OPERANNG OPPORTUNITIES

WALLY LYNCH Paid Associates PO. Box 741623 Dallas. Tx.75243

lf's fHnf TIME of year again. ConI tractors are roofing over and closing in their latest starts. The leaves have gone. Business has fallen off. Turkey Day is just around the corner. It's time to plan for next year.

Another signal has been the annual mailing from the American Management Association on their How To Manuals covering a business plan, marketing plan and analyzing competition. As a sometime participant in that organization's programs, I have seen that it has been easier to be impressed than to put something in the bank. The content of their offerings is awesome, but exposure makes one feel more equipped to run a Fortune 500 company than to win the rumble of the Do It Yourself world.

Though not totally clear, it appears that the creators of these sophisticated tools were directing their efforts to those companies run by managers heading a department or section of an operation. The sole proprietor, or small dealer who personally directs the activities of each employee, is faced with a dilemma in planning to grow without the time or people with which to bring it off They are in the twilight zone; they are the "tweeners." For all of you in this ptight, here is a transitional exercise that will begin to move you out of your shirt pocket to a time when sophistication will serve you better.

In planning, you are programing what to do, how to get it done, the cost and the pay back. Direct these questions to the four major cost areas of your business (labor, communication, inventory and facilities), each with a qualifying question and areas ofconcern.

Labor Costs: Would the company and its people be more eflective with a change in: o Training? o Compensation? o Benefits? o Responsibilities? o Management? o Career Paths?

Communications: Could the company's performance benefit from implementation of or changes in communications with its: o Customers? o Government? o Stockholders? o Suppliers? o Buying? o Pricing? o Competitive Shopping? o Unit Control?

. Associates? o Competitors?

Inventory: Is it possible to improve sales and profits by a change in: Assortments? Market Visits?

Facilities: Will the company be able to provide better service at less cost to the customer through a change in: o Facility o Alterations? Utilization? o Housekeeping? o Equipment? o Signing? o Customer Accomodations?

As you go through each ofthe above with your associates, ask the questions about what, how, the cost and the pay back time of each possibility. Answering this little drill will make the benefits obvious.' The approach is not totally inclusive nor always 1000/o applicable, but it will provide a useful, preliminary step which will someday make the transition to more sophisticated planning easler.

Panel Industry On A Roll

The U.S. structural panel industry is heading for its fifth consecutive production record in 1987, and another record appears possible in 1988 despite an expected further decline in home building.

This was the optimistic message for manufacturers of Plywood and other structural panel products at the annual meeting of the American Plywood Association. APA board chairman James R. Morris, vice president, Western Division, Wood Products Group, Potlatch CorP., Lewiston, Id., noted that as recently as June of this year, APA was forecasting a modest reduction in 1987 structural panel demand. This was linked to the expectation that U.S. housing would be down about 10% from 1986.

"The interesting thing about the revised industry forecast issued by APA at this annual meeting," Morris added, "is that the Predicted home building decline is taking place. Yet expansion of the nonhousing segment of the total Panel market has continued at a strong pace."

The APA chairman rePorted that structural panel industry production has been at a rate 8o/o ahead of the 1986 record level Q5.6 billion square feet, 3/8-inch basis) for the first 40 weeks of this year. He noted that while this kind of accelerated demand will be unlikely to continue through the winter, "APA appears on track in its new estimate of 1987 industry production at 27.l billion square feet."

Morris told industry members that the fifth consecutive production record expected in 1987 represents a 60/o increase over 1986 and "nearly 200/o industry growth in the past two years.tt

Answering the question of how they will manage to surpass the 1986 record in a year of reduced housing activity, he said, ". in market diversification, through unihed promotion tackling the best opportunities in every sector from home building to repair/remodeling, nonresidential construction, industrial applications and exPorts."

Leading the demand exPansion are nonhousing markets and exports, with strong help also from steadily growing over-the-counter sales for home additions and alterations. The chairman also pointed to

"an unexpectedly high level ofpanel usage for nonresidential remodeling and maintenancethis market segment appears to be twice as large as APA previously estimated."

Morris stressed that the exPort market "also continues on a roll, nearly 30% ahead ofthe strong 1986 pace for the first halfofthis year, and still gaining to the point where it would be no surprise to see 1987 offshore shipments surpassing 800 million square feet."

Acknowledging that the Panel industry faces the possibility of a slight production drop in 1988, Morris added that "not even this is certain."

"APA's current thinking is that demand could reach 27.2 billion square feet in 1988 even with a 9olo housing drop. The comPensating gains can come from the diversified market develoPment at home and abroad that has repeatedly exceeded

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PGL Closes 2 Warehouses

Palmer G. Lewis Co.. Inc.. Auburn, Wa., has closed unprofitable PGL Building Products division warehouses in Spokane, Wa.. and Boise, Id., convinced that the regions' unfavorable economic conditions prevent turnarounds at the locations.

"These decisions should emphasize our determination to transform any underperforming assets, wherever they are, into assets which contribute an appropriate return on shareholder investment," said John N. Anderson, c.e.o. "We believe this can be accomplished first by reduction ofdebt and then by expansion ofour profitable businesses and acquisition of better performing business entities."

Palco Takeover Questioned

Maxxam Group's 1985 takeover of Pacific Lumber Co., San Francisco, Ca., may have evaded federal disclosure regulations by having another company "park" stock, according to a congressional staff report.

The Merchant Magazlne

Since a person or firm owning 5olo or more of a company must frle a public disclosure, corporate raiders wishing to keep down the price and avoid alerting management may have other companies hold. or "park," shares for them.

The congressional subcommittee report alleges former Jefferies & Co. executive Boyd Jefferies, alleged to have parked stock for raider Ivan Boesky, parked Palco shares until Maxxam's tender offer was announced.

Maxxam's Charles Hurwitz denied any improprieties, saying Maxxam bought 500,000 palco shares from Jefferies but was still under the 50/o ceiling required for disclosure.

1989 Recession Foreseen

A 1989 recession will follow a year of continued moderate growth, predicts the National Association of Business Economists.

The country's inflation-adjusted output is expected to expanded 2.70lo in 1988 after a 3% rise this year, according to a survey of economists.

The consensus forecast for the slowdown believed to begin in 1989 stems partly from a belief that the new Federal Reserve Board chairman will not allow a recession to occur during an election year.

Next year's anticipated growth will result largely from a reduction in the trade deficit from $155 billion this year to $140 billion in 1988, the group forecast.

Posner Pleads No Contest

Victor Posner, Miami, Fl., financier whose holdings include Evans Products Co., has pleaded no contest to tax evasion charges.

Posner faces a maximum 40-year prison sentence and $75,000 fine for evading $1.2 million in taxes by over valuing 22 acres of land he donated to a Miami college in the late 1970s. He was initially convicted last July, but the hearing was declared a mistrial (see The Merchanl, Oct., 1986, p.51).

The Justice Department has urged the court to deny Posner's current no contest plea because it could complicate efforts to collect back taxes and fines, unlike a guilty plea or conviction.

November 1987

LMA Seminar Open To Dealers

Interested dealers from outside the Lumber Merchants Association of Northern California boundaries are being invited to attend their annual management seminar at Asilomar State Beach in Pacific Grove (Monterey), Ca., Jan. l6-17.

In issuing the invitation, GarY Smith, executive vice president of LMA, announced that the main Program will feature Bruce Merrifield of the Merrifield Consulting Group. He will be speaking on "Service Excellence-Mastering, Achieving, Selling and Getting Paid for It," "Productivity Tactics for Retailers" and "Inventory Management Techniques."

The association also has Plans for a presentation on an employee training program that is fully funded bY the state and a mini-seminar on store