Gradual structural panel recovery

By William T. Robison President American Plywood Association

f, vean ago, I expressed the hope Fthat the anticipated structural panel market decline in 1991 would be slightjust a bump in the road followed by a quick return to better times.

pates U.S. structural panel production of 24.3 billion square feet, 3/8-inch basis, in 1991an 8Vo reduction from 1990. This is more than 2 billion feet below our original estimate.

Will 1992 signal an end to recession? Or will the present "double dip recession" become "triple dip?" Our APA market research department has the benefit of extensive input from our field staff across the country, and I'm happy to report enough positive indications from the marketplace to be cautiously optimistic about 1992.

in years that with and the panel industry. It's been a roller coaster ride. First, the threat of a Gulf War, then the trauma of the war itself. the short euphoria that came with the victory, followed by the realization that the world has deeper problems which impede prosperity.

As we approach the end of a turbulent year for the wood products industry, and all involved in the supply chain, it is clear that for panel producers, 1991 will go into the record books as a year most producers would like to forget. A new APA forecast antici-

While signs of economic revival have been apparent recently in some market sectors, it is our strong feeling that recovery will be gradual. With allowance for 1992 being an election year, we don't believe the federal government can afford to significantly relax its anti-inflation policies.

Other factors that will slow the recovery are off-pace state and local economies; overbuilding in multifamily and nonresidential construction; and continued consumer wariness reflected in an unwillingness to commit to major spending.

Our APA forecast predicts 1.15 million total U.S. housing starts in 1992, up from about one million in 1991. The industrial market also has momentum, led by the materials handling, transportation and furniture sectors.

Other positive factors assisting the overall brighter 1992 total market outlook include an expected surge in residential and nonresidential repair and remodeling, and recovery of the export market from 1991 lower levels associated with the Gulf War.

Exports climbed from only 300 million square feet in 1985 to 1.7 billion in 1990. I have no doubt that the long-term prospects for even more dramatic international market growth are excellent. The same applies to the domestic market, where markets like I-beams (today requiring 300 million square feet of structural panels) have the potential to reach half a billion feet by the end of the decade. APA estimates that U.S. structural panel production will rise to 26.5 billion square feet in 1992, a 9Vo improvement over the level expected in 1991.

Story at a Glance

APA optimistic...1.1 5 million housing starts; 26.5 billion sq. ft. structural panel production ...increased exports... preservationist activity is a major challenge.

New products such as water repellant treatment and the added value components for decks such as posts were predicted to stimulate the market, but, although these products have sold, no noticeable increase in total volumes have resulted.

Regional reports indicate the housing slump has caught up with all areas and, although the amounts of treated wood involved in a new structure are low, (plate stock, etc.) the material

Story at a Glance

No relief for pressure treating ...repair and remodeling optimistic...stricter environmental controls will reduce the number of plants...electaon fever may bring relief to a dull outlook.

used on new decks is also lost. Restrictions in government spending have affected school building and temporary classroom additions. Also, redwood and cedar may have taken some treated business. Texas has had indications of a better year but with little long-term confidence.

The outlook for 1992 is somewhat gloomy despite hopes for a pickup in housing starts. Comments indicating that the market has bottomed out may be more indicative of wishful thinking than improving order books. Winter buying programs although not significant do exist; but the only optimism is in the repair and remodeling sector.

Stricter environmental controls on the treating plants are bound to put more plants out of business in 1992, but the excess capacity in the industry will ensure that there are no windfalls for current producers.

Look for another flat year unless election fever and campaign promises stimulate an otherwise dull outlook.

A major challenge facing the wood products industry, particularly in the Pacific Northwest, is the preservationist-inspired rationing of an abundant timber supply. Environmental extremists have served notice that their ultimate goal is crippling the wood industry in all parts of the country. However, I believe that we can be successful in teaching the public that we can have a stable wood supply in harmonv with the environment. The current -anti-timber policies influenced by fear and misrepresentation must be decisively rejected.

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