Johnson Lumber: Bet on the Upside or Avoid the Downside?

Friday, March $9,20061$

The ringer on James Baker$$s phone seemed overly loud. Perhaps that was because it was $4$:$00$ a$.$m$.,$ and he

was in a hotel room on a business trip. It was never good news when the phone rang at that hour.

This case was no exception. It was Janet McAleer, the security guard at Johnson Lumber$$s planing mill

facility in Ladysmith, Virginia. $$The mill has smoke in it$,$ she said. A fire in a lumber mill, which was by

definition filled with fuel, was to be taken seriously.

Baker was Johnson Lumber$$s general manager. $$Make sure you$$re safe, call the fire department, and call

me right back,$$ he said.

Edward Johnson $($president and the founder$$s grandson$)$ and Frank Johnson $($Edward$$s son, hired recently

as a salesperson$)$ were along with Baker on this trip. Baker called and woke them up$.$ They came to his room

to wait for more information.

Thirty minutes later, McAleer called again. $$I think it$$s under control,$$ she said. In Baker$$s hotel room, the

three men looked at one another and breathed sighs of relief. A problem at the planing mill would have been

extremely bad. Every single piece of finished lumber had to go through that facility, so it was the bottleneck in

their entire operation.

But five minutes later, Baker$$s phone rang again. The situation had changed. $$There are flames through

the roof,$$ said McAleer. $$You$$ve got to get back here!$$

Baker and the Johnsons were on the road within $15$ minutes. The drive took three hours.

When they arrived at the planing mill, $150$ fire fighters from Caroline County and the neighboring

counties$15$ departments in all$$were at the scene. They fought the fire for $24$ hours, but the mill was gone.

The planing operation was a complete loss.

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