Music Trade Review

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JUNE 12, 1920
THE MUSIC TRADE REVIEW
Piano Costs and the Supply Shortage
The Inability of Supply Manufacturers to Secure Adequate Stocks of Raw Materials and the Necessity of Buying What*
ever Is Offered at Top Prices Has Had a Direct Influence in Sending the Wholesale and Retail Prices of
Pianos and Player-Pianos Upward, According to a Prominent Jobber in Piano Hardware
Aside from the increase in the cost of ma-
terials which enter into the construction of
pianos and player-pianos, there is another phase
of the supply situation which deserves no little
Consideration and that is the inability to secure
supplies after they have once been ordered.
The various strikes which have taken place in
the last six or eight months have had a telling
effect upon deliveries, and combined with the
shortage of skilled labor have in some cases put
certain materials almost beyond the reach of
those who desire them.
While investigating the increase in costs and
the higher prices which prevail, The Review
representative talked with, an executive of one
of the largest jobbers in piano hardware who
cited several cases of how they have been com-
pelled to use hitherto unheard of methods in
order to get their orders filled and even then
could not do so to the complete satisfaction of
their customers.
"For instance," he said, "take the brass sit-
uation. In one of the mills where we procure
this commodity the men have been on strike
and orders have to be accepted with the provis-
ion that the price will be fixed at the settle-
ment of the strike. Any price which they make
us is tentative only, and is subject to change
which may be necessitated on account of any
increase in cost of production, which takes place
between the time the order is placed and the
time the shipment reaches us. Now understand
that we cannot place an order that will be ac-
cepted with any guarantee of delivery either.
This is one of the worst conditions which we
have to contend with.
"We have used every means available to try
and keep our customers satisfied. For instance,
you see that post office station over there?
Every night we almost fill that station up with
hardware which we are sending out by parcel
post. This naturally adds to the expense. Re-
cently a manufacturer desired a certain kind of
stock and needed it very badly. He was one
of our good customers and we wished to please
him. On this account we had to go out in the
open market and dig up a job lot of fifty tons
of steel stock and ship a large percentage of
it by express. In other cases we have had to
use motor trucks over long distances, and the
cartage expense has naturally been tremen-
dously heavy. You can imagine what the ex-
press bill amounted to. To begin with, we
had to buy the fifty tons of steel stock at a
fancy price. It was a case of where the manu-
facturer had to have this stock or shut down
his plant and with the orders which he had on
hand, even at the advanced price of the raw
material, it was much better business for him
to buy at a fancy price and pay the express
charges, rather than wait indefinitely and de'ay
production. You must realize that this all has a
bearing upon the price of the finished product,
and is just one of the reasons why pianos and
player-pianos are higher than they ever have
been, and yet they are not as high in propor-
tion as many other commodities.
"Now take for instance wood screws. It is
almost impossible to get number six or smaller
wood screws owing to the fact that the screw
companies have not been able.to get wire from
which to make them, and besides they do not
make as much on small screws as they do on
the larger sizes on which there is not only
more profit but less waste. In order to procure
screws of this kind we are again compelled
to go into the open market and pick them up
where we can and of course when the supply
is exhausted, it is a matter of waiting for the
manufacturers to produce more. We, as job-
bers, are between two fires, the piano manufac-
turer on one side and the manufacturer of raw
materials on the other side. Naturally the busi-
ness we have done has grown in the number of
dollars involved, but this does not mean that
our percentage of profit has grown. In fact
when we consider the investment which has
to be made to purchase materials at prevailing
prices and also the greatly increased overhead
we must contend with to-day, the percentage
of profit we make is really smaller than that
of pre-war years.
"Speaking of shipping again and looking over
our records, I find that in the month of April
we sent out over $20,000 worth of parcel post
packages. These few instances which 1 have
cited show conclusively some of the disadvan-
tages under which we are doing business at the
present time. Ma/iufacturers have blamed us
for not delivering their goods when in all cases
we are endeavoring to do the best we can, but
are compelled to put up with conditions which
can hardly be overcome by the manufacturers
of the hardware themselves, and naturally as
the go-between we are compelled to take the
brunt of- the whole thing.
"I read with interest your story on prices
of hardware which appeared in a recent issue
of The Review, and can conclusively say that
in some instances you were conservative, as
prices of some of the hardware are even higher
than you mention in your comparative table of
costs.
"Piano dealers should be advised of the condi-
tions which prevail in the raw material market,
and I am sure that they will then realize that
the life of the supply man and the piano manu-
facturer has been anything but pleasant in try-
ing to produce instruments of the same superior
quality as in previous years, and at the same
time keeping the prices down to a reasonable
figure."
Why the Cost of Piano Plates Is
Still Showing an Upward Trend
John C. Wickham Furnishes Some Data Regarding the Various Factors Which
Are Making Piano Plates Advance in Price
EDITOR'S NOTE: This article is based on an interview
with John C. Wickham, executive head of the Wickham
United Industries, who is regarded as a most reliable author-
ity in any matters pertaining to the piano plate situation.
"Is there any likelihood that the price of piano
plates will decline in, the near future?"
When asked this question Mr. Wickham an-
swered decisively with a no, and then went on
to explain several reasons why piano plate prices
will not decline, but on the contrary will make
a further advance. He said:
"Within the last sixty days there has been an
advance in the price of coke from $7.00 to $12.00
per ton at the ovens. The shortage right now
of coke is tremendous, so that the market on
this product looks more like an increase than
a decrease. Assuming, however, it remains at
the present price of $12.00, it is certain that
the price of pig iron will be jumped very quick-
ly, because so far it has not been advanced pro-
portionately to the increase mentioned above in
coke. Yet the price of pig iron is directly de-
pendent upon the price of coke, as the process
of making pig iron requires a great deal of
coke. It is, moreover, unbelievable that the
furnaces will absorb for any length of time the
increased cost of producing pig iron, due to the
last increase that, has already been made in coke,
but which so far has not shown in the price of
pig iron.
"To reduce the above to actual figures it is
only necessary to remember that it takes two
tons of ore and one tone of coke to make one
ton of pig iron. On this direct ratio basis, then,
the near future will see an increase of $5.00 a
ton in the cost of pig iron. It is now $46.00 at
the furnace. Hence, at the foundry with the
$5.00 increase mentioned above and the freight
rate added in, the cost of pig iron at the foun-
dry will be in the neighborhood of $55.00 a ton,
or higher."
"Is there any chance of securing scrap iron
more economically than new pig iron?"
When asked this question Mr. Wickham point-
ed- out that the scrap iron market was cleaned,
up very thoroughly during the war and since
the war. Whatever supply is available through
this source now is too expensive to consider in
the production of piano plates.
"Has there been any improvement in the labor
end?"
Mr. Wickham replied: "There has not, and at
the present time there is a great deal of com-
petitive bidding for men between various con-
cerns engaged in the foundry and steel busi-
ness, and, of course, this bidding process tends
to drive wages higher and higher."
"Is there any other important factor affect-
ing the future of piano plates?"
To this Mr. Wickham rejoined: "The freight
situation is very likely to mean a material ad-
vance in the price of piano plates. All over
the country forces are being brought to bear to
increase the freight rates on all commodities due
to the fact that the railroads are unable to effi-
ciently handle the shipments offered them with
the present equipment and present man power.
Already huge sums have been appropriated for
the relief of the freight congestion and it seems
likely that these and the additional investments,
etc., will be at least partially covered by a
general increase in freight rates which, accord-
ing to eminent authorities, will average about 20
per cent.
"If this raise goes through, one might off-
hand feel that the only additions it would make
in the cost of piano plates would be the added
freight between the foundry and the piano fac-
tory, whereas the truth of the matter is the
freight charge which goes into the cost of the
plate will actually increase about ten times this
amount. In other words, the freight increase
will have to be paid not only for the trip the
plate makes from the foundry to the piano plant,
but must also be paid on such other shipments
as the coal to the coke oven, from the coke
oven to the pig furnace, the ore from the mine
to the furnace, the pig iron to the foundry,
etc., and all of this increased freight cost must
show in the ultimate price of the piano plate
when delivered to the piano maker.
''It is possible that unless there is a marked
improvement in the freight situation the delays
in shipment all along the line will also repre-
sent a more or less direct additional cost, be-
cause of the disarrangement in the production
program and the. failure to turn over goods
according to usual schedule. In other words,
time is money and if time is going to be lost
on account of the freight delays it will have
to be paid for somewhere along the line."
All of which furnishes the dealers some food
for earnest thought.