Forest Products Industry Trends

by TOWRY WYATT, President Notionol Forest Products Associotion

THE crippling effects of tight r credit, high interest rates and inflation on housing activity directly reflected conditions experienced by the wood products industry during the past year. As housing activity slowed down in late 1969 and 1970, lumber and wood products and other housing-oriented industries limped along with the same case of doldrums that afflicted housirg.

Housing and economic experts tell us housing turned around during the summer months and that 19?1 will see a recovery and greatly expanded activity throughout the remainder of the decade. An increased pace of activity in home building will certainly affect market opportunities for the forest products industries.

There was a marked improvement in the forces controlling housing activity during the second half of the year: Money markets eased, savings and loan associations experienced healthy new savings inflows, inflationary pressures lessened slightly.

New federal mortgage expansion programs enacted by the Congress have the potential of stimulating additional billions of dollars for home mortgage financing. The new federal .prograrnscontained in the important Emergency Mortgage Credit Actauthorize innovative programs to tap additional credit resources for mortgage lending, both otr an enrerg€trcy basis and over tlre long term.

The determination of bankers, economic and financial experts, pol-

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Greatly expanded activity for rest of this decade federal mortgage expansion plans have great potential . housing activity should peak by'75, taper off through '78.

iticians, housing cxperts and the administration that housing not bc subjected to dramatic peaks and valleys of activity because of tight credit, augurs well for greater stability in the housing sector. It is equally important for the industries which provide its goods' and services.

Forecasts of I97l housing activity are all optimistic. The Department of Commerce is forecasting a combined conventional and mobile home production of 1,935,000 units. The National Association of Home Builders foresees a total production of 2,020,000 units, the NFPA is predicting total new starts will be slightly more than 2,000,(X)0 units. Much, however, will depend on the avaiiability of mortgage credit.

The volume of new starts forecast for the halance of the 1970's, predictably, is very much on the up side. The Departmeut of Housing and Urban Development projech peak housing activity of 2,950,000 units in 1975 and then a gradual tapering off through 1978. The National Association of Home Builders predicts housing starts and mobilc home shipments will average bbout 2,240,000 units annually through 1975 and, in the last half of the decade. will average 2,780,000 units annually.

Based on l97l estimatcs of housing and other construction activity, NFPA is forecasting total Iumber consumption of 42.3 billion board feet next year. This compares with an expected consumption level of 39.4 billion bf. this year and actual consumption oI 42.8 billion bf. in 1969.

Softwood lumbcr consumption is expected to rise to 34.3 billion bf. in l9?I, compared with 32.4 billion bf. this year. Hardwood lumber consumption is expected to increase to eight billion bf. next year, compared with an estimated seven billion this year.

Based on projected increases in l97l housing startso a somewhat flat trend in nonresidential construction and a small upturn in the index of industrial production, domestic soft. wood lumber shipments should in. crease to 29.7 billion bf. next year from the 28.1 billion expected in 1970. Domestic softwood lumber production in 1971 is estimated at about 29.5 billiou bf.o an increase over the 28 billion bf. expected this yeaf.

Philippine Heriloge

Philippine Mahogany is a big item at Higgins Lumber. Over the past 83 years we've earned a reputation as specialists in this great wood. And for good reason. We consistently carry the biggest stocks on the West Coast. That means you can always get uniform color to match plywood and mouldings-and the right texture ror Intenor or maflne use. This is just one of 52 expert- ly selected hardwoods at J. E. Higgins Lumber Company, which ofters Northern California cus:omers 7 million ft. of kiln dried lumber.and over 200,000 sq. ft. oI warenouse.

A lumber for every purpose.