
6 minute read
A look at the future of hardwood
HAT lies ahead for the hardwood industry? Sheldon Engler, economist for the Bank of America, has some answers.
Explaining the position of the United States in supply, he says that, although this country has traditionally been a major importer of hardwood lumber from tropical regions, in recent years it has become a net exporter of hardwood lumber. He feels it unlikely that this shift represents a new trend, but rather that it is a consequence of recessionary levels of wood demand here.
As background, he exPlains that Asia produces32Vo of the world out-
Story at a Glance
Changes in hardwood trading pattoms . scarcity will lead to exploitation of inaccessible lorests prlces to rise, double by 1990s. put of hardwood and 52s/o of all exports with China, Japan and Malaysia as leading producers and Malay- sia the major exporter. The U.S. contains the majority of the l49o of hardwood species located in North America and produces 1990. EuroPe is third in world production with 18.490.
Although most hardwood has historically been traded in the form of logs, this pattern is beginning to change, he reports. Overcutting of tropical forest in Southwest Asia has led to export restrictions by traditional log exporting countries. In the Philippines logs exporting has come to a virtual halt. Many Southeast Asian producers are attempting to secure the remaining hardwood log llt0 supplies for local wood processing industries.
This action will bring changes in Japan which has been a leading importer of logs to process into lumber at their own sawmills. Log importers will be forced to import hardwood in processed form or to import logs from further distances.
Vast hardwood forest reserves exist in Asia, Africa and Latin America, but because ofthe remoteness and lack of commercially attractive species, it will be extremely costly to produce hardwood lumber from these forests. By some estimates, according to Engler, lumber prices would have to increase 5090-10090 before production would become profitable.
It is inevitable, he says, that scarcity of hardwood forest reserves will some day lead to exploitation of more inaccessible forest areas and hence to higher log and lumber prices. The speed with which this will occur depends upon the techniques that are utilized in maintaining the more accessible forests.
During most of the 1970s hardwood lumber consumption gained, particularly in tropical hardwoods. Southeast Asian producers derived benefit from these developments as Europeans and the U.S. relied upon hardwood lumber imports from the Asia/Pacific area.
Since 1980, hardwood lumber consumption has been stagnant. The world recession reduced lumber demands. The Japanese housing slump impacted the tropical timber market substantially. In addition, tropical timber producers reduced exports to preserve dwindling forest resources.
Between 1970 and 1980 hardwood lumber prices increased at an average annual rate of 1590. From 1980 to 1982 prices fell280/o as the economy contracted. In December, 1982, hardwood prices, with the beginning of a housing recovery, turned upward.
In the 1980s hardwood prices will be influenced by supply considerations. As the most easily obtainable tropical hardwood is exploited, less accessible timber will be cut, causing production costs to increase.
It is expected, according to Engler, that the highest cbst hardwood resources, such as those in the Amazon area, will remain virtually untapped until the 1990s. With the expected growth rate in demand, hardwood lumber prices are projected to grow at a rate of about 390 in real terms during this decade. Citing a price of $302 per cubic meter in 1982, $332 in 1983, Engler projects $362 in '84, $395 in '85 and $600 in 1990.
And that's one economist's view of what lies ahead for hardwood.
Readers wishing additional information can get a copy of the "Situation and Outlookfor Lumber," prepared by Sheldon Engler, from Ken Preston, News Relations 3124, Bank of America, P.O. Box37000, SanFrancisco, Ca. 94137-ed.
Memphis Celebrates Wood
The Lumbermen's Club of Memphis will celebrate Wood Products Week Oct.A-30.
This event is sponsored each year by the club to demonstrate the impact the lumber industry has on the lifestyles, traditions, and economy of the mid-South area. The club, organized in 1898, has long been a guiding influence in the establishment of Memphis as "The Hardwood Capitol of the World."
A Lumber's Lady Fair will be chosen to reign over Wood Products Week making tv, radio, and civic club appearances. Festivities will include the Loggers Breakfast, naming "The Lumberlnan of the Year," a ladies luncheon, and Wood Choppers Ball.

Flooring Installation School
The fall 1983 session of the Hardwood Flooring Installation School will be conducted in Memphis, Tn., at the Cook Convention Center, September 19-23.
The hands-on, in-depth course on the installation and finishing of all types of hardwood floors is cosponsored by the American Parquet Association, Maple Flooring Manufacturers and the National Oak Flooring Manufacturers Association. As in the past, a capacity enrollment is expected.
(Continued from Page I0) structure the clinics. This planning session was followed by a discussion of clinic techniques. Then, for more intensive training, the Pros paired off with the vendor representing the product they would be teaching. They received both general product information and hands-on installation training.
"We put on a full ceiling clinic," explains Michelle Landis, marketing representative for Armstrong's Atlanta office. "We began with product knowledge, demonstrated the acoustic capabilities, washability, fire retardance and the variety oftiles and panels available. Then we
Loss Prevention
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Next, if your operation is computerized, make sure your software is programmed so that: o No account can be erased without leaving an audit trail. o No account can be debited or credited without leaving an audit trail. o No orders, quotes or "Picking tickets" can be cancelled without leaving an audit trail. o When an order, quote or "Picking ticket" is cancelled or voided, all documents should be cross referenced. r Cash receipts should not be changed without leaving an audit trail.
. Inventory totals cannot be increased or decreased without leaving an audit trail.
If your computer is "down," take extra care to control and account for all manual tickets. And have a second employee verify proper entry of all tickets once the computer is "up" again. List and limit the number of employees authorized to override or change a selling price in the computer.
Probably the most imPortant waY to trim losses is to hire honest employees. This is time consuming but enormously valuable.
Methods include obtaining de- demonstrated installation, both for suspended ceilings and for our new Easy Up tile system."
Following their vendor classes, the Pros practiced their presentations at home, then participated in a trial run using fellow employees as mock customers.
Each clinic lasted about an hour. Vendor reps sat unobtrusively in the audience to provide back-up help if needed.
Ceiling clinics, for example, were held in the ceiling-fans section of the store. The large fan boxes were reorganized around chairs to create a sound barrier. A portable loudspeaker was brought in and a raised podium constructed. Armstrong's standard Easy Up displaY was used to demonstrate the installa- tion of a new tile ceiling. Store personnel built a wooden "jungle gym" of 2x4s to show how to hang a suspended ceiling. Sound-slide presentations on both installation methods were also emploYed bY the Pros. tailed, signed and dated employee applications, then running full background checks (which includes calling former employers). Also, hire according to a job description, bond all employees, and enforce rules and regulations uniformly. Do not maintain a "double standard."
The meticulous planning and the aggressive promotiond attack paid off. Nearly 4O0 people attended the ceiling clinic alone.
Sitting in the audience, Armstrong rep Landis was able to compare the Pro-conducted with the vendorconducted clinic: "I felt the consumers weremore willing to ask questions because they seemed to know the Home Depot people. And Ithink they realized that when they came back to the store later they would be dealing with these same people."
On the other side, proper termination of dishonest employees is equally essential. Good practices may help recover funds, may limit your unemployment compensation increases and may limit future problems for yourself and other companies.
We recommend interviewing every dishonest employee to determine how, what, why, how much, how long, were others involved, etc. Try to obtain a signed statement admitting theft. (You may seek professional assistance.) Have a witness present. And know legal requirements so you don't invite lawsuits.
In conclusion, the best way to reduce employee theft losses is to remember the following: o You must establish sound loss prevention procedures. r You must publish employee rules of conduct and enforce them uniformly. o You must audit procedures. o You must hire honest employees. o You must care. o You must not make it "easy."
With $50 billion at stake annually, sound loss prevention measures are worth their weight in gold.