Things are getting better . . . bul sloily

J. J. AAULROONEY executive vice president Nofionol-Americon Wholesole Lumber Assn.

I S we muddle through the middle lf' o1 1970's fourth quarter, the forest products industry seems certain to experience improving times in I97I.

It is our feeling, however, that the outlook for 1971 does not portray a gigantic housing boom for the U.S. Better business will be tempered somewhat by our economic picture which continues to require care and nurturing.

On the plus side of the ledger, we definitely have demand for our principal market, housing.

IVe have much encouragement from, administrative and legislative steps to counteract the effects of earlier monetary policies.

Barring a serious recessiono the growth of the second home market is likely to continue.

Even if inflation has been slowed, it is likely that a goodly number of present home owners will engage in remodelingo expanding, or repairing their present homes. Recent statistics on personal savings indicate they easily have the wherewithall for this type of investment.

The optimism of lumbermen and home builders should not be discounted. This can generate initial action in the marketplace and will almost immediately require inventory build-up in the consuming areas.

These ingredients provide a very real potential for a booming year for our industry for 1971. Unfortunatelyo there are other factors that will detract from this promising near-term future.

As we move away from the November elections and into l97I proper, we will see more realistic projections on the federal budget defi

Story ot s Gfqnce

Increased demand for housing tempered by increased competition for available funds . footage of wood per housing unit likely will be less . . . remodeling continues as strong point.

cit for the current fiscal year. The amount of that deficit and the one that likely faces our country for the next year could become an effective damper to the overly optimistic. How big is the deficit? And more important, perhaps, how close to the mark has our government projected tax revenues?

The loss taken by individuals in the stock market for tax purposes and the General Motors strike alone can be a serious factor in overall tax revenue. One can't help coming to the conclusion that government will be in the money market as a substantial competitor for available funds.

Additionally, the thrift institutions will be faced with new compe. tition for savings funds as major industrial borrowers engage in the issuance of their own versiori of savings bonds.

Finally, one must be realistic about the 'omix" of housing units to be built in 1971. The number of units built will certainly increase. The amount of lumber and plywood per unit is something else again. It seems reasonable to assume that mobile homes and multi-unit construction will have similar or larger portions of the market. Due to the building costs and gualification re. quirements, there seems to be a trend towards smaller and less fancy single family structures. The footage of wood per unit, therefore, is likely to be less than in previous years.

Balancing these pros and cons precludes the thought that "things will go out of sight." For the first six months, we should see an upturn of prices and housing starts, which will be welcome relief to our beIeaguered industry. This period may also contain some spurts of activity as consuming area inventories adjust. Activity in the last half of l97l will depend as much on factors outside our immediate industry as on our production capabilities, housing demands, and marketing acumen.