Supply/demand balance

By Harold Maxwell Group Vice President, Building Products Temple-lnland Forest Products Corp.

fiUn expectations for 1992 are for Ya much better balance between supply/demand relationships for building products.

Housing starts should move up to the 1.2-1.3 million range with housing activity in the west south central region (Texas, Louisiana, Arkansas and Oklahoma) remaining strong relative to the balance of the U.S. market. We also anticipate improved demand for repair and remodeling, industrial and non-industrial applications as well as continued good demand from Mexico.

Improvements in the repair and re- model markets should continue to favor a strong demand for southern yellow pine, both treated and untreated.

The major issue facing the lumber industry continues to be resource-oriented with the more public issues of the spotted owl in the West and the red-cockaded woodPecker in the South maintaining their prominence.

Story at a Glance

Housing starts in 1.2-1.3 million range...improved repair and remodeling, industrial, non-residential demand... good treated and untreated southern pine markets...resource issues will remain a challenge...target marketing is key to'90s.

the two major factors for success: corporate thriftiness and customer service. In other words, cut the expenses where it's smart to cut them. and do everything you possibly can to satisfy the customers.

Our 1990s' customer will be very different. They will buy fewer new cars, fewer new clothes and fewer new homes. Instead, as the population ages, there will be a general decline in conspicuous consumption. Home centers in general will benefit because consumers will be very interested in remodeling and fixing up their homes. The 1990's customer will spend his money very carefully.

Story at a Glance

Breaklng of MOU by Canada and envlronmental lesues will affect lumber prlce and supply...corporate thrlftlness and customer servlce malor tactors for auccess...customers to demand value.

However, a number of other issues, such as the wetlands, bio-diversity and below cost timber legislation, will further restrict available resource from both public and private timberlands. The challenge in dealing with these issues will be with us throughout the '90s. 1992 may be the first year we experience a strong cost push that will affect the pricing of solid wood products.

Surveys have shown that the winning strategies of the '70s and early '80s were built around achieving lowcost positions. In the mid-'80s the more successful companies shifted to strategies built around quality products and services to achieve differentiation from their competitors. The winning strategies of the '90s will have target marketing as a comerstone. This does not mean that quality and cost will become secondary. Customers will still demand quality as a prerequisite for doing business and they will certainly continue to shop for the best relative value for products and servlces.