Record lumber consumption expected

HE U.S. will use a record amount Association president H.A. Roberts told the third record year fcr consumption. He I of lumber this year, but an antici- a group of western lumber producers at credited the rise in consumption to inpated slowdown in the U. S. economy the trade association's fall meeting. creased housing starts, which are forecast should push lumber consumption slightly He added that 46.1 billion board feet of to reach 1.8 million this year, and conlower in 1987, Western Wood Products lumber will be used in the U.S. in 1986tinued growth in repair and remodeling.

T

U.S. SOFTWOOD LUMBER CONSUMPTION BY MARKETS AND PRINCIPAL SOURCES 19E6 and 19E7 PR0|ECTIONS

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Slower economic gro\ /th in 1987 is expected to have an impact on lumber consumption, which should decline 3.7 % to 44.3 billion feet. Roberts predicted housing starts will slip to 1.75 million units next year, due to a decline in multifamily construction caused by pending tax changes and high vacancy rates.

Story at a Glance

WWPA fall meeting chairman urges all of western industry to participate in association '87.i88

marketing program trimmed by budget cuts... 1.75 million housing starts forecast Ior'87.

feet to foreign markets this year, an increase of 15 %. Next year, U.S. exports should increase another 6% to 1.85 billion.

Western lumber manufacturers are forecast to ship 18.2 billion feet of lumber in 1986, an increase of 5.2% from the previous year. Western shipments are expected to decreaseby 3.270 to 17.61 billion.

In other reports ai the Sept. Z7-30 meeting, held at the Hyatt Regency Hotel, chairman Richard B. hnish said that the WWPA deserves the hnancial and moral support of the entire western lumber industry.

He stressed that the association has (Continued on next page)

(back

Lumber imports to the U.S., mostly from Canada, are expected to total a record 15.l billion feet in 1986. Roberts said the import projections would have been higher were it not for a recent lumber industry strike in Canada. In 1987, Roberts projected imports will total 14.7 billion feet, supplying 33.1% of the lumber used in the U.S. next year.

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WWPA Meeting

(Continued from previous page) changed to meet the new demands of the lumber industry. "But as strong and as vital as WWPAs functions may be to the western lumber industry only part of the industry fully supports all the WWPA s activities." he commented.

Planning for the 1987-88 marketing program has been initiated by the marketing services committee. Because of budget considerations, the program will focus upon a reduced selection of subjects, rather than the broader program- ming of the original Impetus program. Phoenix/Scottsdale, Az. , and Monterey, Ca. , were named as sites for the 1989 and 1990 fall meetings.

Wholesaler Sales Survey

North American Wholesale Lumber Association recently completed its comprehensive, annual sales survey of the association's 337 wholesaler members who were active in 1985 revealing that wholesaler members had total sales of $7:736,573962 in 1985, which exceeds the

1984 totals by more than $500 million.

In addition, the retail lumber dealer and the retail mass merchandiser continued to be the primary customer of the wholesaler-distributor, accounting for 60.6% of total sales. Another 15.8% of sales were made to industrial accounts, and the remaining 23.6% of sales were made in nine other defined categories of customers.

Slightly more than one-third of the membership are classified as 100% sales out oftheir distribution yard facilities. The remaining56% are involved in both types of distribution.

Direct mill shipments remain the primary method of sales representing nearly 63% of sales in 1985. Horvever, 211 NAWLA wholesale firms operate 387 distribution centers with average annual sales per facility of fi,39,010.

NAWLA wholesalers remain the primary distributors of softwood lumber in North America. In 1985, lumber was 83.8% of sales and 80.2% of sales was softwood lumber.

The survey also showed wholesalers are heavily reliant upon motor carrier transportation. In 1985, nearly 57% ofall shipments were by truck while over 28% were by rail. Intermodal shipments by piggyback and through reload centers accounted for about ll%. Shipments over water represented4% of the traffic.

The survey also showed an increase in number of sales support staff personnel. This increase is attributed to the on-going trend towards specialization and expansion of services to customers. Overall, NAV/LA wholesale member firms employed over 12,625 persons in 1985.

The NAWLA wholesaler members represent a $7J billion market; providing nearly $1.3 billion daily financing; and marketing a majority of the total production of softwood lumber in North America.

Paul does not rest on his fame as the lumberman's symbol of accomplishment. New requirements and changing conditions keep him alert to progress.

Home Building Back On Track

Residential building, which had slackened in recent months, stabilized in August at an annualized contract value of $116.l billion. Single-family housing starts showed a small gain as apartment construction continued to decline.

George A. Christie, vice president and chief economist for FW. Dodge, noted that "The current stability in both mortgage rates and housing starts continues to support an outlook for a strong 1.85 million unit total this year. However, some further slippage in multi-family building seems inevitable next year due to tax reform."

Shipping Coalition Forms

An industry wide Ocean Transportation Coalition is being set up by the National Forest Products Association to deal with the rapidly rising shipping rates facing American wood exporters.

Although a variety of ocean shipping issues will ultimately be addressed, the immediate concern is increased freight costs to Asian ports because of the Transpacific Westbound Rate Agreement.

Super Centers Return To U.S.

" Hypermarkets," massive-sized stores featuring everything from building materials to groceries, will get another chance in the U.S.

The first 150,000 sq. ft. Super Center will be opened by late 1987 by partners Wal-Mart Stores, a discount retailer, and Cullum Companies, a Dallas, Tx., grocery chain.

Long popular in Europe, the concept had previously failed in the U.S. in the 190s.

The companies predict the stores will have weekly sales of $2 million.

Grossman's Upgrade

Grossman's Inc. (Moore's and Grossman's), which will emerge from the

Chapter ll restructuring of Evans Products as an independent company, plans a major improvement program.

Mike Grossman. returning as c.e.o. and chairman of the company which his family founded over 90 years ago, indicated that sales in 1986 will be approximatelv $l billion.

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Plywood Demand To Double

Addressing close to 300 members and guests at the annual meeting, American Plywood Association president William T. Robison said that "a world of fresh opportunity" should enable the industry to reach 44 billion square feet of production by the year 2010. Analyzing trends in domestic and international markets. he stressed that his projection ofa virtual doubling in demand from the 1985 level of 22.8 billion feet "is both realizable and conservative provided the industry main- tains its commitment to makine it happen."

Noting that the structural panel industry has advanced from l95l's 2.9 billion square feet ofproduction, 3/8-inch basis, "to what will certainly be its fourth consecutive production record at 25 billion feet in 1986." Robison said that "there are no grounds for complacency over this achievement."

He referred to the industry's current five billion square feet ofunused capacity, which he termed "a challense that must be immediately addressed by the creation of new market demand.' '

The APA chief executive identified four billion square feet ofadditional opportunity in residential construction through the next quarter century, led by market share advances over other materials in foundation, floor and siding applications.

He pinpointed another 12.5 billion feet of "very realizable" new opportunity in the other domestic marketsnonresidential construction; distribution (overthe-counter sales for do-it-yourself projects, repair and remodeling); and industrial applications. Robison singled out the international marketplace, however, "as the area where the greatest advances are achievable relative to present market size."

Retiring APA board chairman C. B. (Bud) Stevens gave the meeting an economic forecast for 1986/1987 indicating that the industry's 1986 production "can now be confidently predicted at 25 billion square feet, 3/8-inch basisa lO% improvement over 1985."

James R. Morris, vice president, Western Division, Wood Products Group, Potlatch Corp., Lewiston, Id., was elected chairman of the board of trustees. He has been a member of the board since 1978. Morris succeeds C.B. Stevens, recently retired senior vice president, Kirby Forest Industries, Inc., Silsbee, Tx., who has been chairman for the past two years.

Donald A. Graves. executive vice president and group manager, Building Products Group, Southwest Forest Industries. Phoenix. Az.. was elected vice chairman. He has been a member of the board since 197.

The meeting was held Sept. 29-30 at the Contemporary Resort Hotel, Orlando, Fl.