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The Scaffold Plank Incident
What had started as a typically slow February day in the lumber business had turned intoa moral dilemma. With 12 inches of snow covering the ground, construction (and lumber shipments) had ground to a halt and on the 26thof the month; the company was still $5,000 below break-even point. In the three years since he had been in the business, Bob Hopkins knewthat a losing February was nothing unusual, but the country seemed to be headed for a recession,and as usual housing starts were leading the way into the abyss.Bob had gone to work for a commercial bank immediately after college but soon foundthe bureaucracy to be overwhelming and his career progress appeared to be written in stone. Atthe same time he was considering changing jobs, one of his customers, John White, offered hima job at White Lumber Company. The job was a ³trader,´ a position that involved both buyingand selling lumber. The compensation was incentive-based and there was no cap on how much atrader could earn. White Lumber, although small in size, was one of the bank¶s best accounts.John White was not only a director of the bank but one of the community¶s leading citizens.It was a little after 8:00 a.m. when Bob received a call from Stan Parrish, the lumber buyer at Quality Lumber. Quality was one of White Lumber¶s best retail dealer accounts, andBob and Stan had established a good relationship.³Bob, I need a price and availability on 600 pieces of 3 x 12 Doug fir-rough-sawn ± 2 & better grade ± 16-feet long,´ said Stan, after exchanging the usual pleasantries.³No problem, Stan. We could have those ready for pickup tomorrow and the price would be $470 per thousand board feet.´³The price sounds good, Bob. I¶ll probably be getting back to you this afternoon with afirm order,´ Stan replied.Bob poured a third cup of coffee and mentally congratulated himself. Not bad, hethought²a two-truck order and a price that guaranteed full margin. It was only a half-hour later that Mike Fayerweather, his partner, asked Bob if he had gotten any inquires on a truck of 16-foot scaffold plank. As Bob said he hadn¶t, alarm bells began to go off in his brain. While Stanhad not said anything about scaffold plank, the similarities between the inquiries seemed to bemore than coincidence.While almost all lumber undergoes some sort of grading, the grading rules on scaffold plank were unusually restrictive. Scaffold planks are the wooden planks that are suspended between metal supports, often many stories above the ground. When you see painters andwindow-washers six stories in the air, they generally are standing on scaffold plank. The lumber had to be free of most of the natural defects found in ordinary construction lumber and had tohave unusually high strength in flexing. Most people would not be able to tell certified scaffold plank from ordinary lumber, but it was covered by its own rules in the grading book, and if youwere working ten stories above the ground, you definitely wanted to have certified scaffold plank underneath you. White Lumber did not carry scaffold plank, but its rough 3 x 12s certainlywould fool all but the expertly trained eye.At lunch, Bob discussed his concerns about the inquiry with Mike. ³Look, Bob, I justdon¶t see where we have a problem. Stan didn¶t specify scaffold plank, and you didn¶t quote himon scaffold plank,´ observed Mike. ³We aren¶t even certain that the order is for the samematerial.´
³I know all that, Mike,´ said Bob, ³but we both know that four inquiries with the sametally is just too big a coincidence, and three of those inquiries were for Paragraph 171 scaffold plank. It seems reasonable to assume that Stan¶s quotation is for the same stuff.´³Well, it¶s obvious that our construction lumber is a good deal cheaper than the certified plank. If Stan is quoting based on our 2 & better grade and the rest of his competition is quotingon scaffold plank, then he will certainly win the job,´ Mike said.Maybe I should call Stan back and get more information on the specifications of the job.It may turn out that this isn¶t a scaffold plank job, and all of these problems will just disappear.´The waitress slipped the check between the two lumbermen. ³Well, that might not besuch a great idea, Bob. First, Stan may be a little ticked off if you were suggesting he might bedoing something unethical. It could blow the relations between our companies. Second, supposehe does say that the material is going to be used for scaffolding. We would no longer be able tosay we didn¶t know what it was going to be used for, and our best legal defense is out thewindow. I¶d advise against calling him.´Bob thought about discussing the situation with John White, but White was out of town.Also, White prided himself on giving his traders a great deal of autonomy. Going to White toooften for answers to questions was perceived as showing a lack of initiative and responsibility.Against Mike¶s earlier warnings, Bob called Stan after lunch and discovered to hisdismay that the material was going to be used as scaffold plank.³Listen, Bob, I¶ve been trying to sell this account for three months and this is the firstinquiry that I¶ve had a chance on. This is really important to me personally and to my superiorshere at Quality. With this sale, we could land this account.´³But, Stan, we both know that our material doesn¶t meet the specs for scaffold plank.´³I know, I know,´ said Stan, ³but I¶m not selling it to the customer as scaffold plank. It¶s just regular construction lumber as far as we are both concerned. That¶s how I¶ve sold it, andthat¶s what will show on the invoices. We¶re completely protected. Now just between you andme, the foreman on the job kinda winked at me and told me it was going to be scaffolding, butthey¶re interested in keeping their costs down too. Also, they need this lumber by Friday, andthere just isn¶t any scaffold plank in the local market.´³It just doesn¶t seem right to me,´ replied Bob.³Look, I don¶t particularly like it, either. The actual specifications call for 2-inch thick material, but since it isn¶t actually scaffold plank, I¶m going to order 3-inch planks. That is anextra inch of strength, and we both know that the load factors given in the engineering tables aretoo conservative to begin with. There¶s no chance that the material could fail in use. I happen toknow that Haney Lumber is quoting a non-scaffold grade in a 2-inch material. If we don¶t grabthis, someone else will and the material will be a lot worse than what we are going to supply.´When Bob continued to express hesitation, Stan said ³I won¶t hear about the status of theorder until tomorrow, but we both know that your material will do the job ok ± scaffold plank or not. The next year of two in this business are going to be lean for everyone, and our job ± yoursand mine ± is putting lumber on job sites, not debating how many angels can dance on the headof pin. Now if Quality can¶t count on you doing your job as a supplier, there are plenty of other wholesalers calling here every day who want our business. You better decide if you are going to be one of the survivors or not! I¶ll talk to you in the morning, Bob.´
The next morning, Bob found a note on his desk telling him to see John White ASAP.Bob entered John¶s oak-paneled office and described the conversation with Stan yesterday. Johnslid a company sales order across the desk, and Bob saw it was a sales order for the 3 x 12s toQuality Lumber. In the space for the salesman¶s name, Bob saw that John had filled in ³BobHopkins.´ Barely able to control his anger, Bob said, ³I don¶t want anything to do with thisorder. I thought White Lumber was an ethical company, and here we are doing the same thingthat all the fly-by-nighters do,´ sputtered Bob in concluding his argument.John White looked at Bob and calmly puffed on his pipe. ³The first thing you better do,Bob, is to calm down and put away your righteous superiority for a moment. You can¶t make or understand a good decision when you are as lathered up as you are. You are beginning to soundlike a religious nut. What makes you think that you have the monopoly on ethical behavior?You¶ve been out of college for four or five years, while I¶ve been making these decisions for forty years. If you go into the industry or the community and compare your reputation with mine,you¶ll find out that you aren¶t even in the same league.´Bob knew John White was right. He had, perhaps, overstated his case, and in doing so,sounded like a zealot. When he relaxed he felt as though he was once again capable of rationalthought, he said, ³We both know that this lumber is going to be used for a purpose for which it is probably not suitable. Granted, there is only a very small chance that it will fail, but I don¶t seehow we can take that chance.´³Look, Bob, I¶ve been in this business for a long time, and I¶ve seen practices that wouldcurl your hair. Undershipping (shipping 290 pieces when the order calls for 300), shippingmaterial a grade below what was ordered, bribing building inspectors and receiving clerks, andso on. We don¶t do those things at my company.´³Don¶t we have a responsibility to our customers, though?´ asked Bob.³Of course we do, Bob, but we aren¶t policemen, either. Our job is to sell lumber that isup to specification. I can¶t and won¶t be responsible for how the lumber is used after it leaves our yard. Between the forest and the final user, lumber may pass through a dozen transactions beforeit reaches the ultimate user. If we are to assume responsibility for every one of those transactions,we would probably have time to sell about four boards a year. We have to assume, just like everyother business, that our suppliers and our customers are knowledgeable and will also actethically. But whether they do or don¶t, it is not possible for us to be their keepers.´Bob interjected, ³But we have reason to believe that this material will be used asscaffolding. I think we have an obligation to follow up on that information.´³Hold on, just a second, Bob. I told you once we are not the police. We don¶t even knowwho the final user is, so how are we going to follow up on this? If Stan is jerking us around, hecertainly won¶t tell us. And even if we did know, what would we do? If we are going to do thisconsistently, that means we would have to ask every customer who the final end user is. Most of our customers would interpret that as us trying to bypass them in the distribution channel. Theywon¶t tell us, and I can¶t blame them. If we carry your argument to its final conclusion, we¶llhave to start taking depositions on every invoice we sell.³In the Quality Lumber instance, we are selling material to the customer as specified bythe customer, Stan at Quality Lumber. The invoice will be marked, µThis material is not suitablefor use as scaffold plank.¶ Although I¶m not a lawyer, I believe that we have fulfilled our legalobligation. We have a signed purchase order and are supplying lumber that meets thespecifications. I know we have followed the practices that are customary in the industry. Finally,I believe that our material will be better than anything else that could conceivably go on the job.

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