"What Does the Future Hold Jot the Lumber Wholesaler?"

REPORT OF WESTER,N MANAGER, PAUL C. STEVENS

64Ih ANNUAI CONVENTION

NATIONAT.AMERICAN WHOtEIiAtE TUMBER ASSOCIATION

Voncouver, B.C., GclnodqJgng 20, 1956

This is the first time that a National-American annual meeting has been held in the Pacific Northwest. This, despite the fact that 2O/o of our members are located in British Columbia, Washington and Oregon. I feel confident that those of you who never have been out here in "God's country" before will long remember the magnificent scenery and the unmatched hospitality of 'our Canadian neighbors. Now that the ice has been broken, possibly some day . . in the not too distant future we can schedule an annual meeting in one of our Pacific Coast States.

Lumber production in the Pacific Northwest for the first quarter this year was approximately 4 billion feet. This is about 9/o und.er the same period last year. This drop in production can be accounted for by the exceptionally long, drawn-out winter that prevailed throughout most of the producing areas. Barring the unforeseert, production the balance of this year should about equal that of last year.

The mushroom growth of the plywood industry in the Pacific Northwest during the past few years has been phenomenal. For example, in 1945 some 40 Western softwood plants turned out a little over a billion square feet. By 1950, the number of plywood plants had grown to 77

Hardboard is another wood product that is experiencing phenomenal growth. While the production of hardboard in Western plants is not large-{O0 million square feet on 1/8" basis-it nevertheless is another item ,competing for the building dollar. And a couple of new plants are scheduled to start production this year.

On March l9th, the I.C.C. issued Service Order 91O designed to exclude slorv routings as well as circuitous routings. A couple of days prior to the efiective date of the order a large transit operator was successful in having a temporary restraining order issued by a federal court in Portland that delayed the effective date of the Service Order. The move was bicked by a group of substantial transit operators on the grounds that the Service Order discriminates against an established method of distribution.

Without going into all of the pros and cons of transiting, or taking a position for or against the transit method of distribution, I shall endeavor to give lou a brief summary of the arguments offered in opposition to and in support of Service Order 910.

Those opposed to the Service Order contend that during a car shortage a transit car, on an average, does not con- andproductionto2lbi||ionSquarefeetperyear.Last._o......o.....o...oo...oo..L\ vear there were 124 plvwood plants and thev turned out ancproGuctlontoZl/zD||I1onSquarereetperyear.Last._''!'!!''!!!'!'!'!L\ vear out nearly 5 billion square feet of softwood ply*^o-od' And the nearly 5 billion feet of plywood. end is not in sight, for I understand some 26 new plants i will come into production this year with a combined ca- pacity of.lfu billion square feet. :

The Douglas Fir plywood Association has done " i splendid ;oU in trade promotion and d,eveloping nerv i markets and uses for plywood. In te50 the per capita 3 plywoodconsumptionintheUnitedStateswasjust-: tent on home building and is vutnerable to shifts in ner,r, 3

Nevertheless' plvwood' like lumber' relies lr,1.t":*" ""- ! ,ort"a sume any more car days than the ordinary mixed-car mill shipment; that a transit car is usually loaded and on its way in one day, whereas a mixed-car mill shipment ofttimes takes three days; that the average transit car contains more lumber than a mixed-car mill shipment, therefore weighs more, so results in better car utilization; that the transit car is the most economical method of distribution in that it eliminates the necessity of either the mill or the retailer carrying a large inventory; that Service Order 910 will work an unwarranted hardship on a substantial number of mills . . . mills that are dependent on the transit market for their livelihood. Now, those are just a few of the arguments offered by opponents of the Service Order.

The position of those who favored Service Order 910 is that slow and circuitous routings not only constitute a willful delay oi cars en route, but are a violation of sound transportation policy; that deliberately delaying delivery of a'car is not only uneconomical, but deprives other shippers of the use of such cars; that a transit car unnecessarily delayed en route is in reality extending the privileges of free storage to a small segment of the industry at the expense of a large number of shippers. It is their further contention that the accumulation of transit cars at various diversion or hold points constitutes a constant threat to the orderly marketing of lumber; that if it were not for the transit car the market would be more stable and ultimately more profitable for the manufacturers and the retailers. These are just a few of the arguments offered by those who favor Service Order 910. fn other words, the transit car represents the rolling inventory for a large number of small and medium-size mills. And, as f mentioned last year, I believe the transit car also serves as the rolling inventory for a great many retail yards-retail yards that at today,s prices do not have sufficient capital to carry an adequate inventory.

It would be well at this time to point out that, despite the many arguments offered by both those for and against Service Order 910, there are remedies on which both sides agree wholeheartedly. They are: that the I.C.C. should compel the railroads to build more cars-at least as many as they retire; that'during a car shortage, cars should be switched on Saturdays and Sundays; further, that the Portland Gateway should be opened during a car shortage.

It is also important not to lose sight of the fact that elimination of a car shortage is in the best interests of all of us. The fireworks created by Service Order 910 should by no means prevent those for the Order and those against the Order from working together in an effort to find a solution to this perennial problem.

The transiting of cars has developed into a big business-estimated at around 80,000 cars a year; and I am of the opinion that it is a method of distribution that will always have to be reckoned with. The transit car is the stepchild of our expanded economy. It is the outcome of high costs and high prices.

During the post-war period, many mills came into the picture attratted by high lumber prices and an insatiable demand. Their production facilities are limited to the items normally transited and their financial resources are such that it is imperative that they sell as they cut. Or, to put it another way, a large majority of the mills catering to the transit market do not have sufficient sorting or storing facilities to separate for length, size and grade. Nor do a majority of them have sufficient capital to carry from 45 to 60 days' production.

I do not want to leave the impression that the small and medium-size mills are the only ones supplying lumber to the transit shipper. Many of the large mills find the transit operator a convenient and profitable outlet for their low-grade items. The transit shipper may be faced with restrictive transportation regulations with the result some

WKisbes Dou sn! Dours a frott ffiewy Gbrigtmss

PAUL GABOURY HANK VILAS GEORGE HARPOI.E

wholesalers who transit only a few cars a week may get out of the game. But the large transit wholesaler, due to the very nature of his business, will adjust his operation to meet transportation and market changes.

That is a brief picture of the transit game as I see it.

I have often been asked, "'What does the future hold for the lumber wholesaler?" For a business that thrives on catastrophes such as forest fires, shortage of logs, too much rain, too much snow, a car shortage, strikes, floods, vacations, etc., the future for the faint-hearted is not very bright.

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But, as I pointed out last year, research studies indicate a population increase during the next 2O years of approximately 36 million people. There are some who will say 20 years is a long time away. No, not for those concerns who recognize the need to plan for the future.

During the past few years we have been building from a million to 1,300,000 non-farm dwelling units a year. It is predicted that by 1975 we will be building in the neighborhood of 1,8CD,000 new homes a year. Add to this homebuilding program the stores, schools, churches and hospitals that will be needed to accommodate this increase in population and it is not difficult to envision a healthy lumber demand during the years ahead.

What does the future hold for the lumber wholesaler?

Well, with foresight and faith in the future and the ability to do a better job of selling for the mills than they can do for themselves, the future for the lumber wholesaler is as bright, if not brighter, than it has been at any time in the past.