BUSINESS FORECAST

Prie forecasts vry dramatically, but we subscribe to pro- jections thaL on the combined average, prlces f6lumber and_plywmd will increase by about4% next yer.

Traditional influences upon price, such as economic indicatms, wealh€r, inventory leveb seasonality, etc., pale in imporunce when compared lo tbe impact oi tog sfrta8es.

In the Northwest, federal government decisions and court i{iunctions t9 halt logging and timber menag€nrent on public forests have pushed timber sales voluies far below the most pessimistic estimates. Fed€ral timber harvests in tbe five-sare rea of tbe Nathwest have dclined by neqtf ttrGrhirds over the past l0 yeas and d€ expocted o drop again !o one-half rbe l992tevel by 1998. In rhe interim, many Northwest mills are being sustained by increased purchases of logs from privatCnon-industri:jl lands. However, the culent rate of harvest on those prop erties cannot be sustained.

Due to tbese rcalities, U.S. lurrber demand will ursrip supply by approximarely 8 bilion board feet within frvb yqn. Smgnryt panel supply will fall2 billion square feet below national needs within that time period-. North American wood producing regions other than the Northwest can take up liule of that slack because they are growing timber near their leral of higbest potential.

Viable sources of offshore timber are Ueing explced and, in time, can make up for an as yet und-etermined amolnt of pending shortfall. We also will be seeing wmd prodrcts taking new fortrB, such as laninated veneer lumber, sherching the available timber resources while p'roviding utility and sfuctural strength.

From all indications, the wood producls sector will &ce familiar narket conditions in 1994 and continuing challenges to resource supplies. Those who best satiify the customers' needs and who operate efficiently will fare besl Never before have we been so challensed.