Strong Year Expected For Building Products

First quarter growth in the home building and home remodeling industries continues to eclipse even last year's frenetic pace, fueling a strong start to the year for the wood and building products industry according to a new report from Bank of America's Paper & Forest Products Group.

With quarterly housing starts up an estimated 8.5Vo over 1998 levels. demand for building materials has been strong with softwood lumber, structural panel and gypsum manufacturers running full-out.

Last year marked a tonid year for the U.S. construction industry as record existing homes sales stimulated a double-digit increase in home repair spending and total home sales rose by l2Vo to a record 5.68 million units. New coefficients in the housing cycle, such as the wealth effect of a rising stock market and the growing use of equity lines of credit to finance consumer spending, are dramatically adding to its staying power relative to earlier construction cycles, according to the report.

In 1998 alone. the value of real estate and financial assets held by Amer- ican households and non-profit organizations rose by nearly three and 14 times the aggregate growth in disposable income, respectively. By year-end 1998, household net worth had risen by over $18 trillion during the past decade, while household liabilities were up by only $3 trillion. Hence, a considerably wealthier American public has the unprecedented means to spend more on primary and secondary residences.

Softwood lumber producers, in particular, are poised to enjoy a remarkable upturn in profitability as lower log costs, high shipment volume and modestly higher prices are heralding the best cash flow picture in at least five years. Structural panel producers and gypsum wallboard producers are also enjoying outstanding margins. Only log, wood chip and composite panel prices remain disappointing.

The sector stands in contrast to pulp and paper, which remains depressed due to excessive foreign competition.

Building Products Expo ls Coming

Chicago's sprawling McCormick Place complex is again the site of the annual National Hardware Show and sister National Building Products Exposition Aug. 15-18.

The combined events bring together more than 3,000 exhibits covering 1.3 million sq. ft. The National Building Products Expo features over 300 manufacturers of lumber, moulding, fencing, flooring, roofing, insulation, tool, computer software, and other products.

The shows, held in conjunction with International Hardware Week. are accompanied by a full spectrum ofspecial events. services and educational sessions, kicked off with a keynote address by former Congressman and Speaker of the House Newt Gingrich.

Attendees can save the $100 on-site registration fee by pre-registering at www.nationalhardwareshow.com or calling (203) 840-5622.

The show will be previewed in "Expo Preview," a full-color supplement in the August issue of Building Prcducts Digest.