Mr. HORTON. Just one. Mr. Smith, what is your competition? Mr. SMITH. The competition is the west coast, and your freight rate, and everything else that has been brought up by the other men. Mr. HORTON. Is much hardwood coming in from the west coast or Canada? Mr. SMITH. No, we do not have any hardwood in my area. I do not handle foreign woods, nor do I handle anything except hardwoods that are native to the area where I live, that grows here. Mr. STILWELL. Is your market primarily your own area, or do you ship out? Mr. SMITH. No, I ship into the North Carolina furniture trade, sometimes into New York, sometimes to Chicago, wherever I can realize the best profit, the best price. Mr. STILWELL. Thank you. Senator THURMOND. I think Mr. Horton felt maybe your problem might be a little bit different from the rest of them who testified. Mr. SMITH. No, it is to this extent: If the little mills I serve quit producing pine, then I will not have any hardwood to handle. Senator THURMOND. So that is the way it affects you? Mr. SMITH. That is right. Senator THURMOND. And the pine people are having a difficult time now? Mr. SMITH. That is right. Senator THURMOND. Mr. Wall I believe people from North Carolina said they lost money on pine the last 5 years. That means if they are losing money on pine they cannot keep on indefinitely in the pine business. If they go out of the pine business, you go out of business because you are interested in the hardwoods that go along with the pine business? Mr. SMITH. That is right, sir. Senator THURMOND. All right. Do you have any questions, Mr. Mason? Mr. MASON. No, thank you. Senator THURMOND. Thank you very much. Mr. SMITH. Thank you. Senator THURMOND. Is there someone else here now who would like to testify? Mr. SHIRLEY. Senator, I have a statement from Harvey Brown, executive director, Georgia Forestry Association. His wife had to undergo major surgery and he was unable to be here. He wanted to give you a copy of the statement for the record. Senator THURMOND. Have you read the statement? Senator THURMOND. Has he raised any new points? Mr. SHIRLEY. Mr. Cook and some of the others are members of the Georgia Forestry Association, and I believe, Mr. Senator, the points he raised have been covered. (The statement of Mr. Brown referred to follows:) STATEMENT OF HARVEY BROWN, EXECUTIVE SECRETARY OF GEORGIA FORESTRY ASSOCIATION The Georgia Forestry Association, on behalf of those who grow trees and manufacture lumber in our State, respectfully requests that the Congress of the United States impose necessary restrictions on the importation of foreign lumber and wood products into our country. Georgia, as one of the leading timber-producing States of our Nation, is continually finding it necessary to meet foreign competition which is being subsidized by our Government through tariff inequities, foreign aid giveaway programs, etc. Georgia and other southern lumbermen must pay more for Government-owned timber stumpage than in any other section of the country. Higher operating costs, high stumpage costs, and a declining domestic and export market have thinned the ranks of Georgia lumber producers from a high of 2,400 to a low of 527 in 1961. Since 1961, we have had even further decline in the number of operators. We have had to face the possibility of losing the present capital gains treatment on timber sales-the one thing that has made southern forestry progress possible and profitable. Inequitable freight rates have made other sections of the country keen competitors in our in-State markets for Georgia lumber. The profit squeeze from ever-increasing minimum wage legislation in Congress, higher stumpage costs, decreasing sales in unfair competition sanctioned by our national economy advisors, plus increased taxation, mounting production costs are forcing southern lumbermen out of business daily. This opens the door for more use of lumber substitutes of aluminum, steel, brick, concrete, and plastics. The present trend of raw materials in our forests is that we are growing more than we are using. Georgia's busy ports at Savannah and Brunswick were once great lumber export centers; not so today. Government-owned timber from Canada makes unfair competition for 197,000 local taxpaying forest landowners of Georgia. We have the largest group of soil bank participants in the country in forestry. The Government has paid these people to grow trees. Now that they are maturing into merchantable timber, our Government wants to take the domestic market away from these taxpayers and let foreign lumber enjoy the profits of sales, to the detriment of our own treegrowers. When the economy on our forestry home front becomes destitute, the Federal Government will place treegrowers on subsidies, controls, and charity. Free enterprise must not be stifled by big government. The last free vestige of agricultural economy in our country is being doomed by the necessity of having to meet unfair foreign competition from producers subsidized by their governments.. Textiles and steel have gone down under unjust foreign competition aided and abetted by our Federal Government. Lumber is the next one on the list apparently. We urge the following steps be immediately taken to protect our domestic lumber producers in general and our southern lumber producers in particular: 1. Foreign imports of lumber be drastically restricted under a quota system; 2. Equitable tariff boundaries for domestic lumber producers' protection: 3. All foreign lumber and wood products be marked as to country of origin and manufacture and be required to use standard grading procedures as required of domestic lumber producers by the American Lumber Standards Committee; 4. All tax-supported agencies of the Federal Government be required to use domestic lumber for their requirements; 5. No change be made in the present capital gains treatment of timber sales. We feel that all of these matters are pertinent to the continued future operation of lumber producers and treegrowers in Georgia and the South. Senator THURMOND. We are glad to have a representative of the U.S. Forest Service here. Do you care to have anything to say? Mr. WELCH. No, sir. Senator THURMOND. You are just observing? Mr. WELCH. Yes, sir. Senator THURMOND. Gentlemen, there are no other witnesses. Have we heard everybody who wants to testify here? (No response.) Senator THURMOND. I want to say we are glad to be here, and we hope this hearing will bring some beneficial results. Quite a number of valuable points have been mentioned here, most of which were mentioned yesterday also, in Columbia, but there have been a few mentioned here today that were not brought out yesterday. We feel there is a serious problem now confronting the lumber people, and we hope that something can be done by the Congress to be of assistance. Off the record. (Discussion off the record.) Senator THURMOND. Does anybody have anything further? Mr. SHIRLEY. I would just like to say one additional word. I have talked to many of our lumbermen in the State of Georgia. Saturday is a bad day for them to get off, for most of the lumbermen. The number of those here does not indicate by any means the real interest they share in this problem. They are really concerned. Senator THURMOND. It appears you have a sizable number here today who are representative of the lumber people. Mr. SHIRLEY. Yes, sir. Senator THURMOND. I presume you feel that what has been brought out here today is typical of the problems existing and prevalent in this State? Is that correct? Mr. SHIRLEY. Yes, sir. Mr. HANNON. I could have brought several men from Tallahasse, but we have our office force cut down so that they just could not afford to get away. We are clerks ourselves. And they even wanted me to state that. Senator THURMOND. I want to ask you this now: Do you visualize any problems in Florida other than those that have been brought out here today, or do you think the points that have been brought out here would apply to the Florida situation? Mr. HANNON. I do not have any readymade answer, but I just have been thinking. If we could get rid of this lumber that is coming in from way off, Alabama, Georgia, and Florida would have a market for years in Florida. We could not furnish the lumber. We have a tremendous market in Florida. 10 Senator THURMOND. That goes back to the imports from Canada, I presume, or the lumber from the west coast. Mr. HANNON. We have a tremendous market, except it is being spoiled by stuff that is being produced that has a better advantage than we have. Senator THURMOND. All right. Does anybody else have anything to say? Mr. GORDON. Senator Thurmond, before we adjourn, I am sure I am speaking for all of us in expressing appreciation and gratitude of the manufacturers for your untiring efforts in our behalf. I am going to move these gentlemen all rise and give you applause of appreciation. [Standing ovation.] Senator THURMOND. Thank you very much, gentlemen, for your generous applause. I want to thank you for your presence here. I am vitally interested in this problem. I know how it affects you. I know how it affects the people like you in my State and the other Southern States. We are hopeful that some action can be taken that will benefit you. (Whereupon, at 11:58 a.m., the committee recessed, to reconvene in Shreveport, La., Saturday, May 4, 1963.) (The following letters were submitted for the record:) SWAN LUMBER CO., Lafayette, Ala., May 9, 1963. Senator STROM THURMOND, DEAR SENATOR THURMOND: I regret that I was prevented by illness from attending the hearing on the problems of the lumber industry in Atlanta, April 27. I want to take this opportunity to express my appreciation for your interest, advice, and efforts in behalf of our industry. In reviewing the reports of testimony given at the Columbia and Atlanta hearings, I failed to note that anyone brought out the additional advantages enjoyed by the Canadian lumber exporters given them by the managed-dollar policy of their government. It is our understanding that this policy gives Canadian lumber producers about an 8-percent price advantage over American producers, in addition to stumpage, freight, and other advantages. As an example of what is happening so rapidly to the pine lumber industry in the Southeast, our company, the Swan Lumber Co. of LaFayette, Ala., within 3 years, has: Suffered a decline in selling price of 10.26 percent. Been forced to absorb a portion of freight charges on pulpwood chips amounting to $1.73 per thousand board feet of lumber produced. Been forced, by law, to increase our hourly wage rate from $1.11 to $1.23, or 10.8 percent. The total of these amounts to a decrease in net income of more than $11 per thousand feet within a 3-year period. It is evident that this situation must be changed if we are to continue to operate and furnish employment to more than 100 persons. I hope that this letter will arrive in time to be included in the minutes of your hearings. With kind regards, I am, Very truly yours, S. P. MCDONALD, Jr. REYNOLDS & MANLEY LUMBER CO., Hon. STROM THURMOND, New Senate Office Building, DEAR MR. THURMOND: I regret very much being unable to attend and testify before the Senate Commerce Committee on the problems of the southern lumber industry in Atlanta on Saturday, April 27, due to illness. I am president of the Reynolds & Manley Lumber Co., Savannah, Ga. My company has been in continuous operation at Savannah since 1925. I am also president of the Southeastern Lumber Manufacturers Association, headquartered in Atlanta, Ga.; however, the facts brought out below pertain to my mill operation and experience. In talking with different manufacturers over all the southeastern territory, it is my conservative estimate that 90 percent of southern yellow pine mills have been operating for the past 3 years at or very near a loss, if they are depleting their stumpage on the basis of present-day markets. That has been our experience, and I am fairly sure that our estimate of 90 percent or more is comparatively accurate. Our company has shown a loss for the past 3 years for the first time since the 1929 depression. We honestly believe our loss for the past 3 years has been due to the increasing importation of Canadian softwood lumber, which is practically duty free at the present time, and the discriminatory rail freight rates enjoyed by the lumber shippers in the West and particularly in the Pacific Northwest to the east and South. In addition to these low transcontinental rail freight rates applying on lumber, they also are applicable to construction plywood, which has greatly depressed our markets for sheathing lumber. Construction plywood now dominates the sheathing market, which leaves the southern pine mills with a greatly depressed market for its board production. As far as our lumber markets in the official territory are concerned, we have had a good volume of business to date, for we can ship into the eastern edge of official territory by Seatrain Lines, Inc., from Savannah to Edgewater, N.J. This is due to the fact that Seatrain rates are based on heavily loaded boxcars using rates which average one-third less than present rail or truck rates. That is the only way we can ship anything into the official territory, with the exception of some special items which cannot be produced by the west coast or Canadian mills. Seatrain Lines has announced discontinuance of their Savannah, Ga.-Edgewater, N.J., service with last sailing on May 17, 1963. With the discontinuance of this service, we will likely lose most of the construction lumber and timbers we are now shipping into the Edgewater and surrounding areas, including New England destinations. To prove our point, our present Seatrain rate from Savannah to Edgewater, N.J., is 29 cents, and from Edgewater, N.J. to New York City, via rail, our rate is 17 cents. This constitutes a total rate from Savannah to New York City of 46 cents as compared with through-rail rate from Savannah to New York City of 80 cents. After discontinuance of Seatrain service on May 17, our transportation costs on dressed dry boards will increase $7 per thousand board feet, and on rough green planking and timbers, the increase will amount to approximately $15 to $17 per thousand board feet. Without Seatrain service, we will be unable to compete with Canadian and west coast lumber without a further loss to our mill. We cannot continue to survive in such a strongly competitive market. As an individual mill operator, I strongly urge that your committee take whatever action you deem advisable to afford us an equal competitive level with Canadian softwood lumber shippers, the west coast shippers of lumber and plywood, on highly discriminatory rail rates, discontinuance of further minimum wage legislation, equal but fair lumber standards, and positively no change in the present capital gains tax structure on timber. As president of the Southeastern Lumber Manufacturers Association, I am exposed to a lot of the problems arising, and, speaking in behalf of that association's entire membership, we thank you for conducting these hearings, and we are confident that you and your committee will be forthcoming with recommendations and legislation which will ease our burden. Sincerely yours, H. L. MANLEY. |