Costs of Production of Sawn Timber.

Progress, Volume XIV, Issue 2, 1 October 1918, Page 338

Costs of Production of Sawn Timber.

A Treatise on Pre-War and Present-Day Figures. By W. R. NANKERVIS (Messrs. Gamman *5? Co., Ohakune). How often of late have we heard discussions on the above subject? If a sawmiller takes his seat on the Main Trunk train anywhere from Auckland-Palmerston, he is likely to meet a fellow member of the South Auckland or Rangitikei Associations and in very many cases the main topic of discussion will be the ever-increasing cost of production. We hear such a lot of talk and protest as to the High prices timber has reached, and we admit the selling rates to-day are considerably in excess of lists ruling in pre-war days. Some people even go so far as to suggest that the Government should step in and fix prices and stop export altogether. In the belief that this agitation may some day result in action being taken, it behoves us to be prepared with facts and figures to prove that sawmilling is not such a gold mine as is oftimes suggested, and that the present selling price of timbers is justified. Also, it is very certain that not every sawmiller knows what his timber is costing to produce, and very often can only tell at the end of his half-year by taking his debits and basing a cost per hundred on his sales in super, feet. As one who has been interested in the industry during the past eight years or so, not as a practical man, but as the man behind the scenes, it has been a pleasurable task to devote a good deal of spare time (and overtime) to get down to facts, and endeavour to show to what extent costs have risen and to what extent we have been justified in raising prices. At the outset it should lx 1 pointed out that the figures have been taken from books and papers of a mill very favourably situated to mill sawn timber cheaply, not as cheaply perhaps as some, but certainly close to the top of the list in this regard. The system on which our costs are based is one used by a much larger concern than ours> and we believe that it is about as near perfect as can be got; but this point is open to argument. Basis. What is the basis of a cost account? It is the foundation, and the foundation is the DAILY or MONTHLY SAWN TALLY. Nothing is so important as this, for without a correct tally the other figures of our costs are useless. Not many mills, however, are able to get at this without having a man absolutely on the spot* doing nothing else but tallying the output. Where a mill rails each day’s cut away separately, the difficulty is overcome, but this happens in few instances. Nowadays, when men of any kind for a mill are very hard to get it is not possible to spare a tallyman for this work alone, so to get it we have to look for other ways of getting at our basis. In our case Ave had to take a

test, and we found that our mill skid tally of logs (Moor’s Measure; formula, “diameter of small end less 4in. for slabs, squared, multiplied by half the length and divided by 8”) taken on the breakingdown gave us equivalent to our sawn tally after deducting 5 per cent. Having satisfied ourselves on this point, we are able to proceed further, and now lake up our actual costs. Royalty. We hold that this is the first charge against the cost; in most cases this has to be paid before timber is removed. It is rather different to the profit and loss charges dealt with later and we have in recent years looked on royalty as a charge against our trading account. There is no need to go more fully into this matter except to point out that, whereas £7 to £lO per acre was the average value of mixed bush some 10 years ago, the cost to-day on Government valuation is £2O —just double. The cost of royalty per 100 will be based on the average yield per acre, and as the cost per acre is known this is easily calculated. I To he continued .l