The CHAIRMAN. Very well, you may proceed. Mr. HILTON. Mr. Chairman and members of the committee, my name is Edmund W. Hilton, Jr. I am traffic manager of the American Plywood Association, whose member mills produce about 90 percent of the Nation's softwood plywood. This year they will produce about 12.7 billion square feet. I have submitted a detailed report of about 15 pages supporting my industry's reasons for favoring H.R. 7165 and related legislation. Rather than read that statement now I will confine my remarks to the general transportation situation and try to provide a picture of what it means to my industry. At this time I would like the 15-page statement to be made a part of the record. Yes, the one you have in your hand. I don't want to read all this but I want it in the record. The CHAIRMAN. It may be included in the record. Do you also want to include the membership roster with it? Mr. HILTON. All of it, sir, all the enclosures. The CHAIRMAN. You have in connection with it, I notice, certain information that includes-it looks like labels and so forth. that would be a little difficult to put in the record. I think Mr. HILTON. You are referring to that which is part of the membership record. That is just the way we print it. It doesn't have to be part of the record. The CHAIRMAN. I think it would be better to just let the membership roster become part of the record and the backside of it I don't think would necessarily add to the record. Mr. HILTON. No, sir; it would not. The CHAIRMAN. Now there is an advisory committee list, it will go in the record. Mr. HILTON. Thank you. The CHAIRMAN. There is a table on the production of plywood by STATES. Mr. HILTON. That is rather meaningful. The CHAIRMAN. That is not only States in the West. I don't see my State of Arkansas. Mr. HILTON. Yes, sir; in the lower right-hand corner. The CHAIRMAN. I guess we are not looking at the same thing. The CHAIRMAN. Oh, southern plywood will be included in that? The CHAIRMAN. It will be included in the record. And you have two maps we will do the best we can. I think probably both of these can be printed in the record. However, I am not sure that the first one, where there are so many locations by designations, that it will be plain enough to discern what it will be after the record is printed, but we will do the best we can. (Statement and attachments referred to follow:) STATEMENT BY EDMUND W. HILTON, JR., TRAFFIC MANAGER OF AMERICAN PLYWOOD ASSOCIATION Mr. Chairman and members of the committee, my name is Edmund W. Hilton, Jr. I am traffic manager of the American Plywood Association, which has its headquarters in Tacoma, Wash. My background includes 6 years of employment by the Union Pacific, and 13 years with the association. The American Plywood Association is composed of some 95 firms which operate about 160 plants in the Western and Southern States, and which represent in their total production almost 90 percent of the softwood plywood produced in the United States. The principal activities of the association, which is the largest, in terms of budget, of all those in the forest products field, are promotion, quality control and research. As our research has developed new uses for plywood, and broadened our markets, it also has made possible the utilization of new stands of raw material. This has made our industry the fastest growing of all those in the country, according to Federal Reserve Board figures, and has made it possible for our industry to broaden both its producing and consuming areas, geographically. Because of the remote location of our production units, both from urban centers and from our markets, we rely heavily on rail transportation for both our raw material and our transport to market. I am here today to add the support of my industry to House bill H. R. 7165 and related bills, and to explain why the plywood industry feels that passage of these bills is necessary for continued healthy growth of the industry. This statement is presented as the unanimous view of the association's traffic committee, made up of representatives of companies with factories in the States of Washington, Idaho, California, Oregon, Montana, Texas, and Arkansas. During this year, we expect to represent new mills now being built, as the result of technological advances, in the States of Virginia, North Carolina, South Carolina, Mississippi, Louisiana, Alabama, Georgia, and Florida. The distinguished members of this committee are well aware of the general situation in regard to car supply. In a nutshell, there simply are not enough cars, in gross terms, to satisfy the demands of shippers. The shortage is particularly acute when the shipper is located in a relatively remote area, and when his needs are for a special type of car, and a type of car that also has considerable utility to other shippers. In the State of Oregon, for instance, four cars are loaded for every car that is unloaded. Oregon originates four times as much traffic as it receives. So plants in Oregon must be supplied with cars that have to be returned empty, but which are often shunted to shippers in other States long before they complete their westward journey. The needs of our industry are for wide-door and double-door boxcars. Just any car will not do. This is because of the size of plywood-normally panels 4 by 8 feet or longer-and because of its weight, which requires mechanical loading, usually by forklift truck. Some panel sizes are impossible to squeeze through a 6-foot door, so orders for such products must either be turned down or back ordered, much to the disgust of both the customer and the plant. In addition to the related problems of a shortage in gross terms and a net shortage of usable cars, we have a third problem for which we are to blame, but for which we hesitate to apologize. Our industry grows at an annual rate of about 14 percent. The boxcar supply, in total, declines at a rate of about 3 percent per year, so we are faced with the problem of trying to put 14 percent more plywood into 3 percent fewer cars, every year. We have tried to take advantage of every solution we felt was open to us. We have worked closely with the roads that serve our industry, anticipating our needs as best we could, and exchanging information useful to us both. We have even conducted research on shipping in our own laboratories. The roads have responded by building a substantial number of new cars, and remodeling a substantial number of old ones, to fit our needs. We have nothing but compliments for their policies. However, once in service, these cars disappear eastward, where they are hoarded by other lines that can easily afford the unrealistic per diem rates now in effect. Our lines are in the frustrating position of building cars for everyone, and then watching their own customers suffer. Because of our distribution pattern, to all of the 50 States, we are continually approached by all of the country's lines for business. But only our local lines express any concern over our car shortage. The Association of American Railroads has asked us to be patient while it worked out the problem with service orders and per diem rates of its own. We have been patient, and we have hesitated in the past to ask for direct relief through the Government. But the plain facts are that the AAR has been completely ineffectual. The car supply still dwindles, and cars built for us by our lines are still grabbed off by the same railroads that refuse to endorse a solution by the shipping industry. We have tried in every possible way to stretch the supply of cars. Average weight per car has increased since 1961 from 62,256 to 84,059 pounds in February 1965. And now the figure is nearly 90,000 pounds per car which is the point of no return. In other words, we simply cannot load any more plywood panels in cars. This has increased the revenue to the railroads, but has not increased the supply of cars. The Interstate Commerce Commission has been amazingly generous in its preferential efforts on our behalf. We have received car orders and special service orders many times, and these orders have alleviated our problems temporarily. But they eventually expire. In addition, we feel we cannot any longer ask for this special treatment, even though the cars were built by western roads for western shippers. It is simply impossible to issue effective service orders until more cars are available, or until it becomes uneconomic for a road to use others' cars. The ICC is in the position of stretching a shorter and shorter sheet over a longer and longer bed. The effect on our industry has been to produce a state of constant crisis. Our car shortages vary in intensity, but they are always with us. It is not just the producer who is affected. chain is involved. Our whole nationwide distribution In 1950 the average home required only about 500 square feet of plywood. Today, because of advances in technology in our industry and in homebuilding, the average house uses six times as much plywood-about 2,900 square feet. When we cannot ship, the builder cannot build with plywood. He is forced to wait or switch to other materials. If we must ship in cars that are more expensive to load and unload, the builder, and the person who buys his house, must pay more. There are four areas in which the chronic shortage of cars affects our industry when the shortage becomes more aggravated than usual. First, it naturally involves the rate of shipments. When we produce more than we can ship, storage space fills up very rapidly, because of plywood's bulk. Then we get the second effect, on production. There is no point in my going into all the economics of plywood manufacture, but it is obvious, in any industrial plant, that production must be close to capacity or the per-unit cost becomes unrealistically high. When plants are forced to curtail beacuse of the car shortage, their costs are forced upward. The undependable character of the car supply situation has caused the plans for one plywood plant to be canceled and plans for another to be indefinitely postponed, in the State of Washington alone in the last year. The third effect is the threat or reality of shutdowns. In the last year, mills in each of the five producing States in the West have been shut down, for varying periods, because of car shortages. When production is simply curtailed, it usually is possible to keep men working. But when shipping must cease entirely, there is nothing left but to close a mill, with the resulting loss in employment. Since most plywood plants, and the logging operations that sustain them, are located in small communities, any widespread unemployment tends to have a severe effect. In just the States of Washington, Oregon, and California. there are 118 small towns almost totally dependent on plywood payrolls and 209 others supported by logging operations for plywood producers. A map attached as an exhibit to my testimony illustrates this point. These three problems occur when we cannot get cars of any kind. We have heard the argument that our industry would have plenty of cars if it would simply use the older boxcars with 6-foot doors. Many of them are available, when the shortage affects only wide-door and double-door equipment. Today we can't even get single door boxcars--they are simply unavailable in enough quantity to meet our demands. We do use them, because we have no choice. But we cannot use many of them. Results of a study conducted by the association in February 1965, on the pattern experienced by 50 representative mills showed that, on the average, mills are receiving only 50 to 60 percent of the wide- and double-door cars that are ordered. The percentage varies from plants located at points where two or more roads compete for business, where close to 100 percent of wide-door cars are supplied, to plants captive on a branch line of a single railroad. These more isolated plants receive about 25 percent of the type of car they order. The net result is to either reduce the profit of the manufacturer or eliminate it entirely, or to increase the price to the distributor and, ultimately, to the consumer. The average cost of loading a thousand square feet of plywood (%-inch basis) into a car with a door 9 feet wide or wider is 54 cents; loading through an 8-foot single door sends the average cost up 16 cents per thousand; a 6-foot door increases the cost 31 cents per thousand, to 85 cents. In other words, since the average car contains about 80,000 square feet (%-inch basis) when it leaves the mill, it costs an additional $13 to load through an 8-foot door, and $25 to load through a 6-foot door. However, the averages don't paint a true picture. The increase in costs for a 6-foot door vary from $5 to $45, depending on the facilities available to the loading crew. Since it is the larger plants that are best equipped, the smaller plants, which also are less attractive as freight customers than the larger producers, are penalized disproportionately. The buyer of a car of plywood has an even worse problem. The unloading cost penalty, when the shipper must take a car with a 6-foot door, ranges from $15 per car to $190. At the customer end, the unloading costs for single doors are greater than the mill costs of loading because specialized equipment and skills, developed in largevolume shipping departments, enable the mills to reduce their costs. Obviously, this is not possible for the average lumber dealer or other consignee. Often, these extra costs are levied against the mill, in the form of deductions from his invoice. In other cases, shipments are quoted on the basis of the available car supply. Sheathing, for instance, is quoted at a price generally $2 per thousand below the normal rate for shipments to be made in cars with 6-foot doors. This amounts to about $150 per car in lost revenue to the plant. In an admittedly extreme example, where a plant might face the maximum loading cost ($45 extra) and the maximum chargeback ($190), the total extra cost to the shipper would be about 5 percent of the total value of the shipment, or more than twice as much as the profit the producer could expect from the whole transaction. Few plants can make a profit of 2 percent on half their shipments and take a loss of 3 percent on the other half, which is a very real-though theoretical-possibility. I am using the most extreme example I can, and still make use of the figures that we are dealing with today. However, the figures are correct, and it is not unreasonable to expect that today's fear can become tomorrow's reality. We feel that we have done all we can. We have waited for the railroads to develop their own solution. We have loaded cars to their absolute capacity. We feel that the ICC has done all it can, and we feel that the Congress has been most understanding in holding back on regulating this problem, in answer to protests against regulation from the railroads. But we feel now that we may have waited too long. Our industry is currently in the grip of a severe boxcar shortage that has been with us for more than 6 months. There is no relief in sight, and we can see no alternative to action by the Congress. We are working with water shipping lines and with trucking firms to try to come up with alternatives to rail transportation, and we feel that we will enjoy some success. But we presently ship 90 percent of our production by rail, and I am sure that the percentage will remain the same for the foreseeable future. In the last month, we have had at least two complete shutdowns of mills because of a boxcar shortage, and we have had many production cutbacks. Even so, as an industry, we are producing more plywood than we can ship almost every week. We need more boxcars. We strongly feel that House bill H. R. 7165 and related bills, offers the best available solution to providing a permanent and equitable solution to the boxcar shortage. It would provide for a fair rental to owning lines, and would not unduly penalize lines that use cars they have not built. The However, the penalty would be substantial enough to discourage the hoarding of boxcars and, conversely, would encourage the construction of new cars. net effect would be more cars, for us and for all shippers. In closing, I wish to express the sincere appreciation of my industry to this committee for having given us the opportunity to be heard, and for past efforts by members of this committee, especially to the chairman, in finding ways for us to obtain cars during the periods of worst shortage. Thank you, Mr. Chairman. AMERICAN PLYWOOD ASSOCIATION MEMBERSHIP ROSTER, OCTOBER 1965 Agnew Plywood, Grants Pass, Oreg.; sales manager, Larry St. Onge. American Forest Products Corp., Amador-Calaveras Division, Martell, Calif.; general manager, John T. Rushton; sales, Tarter, Webster & Johnson, Stockton, Calif. Anacortes Veneer, Inc., Anacortes, Wash.; general manager, John H. Martinson; sales manager, Thomas Martin. Angelina Plywood Co., Keltys, Tex.; president, E. L. Kurth, Jr.; general manager, K. Hoseid. Astoria Plywood Corp., Astoria, Oreg.; general manager, Elmer Brown. Bate Plywood Co., Inc., Merlin, Oreg.; president, John L. Bate; western sales, R. A. Reyneke. Bingen Plywood Co., Bingen, Wash.; manager, W. E. Stevenson; sales manager, Glenn Lee. Bohemia Lumber Co., Inc., Culp Creek, Oreg.; president, L. L. Stewart; sales manager, S. E. Pittman. Boise Cascade Corp., Boise, Idaho; general sales manager, lumber and plywood, E. A. Stamm; Portland; vice president, Timber & Wood Products Division, S. B. Moser, Yakima, Wash.; vice president, Eastern Timber Division, George V. Hjort, Boise; plants: Valsetz, Elgin, and Independence, Oreg.; Yakima, Wash.; Payette, Idaho. Brand-S Plywood Corp., Albany, Oreg.; production manager, Fred Darby. Brookings Plywood Corp., Brookings, Öreg.; president, E. Ř. Ólson; vice president, Neil J. Martin; general manager, Donald G. Baxter. Buffelen Woodworking Co., Tacoma, Wash.; president, R. C. Fuhrman; general manager, Peter DeFotis. Cabax Mills, Plywood Division, Eugene, Oreg.; president, Donald R. Barker; sales manager, Mrs. Mildred Malsen. Camac Veneer, Inc., Eugene, Oreg.; president, L. C. Nelson. Carlson Hardwoods, Sonoma, Calif.; owner, R. O. Carlson. Centralia Plywood, Inc., Centralia, Wash.; general manager, John Waters; sales manager, Ted Kline. Cloverdale Plywood Co., Cloverdale, Calif.; general manager, Richard Ranft. Coos Head Timber Co., Coos Bay, Oreg.; president, F. Willis Smith; sales manager, H. A. Page. Crown Zellerbach Corp., Northwest Lumber and Plywood Division, St. Helens, Oreg.; general manager, W. E. Koch, Jr. (Portland); sales manager, D.H. Pinkerton; plant: St. Helens, Oreg. DL Veneer & Plywood Co., McMinnville, Oreg.; president and general manager, Lowell Sexton. A. DeWeese Lumber Co., Inc., Philadelphia, Miss.; president, Tom DeWeese; general manager, Richard C. Allen; sales manager, Hugh Thomasson. Drain Plywood Co., Drain, Oreg.; general manager, Harold Woolley; plant manager, Alvin Fields. Dwyer Lumber & Plywood Co., Division of Publishers' Paper Co., Portland, Oreg.; general manager, Thomas L. Bentley; general sales manager, William McCoy. Elma Plywood Corp., Elma, Wash.; president, Lester O. Thompson; general manager and sales manager, Henry Hoffman. Evans Products Co., Building Materials Division, Portland, Oreg.; vice president and general manager, G. P. Oldham; director of sales, Clark Johnson; plants: Roseburg, Oreg.; Hoquiam and Aberdeen, Wash. Everett Plywood Corp., Everett, Wash.; general manager, Charles A. Merchant; sales manager, Donald Van. Farwest Plywood Co., Tacoma, Wash.; president and general manager, George Baum. Fir-Ply Co., White City, Oreg.; general manager, A. B. McGuire. Forrest Industries, Inc., Dillard, Oreg.; president, W. F. Forrest; vice president and general manager, R. G. DeMoisy. Fort Vancouver Plywood Co., Vancouver, Wash.; general manager, V. A. Nyman. Georgia-Pacific Corp., Portland, Oreg.; Executive vice president, W. H. Hunt; vice president, F. V. Langfitt, Jr. Plants: Olympia, Wash.; Coos Bay, Coquille, Springfield, and Toledo, Oreg.; Fordyce and Crossett, Ark. Giustina Bros. Lumber & Plywood Co.; Eugene, Oreg.; vice president, E. V. Giustina; marketing manager, H. E. Sanderson. Glendale Plywood Co., Inc., Glendale, Oreg.; vice president and general manager, T. H. Mehl, Jr. Plants: Hardel Mutual Plywood Corp., Olympia, Wash.; manager, James Kline. Idaho Veneer Co.; Post Falls, Idaho; president, L. A. Malloy; general manager, |