Western Woods

By ll. A" Roberts executive vice president Western Wood Products Assn.

A T,TH0UGHfrhousine starts and lumber consumption will reach record highs this y€or, we foresee a de. cline in both categories in L97?l

One of the contributing factors will be a constric. tion of raw material from federal lands.

Housing starts of 2.08 million irr l97l exceeded all expectations, e-xcept the most optimistic. The most informed sources now believe that housing starts for l9?2 will reach 2.25 milliona new record. The momentum of record-breaking housing activity has continued unabated through the first seven months of

1972 and is carrying into the fall months. 'fhr: rate at the end of Juty was nearly l6/s ahead of the rate for the first seven months of 197I.

First proiections of 1972 soft. wood lumber consumption appear lorv. We: now expect U. S. softwood lumber consumption to total 40.6 billion board feet in 1972, nearly 1O/o above the record reached in 1971. Residential construction. which accounts for 46lb oI softwoocl lumber consumption, has probably peaked for the year, but any declines are likely to be modest in coming weeks.

The year 1973 should be the thirtl best ever for housing starts. equaling or perhaps surpassing the l,952,000 starts in 1950 and exceeded only by the totals for l97l anC 1972. The expected decline in I97iJ is about l\Vc from the l9?2 level.

Non-residential construction is expected to remain strong in the coming year. Lumber for repairs and remodeling should show an increase while lumber used for material handling should remain close to thc' 1972 level. All in all, 1973 should rank second only to 1972 fior total Iumber consumption.

Along with these trends, economists and bankers agree generally that tighter and more expensive credit will return next year. A general business upturn and a growing federal deficit are straining the money supply, forcing interest rates up. ward. While the prime rate was 4s/n/e last February1, it has risen to $t/rta/6 and is expected to go higher.

The Federal Home Loan Bank Board reports that the average interest rate on conventional single.family mortqages edged up in July for the third straight month to 7.58.

Sfory q] d Glonce

Next year should be 3rd best ever for housing starts credit will get tighter and raw material shortages can be expected . . . lumber production in The West will drop 1.5 billion board feet.

Other indicators, such as unsold new homes and rental vacancy rates, are also edging upward. ln May, it took 5.1 months to sell a new home. one month longer than in IVIay of 1971. Rental vacancies have risen Irom 5.3/o in the first quarter to 5.5/6 in the second quarter of 1971. f)espite labor difficulties, log shortages, rail car shortages, antl developing raw material supply problems, shipments of lumber from the $iiest this year are expected to exceed l97l shipmentsby about 6/o, Lumber imports from Canada are currently 35/o above Iast year and are expected to reach 9 billion board feet by the end oI 1972, up 26.8/o from the l97I imports from Canada.

In spite of all the good news about '1972, the lumber industry will face raw material shortages next year. These will result from lowered tree

Forecast For Redwood

(Continueil lrom Page l0) and 1974. Assuming demand does not decrease precipitously ( a hope we fervently share), it looks as though stocks of certain redwood grades will remain short through the first half of 1973.

Production of green redwood, on the other hand, can and has been pushed to meet orders. While greerr redwood has many of the traditional redwood advantagesbeauty. durability, and workability it does not exhibit extreme dimensional stability, a characteristic of dry redwood. 'As you would expeci, green redwood might well move after installation.

For this reason, we cannot strong- ly enough stress the importance of using the proper grade. /t is the retoi)er's responsibility to ucquaint his redwootl cusroners witlr, the wood's characteristic.s. The retailer must do everything in his power to discourage, for example, the use of green material for siding or paneling.

Green redwood is not suitable for fine architectural uses .- siding, interior paneling, trim and so on .where tight joinery is required. The unwary consumer who attempts this, with predictable unsatisfactory results, will serve as a living, breath. ing mis-advertisement for redwood.

The green common, or ttgarden" grades of redwood are eminently suitable for p;arden application, such as fences, decks, and shelters. As the name implies, garden grades should stay in the garden.

I{ousing prognosticatorst-hose inimitable educated guesserstell us that the country's in for another big vear of housing starts.

If, as the,v say, 1973 will see about 2 million housing starts, then thc consumption of softwood lumber will be in the neighborhood of 37 billion board feet. The redwood indus. try is among the vanguard of lumber producing groups that will not only providc the materials for 1973 homes, but ensure a continuing sup. ply of materials for future homes.

T972

harvesting goals on federal forests and litigation in the environrnental arena which threatens to lock up 34 million acres of national forest lanrl in the West bearing timber of commercial quality. We expect that lum. ber production in the West rvill drop 1.5 billion board feet in 1973.

The President's Budget provided for timber sales from the national forests totaling 11.8 billion board feet in the fiscal year beginning last July I. The sale goal was- related to available manpower and funds and the budget requ€st was approved bY Congress. It later became aPparent that both manpower and funding would be inadequate to meet the harvest goals when related to new environmental quality standards and restraints suc.h as court actions, ap' peals and protests.

Subsequently, the Forest Service revised its estimate of the volume to be sold to 10.6 billion board feet, down 1.2 billion from original ex' pectations, and Congress has been advised of the reduced estimate. The original goal would have re' quired $18.3 million and 679 people over and above the current authori' zation. The increased cost is attrib' uted to inflation as well as environ' mental constraints.

ECONOMIC OVERVIEW (Continu,ed lrom Page Il)

Individual spending for all types of goods will likely be stimulated in the first few months of 1973 by substantial refunds of income taxes overwithheld this year, he says.

Overall industrial production shorrld be spurred by an expected l0% gain in capital expenditures by American business and by the further recovery of defense expenditures. Look for furtler stimulus to business activity from somewhat more aggressive inventory policies than those that characterized the early months of this year.

Monetary policy does shape up as more restrictive through most of next year, but short-term rates are not likely to rise from current levels by more than I or lt/z percentage points, whereas long-term yields should average out at something under I percentage point above the currcnt level.