1987 will repeat 1986

By Pete Niebling Executive Vice President North American Wholesale Lumber Association

1986 should provide some better results in U.S. exports.

repeat of 1986 business activity. Economists, trade group gurus and

CONOMIC projections for 1987 generally indicate a tea leaf readers are mildly optimlstlc ln a number of economic areas.

They foresee sluggish but continued improvement in the GNP and another "leg" on the Bull

Market in Wall Street. Perhaps there will be slightly higher interesr rates and inflation, but such upward pressures will be minimal. Slight improvement in U.S. international trade should be another plus ingre- dient. Such general optimism is tempered a bit by the likelihood that economic activity will remain regional in nature. By this we mean, good times on the eastern and western coasts and continued trouble in America's heartland.

For the forest products industry, we should also have a repeat of 1986. If we build 1.8 to 1.85 million housing units in 1986, we might expect a decline of about l0o/o in 1987. NAWLA projects a housing start year in 1987 of I .63 to I .65 million units. Tax reform and overbuilding in some areas may affect apartments and multifamily units but the trend towards more single family homes as a percentage of the whole should continue.

Our association sees a substantial increase in remodeling markets during 1987. And this was a great market for wood products this year!

Industrial wood markets have been good and, again, more of the same for 1987. Our wood pallet market is adversely affected by the decision of auto manufacturers and the Federal Government to discontinue the use of wood pallets. These decisions may be reversed, but if not, the remaining industrial market for lumber will be better during 1987.

It looks as if the overseas export of lumber will also improve slightly in 1987. The fall of the dollar in

In summary, d-emand levels for lumber, plywood and other wood products should be almost as great as in 1986.

Story at a Glance

Mild optimism... 1.63 to 1.65 million housing starts. substantial increase in remodeling markets. industrial wood markets good continued oversupply.

Conversely, it should that our 1987 projection demand. We also expect be noted deals with a continu- ation of oversupply. This means that both the domestic and foreign marketplace will be very competitive. There will be continued pressure on sales margins and continued problems in depressed regions of the U.S.

Projecting effecrs of the Tax Reform Act of 1986 and the controversy over Canadian sofnpood lumber imports on our lumber business is extremely diflicult. If history is any guide, these events will neither be as good nor as detrimental for our industry as some people expect.

Therefore, our message is the same as a year ago:

Good management, operating cost containment, and professionalism in marketing and sales will continue to be the answer to profitability and growth.