1969 - more money around for building

S 1968 opened, most economic prognostieators foresaw a price decline in the lumber business-a decline which failed to materialize. In large measure, this may be attributed to the pressure on prices caused in part by log exports.

Although there is no strong indication of it at this time, slightly softer prices for lumber may occur in the fourth quarter of 1968. In fact, the lumber industry may have reached the pricc and purchaser demand plateau which has been talked about for so many years. This would ,be manifested in comparatively consistent high prices over a long period of time rather than the pattern of high peaks followed by va[eys which we have known for so many years.

It appears possible that the magic figure of 2 million housing starts annually is still attainable in the foreseeable future. Figures for this July show that on a seasonally adjusted rate, housing starts reached 1.53 million annually, up from the 1.3 million reported both in July of 1967 and in June of 1968. Mortgage money, as always, holds the key to housing starts and it appears that action within the past few months has caused that key to be inserted in the door of new residential construction.

The recent tax increase has been followed by a drop in yields on securities, narrowing the wide gap that existed during the first part of the year between returns from securities and return from mortgage loans. As a result, financial institutions once again are finding mortgage loans a good investment.

Sfory sl q Glonce

The Western Wood Products Association foresees soaring demands, but cautions that delays in buying now can mean serious delivery delays this spring.

Economists who see 1969 as the year of 2 million housing starts base this expectation on greater availability of money. Money, of course, will make it easier to answer the demand for housing which has been building up during the past several years as the number of new families has increased. It is extremely doubtful, however, that the 2 million housing starts figure can become a reality until a-fter the end of the Viet Nam War. Military requirements for lumber are currently 1.5 billion board feet a year or about five percent of softwood consumption in the domestic market.

As available land for forests diminishes in this country, we must look to increased plantings and higher yields of lumber per tree. Several of the nation's wood products companies have announced favorable re- sults of experiments along these lines. These efiorts must continue and become the responsibility of all forest land owners, including the state and federal governments, if we are to meet the increased demand for forest products.

At the same timeo we continue to be plagued by export of raw materials to Japan. Log export figures for 1968 will soar, and nothing that has been done will reduce log exports much before 1970.

However, the recently passed Foreign Aid Bill with the Morse amendment provides protection to both coastal and inland areas in the western states for three years, beginning with contracts made in 1969.

These are some of the major problems and opportunities facing the industry. Although it appears in the short term that prices may vacillate, this vaeillation will probably not be as great as it has been in the past. Unfortunately, the lumber industry has not yet learned how to control its inventory as have other major industries.

Those builders, retailers and wholesalers who are waiting for a break in lumber prices before ordering will likely find that this break is not in the offing. A year agq we recommended that dealers and builders place and fill their order rather than wait for a price break. The industry found this to be prophetic and prices rose as we estimated.

1969 - shakes and shingles continue strong

by Virgil C. Peterson '' Red Cedar Shingle & Hand Split Shake Bureau

Although the West has known it for a long time, much of the country just recently has discovered that red cedar shingles and handsplit shakes have a sales magic second to none. The result: a swiftly escalating demand for both products and a soaring pricetag which may result in substantial changes marketing structure for

The increased demand has not come solely from residential eonstruction; what up to now has been a spasmodic series of forays into the commercial field finally bloesomed into a full-fedged bonanza during 1968, and industry ofiicials are predicting virtually unlimited opportunity in the suburban business building market.

"The Quality Shift"

While residential construction likely will remain cedar roofing's bread,-and-rbutter market for years to come, key industry ofiicials are candidly predicting that the combination of limited supply and rising prices will cause a shift to the high end of the single family unit market.

Virgil G. Petersono secretary-manager of the Seattle-based Red Cedar Shingle & Handsplit Shake Bureau, ealls this trend a

"quality shift." o'Shingles and shakes have always been a quality material in the eyes of the consumer," Peterson says. ttWhat we are now seeing is that quulity image reflected by the facts of the marketplace."

Story d] s Gfsnce

A quiet revolution is continuing to expand the demand for shingles and shakes. Quality, geography, even sociology are part of the "shift to quality."

The shingle and shake industry's quiet revolution is taking place principdly in suburban areas, where satellite business complexes are mushrooming side,by-side with shopping centers, garden apartrnents and high-priced residential construction.

Geography, too, has played a crucial role in expanding market opportunities for the industry. oolt is no secretr" Peterson states, 'othat in the poet-war years, California, Tex. as, parts of the Midwest and New England were the sum and substance of our market. Now we are enjoying demand increases in virtually all parts of the country, including a newly revitalized market in the Southwest."

The broadened base for shingles and shakes, according to Peterson, has occurred for a variety of reasons-increasing affiu-