states with Kent Merrill of Dallas, Simpson's southern representative.

R. E. Byard, Jr., Gillon Lumber Co., San Francisco, with Mrs. Byard and A. E. Vann, Trinity River Lumber Co. executive, and Mrs. Vann spent two weeks of October vacationing in lItah, Colorado, Arizona and Nevada.

Jim Mcleod, head of Mahogany Importing Co. in Los Angeles, is on the job again after recuperating from a major operation last month; he was away from his desk about five weeks.

Charlie Schmitt, manager of Atkins, Kroll & Company's lumber division, spent the week of November 12 in Los Angeles on business. He heads branches in Portland, L. A. and New York but makes his headquarters in San Francisco.

Bill MacBeath, who was injured in an automobile accident in October in San Jose, is back on the job in Berkeley at MacBeath Hardwood Co. Although he had a narrow escape and is still not breaking any records in any 100-yard dashes, Bill will soon be good as new, advises his father, K. E. MacBeath.

Roy Stanton, Jr., executive vice-president of E. J. Stanton & Son, Los Angeles, his wife Mitzi and the four children-Sheri, Janice, Jimmy and Lauri, left Nov. 2I aboard, the American President Lines "S. S. President Wilson,, on an 8-week Pacific cruise, stopping in Honolulu, Japan, Hong Kong and the Philippines on a business-and-pleasure trip. The young Stantons will enjoy the Thanksgiving, Christmas and New" Year's holidays "at sea," returning to SoCal in mid-January. While in the Orient, Roy will contact sources of supply for hardwood shipments to L. A. harbor during 1957. Inter-island trips will be made in the Philippines to visit mahogany mills at Cebu, Mindanao and Zamboanga.

P. O. Box | 183

PORT HUENEME, CATIFORNIA

HUnler 54225 HUnter 5-2635

Phil Kelry, Generol i/lonoger

Mack Giles and Art Bond, Drake's Bay Lumber Co. partners, spent an early November week in southern California on business for their firm's headquarters in San Rafael and distribution yard in Cloverdale.

Al Kelley of Kelley Enterprises, Alameda, spent the en<l of October enterprising in southern Oregon.