STATEMENT OF ROLLIN PRATT, ROLLIN LUMBER CO.,
CLACKAMAS, OREG.

Mr. PRATT. I have a prepared statement.

I am Rollin Pratt, representing Rollin Lumber Co., established in 1948, and Alford Logging Co., established in 1959, corporations conducting business in Clackamas County, Oreg.

In 1964 we employed 80 men in our operation with a gross payroll of $614,000, with company-paid and withheld payroll taxes totaling $133,000.

Senator MORSE. May I interrupt, Mr. Pratt? Do you have extra copies of your statement?

Mr. PRATT. I don't. For 1967 the employees numbered 96, and the gross payroll was $780,000, with company-paid and withheld payroll taxes totaling $210,000.

In 1964 we contracted for 4611⁄2 million feet of logs for our various operators, 7.8 million was used in our mill and 96 percent of the balance was used by mills in the area.

In 1967 we contracted to log 48 million feet of logs for various operators using 9.2 million and a large percentage of the balance was exported.

For the year ending June 30, 1964, our average log cost, all species, was $58.16 per thousand. For the period ending June 30, 1967, the average log cost was $69.62 per thousand, all species, an increase of $11.46 per thousand. At the end of 6 months this year, the log cost was $85.98 per thousand, all species, an increase of $16.36 per thousand in the 6 months, for an overall raise of $27.82 per thousand. During this same period we reduced our manufacturing and overhead costs by $7 per thousand through the installation of additional machinery.

Ninety-eight percent of the raw material is now utilized in our plant with 100 percent expected in 1968. Further reduction of manufacturing costs cannot be achieved in this direction.

The sales price of stumpage during 1967 was so inflated due to the pressure of export buyers that we were unable to secure the necessary stumpage to assure us uninterrupted production in 1969. At present our supply of stumpage will be depleted during September of this year.

It is my conviction that the export of logs from public land should be reduced to the average of 1965 export figures until the time that such footage is not needed for primary manufacture by Northwest mills.

In my estimate, this is the only way prices for logs can be reduced so that the finished product can compete on the markets of the world. Speaking strictly for Rollin Lumber Co., if exports are not curtailed immediately, we will be forced upon completion of our present Forest Service contracts to follow the other mills that have ceased operations. We are completely dependent upon federally owned timber, and therefore are entirely at the mercy of the U.S. Government.

Senator MORSE. Senator Hatfield.

Senator HATFIELD. Thank you, Mr. Chairman, Mr. Pratt, how long-I am sorry, the first part of your testimony I had difficulty in hearing did you tell us how old your operation is?

Mr. PRATT. The Rollin Lumber Co. was established in 1948, 20 years.

Senator HATFIELD. 20 years. And have you been dependent upon Federal source for your log supply for all 20 years?

Mr. PRATT. No, sir. For about the last 12 years.

Senator HATFIELD. Where did you get your log supply before? Mr. PRATT. In the lowland second growth. It has since been depleted.

Senator HATFIELD. In this 12-year period where you have been dependent upon the Federal Government, what has been the situation, say in the first part of that 12-year period as compared to this part? Mr. PRATT. There is a lot of difference.

Senator HATFIELD. Pricewise you are speaking now?

Mr. PRATT. Yes, pricewise.

Senator HATFIELD. In other words, you were in a field where you could compete before in the first part of the 12-year span and it is different now with the Japanese development?

Mr. PRATT. Very much so.

Senator HATFIELD. Would you call your plant today a plant that is modern with a low degree of obsolescence?

Mr. PRATT. We completely rebuilt in 1962.

Senator HATFIELD. So that it could not be blamed, your operational difficulties could not be blamed on obsolescence?

Mr. PRATT. Not at the present time.

Senator HATFIELD. Would you care to comment on how you have been able to survive even this long as it relates to the lack of survival by many of your colleagues in the industry?

Mr. PRATT. Well, it gets to the point of how deep your sock is. We have sustained very great losses, as small as we are, in the last 3 years. With a good market right today, we are doing all right, but we can't replace the stumpage that we have used. Last year we didn't buy anything.

Senator HATFIELD. Would you say with the good market which you have experienced today, if this market continued, say, that you now have, would this remove the problem as far as it relates to Japanese log exports?

Mr. PRATT. No, sir; it wouldn't.

Senator HATFIELD. What would be the impact of Japanese log exports under its present trend, even though we have a continued good market that you now at the moment have?

Mr. PRATT. Well, as I stated, our timber that we have under contract will be depleted by approximately September of this year. We have been unable to buy anything. They are not beating us just a little bit. They are beating us where we can't even come in.

Senator HATFIELD. In other words, you really are on a reserve now and a resource that you contracted some time back so that when this is out then you face the question of your survival. It is not a question of whether the market is good or hard or soft or whatever other word you want to use to describe the market. You are just going to face the question of survival, aren't you?

Mr. PRATT. Right.

Senator HATFIELD. So for those who say that the lumber market is good today, therefore there is no problem, they just don't really comprehend the basic problem we face, do they?

Mr. PRATT. That is correct.

Senator HATFIELD. And you have heard that I suppose by some outside in the field in lumber economics?

Mr. PRATT. Many times.

Senator HATFIELD. The lack of knowledge that they exhibit by this kind of statement. I know I get many comments made to me "Why should we be concerned now? The lumber market is good. The homebuilding construction industry is on the rise. Therefore your problem has disappeared. You lumber people out there no longer have reason to cry about this," and so forth. These are comments that I have faced, and they are wrong, aren't they?

Mr. PRATT. They don't understand the problem.

Senator HATFIELD. Because you do face that very basic question of survival even now with the so-called good market which could be better, but relatively speaking a good market, you still face the question of survival when this resource that you now are using is depleted? Mr. PRATT. That is correct.

Senator MORSE. Congressman Clausen.

Representative CLAUSEN. Mr. Pratt, how many people are employed in your organization?

Mr. PRATT. We have in the logging and the sawmill, 80.

Representative CLAUSEN. 80.

Mr. PRATT. I beg your pardon, 96 as of right now. It is seasonal in the logging.

Representative CLAUSEN. How many organizations like your own in the Pacific Northwest would you say are similarly affected, would be in the same category that you are?

Mr. PRATT. I think we are all in that category, all of the operators that are completely dependent upon federally owned timber.

Representative CLAUSEN. And approximately how many mills would this be and what number of employees, would you have any idea?

Mr. PRATT. No, I have no idea.

Representative CLAUSEN. Just approximately.

Mr. PRATT. No, I don't.

Representative CLAUSEN. Thank you.

Senator MORSE. Mr. Pratt, you have given us unequivocal testimony as to what you think the cause and effect relationship is between the purchase of logs by the Japanese and the resulting effect upon your mill. So I want to talk about it for a moment.

If I had to write an examination on your testimony, I would write that Mr. Pratt said in effect that the purchase of logs in his area by the Japanese has so upped the log prices that if it continues unabated, the probabilities are you are going to have to go out of business. Is that a fair statement?

Mr. PRATT. That is an understatement.

Senator MORSE. Suppose, during this period of time in which you have been confronted with the Japanese competition in log purchases, there had been no purchase of logs by Japan at all. Is it your testimony that the price of the logs that you then would have paid would have been substantially less than what you have been paying, and your mill with cheaper logs would be in much less danger of going into the red than at the present time?

Mr. PRATT. That is very correct.

Senator MORSE. You know, it is argued by some in the administration and out of the administration that the Japanese bidding on logs has not substantially increased the price of the logs. These people say that if they were not in there bidding, our own lumber companies, large and small, would still be bidding the logs up to a price that makes it unprofitable for some of the smaller mills and others mills for that matter, to stay in business. What is your reaction to that argument?

Mr. PRATT. Well, to a certain extent, yes. We have a lid, though, on the price that we can charge for lumber in the United States. that is put there by the Canadians in a sense, and we would have to compete with them, but are competing against the neighbor who has the same problem. This isn't so with the Japanese.

Senator MORSE. Therefore, when they come down into our State and start bidding against you in these log sales, they push the price up in your opinion much higher than competing domestic companies would push them up against you.

Mr. PRATT. Unless they have timber of their own to lower the average cost, yes.

Senator MORSE. You advocated a ceiling of the amount of sales in 1965. Other witnesses have been using the figure of 1966 which is 350 million board feet from Federal lands. Do you consider the 1966 figure unacceptable?

Mr. PRATT. No, not necessarily. I was trying to get it as low as I could.

Senator MORSE. 1965 is lower.

Mr. PRATT. Yes.

Senator MORSE. Could you supply the 1965 figure?

Mr. PRATT. I do not know the exact figure.

Senator MORSE. 300, I think. We will put the exact figure in.

(The information referred to follows:)

Exports of round logs from public lands in 1965 were approximately 275' million board feet (log scale).

Senator MORSE. You heard the testimony today from witnesses that believe the Forest Service and the BLM possess the legal power under existing law, to impose restrictions upon the exportation of logs to Japan. This line of thinking runs that if they did so, it would be of help in meeting an immediate emergency pending possible negotiations with Japan for some kind of a long-range trade understanding as to the Japanese imports of American logs and lumber. Do you think they have those powers, and if they exercised them do you feel that it would bring some economic relief to your specific mill? Mr. PRATT. Yes: I do.

Senator MORSE. Are there further questions?

Thank you very much.

Our last witness will be Mr. Glen Park, Lumber Co., Estacada, Oreg.

Mr. Park, as I said to Mr. Pratt, I am very glad to have you as a witness. In behalf of the committee I want to thank you for your patience in waiting until this late hour. On each day we are going to try to cover the witness list if it is at all possible to do so. Then, of course, I have a group of constituents here such as yourself, and it is a good thing for them to learn about the working conditions back here.

A hearing of this length is not an exception, particularly with this chairman and Senator Hatfield. We believe in trying to cover our committee agenda each day if it is possible. Some days it can't be done. We may be running behind before we get through with this hearing, but due to the patience of our witnesses, we will be able to cover all the appearances scheduled for today. I want you to be sure to take your time however. You represent another one of our smaller mills that is so important to this committee and want very much to get your point of view into this record. So you may proceed in your own way.

STATEMENT OF GLEN PARK, PARK LUMBER CO., ESTACADA, OREG.

Mr. PARK. Thank you.

Mr. Chairman, my name is Glen Park. I operate Park Lumber Co. at Estacada, Oreg.

Our annual production is about 45 million feet of lumber, of which about 75 percent is fir, about 25 percent hemlock, or it has been up until the last 2 years. It has been slightly curtailed by Japan, especially on hemlock.

Our payroll last year was $1,338,000.

I may be bragging a little, but I have one of the most modern mills in the United States today. We save 100 percent of all logs, the bark, the chips, the sawdust, the planner shavings.

We own all of our own lumber trucks, all of our own chip trucks, enough logging equipment to log all that the logs that I wanted to. However, sometimes it is preferable to contract some of it out. They can do it cheaper than I can.

We have been in business since 1946 in September and we are still in business. For how long, I don't know. As many operators have told you, the going is getting pretty tough.

This year, 1967, for the first 6 months of this year I lost about $50,000. I am not terribly concerned about that, but I am concerned. about the future. However, due to the rise in the lumber market in the last 4 months, as you know, lumber is always feast or famine, we have probably picked that up, so up to date we may have broken even. But I can truthfully tell you when it gets to a break-even point for us, I am not trying to brag, it is going to be plenty tough for a lot of mills, and there is a question even in my mind whether we can stay with it.

I think there are a few points that haven't been brought up, and I am not too smart either. We will say, just take 100 million feet of timber, for instance, that is going to come up. Out of that proportion, maybe 40 million feet of hemlock. At today's market you can't compete with it. The Japs will buy it whether you like it or whether you don't. They will blow another 5, another 10, another 15. We don't know where they will stop. So that 100 million was manufactured, we will say, by four mills. You take the 40 million out of the 100, there is not enough left. Somebody has to quit, either us or Japan. I guess that is what we are here for. I guess that is about all I have to say. Senator MORSE. What you are saying, Mr. Park, 100 million feet go out and when it comes to the hemlock, the Japanese will simply pay whatever they have to pay to get it.